En banc court sidesteps high court
In Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962, 1974 (2014) (post here), the Supreme Court ruled that the defense of laches — unreasonable delay in bringing suit — does not preclude recovery of damages for copyright infringement during the usual statute of limitations period (three years under the Copyright Act). Does the same rule apply to patent cases?
The en banc Federal Circuit held last week, by the smallest of margins (6-5), that Petrella does not govern cases under patent law. Defendants may thus cite a patent holder’s delay in filing a lawsuit as a ground for reducing or barring damages within the six-year pre-suit period that patent law generally allows.
Origins in diapers
The case arose in the Western District of Kentucky and concerned “pants-type diapers” for adults. The patent holder, SCA Hygiene Products, sued First Quality for infringement almost seven years after threatening suit but not following through and three years after obtaining from the U.S. Patent and Trademark Office a ruling that confirmed the patentability of the SCA patent’s subject matter. The district court granted summary judgment to First Quality on its laches defense.
A panel of the Federal Circuit affirmed. It “rejected SCA’s argument that the Supreme Court’s Petrella decision abolished laches in patent law, reasoning instead that the panel was bound by this court’s prior en banc opinion in A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc), and that Petrella left Aukerman intact. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, No. 13-1564 (Fed. Cir. Sept. 18, 2015). SCA sought and obtained rehearing of the case by the all 11 of the then-members of the Federal Circuit.*
Full court affirms
By a 6-5 margin, the en banc court agreed with the panel’s ruling. The main point of the majority, which Chief Judge Prost authored, concerned section 282, which since 1952 has provided thus:
(b) Defenses.— The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:(1) Noninfringement, absence of liability for infringement or unenforceability.(2) Invalidity of the patent or any claim in suit on any ground specified in part II as a condition for patentability.(3) Invalidity of the patent or any claim in suit for failure to comply with—(A) any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or(B) any requirement of section 251.(4) Any other fact or act made a defense by this title.
The majority brushes aside the teachings of Petrella and finds based on vague legislative history and muddled case law that Congress intended to depart from the common-law principle that laches only bars equitable relief where a statutory limitations period applies. See Maj. Op. at 18–35. Two flaws pervade the majority’s analysis. First, the majority interprets 35 U.S.C. § 282 in isolation, without regard to Congress’ intent [to allow recovery of damages for six years before the filing of a suit for infringement] expressed in § 286. Second, in addition to misreading the pre-1952 cases it cites, the majority limits the scope of its review to favorable patent cases. The majority ignores Supreme Court precedent and other federal court decisions holding that laches does not bar claims for legal relief filed within a statutory limitations period. Properly analyzed, we cannot reasonably infer from the Patent Act that Congress intended to depart from this common-law principle.