EXPECTED DECISION BY SUPREME COURT IS PRO-PATENT
On March 21, the United States Supreme Court ruled in SCA Hygiene Products Aktiebolag et al. v. First Quality Baby Products, LLC, et al that laches cannot be invoked as a defense against a claim for damages in a patent infringement case brought within the sixyear statute of limitations set forth in the U.S. Patent Act. Laches is an unreasonable delay in making an assertion or claim.
The same ruling was reached in 2014 in Petrella v. Metro-Goldwyn-Mayer, Inc., with respect to laches as a defense in copyright infringement claims.
The case involved a dispute over a patent for adult incontinence products. SCA Hygiene, the plaintiff, accused defendant First Quality of infringement in October 2003 but did not file suit until August 2010—almost seven years later. The district court and a panel for the United States Court of Appeals for the Federal Circuit held that SCA’s delay in filing suit was unreasonable and that laches therefore barred SCA’s claim for pre-suit damages. These included damages for infringement occurring within the patent act’s six-year damages limitation period.
But the 7-1 Supreme Court decision, delivered by Justice Samuel Alito, vacated the federal circuit’s ruling and eliminated what had been an important tool used by accused infringers to fight delayed infringement claims. A dissent was filed by Justice Stephen Breyer, who would have affirmed the federal circuit ruling finding that U.S. patent law
codified a laches defense without using the term “laches.”
This case was hardly difficult to predict. Justice Alito explained, in a rather exasperated way, that the federal circuit seemed to ignore previous Supreme Court pronouncements that laches could not be used as a defense to a claim brought during the statute of limitations period because those cases did not specifically deal with a claim of patent infringement.
First Quality did make an interesting argument about the six-year statute of limitations for patent infringement actions not being a true statute of limitations because it counts backwards from the filing of the complaint, rather than forward from the date of infringement. The importance of this nuance seemed completely missed on the majority; only Justice Breyer seemed to understand the importance of the argument. Of course, without a laches defense possible, a patent owner could lie in wait for infringement to become widespread and then sue for infringement, seeking only the previous six years worth of damages.
Although I doubt the Supreme Court really understands what it did, the fact that laches cannot be used as a defense to a patent infringement action brought during the statute of limitations is definitely a pro-patent decision. Presently, patents are much weaker than they have been at any time in the past 36 years. But patent law has always swung like a pendulum, and this low point will not last forever.
Thus, in the wake of the Supreme Court’s decision in SCA Hygiene, patent owners would do well to consider forgoing patent enforcement. Instead, allow infringement to accrue and then sue for infringement in several years when the law may be quite a bit more favorable. After all, patents can last for 20 years, the statute of limitations is six years, and without a laches defense available to infringers you will be able to seek damages going back six years from whenever you choose to sue.
A couple of comments caught my attention in this case. First, in the majority opinion, Justice Alito wrote: “[A]pplying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role that is beyond the Judiciary’s power.”
The Supreme Court never seems to be bothered with “legislation-overriding” when applying its extra-statutory requirements for patent eligibility. U.S. Code Title 35, Section 101 specifically says that if a claim is directed to a machine, process, manufacture or composition of matter, the claim is patent eligible. But without any statutory support for doing so or any support in the Constitution, the Supreme Court has added two additional inquiries through what it refers to as the Alice/Mayo framework created by those landmark cases. It is interesting that the Supreme
Court at times can so correctly understand the role of the judiciary and at other times completely ignore separation of powers, ignore Congress and the statutes it passes and do whatever it wants. S
econd, in his dissent, Justice Breyer wrote: “I would be more cautious before adopting changes that disrupt the settled expectations of the inventing community.” But settled expectations meant nothing to Justice Breyer, or any of the other Supreme
Court justices, when they decided AMP v. Myriad Genetics in 2013. Although the Supreme Court clings to the fiction that Myriad did not overrule the landmark Diamond v. Chakrabarty case in 1980 (in which a live human-made microorganism was ruled patentable subject matter), there is no way to interpret Myriad in any other way than overruling the settled expectations that had been understood by the industry for more than 30 years.