CAFC says laches still a defense to patent infringement


Recently, the United States Court of Appeals for the Federal Circuit, sitting en banc, decided SCA Hygiene Products Aktiebolag v. First Quality Baby Products, which required the Court to determine the continued applicability of the laches defense for patent infringement actions. This issue presents itself in light of the Supreme Court’s recent decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), which determined that laches is not a defense to a copyright infringement action brought within the statute of limitation.

Petrella involved an assertion that Metro-Goldwyn-Mayer’s (“MGM”) 1980 film “Raging Bull” infringed a copyright in a 1963 screenplay authored by Frank Petrella. Frank Petrella’s daughter renewed the copyright in 1991, but did not contact MGM until seven years later. Over the next two years, Petrella and MGM exchanged letters concerning Petrella’s copyright claim. Petrella then went silent, and did not file suit until January 6, 2009, about nine years after her last correspondence with MGM. MGM moved for summary judgment based on laches, which the district court granted and the Ninth Circuit affirmed.

The Supreme Court accepted the appeal and reversed, holding that laches is no defense to a copyright infringement suit brought within the Copyright Act’s statutory limitations period. Fundamentally, the Supreme Court reasoned that “the copyright statute of limitations, § 507(b), itself takes account of delay,” crowding out the judiciary’s power to decide whether a suit is timely. Notwithstanding, Petrella also addressed the extent to which laches should affect equitable relief. The Supreme Court explained: “In extraordinary circumstances, however, the consequences of a delay in commencing suit may be of sufficient magnitude to warrant, at the very outset of the litigation, curtailment of the relief equitably awardable.” Further, the Supreme Court in Petrella recognized that Congress could provide for a laches defense, noting, as an example, that it had done so in the Lanham Act, governing trademarks.

The Federal Circuit (i.e., Judges Prost, Newman, Lourie, Dyke, Moore, O’Malley, and Reyna) held that Congress has provided for a laches defense under the Patent Act as well.  The Federal Circuit concluded that Congress codified a laches defense in 35 U.S.C. § 282(b)(1) that may bar legal remedies. The Federal Circuit reached this conclusion based on the fact that the purpose of the 1952 Patent Act was to codify existing case law, which did provide for a laches defense to patent infringement. Thus, the Federal Circuit followed the common law principle that, “[w]hen a statute covers an issue previously governed by the common law, [the Court] must presume that Congress intended to retain the substance of the common law.” Accordingly, the Federal Circuit determined it had no judicial authority to question the law’s propriety. Whether Congress considered the quandary presented in Petrella was found to be irrelevant because in the 1952 Patent Act, Congress settled that laches and a time limitation on the recovery of damages can coexist in the context of U.S. patent laws.

The Federal Circuit did, however, adjust the laches defense in one respect to harmonize it with Petrella and other Supreme Court precedents. The Federal Circuit emphasized that equitable principles apply whenever an accused infringer seeks to use laches to bar ongoing relief. Specifically, as to injunctions, the Federal Circuit explained that considerations of laches fit naturally within the eBay framework. Moreover, Menendez v. Holt, 128 U.S. 514 (1888), and Petrella counsel that laches will only foreclose an ongoing royalty in extraordinary circumstances. Thus, laches can bar an injunction if an injunction would be inequitable, but laches does not preclude an ongoing royalty.

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