The Other Shoe Drops on Laches Defense in IP
In 2014, the Supreme Court’s opinion in Petrella v. Metro-Goldwyn-Mayer, Inc. held that the equitable doctrine of laches is not available as a defense to copyright infringement when the claim is brought within the three years specified by law. On March 21, 2017, in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the Supreme Court extended Petrella to patents. Accordingly, laches is no longer available as a defense to patent infringement when the claim is brought within the six-year limit set by federal statute.
Laches is an equitable doctrine that protects defendants against unreasonable, prejudicial delay in commencing infringement suits. However, statutes governing the protection of intellectual property specify time limits by which infringement suits must be commenced: three years for copyright infringement under 35 U.S.C. § 507(b) and six years for patent infringement under 35 U.S.C. § 286.
In both Supreme Court cases cited above, the Court reasoned that allowing courts discretion based on laches within the limitations period to prematurely cut off the time in which a plaintiff could bring suit would allow courts to overrule Congress, thereby violating separation of powers. Furthermore, the Court reasoned that laches is a gap-filling doctrine applied in situations where the legislature has provided no fixed time limitation. Where such a time period exists, there is no gap to fill and the defense is redundant.
The dissent in SCA argued that abolishing laches would allow a patent holder to delay filing until the defendant had made significant investment and accrued significant profits and allow the patent holder to profit from the defendant’s labors or create additional pressure to settle. However, one factor of which the Majority no doubt was aware but left unmentioned is the relatively wide range of options available to potential patent defendants under the America Invents Act (“AIA”).
Patent applications are published relatively early in prosecution and astute business people working in fields where intellectual property protection is common will routinely avail themselves of freedom to operate opinions of counsel to uncover potentially troublesome patents before investing heavily. Furthermore, the AIA created several methods for a potential defendant or indeed any third-party to attack the validity of a patent application/patent before an infringement suit is filed. In particular, third-party preissuance submissions (“TPPS”), inter-partes review (“IPR”) and post-grant review (“PGR”) are procedures that can be filed with the patent office to cost-effectively challenge a rival’s patent application/patent and avoid uncertainty. With such remedies available, the Court concluded that laches is unnecessary and that the bright line rule provided by the statutory period is preferable.
It is advisable to keep an eye on patent application publications in technology areas of interest and consider all available options to challenge issuance of the patent (e.g., TPPS) or challenge the validity of a patent once issued (IPR or PGR). For more information on these matters, please contact the authors or the attorney at the firm with whom you are regularly in contact.