Procrastinators can rejoice in the wake of a recent Supreme Court (0) ruling that the defense of “laches” no longer applies in patent cases.
Derived from an old French term for “delay,” laches is a centuries-old English common law doctrine that bars a legal claim whose pursuit was unreasonably delayed. In general, if a claimant waits too long before filing suit, it would be unfair to the defendant to allow the case to move forward when she reasonably assumed the claimant had relinquished his claim. It would burden the legal system to handle evidence and witnesses when substantial time had passed after the events in question occurred, and it would reward the claimant for acting dilatorily.
Laches serves similar purposes as a statute of limitations, which fixes a certain number of years to bring a claim, although the former is far fuzzier and more open to interpretation than the bright-line rule of the latter.
But these two concepts have clashed in recent years in the context of intellectual property, as the Supreme Court first held in the 2014 case of Petrella v. Metro-Goldwyn-Mayer that laches does not apply in copyright cases and then, last week, ruled in a 7-1 opinion in SCA Hygiene Products v. First Quality Baby Products that the same logic applies to patents.
The case began in 2003 with a letter from SCA accusing First Quality of infringing its patent on an absorbent adult diaper. First Quality wrote back soon thereafter, claiming SCA’s patent was invalid in light of similar, earlier inventions. In light of those inventions, SCA then subjected its own patent to further Patent Office scrutiny in a process called “reexamination.” In 2007, the Patent Office confirmed that SCA’s invention was valid.
But SCA then waited until 2010 — three years after the reexamination had concluded, and seven years after it had last contacted First Quality — to file its complaint for patent infringement. First Quality moved to dismiss the case on grounds of laches, which the district court approved, and the Federal Circuit Court of Appeals affirmed (1).
SCA then petitioned the Supreme Court to strike down the laches defense altogether, arguing that, as with copyright, the existence of a statute of limitations for patent infringement renders laches unnecessary and confusing.
Justice Samuel Alito, writing for the majority, agreed (2), concluding that “laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.” Specifically, the relevant patent statute “represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”
Thus, because Congress fixed a statute of limitations for patent damages — six years — laches no longer qualifies as a defense. In other words, even though SCA waited to sue First Quality for three years after receiving its reexamined patent, the delay fell within the statutory six years, and therefore should not bar recovery of damages.
In its earlier decision, the Federal Circuit had reasoned that a different section of the patent statute had implicitly incorporated the laches defense notwithstanding the statute of limitations. But Alito gave that position short shrift, holding that even if true, that provision couldn’t bar patent owners from receiving damages if their claim were filed within the statutory period.
At the time of the Federal Circuit ruling, my law partner John Dragseth told IPLaw 360 (3) that patent defendants should pursue a laches defense only “if the facts are wonderful and your client looks like an angel and the patent owner looks like the devil.” However, Dragseth continued, “the biggest message is, ‘Don’t let this defense distract you from something better.’” That advice proved prescient, as accused infringers can no longer rely on laches at all.
On balance, because SCA makes it modestly more difficult for such accused infringers to escape liability, it tips the balance slightly toward patent owners and may make long-delayed legislative patent reform a bit more likely. But with Congress in knots over repealing Obamacare, reforming the tax code, and other pressing matters, tweaking the patent system will likely continue to remain a low priority.