May 3, 2017

Supreme Court Limits Laches as a Defense to Patent Infringement

Category: Claims & Defenses, Indianapolis Law Club | Author: | Share:

In Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ____ (2014), the Supreme Court addressed the relationship between the equitable defense of laches and claims for damages that are brought within the time allowed by a statute of limitations, holding that laches cannot preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period. “[L]aches,” the Court explained, “cannot be invoked to bar legal relief” “[i]n the face of a statute of limitations enacted by Congress.” The question in SCA Hygiene Products Aktiebolag et al. v. First Quality Baby Products, LLC was whether Petrella’s reasoning applied to a similar provision in the Patent Act, 35 U.S.C. §286.

The Court explained that laches is “a defense developed by courts of equity” to protect defendants against “unreasonable, prejudicial delay in commencing suit.”

Before the separate systems of law and equity were merged in 1938, the ordinary rule was that laches was available only in equity courts. In this case, the Court addressed the application of the defense to a claim for damages, “a quintessential legal remedy.”

Petrella’s holding rested on both separation-of-powers principles and the traditional role of laches in equity. Laches provides a shield against untimely claims, and statutes of limitations serve a similar function. The enactment of a statute of limitations necessary 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. As we stressed in Petrella, “courts are not at liberty to jettison Congress’ judgment on the timeliness of suit.”

As Petrella recounted, the “principal application” of laches “was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitation.” Laches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.

In holding that Congress codified a damages-limiting laches defense, the Federal Circuit relied on patent cases decided by the lower courts prior to the enactment of the Patent Act. After surveying these cases, the Federal Circuit concluded that by 1952 there was a well-established practice of applying laches to such damages claims that Congress, in adopting §282, must have chosen to codify such a defense in §282(b)(1). We have closely examined the cases on which the Federal Circuit and First Quality rely, and we find that they are insufficient to support the suggested interpretation of the Patent Act.

Accordingly, the Court concluded: “Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.”

Justice Breyer, dissented, making this point:

The majority tries to minimize the overall thrust of this case law by dividing the cases into subgroups and then concluding that the number of undistinguishable precedents in each subgroup is “too few to establish a settled, national consensus.” The majority’s insistence on subdivision makes it sound a little like a Phillies fan who announces that a 9-0 loss to the Red Sox was a “close one.” Why close? Because, says the fan, the Phillies lost each inning by only one run. (In case you were wondering, as Wikipedia points out, Alito is an avid Phillies fan while Breyer spent most of his adult life in Boston.)

Lessons:

  1. Laches will be no defense to a patent infringement claim if there is compliance with the statute of limitations, notwithstanding substantial prior case law to the contrary.
  2. The Supreme Court’s reasoning arguably applies to any claim for which Congress has set a limitations period.
  3. The Court’s separation of powers discussion may also apply to state law claims where a state legislature has adopted a statute of limitations.

Read the full March 2017 Law Club Handout or listen to the recording here.