Under Federal Circuit case law, patent-infringement defendants may assert the laches defense – an equitable defense barring claims brought after an unreasonable delay. But the doctrine will soon square off in the Federal Circuit against a heavy hitter: “Raging Bull.”
In 2014, the Supreme Court decided a copyright case about the popular boxing movie “Raging Bull.” There, the Court struck laches as an available copyright infringement defense. Now, the stage is set for the full Federal Circuit to revisit the laches doctrine in the patent arena.
In December, the Federal Circuit voted to rehear, en banc, its panel decision in SCA Hygiene Products v. First Quality Baby Products, LLC, 767 F.3d 1339 (Fed. Cir. 2014). In SCA, the panel affirmed the dismissal of SCA’s patent-infringement claim based on laches. In affirming dismissal, the panel relied on its prior precedent, A.C. Aukerman Co. v. R.L. Chaides Constr., 960 F.2d 1020 (Fed. Cir. 1992). In Aukerman, the Federal Circuit held that laches is available to patent-infringement defendants. But now, the Aukerman reasoning is in doubt after the Supreme Court’s recent “Raging Bull” decision – aka Petrella v. MGM, Inc., 134 S.Ct. 1962 (2014).
In Petrella, the Supreme Court held that the Copyright Act’s three-year statute of limitations supplants the need for the laches defense. Accordingly, laches is unavailable to copyright-infringement defendants. The en banc Federal Circuit will now decide whether the Petrella reasoning translates to patent law when it rehears SCA.
The issue is that the patent statute, like the Copyright Act, includes a time limitation on damages:
“Except 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.”
35 U.S.C. § 286.
In Aukerman, the Federal Circuit held that this patent damage limitation could coexist with the laches doctrine. But after Petrella, it’s not so clear. The Supreme Court’s reasoning in Petrella appears to clash with the Aukerman opinion on several key issues. And the en banc SCA rehearing sets the stage for the Federal Circuit to address those issues.
First, the court might determine whether § 286 is, in fact, a “statute of limitations.” The Aukerman court held that it was not a statute of limitations. Rather, it explained that § 286 is an “arbitrary limitation on the period for which damages may be awarded,” and “[l]aches, on the other hand, invokes the discretionary power of the district court to limit the defendant’s liability for infringement by reason of the equities between the particular parties.” Aukerman, 960 F.2d at 1030. Thus, the court implied that § 286 could coexist with the laches defense since they serve different purposes.
Yet, the Supreme Court might disagree. In describing the Copyright Act’s statute of limitations in Petrella, it stated: “No recovery may be had for infringement in earlier years.” Petrella, 134 S.Ct. at 1973. This language is notably similar to that of § 286, which the Aukerman court declined to call a statute of limitations: “no recovery shall be had for any infringement committed more than six years prior . . . .” 35 U.S.C. § 286. In short, the Supreme Court may have foreseen the conflict, and tipped its hand.
Second, if § 286 is a statute of limitations, the court will likely address whether laches can apply within that limitations period. In Aukerman, the Federal Circuit held that “[i]n other areas of our jurisdiction, laches is routinely applied within the prescribed statute of limitations period for bringing the claim.” Aukerman, 960 F.2d at 1030. Yet, in Petrella, the Supreme Court held that “we have never applied laches . . . within a federally prescribed limitations period.” Petrella, 134 S.Ct. at 1974.
Finally, the court will likely address whether laches – an equitable doctrine – is an appropriate defense against patent infringement – a legal claim. In Aukerman, the Federal Circuit held that the equitable defense could be asserted against a claim for patent infringement. It reasoned that “the equitable defense of laches in a civil action is specifically recognized in Fed. R. Civ. P. 8(c).” Aukerman, 960 F.2d at 1031.
However, in Petrella, the Supreme Court specifically rebuked this argument when made by MGM, explaining that “[t]he expansive role for laches MGM envisions careens away from understandings, past and present, of the essentially gap-filling, not legislation-overriding, office of laches.” Petrella, 134 S.Ct. at 1974.
The Supreme Court repeatedly emphasized the “gap-filling” role of laches. For example: “[W]e adhere to the position that, in face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief . . . .” Id. Thus, although the defendant may try to distinguish the six-year statute of limitations in § 286 from the Copyright Act’s three-year statute of limitations, the Supreme Court appears willing to defer to Congress on what delay is unreasonable.
Briefing for the en banc hearing is still underway, with SCA’s appellant brief due February 27, 2015.