SCA Hygiene Laches Oral Arguments: How Do we Interpret Congressional Silence?

Today the Supreme Court heard oral arguments in SCA Hygiene v. First Quality with the following question presented:

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, 35 U.S.C. § 286.

Sitting in the background is the Supreme Court’s parallel copyright decision in Petrella v. MGM (2014) holding that the doctrine of laches cannot bar a claim for legal damages brought within the three-year statutory limitations of copyright law. In its opinion, the Federal Circuit distinguished Petrella – finding that in this situation patents should be treated differently than copyrights.

Martin Black (Dechert) argued for petitioner-patentee SCA Hygiene and suggested that Petrella paves the way: “There is nothing in the Patent Act which compels the creation of a unique patent law rule, and if the Court were to create an exception here, that would invite litigation in the lower courts over a wide range of Federal statutes.”

According to Black, the focus should be on the statute – and the statute does not provide for laches. Further, section 286 is entitled “Time Limitation on Damages” — that is the section that should be applied when determining whether a patentee unduly delayed its enforcement.

Mr. Black: Laches has never been applied in the face of the Federal statute of limitations. The Court looked at that issue exhaustively in Petrella and could not find Respondents one single example.

Petrella was decided 6-3 and with Justice Scalia’s death the result would be 5-3.  Justice Breyer dissented then and indicated in oral argument “Just to repeat, I’m still dissenting.”

Mr. Waxman, representing the accused infringer in this case (who won on laches) began by highlighting the background of the 1952 Patent Act — “This Court has repeatedly recognized that the 1952 Patent Act sought to retain and reflect patent law as it then existed.”  And, at that time (1952), laches was thought to be an available defense.

Mr. Waxman: The question  in this case is what Congress understood the patent law doctrine was in 1952. And we think that there is a literal mountain of cases. Every single case that was decided in any court at any level from 1897 when the six-year damages cap was put into place until today, with the exception of one district court decision in Massachusetts which demonstrably misapplied the two authorities that it cited, every single case has recognized that — that laches was a defense in an appropriate case to claims for damages. And no case has ever said or suggested to the contrary.

CHIEF JUSTICE ROBERTS: That mountain of cases were in equity, right? . . .  that’s where your mountain becomes a mole hill, right? . . .

Mr. Waxman: But the point I’m trying to make — and if I make no other point, please let me not be misunderstood here — Congress in 1952 simply continued in haec verba the statute that had existed on the books since it was put in on the equity side in 1897. And there were — whether it is a mountain, a mole hill, or a mesa, all of the — okay. Never mind. I’ll just stick with mountain or mole hill. All of the — I mean, I — I don’t think — I hope I live long enough to have another case where I can come to Court and say, all of the case law that decide — that examine this question, all of which was adjudicating the applicability of laches to claims of damages alongside the six-year damages limitation provision, all of them recognize that laches existed comfortably alongside that provision. And there is nothing really anomalous about that.

 

The difference then, according to Waxman, between patents and copyright is not really found in the statutory text itself but instead emanates from the history and congressional sense at the times of enactment.  For patents, the background law allowed laches and congress intended to implement that background law in 1952.

Mr. Black disagreed with the state-of-the-law:

So it was in front of Congress in 1952 with three things. This Court’s precedent that said that  laches could not be used to bar legal relief. You had the merger of law and equity in 1938 which scrambled all the eggs. You had the 1946 Lanham Act, which also went through the committee on patents and copyrights where they specifically included the word “laches” in the statute. And you had the abolition of the remedy that parties had been seeking as the primary means of monetary relief in patent law for 60 years. There is no way that you can look at that, that fact, and get around it by pointing to a book, a treatise, which, by the way, does not have a section in it on unenforceability.

A practical problem with eliminating laches is the lying-in-wait scenario — do we allow a patentee to simply wait for years until the defendant is locked-in and then sue? Mr. Black argued that Congress offered a solution — concerned third parties can file a declaratory judgment action or else a petition for inter partes review.   Black also argued that the lying-in-wait scenerio doesn’t happen in practice because the patent term ends too soon (unlike in copyright law).  The discussion also entered into patent trolls and the FTC recent report.  Mr. Black argued that “The companies that get hurt by [Laches] are operating companies who don’t like to sue and therefore wait until they have to [while] patent trolls . . . have to sue to monetize.”