Source: http://cafc.whda.com/2015/10/a-guide-for-the-international-patent-attorney-how-to-read-the-recent-cafc-en-banc-decision-on-laches-a-viable-defense-against-patent-infringement-for-the-time-being-2/
Timestamp: 2017-04-26 13:54:09
Document Index: 387534685

Matched Legal Cases: ['§ 286', '§ 282', '§ 282', '§ 286', '§ 282', '§ 286', '§ 282', '§ 282', '§ 282', '§ 282', '§286', '§ 282', '§286', '§282']

A guide for the international patent attorney: how to read the recent CAFC en banc decision on laches–a viable defense against patent infringement, for the time being : CAFC Alert
Le-Nhung McLeland | October 19, 2015
SCA Hygiene Products Aktiebolag v. First Quality Products, LLC
Introductory note from the author of this review: When I read this decision, it struck me that the legal analysis is based on concepts and distinctions which may not be clearly appreciated by someone not familiar with the “common law” tradition, the co-existence of remedies “at law” and remedies in “equity”, and the underlying principle of “separation of powers” in the federal government in the U.S. This en banc decision is very important, so there have been already numerous reports on the decision. I hope to contribute, in the form of the interspersed “notes” below, background information which may shed more light on the decision for our international colleagues. Le-Nhung McLeland
En banc decision: Opinion for court by Prost, joined by Newman, Lourie, Dyk, O’Malley, and Reyna. Opinion concurring-in-part, dissenting-in-part by Hughes, joined by Moore, Wallach, Taranto, and Chen. Judge Stoll did not participate in decision.
Note: Twenty three “amicus curiae” briefs were received in this case, which is a measure of its importance. The briefs were submitted on behalf of patent professional associations, as well as a broad range of corporations including Hewlett-Packard, Intel Corporation, Xerox Corporation, Johnson & Johnson, AT&T Mobility II LLC, T-Mobile USA, Roche Molecular Systems, Harley-Davidson Motor Company, and Rockwell Automation, Inc. The en banc majority refers to some of these briefs, in the body of the opinion or in footnotes.
Background: Appeal from U.S. District Court for Western District of Kentucky
SCA owns U.S. patent No. 6,375,646 (the ‘646 patent) for adult incontinence products
October 31, 2003: SCA sent a warning letter to First Quality, stating that SCA believes First Quality’s pants-type diapers infringe the ‘646 patent, and asking First Quality to either explain why the products do not infringe, or give assurance that First Quality will stop making and selling the products if First Quality believes the products to infringe the patent.
November 21, 2003: First Quality responded promptly by letter, stating that prior art U.S. patent No. 5,415,649 (the ‘649 prior art patent) invalidates the ‘646 patent.
July 7, 2004: SCA filed a request for ex parte reexamination of its ‘646 patent over the ‘649 prior art patent, but did not notify First Quality about the reexamination.
March 27, 2007: The PTO confirmed the patentability of all the original claims of SCA’s ‘646 patent and also granted new claims added during the reexamination.
August 2, 2010: SCA filed suit against First Quality for infringement of the ‘646 patent (six years and nine months after sending the warning letter, and more than three years after the conclusion of the reexamination.) First Quality counterclaimed for declaratory judgment of non-infringement and invalidity. After the district court’s claim construction order, First Quality moved for partial summary judgment of non-infringement, and summary judgment for laches and equitable estoppel. The district court granted summary judgment for laches and equitable estoppel, and dismissed the remaining motion as moot. SCA appealed.
CAFC panel decision: A panel of the CAFC affirmed the district court’s decision on laches, but reversed as to equitable estoppel. The panel rejected SCA’s argument that the Supreme Court decision in Petrella v. Metro-Goldwyn-Mayer, Inc. abolished laches in patent law. The panel reasoned that it was bound by the CAFC en banc decision in Aukerman Co. v. R. L.Chaides Construction Co., which decision the panel considers to have been left intact by Petrella.
Petition for rehearing en banc: The CAFC granted the petition filed by SCA, and set the following two questions for the en banc proceedings:
(a) Should the CAFC en banc decision in Aukerman be overruled in view of the Supreme Court decision in Petrella?
(b) Should the defense of laches be available under certain circumstances to bar an entire infringement suit for either damages or injunctive relief, considering that there is no statute of limitations for claims of patent infringement?
Note: The second question above pits the laches defense against the “statute of limitations”. U.S. law, including patent law, is a hybrid legal system of ‘law” and “equity”. The laches defense is an “equity” concept, whereas the statute of limitations is a provision of “law”, more specifically codified law. Implicit in this query is the question of balance of power between the judicial branch (i.e., U.S. federal courts) and the legislative branch (i.e., the U.S. Congress) of the federal government. Equity concepts arise from court-made law, whereas codified or statutory law is made by Congress. (The third branch of the U.S. federal government is the executive branch, which implements the laws made by Congress and interpreted by the courts. The U.S. Patent and Trademark Office is an agency of this executive branch.)
En banc majority on first question: Aukerman not overruled in view of Petrella.
In Petrella the Supreme Court held that laches is not available as a defense in a copyright infringement suit, when the suit has been filed in a timely manner within the statutory period provided in the Copyright Act. The CAFC en banc majority attributes the decision of the Supreme Court in Petrella to a concern about respecting the separation of powers between the courts and the U.S. Congress. In other words, if the Congress has set a statutory term for a suit to be filed timely, that statute of limitations has the effect of “crowding out the judiciary’s power to decide whether a suit is timely.”
The CAFC en banc majority distinguishes patent law from copyright law in that there is no statute of limitations in patent law. Therefore, the U.S. Congress (or legislative branch) has not “crowded out” the judiciary’s power to decide whether a patent suit is timely, and consequently the judiciary is free to apply the “equity” concept of laches to a patent suit.
The en banc majority reviews the following two provisions of the patent statutes, § 286 and § 282(b), and concludes that patent law provides no statute of limitation for the filing of an infringement suit, and that laches are implicitly included in the “catch-all provision” of § 282(b)(4) which recites this broad category of defenses in a patent suit: ”[a]ny other fact or act made a defense by this title.”
§ 286:
§ 282(b):
(1) Noninfringement, absence of liability for infringement or unenforceablity.
(2) Invalidity of the patent or any claim in suit on any ground specified in part II as a condition for patentability
(3) Invalidity of the patent or any claim in suit for failure to comply with –
(A) any requirement of section 112…
With respect to § 286, the en banc majority points out that this section is a limitation on the recovery of damages, as opposed to a limitation on the period for filing a suit timely. As to § 282(b) which nowhere recites the concept of laches, the en banc majority relies on the legislative history to support the conclusion that laches are included in the “catch-all provision” mentioned above.
Note: The following excerpt from the en banc majority opinion gives a flavor of how legislation is made in the U.S. Congress. At issue is the weight of authority to be accorded to a person identified simply as “Federico”. (Note: According to the Patent and Trademark Office Society, Pasquale J. (Pat) Federico “was an institution within the Patent and Trademark Office.” He entered the Patent Office in 1923 as a junior examiner. He was appointed to the Board of Appeals in 1947 and remained there until his retirement from the Office in 1977. Federico was “a prolific author of articles dealing with intellectual property”, and wrote the first draft of the 1952 Patent Act. He was also, according to Judge Rich of the Court of Customs and Patents Appeals (CCPA, which is the predecessor of the CAFC), “the man most responsible for getting the 1952 Patent Act through Congress and enacted into law.” Judge Rich himself was a towering figure in the history of U.S. patent law.
Federico authored the “Federico Commentary” on the Act. The following excerpt from the en banc CAFC majority quotes the Supreme Court’s endorsement of Federico, referring to the deference accorded to Federico by Judge Rich:
“… Judge Rich, who was deeply involved in crafting the Patent Act, described Federico in a concurring opinion as “[t]he key person” in drafting the Patent Act…. According to Judge Rich, Federico “not only wrote the first draft of the Act himself and actively participated the next two years in every detail of its revisions but, having been made a special consultant to the House subcommittee in charge of the project, he was also an author of the House Report No. 1923 on the bill, which was virtually copied by the Senate Judiciary Committee as its report No. 1979, and the author of the section-by-section Revisors Notes.”
The en banc majority considers the Federico Commentary to be a sufficiently reliable source on the meaning of § 282, and notes that “the Federico Commentary explicitly states that § 282 includes laches.” The majority therefore concludes “that Congress has codified a laches defense in § 282.”
En banc majority on second question: laches does not bar recovery of ongoing relief.
Aukerman held that laches could not bar prospective relief. The CAFC en banc majority reexamines that rule in light of the Supreme Court decisions in Petrella and eBay. Inc. v. MercExchange, L.L.C., and concludes: “Laches bar legal relief, and courts must weight the facts underlying laches in the eBay framework when considering an injunction. However, absent extraordinary circumstances, laches does not preclude an ongoing royalty.” The en banc majority opinion refers to the well-established four-factor test of eBay for the grant of a permanent injunction in a patent case:
“A plaintiff must demonstrate (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”
Note again the contrast drawn between remedies “at law”, such as monetary damages, and remedies in “equity”, such as injunctions where the court exercises its “equitable discretion” in “balancing the equities.”
Looking forward: changes may still be coming with Congressional action
This comment in the majority en banc opinion points to changes that could take place in the future: “If, in light of this issue’s newfound salience, Congress decides that the §286 damage limitations and the § 282 laches defense are incompatible, it can change the law. As a court, however, we must apply the law as enacted, which means that the §286 damages limitations and the §282 laches defense must continue to coexist.” (emphasis added)
Patentees, beware of laches, which remains a viable defense for accused infringers.
It is always possible, however, that the Aukerman and SCA precedents may be overruled by the Supreme Court, removing laches as a defense in patent infringement suits. Change may also come by way of congressional action.
Category: Case SummaryTags: injunctions > laches > patent infringement