Laches as a
Defense to Patent Infringement
AIPLA Mid-Winter Institute
IP Practice in Japan Committee Seminar
January 26, 2016
La Quinta, CA
Raymond E. Farrell
Carter, DeLuca, Farrell & Schmidt, LLP
Serving the
Creative and Legal Communities
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Overview
 Laches Background
 SCA Hygiene v. First Quality
 Petrella v. MGM
 What’s Next?
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Laches Background
 Common law defense – developed by
courts of equity
 “Equity aids the vigilant, not those who
slumber on their rights.”
 Raised in cases where plaintiff has
delayed bringing suit without good
reason, often causing detriment to the
defendant
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Laches Background
• Historically a defense only in a “court of
equity” (vs. “court of law”)
• Acted as a complete bar to suit
• Federal Courts remained split between
law and equity until 1938 adoption of the
Federal Rules of Civil Procedure
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Laches Background
 Aukerman v. Chaides (CAFC1992)
 Confirmed laches as defense that bars damages
incurred prior to filing suit
 Requires two part showing:
o Unreasonable and inexcusable delay in asserting claim
o Material prejudice to defendant resulting from delay
 Presumption arises where patentee delays bringing
suit >6 years from date patentee knew/should have
known of alleged infringer’s activity
 Shifts burden of going forward with evidence, not
burden of persuasion (i.e., patentee must show
evidence to raise a genuine issue of fact; ultimate
burden remains with defendant)
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SCA Hygiene v. First Quality - Timeline
SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC
At least this portion of delay deemed
unreasonable and inexcusable
October 31, 2003
SCA sends letter to First Quality alleging
infringement
July 7, 2004
SCA requests
reexamination
in view of the
‘649 patent
March 27, 2007
USPTO Confirms
patentability of all claims
August 2, 2010
SCA files suit alleging infringement
2006
November 21, 2003
First Quality responds
claiming patent invalid in view
of ‘649 patent
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First Quality expands
potentially infringing
product line
2009
2008
First Quality acquires Tyco
Healthcare Retail Group –
adding further product lines
First Quality acquires three
additional related product
lines for $10 million
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SCA Hygiene - History
 Dist. Ct.:
 Granted SJ motion of laches and equitable
estoppel
 Dismissed non-infringement SJ motion as moot
 CAFC panel:
 affirmed SJ of laches
 followed Aukerman
o Delay - “SCA was not required to provide notice of the
reexamination to First Quality,” but “SCA remained
silent for more than three years after the patent came
out of reexamination.”
o Prejudice - Affirmed district court’s finding of prejudice
against First Quality
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SCA Hygiene –
Federal Circuit en banc Rehearing
Questions considered by en banc CAFC
 In light of Sup. Ct. decision in Petrella … (and considering
any relevant differences between copyright and patent
law), should … Aukerman … be overruled so that …
laches is not applicable to bar a claim for damages
based on patent infringement occurring within the sixyear damages limitation period established by … §286?
 In light of the fact that there is no statute of limitations for
claims of patent infringement and in view of Sup. Ct.
precedent, should … laches be available under some
circumstances to bar an entire infringement suit for either
damages or injunctive relief?
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SCA Hygiene –
CAFC Analysis of Aukerman
 Laches – codified as a defense in §282
 Rejected that laches conflicts with §286
o
§286: limits recovery to damages (not statute of
limitations in sense of barring infringement suits)
o Laches: not inherently incompatible with a SOL
anyway:

o
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“[i]n other areas of our jurisdiction, laches is routinely
applied within the prescribed statute of limitations
period for bringing the claim.”
§286 imposes an arbitrary limitation on period of
recovery, whereas laches invokes discretionary
power of Dist. Ct.
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SCA Hygiene –
CAFC Analysis of Aukerman (cont.)
 Despite history as an equitable defense,
applicability is not limited to monetary awards
resulting from an equitable accounting but
may apply to legal relief of damages (merger of
law and equity)
 Prohibits recovery of pre-filing damages only,
not the entire suit
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
 Potential conflict: Petrella and Aukerman
 Petrella: laches no defense to copyright
infringement brought within the statutory
limitations period (17 U.S.C. § 507(b))
 Aukerman: laches may bar a claim for
damages based on patent infringement
occurring within the six-year damages limitation
(35 U.S.C. § 286)
 Petrella - no position on whether decision
extends to patent context – noting § 286 as
important to that context
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Copyright Statute vs. Patent Statute
Copyright
17 U.S.C. § 507 - Limitations on actions
(b)CIVIL ACTIONS.—No civil action shall be maintained
under the provisions of this title unless it is commenced
within three years after the claim accrued.
Patent
35 U.S.C. § 286 - Time limitation on damages
Except as otherwise provided by law, no recovery shall
be had for any infringement committed more than six
years prior to the filing of the complaint or
counterclaim for infringement in the action.
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Petrella v. MGM
 Petrella:
 1998
Plaintiff alleges copyright infringement
 1998-2000 Plaintiff and Defendant exchange emails debating
infringement claim
 2009
Copyright infringement suit demanding damages
for acts occurring between 2006 and 2009
 Copyright Act: "[n]o civil action shall be maintained under
the [Act] unless it is commenced within three years after
the claim accrued." 17 U.S.C. §507(b).
 Sup. Ct.: in light of the statute of limitations (§507(b)), laches
does not apply in copyright cases
 Plaintiff may recover for the previous 3 years
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Petrella v. MGM
 § 507(b) already takes into account plaintiff delay
 Allows the defendant to offset "deductible expenses" against
profits made in that period – Defendant is not materially
prejudiced
 Laches cannot be invoked to bar relief at law in the face
of a statute of limitations enacted by Congress
 Laches is a defense developed by courts of equity
 Equitable claims may apply where the Legislature has
provided no fixed time limitation
 “[T]he dissent has come up with no case in which this
Court has approved the application of laches to bar a
claim for damages brought within the time allowed by a
federal statute of limitations.”
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
CAFC on 35 U.S.C. § 286 and 17 U.S.C. §507
• Although § 286 is a damages limitation, not a
statute of limitations, that distinction is irrelevant
because both § 286 and § 507 relate to the
timeliness of infringement damages claims
• I.e., no relevant difference between copyright
statute of limitations and patent damages
limitation to determine whether and how
laches may be applicable in patent cases
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
CAFC – Laches codified in 35 U.S.C. § 282
 §282 broadly sets out categories of defenses rather
than enumerate specific defenses
 House and Senate Reports on §282 confirm it was
meant to be broad
 35 U.S. Code §282 - Presumption of validity; defenses
***
 (b)DEFENSES.—The following shall be defenses in any action
involving the validity or infringement of a patent and shall be
pleaded:
***
(4)Any other fact or act made a defense by this title.
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
Does laches as codified in the 1952 Patent
Act bar recovery of legal relief?
 When statute covers an issue previously
governed by common law, presume Congress
intended to retain common law unless there
was an express or implied intention to change
 House report: decided not to include most of
the proposed changes in bill; deferred them for
later consideration to limit the bill to the main
purpose: codification of Title 35
 No changes to laches doctrine were
mentioned in law or legislative history
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
Does laches as codified in the 1952 Patent
Act bar recovery of legal relief? (cont’d)
 Case law
o 1870: Congress gave courts of equity power
to award legal damages (previously only
injunction and accounting of profits allowed)
o 1915: in all actions at law equitable defenses
may be raised
o By 1952, courts consistently applied laches to
preclude recovery of legal damages
 Conclusion: case law strongly supports
availability of laches to bar legal relief
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
CAFC: Petrella fundamentally concerns
separation of powers
 In copyright (Petrella), Congress had already
spoken on the timeliness, so no room for a
judicially-created timeliness doctrine
 In patent, Congress codified a laches defense
in § 282.
o “[W]e have no authority to substitute our views for
those expressed by Congress in a duly enacted
statute.”
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
Major difference between copyright and patent law:
 Copyright:
o Infringement requires evidence of copying
o Potential copyright infringement defendant:



typically aware of a risk that it is infringing
estimates exposure when making initial investment decision
can accumulate evidence of independent creation to protect
investment
 Patent:
o Innocence no defense to infringement
o Company may independently develop and still infringe
o Enormous sums may be invested in developing product
and market
o Without laches, no safeguard against tardy claims
demanding a portion of commercial success
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
LACHES APPLICATION TO ONGOING RELIEF
 When a court orders ongoing relief, it acts within its
equitable discretion
 Injunctive Relief
 Laches can bar permanent injunctive relief
 Courts must weigh facts underlying laches in the eBay
framework
o
o
o
o
o
o
1. Competition Between the Parties
2. Nature of the Market
3. Licensing History
4. Defendant Considerations
5. Plaintiff Considerations
6. Public Interest
 Ongoing Royalty
 Laches can only bar ongoing royalty for continuing infringing
acts in extraordinary circumstances
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SCA Hygiene –
Federal Circuit en banc Rehearing (cont’d)
En banc CAFC
 Laches remains a defense to legal relief in
patent infringement suits
o Court weighs facts underlying laches in eBay
considerations
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What Next?
• Petition for writ of certiorari filed with U.S.
Supreme Court - January 19, 2016
• Response due February 22, 2016
• Stay tuned…
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Takeaways
 Potential Patent Infringers
 Laches remains possible defense and should
be raised if facts reasonably support the
assertion
 Patentees
 Be Vigilant!
o Laches can bar damages where patentee knew or should
have known of the infringement
 Be Active!
o Letters to infringing parties should be followed up promptly
and continually
 Be Cautious!
o File suit as early as reasonably possible. Negotiations and
reexamination proceedings may continue during litigation
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References
• SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC,
•
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•
•
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•
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No. 13-1564 (Fed. Cir. Sept. 18, 2015)
Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014)
A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir.
1992)
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)
Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116
(S.D.N.Y. 1970), mod. and aff’d, 446 F.2d 295 (2d Cir. 1971), cert.
denied, 404 U.S. 870 (1971)
35 U.S.C. § 282
35 U.S.C. § 286
17 U.S.C. § 507
Black’s Law Dictionary 126 (9th ed. 2009)
Myron G. Hill, et. al. Smith Review Series: Remedies p.10 (1984)
Feldstein, Mark, Permanent Injunctions and Running Royalties in a Post
eBay World, 16 Intellectual Property Today 34–46 (2009)
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Questions?
Raymond E. Farrell
www.cdfslaw.com
+1 (631) 501-5700
rfarrell@cdfslaw.com
@RayFarrell_CDFS
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