October 01, 2015 Practice Points

Defense of Laches Preserved in SCA Hygiene Products v. First Quality Baby Products

The underlying litigation in Petrella centered on the 1980 film Raging Bull.

By Jarrad Wood and Ronny Valdes

On September 18, 2015, the en banc Federal Circuit issued a decision in SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, finding that the defense of laches continues to apply as a bar to recovering damages in patent infringement lawsuits. SCA Hygiene comes in the wake of Petrella v. Metro-Goldwyn-Mayer, Inc., a 2014 U.S. Supreme Court case holding that the defense of laches does not apply in copyright infringement lawsuits for the recovery of damages. The en banc court in SCA Hygiene largely based its decision on section 282(b)(1) of the Patent Act codifying laches as a defense.

The underlying litigation in Petrella centered on the 1980 film Raging Bull. Frank Petrella, who wrote the original screenplay in 1963, assigned his rights to a production studio that eventually assigned the rights to Metro-Goldwyn Mayer. When Frank Petrella died the renewal rights in the screenplay passed to Petrella's daughter. Petrella's daughter renewed the copyright for the screenplay in 1991, but did not sue MGM for copyright infringement until 2009. The suit sought damages only for infringement dating back to 2006, as allowed by the Copyright Act. MGM asserted the defense of laches as a reason justifying summary judgment. The suit reached the Ninth Circuit, which found laches to be a viable defense.

After the case was appealed to the U.S. Supreme Court, Justice Ginsburg announced the Court's decision reversing the Ninth Circuit. The Court reasoned that Petrella only sought to recover damages for actions occurring from 2006 to 2009 and could not be barred under laches because she was complying with the Copyright Act's requirements. Justice Ginsburg also emphasized that laches was created by courts of equity and found its principal purpose in claims for equity.Justice Breyer dissented and argued that the modern litigation structure purposefully created defenses like laches to address inequities in the judicial process.

In SCA Hygiene, the district court had granted summary judgment in favor of defendant First Quality based on the doctrine of laches. A panel of the Federal Circuit affirmed. The panel stated that Petrella did not remove laches as a defense in patent infringement claims for damages. SCA appealed to the Federal Circuit en banc, which upheld the panel's decision that laches remains a viable defense in patent infringement actions.

The majority opinion, announced by Chief Judge Prost, distinguished SCA Hygiene from Petrella by noting that, unlike copyright law, patent law codifies the laches defense in the Patent Act. The Patent Act states that "noninfringment, absence of liability for infringement or unenforceability" are defenses in actions involving the validity or infringement of a patent. The majority opinion found that Congress intended for the reach of this section to be broad and to encompass the defense of laches. After determining that laches was codified, the majority opinion concluded that laches is an available defense in patent law to bar monetary damages. The majority opinion further concluded that laches continues as a defense to claims of equity such as an injunction but cannot be used to bar an ongoing royalty.

Judge Hughes dissented, writing that the majority ignored the implications of Petrella and misinterpreted congressional intent. Judge Hughes emphasized that the Supreme Court has often cautioned the Federal Circuit from creating special rules for patent cases. Judge Hughes disagreed that congressional intent is clear in allowing laches to bar claims for monetary relief and expressed concern that the majority essentially ignored Supreme Court precedent.

After SCA Hygiene, a defendant in a patent infringement case may still be able to raise a patent laches defense in a suit brought within the 6-year period outlined in the Patent Act. The defense of laches remains available to prevent an injunction; however, the defense may not prevent an order to pay an ongoing royalty.

Keywords: intellectual property, litigation, SCA Hygiene, Petrella, laches, copyright, infringement

Jarrad Wood is with Unified Patents and Ronny Valdes from the Office of Policy Planning at the Federal Trade Commission in Washington, D.C.

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Jarrad Wood and Ronny Valdes – October 1, 2015