Laches (Copyright) is Dead. Long Live Laches (Patent)!
October 2, 2015
In 2014, the United States Supreme Court effectively killed a long-standing affirmative defense to copyright infringement, the defense of “laches.” See Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (U.S. 2014). Laches is essentially an alleged infringer’s defense to a “gotcha!” tactic by a rights holder who has delayed for many years in bringing suit to enforce those purported rights. Laches is based on equitable principles that a substantially long delay in enforcing legal rights is likely to prejudice the adverse party. It is the judicial system’s way of saying “hey! That’s not fair! We are not going to let you do that.” Laches is available as a defense in many types of proceedings, not just intellectual property matters, but the intangible nature of IP rights lends itself more favorably to successfully invoking “laches” as a defense.
For many years, defendants in copyright suits would invariably claim laches as a defense to infringement allegations if there was any appearance of a delay by the plaintiff. It usually requires a substantial delay by the plaintiff to gain traction with the court, but the defense itself was nearly always pled as a matter of course in any copyright matter. Until Petrella (also more commonly known as the “Raging Bull” case).
The Petrella court outright rejected laches as an available defense to copyright claims on grounds that the Copyright Act’s three-year statute of limitations was a sufficient cut off for copyright infringement claims and the statute of limitations thereby trumps any equitable defenses, including laches. SCOTUS basically implied that if there is a statute of limitations associated with a particular area of law, equitable defenses such as laches cannot be invoked. Copyright law includes a statute of limitations for recovering damages, 17 U.S.C. § 507. Copyright law is unique from other legal actions such as breach of contract however. Copyright infringement is considered a “continuing violation” and each instance of infringement essentially re-starts the clock on the statute of limitations – but the plaintiff is only allowed to recover damages accrued for the preceding three-years prior to the date of the claims made against the defendant. Nevertheless, the concept of “laches” in a copyright case is no longer available to alleged infringers in the United States, based on the holdings of the highest court in the land.
You would think this settles the matter on laches for all legal proceedings whereby there is a statute of limitations for a particular cause of action. The Federal Circuit, however, laughs at your use of the Jump to Conclusions Mat™.
On September 18, 2015, in SCA Hygiene v. First Quality, Case No. 10-cv-0122 (Fed. Cir. 2015), the Federal Circuit affirmed the prior application of laches to patent cases, distinguishing patents from copyrights in the realm of laches. It also appears to strongly conflict with the Supreme Court’s Petrella decision on its face, even though SCOTUS did specifically advise that its ruling was not a review of the Federal Circuit’s prior position on laches in patent cases (citing to the Aukerman precedent, 960 F.2d 1020 (Fed. Cir. 1992)).
In SCA, the plaintiff (SCA) sent a cease-and-desist letter to the alleged infringer (First Quality) in 2003 regarding the use of patented adult diapers. SCA, however, did not file an actual lawsuit against First Quality until 2010, after First Quality had expanded its use of the allegedly infringing adult diapers. The district court held that the nearly six year delay constituted laches and equitable estoppels and dismissed the case due to this delay.
Naturally, because U.S. patent law has a six-year statute of limitations, 35 U.S.C. § 286, the plaintiffs disagreed with the basis for dismissal and took it to the Federal Circuit on appeal. The Federal Circuit’s eventual ruling made headlines due to the fact that patent law has a set statute of limitations and SCA appears to have timely filed its action within the construct of this statute. The actual issue, however, may turn on a more hair-splitting aspect of the law. In particular, the difference could reside in whether laches still applies to equitable remedies as opposed to traditional legal remedies and methods of recovery of damages.
Accordingly, as of today, laches is still alive with regard to patent cases. It is possible that SCA could request an en banc review by the Federal Circuit. It is also possible that the Supreme Court could take this case and review the Federal Circuit’s position on laches. If that happens, the Supreme Court could determine that patents are no different than copyrights and “Raging Bull” applies equally to patent law, thereby nullifying laches as a defense to patent infringement claims as well. The Court could also distinguish the two types of claims and keep laches alive, though this would make for murky legal precedent.
It remains to be seen whether laches and the statute of limitations can play nice with each other.