SCA Hygiene Products v. First Quality Baby Products

Laches Inapplicable as Defense to Damages within Six Years of Patent Infringement
March 23, 2017

SCA Hygiene Products v. First Quality Baby Products: Laches Inapplicable as Defense to Damages within Six Years of Patent Infringement

In SCA Hygiene Products v. First Quality Baby Products, 580 U.S. ___ (2017), the Supreme Court held that the equitable defense of laches cannot be invoked against a claim for damages brought within the 6-year statute of limitations period provided by Section 286 of the Patent Act. This decision overturns recent Federal Circuit precedent, and brings the laches analysis for patent lawsuits in line with that of copyright lawsuits set forth in Petrella v. Metro-Goldwyn-Mayer.

In October of 2003, SCA sent a letter to First Quality notifying it of SCA’s belief that First Quality was infringing U.S. Patent No. 6,375,646. First Quality responded by alleging that the ’646 patent was invalid and therefore could not support an infringement claim. Without any further correspondence between the two parties, SCA filed a patent infringement action against First Quality in August of 2010. The district court granted First Quality’s motion for summary judgment that SCA’s claims were barred by laches. This decision was affirmed twice by the Federal Circuit, including once in light of the Supreme Court’s recent determination in Petrella v. Metro-Goldwyn-Mayer that laches cannot apply to copyright actions within the statute of limitations window.

Section 286 of the Patent Act states that “[e]xcept 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.” The Supreme Court interpreted this as “a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.” The Court applied its reasoning from Petrella, noting that its decision was based on both the separation-of-powers principles and the traditional role of laches in equity. According to the Court:

When Congress enacts a statute of limitations, it speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief. The enactment of a statute of limitations necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted. Therefore, applying laches within a limitations period specified by Congress would give judges a “legislation overriding” role that is beyond the Judiciary’s power.

The Court further noted that applying laches within the limitations period would clash with the purpose of laches itself, which was intended to be a “gap-filling doctrine” to address situations where the “Legislature has provided no fixed time limitation.”

First Quality argued however that Petrella should not be applied here because Section 286 of the Patent Act is not a true statute of limitations, in that it runs backward from the time of the suit whereas a true statute of limitations runs forward from the date of the cause of action. The Supreme Court dismissed this argument, noting that Petrella specifically described the Copyright Act’s statute of limitations in similar terms, as “allow[ing] plaintiffs ... to gain retrospective relief running only three years back from the date the complaint was filed, and therefore was not solely applicable to “true” statutes of limitations.

The Supreme Court next addressed the Federal Circuit’s argument that Section 282 of the Patent Act codifies laches as a defense to all patent infringement claims, including those within the 6-year statute of limitations because it fits within Section 286’s carve-out of “except as otherwise provided by law.” The Supreme Court found that Section 282 did not specifically identify or incorporate laches as a defense, and that even if it had, “it does not necessarily follow that this defense may be invoked to bar a claim for damages incurred within the period set out in §286. According to the Supreme Court:

[I]t would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim. Neither the Federal Circuit, nor First Quality, nor any of First Quality’s amici has identified a single federal statute that provides such dual protection against untimely claims.

The Court also analyzed the legal landscape at the time that Section 282 was codified to attempt to determine whether Congress intended to codify laches as a damages-limiting defense, and found that “the most prominent feature ... was the well-established general rule ... that laches cannot be invoked to bar a claim for damages incurred within a limitations period specified by Congress.” The Court came to the conclusion that “[i]f Congress examined the relevant legal landscape when it adopted 35 U.S.C. §282, it could not have missed our cases endorsing this general rule.”

As a result, the Supreme Court held that “[i]n light of the general rule regarding the relationship between laches and statutes of limitations, nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that §282(b)(1) codifies a very different patent-law-specific rule.” After analyzing the relevant cases, the Court determined that “[n]o such consensus is to be found,” and therefore held that laches “cannot be interposed as a defense against damages where the infringement occurred within” the 6-year statute of limitations.