SCA Hygiene v. First Quality was decided by the Supreme Court on March 21, 2017 on appeal from the Western District of Kentucky. There, the district court granted defendant First Quality’s summary judgment motion of laches and equitable estoppel. A Federal Circuit panel affirmed as to laches, but reversed as to equitable estoppel. The en banc Federal Circuit held that laches may bar the recovery of damages for a suit brought within the limitations period. Plaintiff SCA appealed.
The Supreme Court held that laches may not bar the recovery of patent damages for a suit brought within the limitations period, vacating the Federal Circuit decision and remanding.
In Petrella v. MGM, the Supreme Court held that laches is no defense to a copyright infringement suit brought within the Copyright Act’s statutory limitations period. The Supreme Court so held because applying laches within the statutory limitations period would “give judges a legislative-overriding role that is beyond the Judiciary’s power.” Under §286 of the Patent Act, “[e]xcept as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.” Similarly to Petrella, this represents a congressional judgment “that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”
The Supreme Court noted that the laches defense is nowhere incorporated in §282’s defenses to validity and infringement. And even if laches was incorporated, the Court continued, “it does not necessarily follow that this defense may be invoked to bar a claim for damages incurred within the period set out in §286.” It would be “exceedingly unusual” if Congress chose to include both a statute of limitations for damages and a laches provision applicable to a damages claim.
While laches cannot bar a claim brought within the statutory period, the Supreme Court noted that equitable estoppel provides protection against unscrupulous patentees inducing potential lawsuit targets to invest in the production of arguably infringing products.
Justice Breyer dissented because for more than a century courts have applied laches in patent damages cases, and because Congress intended to codify that judicial practice.
Justice Breyer argued that laches fills a gap in §286’s scheme. Because §286 permits a patentee to sue at any time after an infringement takes place, a patentee might wait for a decade or more while the infringer invests heavily in the development of the infringing product (of which the invention could be only a small component), while the evidence the infringer might use (eg, to invalidate the patent) disappears with time. Laches, according to Justice Breyer, “works to fill the gap by barring recovery when the patentee unreasonably and prejudicially delays suit.”
Justice Breyer also made a statutory argument. Under §286, “[e]xcept as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint…” (emphasis added). And §282(b) provides that “unenforceability” shall be a defense “in any action involving the validity or infringement of a patent.” (emphasis added). “[U]nenforceability”, and thereby laches, is one of those “except[ions]” to the limitations period.
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