What is the Viability of the Laches Defense in Patent Suits?

Supreme Court to Determine Viability of Laches Defense in Patent Suits

On November 1, the U.S. Supreme Court heard oral arguments in SCA Hygiene Products v. First Quality Baby Products. The closely watched intellectual property case will determine whether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period.

Doctrine of Laches

Laches is an equitable defense under which a legal right or claim will not be enforced if a significant delay in asserting the right or claim has prejudiced the opposing party. The reasoning is that waiting an unreasonable amount of time to bring a claim functions as a sort of “legal ambush” and is unfair to the defendant. Laches is a very powerful affirmative defense and is frequently asserted. However, courts are often reluctant to apply it, particularly within the term of the applicable statute of limitations.

Impact of Patrella Decision

In Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014), the Supreme Court held that the defense of laches cannot be used to shorten the three-year copyright limitations period set forth in 17 U.S.C. § 507(b). The plaintiff, Paula Petrella, alleged that the film Raging Bull infringed a 1963 screenplay written by her late father, Frank Petrella. Patrella did not file suit until 1999, nearly 20 years after the film was first released. To satisfy the three-year statute of limitations, Patrella cited the DVD release of Raging Bull by MGM Holdings Inc. and Twentieth Century Fox Home Entertainment as the basis for her claim.

The Supreme Court rejected lower court rulings that laches barred Petrella’s suit in its entirety. Writing for the majority, Justice Ruth Bader Ginsburg reasoned that “we have never applied laches to bar in their entirety claims for discrete wrongs occurring within a federally prescribed limitations period.” She added “inviting individual judges to set a time limit other than the one Congress prescribed, we note, would tug against the uniformity Congress sought to achieve when it enacted § 507(b).”

Applying Laches to Patent Suits

The justices will now decide if the same principle applies in patent infringement cases. Notably, the Federal Circuit Court of Appeals has not followed in the patent setting, applying laches to bar infringement claims accruing within the six-year limitations period prescribed in 35 U.S.C. § 286.

During oral arguments, the justices appeared to see few distinctions between applying the doctrine to copyrights or patents. Several justices also did not seem particularly bothered by the risk that patent plaintiffs might “lie in wait” to entrap defendants.

“Petrella explained, in the context of that case, that it wasn’t unscrupulous for this woman to wait to see whether there was anything in it for her. Why should she spend her money on a lawsuit when there wasn’t anything in the bank?” Ginsburg added “frankly, I don’t see a big difference between the way the patent statute of limitations works and the way the copyright statute did in Petrella.”

If the Supreme Court’s ruling is in line with their positions taken at oral argument, it will likely impact patent litigation by leading to a reduction in the assertion of the laches defense by defendants, although many defendants take a “spaghetti approach” when asserting defenses, in that they throw everything against the wall and hope somethings sticks. On the other hand, plaintiffs would be smart to take advantage Court’s ruling and “lie in wait” to determine if potential defendants have, as Justice Ginsburg put it, “anything in the bank.” Of course, we must await the Court’s final decision.

I encourage readers to stay tuned for further legal updates, however, should any questions arise regarding how the ruling in SCA Hygiene Products v. First Quality Baby Products may impact your business or if you would like to discuss the matter further, please contact me, Shane Birnbaum, at 201-806-3364.