The Supreme Court issued a decision today removing the laches as a defense to patent infringement. The case is reported at SCA Hygiene Products Aktiebolag et al. v. First Quality Baby Products, LLC, et al., Slip. Op. No. 15–927 (March 21, 2017).
Historically, laches is an equitable defense to patent infringement, based upon an unreasonable and prejudicial passage of time in bringing a lawsuit. Thus, if a patent owner knew of an alleged infringer for a long period of time, an accused infringer could argue that the patent owner waited too long to sue for patent infringement and that the accused infringer would be prejudiced if the patent owner was permitted to “sit on their hands” for years without taking action.
The Patent Act has a statute of limitations, 35 U.S.C. § 286, titled “Time Limitation on Damages.” That Section of the Patent Act reads, in pertinent part: “Except 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.”
The question at issue in the SCA Hygiene case was whether a laches defense can bar any recovery for patent infringement, even as to those acts committed within the six-year statutory limitations period.
In a related copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. ___, ___ (2014), the Supreme Court considered a similar issue under the Copyright Act. The Copyright Act’s statute of limitations requires a copyright holder claiming infringement to file suit “within three years after the claim accrued.” 17 U.S.C. §507(b). In Petrella, the copyright owner sought relief for alleged acts of infringement that accrued within the three-year period before the lawsuit, but the district and appellate courts held that laches barred the claims entirely. The Supreme Court reversed, holding that laches cannot defeat a damages claim brought within the period prescribed by the Copyright Act’s statute of limitations. In its decision, the Supreme Court stated that “[i]n the face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.”
Applying the same logic to the SCA Hygiene case, the Supreme Court held that a patentee may recover damages for any infringement committed within six years of the filing of the a patent infringement lawsuit.
The practical impact of this decision is that a patent lawsuit, and considerable potential damages, could be hanging over an accused infringer’s head for a very long time. Patents in the United States have a term of 20 years from the earliest priority date. A patent owner could wait over fifteen years to file a patent infringement lawsuit and still be able to recover damages for the six years prior to the date the lawsuit was filed.
In a lone dissent, Justice Breyer laid out the historical background of the laches defense in patent law that was given little weight in the majority opinion. In particular Section 282 of the Patent Act of 1952 was intended to codify then-existing patent defenses, which included laches. If over a century of patent case law that applied the laches defense is to be restored in order to prevent a plaintiff patent owner waiting for years to “spring” a patent infringement claim against a defendant, it will now take Congressional action to amend Section 282. As it now stands in the Supreme Court’s decision, patent owners could have an advantage with respect to lost prior art in the form of business records, etc., that could be used for an invalidity or unenforceability defense.
It is also interesting to note the majority’s position that it does not want to invade the province of the legislature by allowing judge’s discretion in such cases where the laches defense would previously have been available. However, the Supreme Court has been more active in recent history in legislating from the bench in other areas of the law.
To summarize, it will now be possible for patent owners to seek up to six prior years of damages from parties previously accused of patent infringement, even if the original infringement accusations were made many years earlier. With laches no longer valid as a defense, parties accused of patent infringement must now rely on other available defenses.