The U.S. Supreme Court ruled this week that laches is not a defense in the majority of patent cases. Justice Alito, writing for the 7-1 majority, found the application of laches to patent disputes incompatible with the six-year statute of limitations found in 35 U.S.C. § 286.
The decision arose out of a dispute between two competitors in the market for adult incontinence products. In October 2003, SCA Hygiene sent an infringement notice letter to its competitor, First Quality; it filed suit against First Quality nearly seven years later, in August 2010. First Quality then moved for summary judgment, arguing that laches barred SCA Hygiene’s claim. The District Court and the Federal Circuit both agreed: because SCA had waited over six years before filing suit, its case was barred by laches and should be dismissed.
But the Supreme Court disagreed, holding that laches does not bar a suit for patent damages because patent cases are already subject to the six-year statute of limitations found in § 286 of the Patent Act. In reaching this conclusion, the court adopted its reasoning in Petrella v. Metro-Goldwyn-Mayer, a case that addressed a similar issue in copyright cases.
Per 17 U.S.C. § 507(b), the Copyright Act requires copyright owners to file suit within three years after a claim accrued. In Petrella, the Supreme Court held that because of this limitations period, laches could not apply for at least two reasons. First, by enacting a statute of limitations, Congress already addressed the issue of timeliness head-on: it had determined that a bright-line rule was more appropriate than the “case-specific judicial determination” required when assessing a laches claim, and it provided a clear rule to govern whether a claim has been timely asserted. Allowing judges to apply laches on top of that statutory limitation would therefore impermissibly override Congress’ determination. Second, applying laches within a Congressionally-determined limitations period would also be inconsistent with the purpose of the laches defense. Laches is intended to be a gap-filling doctrine to address circumstances where the legislature has not seen fit to impose any statutory bars; where a statute of limitations exists, according to the Supreme Court, “there is no gap to fill.”
Finding the Copyright Act’s statute of limitations indistinguishable from § 286 of the Patent Act, the court then applied the Petrella reasoning to patent cases, and disallowed laches as a defense to a patent damages claim. In reaching this conclusion, the majority rejected the view – advocated by both the Federal Circuit and Justice Breyer in a dissenting opinion – that § 282 of the Patent Act, which lists defenses available to accused infringers, codified laches as a defense to patent infringement, holding instead that case law prior to the 1952 Patent Act did not conclusively establish laches as a defense to patent infringement. Justice Breyer also raised a concern that defendants could wait until late in a patent’s life to assert an infringement claim, but the majority found this policy argument no more convincing, observing that equitable estoppel can provide protection from these types of tactics.
Importantly, the Supreme Court’s decision does not categorically ban laches in all patent cases. Indeed, it expressly does not address the Federal Circuit’s determination that laches can apply to a claim for equitable relief, such as a permanent injunction. And, it does not preclude the use of equitable estoppel as a defense against an infringement claim.
This decision will be very important to patent holders and accused infringers alike, as it limits available defenses to patent infringement claims and alters the pre-suit dynamic between accused infringers and patent holders. In the wake of this opinion, the doctrine of equitable estoppel will no doubt receive increased focus and attention, and it will bear watching by all litigants.
The case is SCA Hygiene Products v. First Quality Baby Products, No. 15-927 (2017), with Justice Alito writing for the majority. A copy of the opinion can be found here.