SCA Hygiene Products Aktiebolag v. First Quality Baby Products

SCA Hygiene Products Aktiebolag v. First Quality Baby Products

137 S. Ct. 954 (2017)

Authored by Brianna Ryan

Statement of Facts: SCA Hygiene Products Aktiebolag (“SCA”) sold adult incontinence products. In October 2003, SCA sent First Quality Baby Products (“First Quality”) a letter alleging First Quality was infringing on SCA’s patent number 6,375,646 B1 (“‘646 patent”). First Quality responded, claiming their patent (5,415,649) was issued before ‘646 patent and concerned the same diaper construction. First Quality believed the ‘646 patent was invalid. SCA asked the Patent and Trademark Office (“PTO”) to reexamine the ‘646 patent to determine the validity, which the PTO confirmed.

Procedural History: SCA filed a patent infringement suit against First Quality in August 2010. The District Court of the Western District of Kentucky (“District Court”) granted First Quality’s summary judgment motion based on laches and equitable estoppel grounds. SCA appealed to the Federal Circuit and the Federal Circuit held SCA’s claims were barred by laches but not on equitable estoppel grounds, based on precedent under A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc). While this case was pending, the Supreme Court decided Petrella v. Metro-Goldwyn-Mayer, which held laches could not preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period. 134 S. Ct 1962 (2014). Based on the Petrella decision, the Federal Circuit reheard the case to reconsider Aukerman. The court reaffirmed Aukerman’s holding that laches can be asserted to defeat a claim for damages incurred within the 6 year period set out in the Patent Act. The Supreme Court then granted certiorari.

Question Presented: Whether the reasoning behind Petrella’s holding that laches cannot preclude a claim for damages incurred within the Copyright Act’s 3-year limitations period applies to a similar provision of the Patent Act, 35 U.S.C. § 286.

Holding: Yes, the reasoning behind Petrella applies to 35 U.S.C. § 286 in that laches cannot be used as a defense against damages where the infringement occurred within the 6-year period of the Patent Act. The Federal Circuit’s judgment is vacated in part and remanded for further proceedings.

Reasoning: Petrella’s holding rested on separation of powers principles and the traditional role of laches in equity, which easily fits into the provision of the Patent Act. Congress created a statute of limitations to provide a rule for determining when claims are timely. If a court applies laches within the statute of limitations to bar claims, the courts are overriding legislation and this is beyond the power of judiciary. Laches was meant to fill the gap in legislation where there was no statute of limitations, but there is a 6-year statute of limitations provided, just like there was a 3-year statute of limitations provided in Petrella. First Quality claimed § 286 is not a true statute of limitations because the statute of limitations runs backward from the filing of the complaint, however, Petrella also stated the Copyright Act’s statute of limitations runs backward from the date the suit is filed and laches did not bar a claim. The Federal Circuit found § 282 of the Patent Act to be an exception to § 286. While § 282 does not specifically mention laches as a defense, it does mention unenforceability as a defense. First Quality argued laches to be included under unenforceability. However, it does not follow that the defense could be invoked within the time period even if the unenforceability provision did incorporate laches to some degree. It also would be very unusual and unprecedented for Congress to include a statute of limitations and laches provision in the same federal statute.

The Federal Circuit and First Quality relied on cases prior to the enactment of the Patent Act and claimed § 282 codified the practice of allowing laches to be asserted against damages claims. However, the well-established general rule at the time of § 286’s enactment was that laches could not be invoked to bar a claim for damages incurred within the statute of limitations. The court evaluated the cases the Federal Circuit and First Quality relied on pre- and post-1938 based on the merging of the courts of law and equity. First were the pre-1938 cases, where the courts of law and equity were separated, which the Supreme Court did not find persuasive. Most of the cases did not state whether the plaintiff asked for damages. Those that did mention damages either indicated in dicta that laches may limit recovery of damages or were so few in number that it could not be considered a national consensus. The most that could be stated from these cases was that laches could bar a claim in an equity court but not that it could entirely prevent the plaintiff from recovering damages. In addition, there were too few of cases to indicate Congress legislated against the common law and First Quality did not overcome their burden of showing Congress intended to legislate against the common law. In the post-1938 cases with the merging of the two courts, there was no indication of a settled uniform practice of applying laches to damages claims since only two courts held laches could bar a damages claim.

Dissenting Opinion: Unlike the majority, Justice Breyer believes laches fills a gap that exists in § 286. The statute does not provide a time period in which one must sue, but allows a plaintiff to sue at any time, only limiting damages to the 6 years prior to filing. Since plaintiffs can wait to sue, laches fills the gap in the statute of limitations. During the enactment of § 286, courts applied laches in patent infringement damages cases and Congress knew of this practice and chose to codify the practice. Section 286 provided no recovery would be allowed for infringement more than 6 years prior to the filing of the complaint except as otherwise provided by law and § 282 is the statute that is otherwise provided as law. Section 282 states unenforceability is a defense, which at common law included laches. From the late 19th century through the enactment of the Patent Act, courts consistently held laches as a bar to damages. The majority stated courts of equity did so to fill the gap when no time limitation existed, but Congress enacted a statute of limitations for patent claims brought in courts of equity and courts continued to apply laches. In addition, Congress recognized that patent infringement largely took place in courts of equity prior to the merger of law and equity courts so when Congress wished to codify the legal practice in § 286, they would have looked to the equity courts. Although only a couple of courts of law applied laches, this was because the majority of patent litigation occurred in courts of equity. Even after the merger of law and equity courts, courts still applied laches to patent damages cases.

The majority may have found weaknesses in the reasoning of the pre-1952 cases, but they are not sufficient to suggest laches may not be used to bar patent claims. The majority cannot find a single court to hold laches could not bar a patent infringement claim. By separating the cases into subgroups like the majority did, they found there was not a consensus applying laches to bar claims, but when looked at as a whole, there is sufficient support. The majority’s strongest argument is the Petrella but there are several differences between copyright and patent law. First, copyright law does not have the same history of patent law in applying laches to bar claims. The Copyright Act also contained other provisions to prevent the unfairness of bringing a claim years later while the Patent Act did not contain additional provisions. Additionally, the evidentiary loss from time in copyright cases harm both the plaintiffs and defenses, while in patent law evidentiary losses do not burden plaintiffs and defendants symmetrically. Finally, there are incentives in patent law to delay suit to financially harm infringers as much as possible.

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