Sca Hygiene Prods. V. First Quality Baby Prods. (U.s. 2017)

By Kevin E. Noonan --

The U.S. Supreme Court overturned another Federal Circuit decision today (this one having been decided en banc by the appellate court), in SCA Hygiene Products Aktiebolag 5. Offset Quality Baby Products, LLC.  The effect was non a surprise, at least because 1) the decision was consistent with the Court's decision in Petrella 5. Metro-Goldwyn-Mayer, Inc., decided iii years ago; 2) the Justices' questioning at oral argument presaged how they were thinking; and iii) it was, later on all, a Federal Circuit decision.  The decision was not unanimous, however; Justice Breyer dissented, in an opinion consistent with his full general suspicion regarding bad beliefs by patentees and his penchant for having the Court make policy judgments that his brethren (at least in this instance) believe are within the province of Congress.

The case arose over infringement of SCA'southward patent (U.Southward. Patent No. six,375,646) on adult incontinence products, which First Quality contended was invalid over its own prior art patent (U.S. Patent No. 5,415,649).  Following ex parte reexamination of SCA's patent and a finding past the USPTO that the claims were patentable over First Quality's patent, SCA brought adjust (most 7 years after SCA beginning notified First Quality regarding its allegations of infringement).  The District Court ruled by summary judgment that SCA'south suit was barred by laches (an equitable doctrine that prevents a patentee from "sleeping on her rights" past undue delay in filing a patent infringement adjust).  A sharply divided Federal Circuit (6-five) affirmed en banc, based on its reasoning that although Congress enacted a six-year fourth dimension limitation on money damages in the statute (35 UsC. § 286), the provisions of 35 U.S.C. § 282, which states that "[n]oninfringement, absenteeism of liability for infringement or unenforceability" are available equally defenses, and "unenforceability" includes within its scope the equitable doctrine of laches.  One source of the division on the appellate court was the Supreme Court's intervening Petrella decision, barring laches equally a defense in copyright infringement actions based on a three-year statute of limitations enacted past Congress; the majority relied on its own earlier decision in A. C. Aukerman Co. v. R. L. Chaides Constr. Co. to the opposite.

The Supreme Courtroom'due south determination (authored past Justice Alito and joined past all but Justice Breyer) vacating the Federal Excursion'south affirmance was based in role on its Petrella decision, but also on the Courtroom'south analysis of the exercise at police force and in equity stemming from the time when these two actions were maintained separately and when they were merged in 1938.  The Court "spoke broadly" in Petrella co-ordinate to the majority, so that laches was barred as a defense whenever Congress enacted an express statute of limitations (in that case, in 17 U.s.a.C. § 507(b)).  The reasons for the Court'south Petrella decision included "separation-of-powers principles" (wherein the judiciary does non have the power to override Congressional decisions in its statutes; see, e.g., National Federation of Independent Business v. Sebelius), according to the stance.  Specifically Justice Alito wrote:

When Congress enacts a statute of limi­tations, it speaks directly to the issue of timeliness and provides a rule for determining whether a merits is timely plenty to permit relief.  []  The enactment of a statute of limitations necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the footing of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defence force is asserted.  Therefore, applying laches within a limitations period specified by Congress would give judges a "legislation­ overriding" role that is beyond the Judiciary's power.

In improver, the Courtroom in Petrella (and here) considered the "traditional role of laches in equity" and its interaction with legal principles similar statutes of limitations.  And hither, as in Petrella, the Court determined that there was no basis for the Federal Circuit's determination that laches could contradict the statute of limitations provisions of § 286.

With regard to the traditional role of laches in equity suits, the Court opined that this doctrine was developed for situations where Congress had not specified a stock-still time for bringing adapt, and thus was a "gap-filling" doctrine to cure in disinterestedness what the police did not expressly provide.  When, as here, Congress has provided an express statute of limitations "at that place is no gap to fill" and thus no purpose for laches according to Justice Alito's opinion.

The Court first rejected First Quality'southward contention that § 286 was not a "true" statute of limitations because it "ran backwards" from the time accommodate is filed to limit the temporal extent of damage rather than "run[ning] forrad from the fourth dimension a cause of action accrues."  And so the stance turned to the Federal Excursion'due south rationale regarding the relationship between § 286 and § 282, and specifically whether § 282 satisfies the qualifying phrase from § 286 that the section governs "[e]xcept every bit otherwise provided by law."  The Courtroom deigned non to parse out whether § 282 provided some measure of laches as a defense; rather, Justice Alito refused to countenance interpretation of the statute to include laches as a defense force that would defeat the limited statute of limitations found in § 286.  This determination was supported by a survey of cases (from both earlier and later enactment of the Patent Act in 1952).  In rejecting the Federal Circuit's decision, the stance states that "[t]he most prominent feature of the relevant legal landscape at the time of enactment of the Patent Act was the well-established full general rule, oft repeated past this Court, that laches cannot exist invoked to bar a claim for damages incurred within a limitations period specified by Congress," citing Holmberg v. Armbrecht; U.s. v. Mack; and Wehrman 5. Conklin; and Cross v. Allen.  None of these were patent cases, but the opinion rejects the significance of this distinction on the grounds that "[p]atent law is governed by the same mutual-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation" co-ordinate to the dissent in the Federal Excursion.  Justice Alito states that "nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that §282(b)(1) codi­fies a very unlike patent-law-specific dominion," and, as is the Courtroom's wont he finds no evidence of such a patent-law-specific rule in the cases cited by either the Federal Excursion or First Quality.  These cases included those:  "decided by equity courts before 1938" ("unpersuasive for several, often overlapping reasons"; "besides few to institute a settled, national consensus"); "decided by constabulary courts earlier 1938" ("even if all of these cases squarely held that laches could be applied to a amercement claim at law within the limitations period, they would still found simply a scattering of decisions out of the corpus of pre­1952 patent cases, and that would non be enough to over­come up the presumption that Congress legislates against the background of full general mutual-police principles"); and "decided after the merger of equity and law in 1938" ("First Quality'south evidence is scant").

Finally, the majority rejected First Quality's invitation to make its decision based on policy considerations ("we cannot overrule Congress's judgment based on our ain policy views") and suggests that other doctrines (such as equitable estoppel) may provide relief.

Justice Breyer dissented, based on many of the policy arguments fabricated by Respondent and amici.  Dissimilar the majority, the Justice sees a "gap to fill," specifically when a patentee can delay to let an infringer to develop a product in a way that maximizes infringement amercement (which would constitute "harmful and unfair legal consequences").  For example, under the provisions of § 286 "a patentee, after learning of a possible in­fringement in year one, might await until twelvemonth 10 or yr xv or yr 20 to bring a lawsuit.  And if he wins, he can col­lect amercement for the preceding half dozen years of infringement."  This "gap" could permit an infringer (including an unknowing infringer according to the dissent) to "in­belong[] heavily in the evolution of the infringing product (of which the patentee'due south invention could exist only a pocket-size component), while prove that the infringer might apply to, say, evidence the patent is invalid disappears with time."  This is peculiarly pernicious in circumstances where the infringer is "locked in," i.e., when "business-related circumstances make it difficult or impos­sible for the infringer to abandon its use of the patented invention."

Besides these policy concerns, Justice Breyer believes that the 1952 Patent Act was intended merely to formulate existing constabulary, and part of that existing police includes laches.  This law included a number of cases that the Justice sets forth expressly in the dissenting opinion, including:

Lukens Steel Co. v. American Locomotive Co. [] (CA2 1952); Chicago Pneumatic Tool Co. 5. Hughes Tool Co. [] (CA10 1951); Brennan five. Hawley Prods. Co. [] (CA7 1950); Shaffer 5. Rector Well Equip. Co. [] (CA5 1946); Rome Grader & Mach. Corp. v. J. D. Adams Mfg. Co. [] (CA7 1943); French republic Mfg. Co. v. Jefferson Elec. Co. [] (CA6 1939); Universal Coin Lock Co. five. American Sanitary Lock Co. [] (CA7 1939); Matrimony Shipbuild­ing Co. 5. Boston Atomic number 26 & Metal Co. [] (CA4 1938); Gillons v. Shell Oil Co. of Cal. [] (CA9 1936); Holman five. Oil Well Supply Co. [] (CA2 1936) (per curiam); Dock & Term. Eng. Co. v. Pennsylvania R. Co. [] (CA3 1936); Broker v. Ford Motor Co. [] (CA3 1934); Westco-Chippewa Pump Co. v. Delaware Elec. & Supply Co. [] (CA3 1933); Window Drinking glass Mach. Co. v. Pittsburgh Plate Glass Co. [] (CA3 1933); Dwight & Lloyd Sintering Co. five. Greenawalt [] (CA2 1928); George J. Meyer Mfg. Co. 5. Miller Mfg. Co. [] (CA7 1928); Wolf Mineral Process Corp. v. Minerals Separation Northward. Am. Corp. [] (CA4 1927); Cummings v. Wilson & Willard Mfg. Co. [] (CA9 1925); Ford v. Huff [] (CA5 1924); Wolf, Sayer & Heller, Inc. five. United States Slicing Mach. Co. [] (CA7 1919); A. R. Mosler & Co. v. Lurie [] (CA2 1913); Safety Car Heating & Lighting Co. v. Consolidated Auto Heating Co. [] (CA2 1909) (per curiam); Richardson v. D. One thousand. Osborne & Co. [] (CA2 1899); and Woodmanse & Hewitt Mfg. Co. five. Williams [] (CA6 1895).

To the bulk'southward rejoinder that these cases "prove[] nothing" because they are decisions from courts of equity, the Justice says "Adept reply But no cigar" because:  in 1897, Congress enacted a limited statute of limitations in patent cases that could be used against claims brought in equity courts; in 1870, Congress gave equity courts the power to award amercement in patent cases; Congress recognized that patent cases were brought (at that time) in courts of equity; and finally that in the (admittedly) few cases pre-merger that considered whether laches could bar suits at police, those courts held that they could.  And those cases relied upon by the majority to the contrary were non patent cases, Justice Breyer notes, and thus "do not prevent Congress from enacting a statute that, recognizing patent litigation's history, combines a statute of limitations with a laches defense," which in the Justice'south opinion is what Congress did.

The dissent illustrates the significance of where the brunt is placed on disarming the Court with earlier cases:  here, the dissent contends that the majority was "unable to place a single case—non 1—from any courtroom of ap­peals sitting in police force or in disinterestedness before the merger, or sitting after the merger but before 1952 property that laches could not bar a patent claim for damages."  Of course the majority considered the converse, that Respondents and amici did not show sufficient cases that laches could provide such a bar.  And the Justice notes that every Court of Appeals instance considering the question since enactment of the 1952 Patent Act had found that laches can bar amercement claims, contrary to the majority's decision.

The dissent also distinguished Petrella, relying on legal every bit well as practical differences between patent and copyright.  And the dissent ends with an adage ironic in view of the pen that has written it:

[T]he bulk remains "determined to stay the grade and continue on, travelling even further away," Mathis v. United States, 579 U. S. ___, ___ (2016) (ALITO J., dissenting) (slip op., at ix), from Congress' efforts, in the Patent Act, to promote the "Progress of Science and useful Arts," U. Southward. Const., Art. I, §8, cl. 8.  Trite but true: Two wrongs don't make a right.

SCA Hygiene Products Aktiebolag five. First Quality Baby Products, LLC (2017)
Opinion of the Court by Justice Alito, joined past Chief Justice Roberts and Justices Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan;
Dissenting opinion past Justice Breyer

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Source: https://www.patentdocs.org/2017/03/sca-hygiene-products-aktiebolag-v-first-quality-baby-products-llc-2017.html

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