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Supreme Court Tosses Laches in Patent Cases

March 23, 2017

Overview

In SCA v. First Quality Baby Products, the Supreme Court rejects the Federal Circuit’s distinction ‎between the Copyright Act’s 3-year statute of limitations and the Patent Act’s 6-year limitation on ‎damages, and rules that laches should not apply in either case. In light of Petrella, the Court rules that ‎nothing less than a broad and unambiguous consensus of lower court decisions could support the ‎inference that §282(b)(1) codifies a very different patent-law-specific rule. The Court finds no such ‎consensus here. Thus, once again, the Court rejects the Circuit’s attempt to apply a special rule to ‎patent cases.‎

Pete

SCA Hygiene Products Aktiebolag v. First Quality Baby Products, Supreme Court Case 15-927 (March 21, 2017)‎

In 2003, SCA notified respondents First Quality that their adult incontinence products infringed an SCA patent. First Quality ‎responded that its own patent antedated SCA’s patent and made it invalid. In 2004, SCA sought reexamination of its patent in light ‎of First Quality’s patent, and in 2007, the PTO confirmed the SCA patent’s validity. SCA sued First Quality for patent infringement ‎in 2010. The District Court granted summary judgment to First Quality on the grounds of equitable estoppel and laches. While ‎SCA’s appeal was pending, this Court held that laches could not preclude a claim for damages incurred within the Copyright Act’s ‎‎3-year limitations period. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. ___, ___. A Federal Circuit panel nevertheless ‎affirmed the District Court’s laches holding based on Circuit precedent, which permitted laches to be asserted against a claim for ‎damages incurred within the Patent Act’s 6-year limitations period, 35 U.S.C. §286. The en banc court reheard the case in light of ‎Petrella and reaffirmed the original panel’s laches holding. ‎

Held: Laches cannot be invoked as a defense against a claim for damages brought within §286’s 6-year limitations period. ‎

‎(a) Petrellas holding rested on both separation-of-powers principles and the traditional role of laches in equity. A statute of ‎limitations reflects a congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial ‎determination. Applying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role ‎that exceeds the Judiciary’s power. Petrella. Moreover, applying laches within a limitations period would clash with the gap-filling ‎purpose for which the defense developed in the equity courts. ‎

‎(b) Petrellas reasoning easily fits §286. There, the Court found in the Copyright Act’s language a congressional judgment that a ‎claim filed within three years of accrual cannot be dismissed on timeliness grounds. By that same logic, §286 of the Patent Act ‎represents Congress’s judgment that a patentee may recover damages for any infringement committed within six years of the filing ‎of the claim.‎

First Quality contends that this case differs from Petrellabecause a true statute of limitations runs forward from the date a cause of ‎action accrues, whereas §286’s limitations period runs backward from the filing of the complaint. However, Petrella repeatedly ‎characterized the Copyright Act’s limitations period as running backward from the date the suit was filed. First Quality also ‎contends that a true statute of limitations begins to run when the plaintiff discovers a cause of action, which is not the case with ‎‎§286’s limitations period, but ordinarily, a statute of limitations begins to run on the date that the claim accrues, not when the cause ‎of action is discovered. ‎

‎(c) The Federal Circuit based its decision on the idea that §282 of the Patent Act, which provides for “defenses in any action ‎involving the validity or infringement of a patent,” creates an exception to §286 by codifying laches as such a defense, and First ‎Quality argues that laches is a defense within §282(b)(1) based on “unenforceability.” Even assuming that §282(b)(1) incorporates a ‎laches defense of some dimension, it does not necessarily follow that the defense may be invoked to bar a claim for damages ‎incurred within the period set out in §286. Indeed, it would be exceedingly unusual, if not unprecedented, if Congress chose to ‎include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim. Neither the ‎Federal Circuit, nor any party, has identified a single federal statute that provides such dual protection against untimely claims. ‎

‎(d) The Federal Circuit and First Quality rely on lower court patent cases decided before the 1952 Patent Act to argue that §282 ‎codified a pre-1952 practice of permitting laches to be asserted against damages claims. But the most prominent feature of the ‎relevant legal landscape at that time was the well-established rule that laches cannot be invoked to bar a claim for damages incurred ‎within a limitations period specified by Congress. In light of this rule, which Petrellaconfirmed and restated, nothing less than a ‎broad and unambiguous consensus of lower court decisions could support the inference that § 282(b)(1) codifies a very different ‎patent-law-specific rule. ‎The Federal Circuit and First Quality rely on three types of cases: (1) pre-1938 equity cases; (2) pre-1938 claims at law; and (3) ‎cases decided after the merger of law and equity in 1938. None of these establishes a broad, unambiguous consensus in favor of ‎applying laches to damages claims in the patent context.‎

ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, GINSBURG, SOTOMAYOR, and ‎KAGAN, JJ., joined. BREYER, J., filed a dissenting opinion. ‎

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