28 Oct 2016 in Newsletter
U.S. Supreme Court to Decide Whether Laches Applies in Patent Cases
By: David S. Forman
A key principle of our U.S. legal system is that it is unfair to defendants for a plaintiff to launch a suit after too much time has passed, when evidence may be lost, memories have faded, and witnesses may have disappeared. One mechanism to promote fairness is a statute of limitations, a rule that a defendant will not be held liable after a specified period of time has lapsed. Another mechanism is the equitable doctrine of laches, the principle that a court will not aid a plaintiff whose unexcused delay, if the suit were allowed, would be prejudicial to the defendant. This fact-dependent principle requires proof of lack of diligence by the plaintiff and resulting prejudice to the defendant. When found, laches bars retrospective relief for damages before filing suit, although it does not bar prospective relief. Statutes of limitations are fixed time periods set by statute, whereas laches is determined by the discretion of the judge based on the facts of the case.
Patent law currently has both. A type of statute of limitations is embodied in 35 U.S.C. § 286, under which a plaintiff cannot recover damages for infringements that occurred more than six years before filing of the infringement suit. In addition, case law has applied laches in patent cases to bar liability for infringements occurring during the six-year period.
The Copyright Act of 1976 contains a statute of limitations. It states that no infringement suit can be maintained unless it is filed within three years of the infringement of the copyright. 17 U. S. C. §507(b). In a case where a defendant in a copyright suit invoked laches as a defense, the Supreme Court ruled that laches cannot bar a claim for damages (money) brought within §507(b)’s three-year window. Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. ___ (2014). However, “in extraordinary circumstances” laches can still curtail equitable relief (e.g., non-monetary relief such as destruction of infringing books and film).
Now a similar question has reached the Supreme Court regarding patent law: SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, Supreme Court Docket No. 15-927 (2016). As in Petrella, the lower courts held that laches could be applied in patent infringement suits. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 767 F.3d 1339 (2014). The Supreme Court will decide “Whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286.”
Bar associations, trade associations, and companies have weighed in with amicus briefs on both sides of this issue. Those supporting the elimination of laches argue that the Supreme Court’s reasoning in Petrella should apply equally in patent cases. They argue that retaining laches encourages rushed, premature filings of lawsuits. Those arguing for the retention of laches argue that 35 U.S.C. § 286 is different from the statute of limitations for copyrights, since it does not bar bringing an infringement suit but only limits the time period for which damages can be collected. They also point to evidence suggesting that, unlike in the Copyright Act, Congress recognized that equitable remedies such as laches could apply in patent cases. They also argue that if a laches defense is not retained, nothing would stop a patentee from sitting silently on its rights while an innocent infringer invests substantial time and resources to develop and commercialize a product independently, only to have the patentee emerge six years later to seek the most profitable six years of revenues.
Oral arguments at the Supreme Court have been scheduled for November 1.