Now that we have reviewed recent actions by U.S. Congress, the Obama Administration and the various states directed at reforming the U.S. patent system, I would like to review some of the most recent decisions by the U.S. Supreme Court that changed patent law over the last five years.
The U.S. Supreme Court has decided at least 14 patent cases within the last five years, which is an unusually high number of cases. These cases have addressed various issues relating to patentability, invalidity, infringement and licensing practices.
I intend to post at least 10 articles on those Supreme Court decisions. However, I would like to cover a copyright case that was decided by the Supreme Court in Petrella v. Metro Goldwyn-Mayer, Inc. et al., __ U.S. ___, 134 S. Ct. 1962 (2014). The case considered the applicability of the laches equitable defense in copyright cases and had implications in patent law as well.
I discussed the equitable defense of laches, as it applies in patent law, on Oct. 5, 2010, in this blog. The defense requires a showing that the patent owner has unreasonably and inexcusably delayed filing a patent-infringement lawsuit to the material prejudice of the accused infringer (e.g., Gasser Chair Co., Inc. v. Infiniti Chair Manufacturing Corp., 60 F.3d 770, 773 – Fed. Cir. 1995). The defense limits the amount of damages that a patent owner can obtain from an infringer if the accused infringer can make the required showing of prejudice and can establish that on balance the accused infringer has acted in a more equitable manner than the patent owner. The equitable defense of laches can also be used to prevent a court from issuing a preliminary injunction.
Laches in Copyright Law
In 2014, the Supreme Court considered whether the equitable defense of laches could be used by defendants that were accused of copyright infringement in the Petrella case. In that case, the plaintiff sought to obtain damages for copyright infringement for a screenplay off the movie “Raging Bull” that occurred over a three-year period before the statute of limitations for the underlying claim had run.
A California district court ruled that the copyright infringement claim, as a whole, was barred for laches. The U.S. Court of Appeals for the Ninth Circuit upheld the ruling. However, the accused infringer appealed the case to the Supreme Court and noted that the Copyright Act did not expressly provide for the defense of laches.
The Supreme Court examined the federal statute of limitations for copyright claims, as well as various other arguments that were presented by the plaintiff. They concluded that laches could not be used as a defense to claims for monetary damages for copyright infringement. The Court determined that laches could be used to defeat a claim for equitable relief, however, such as an injunction.
As a result of the Petrella decision, the equitable defense of laches was severely weakened in copyright-infringement cases.
Laches in Patent Law
Immediately after the Supreme Court issued the Petrella decision, attorneys who represented defendants in patent cases began considering whether the Supreme Court’s reasoning with respect to the Copyright Act could be applied in patent cases as well.
Like the federal Copyright Act, the federal Patent Act did not expressly provide for the equitable defense of laches. However, the federal statute of limitations in patent cases was worded differently.
A panel of three judges for the U.S. Court of Appeals for the Federal Circuit considered whether the Petrella decision could also be applied in patent cases.See SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 767 F.3d 1339 (Fed. Cir. 2014). The court concluded that it could not eliminate the laches defense due to an earlier precedent by the entire court.
Shortly after the SCA Hygiene panel decision was issued by the court, the entire Federal Circuit court decided to review the panel’s decision. See SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, __ F.3d __ (Fed. Cir. September 18, 2015 – en banc). The court considered the legislative history of the statute of limitations in the Patent Act, along with other differences between federal patent law and copyright law, and concluded that laches could be applied in patent cases to limit both monetary damages and equitable relief.
It is possible that the Supreme Court could address the issue at a later date, but laches remains a viable equitable defense in patent cases until it does.
Laches in Trademark Law and in Trade-Secret Law
Laches can apply in other areas of intellectual property, such as in trademark law and trade-secret law. Trademark law is governed by both federal law and state law. Trade-secret law is governed by state law.
The Lanham Act, the federal law that governs federal trademark like, expressly provides for the affirmative defense of laches. See 15 U.S.C. § 1115(b)(9). This means that the issues raised by the accused infringers in Petrella and SCA Hygiene do not apply.
Trade secrets are essentially governed by state law so that defendants in trade-secret cases can rely upon laches if their state recognizes such equitable defenses.