SCA Hygeine et al. v. First Quality Baby Products, LLC et al.


Docket No. 2013-1564

En banc opinion (PROST, NEWMAN, LOURIE, DYK, O’MALLEY, REYNA; CIP/DIP: HUGHES, MOORE, WALLACH, TARANTO, CHEN)
September 18, 2015

Brief Summary: On the “critical question” of whether § 282 applies to both equitable and legal relief, the court found both are encompassed (“If…Congress decides that the § 286 damages limitation and the § 282 laches defense are incompatible, it can change the law.”) It also found the “eBay framework” applies to equitable relief. The dissent argues that the decision “ignores Supreme Court precedent and other federal court decisions holding that laches does not bar claims for legal relief filed within a statutory limitations period.”

Summary: This opinion explains that “laches remains a defense to legal relief in a patent suit” and “adjust[s] the laches defense in one respect to harmonize it with Petrella [US, 2014, the Raging Bull case deciding “laches was not a defense to legal relief in copyright law”] and other Supreme Court precedent” (“equitable principles apply whenever an accused infringer seeks to use laches to bar ongoing relief…as to injunctions, considerations of laches fit naturally within the eBay framework” and “laches will only foreclose an ongoing royalty in extraordinary circumstances” (contrasting Menendez, US 1888)). The history of this dispute follows: SCA sent a letter to FQ contending infringement of US 6,375,646 relating to adult incontinence products on Oct. 31, 2003; FQ responded on Nov. 21, 2003 in a letter alleging the patent is invalid in view of US 5,415,649; SCA requested reexamination of the ‘646 patent in view of the ‘649 patent on July 7, 2004; FQ “invested heavily in its protective underwear business” and “[i]n 2006…expanded its line of adult incontinence products”; PTO confirmed patentability of ‘646 patent and allowed several new claims in 2007; FQ acquired another company and competing products in 2008-2009 (SCA “was aware of [FQ’s] activities, but never mentioned the ‘646 patent to [FQ] during this time”); and SCA filed an infringement complaint in 2010 (“over three years after reexamination concluded…the first time in nearly seven years that SCA had communicated with [FQ] regarding the ‘646 patent.”) The DC granted partial SJ of non-infringement to FQ, and granted FQ’s motion to dismiss based on laches and equitable estoppel. An FC panel affirmed as to laches (SC Petrella decision did not abolish laches as a patent defense (A.C. Aukerman, en banc FC 1992 decision left intact but “SCA…failed to raise a genuine issue of material fact regarding the reasonability of its delay”)) but reversed on equitable estoppel in 2014. Under Aukerman, the laches defense rules are: 1) it is an equitable defense to patent infringement (included in 35 USC § 282); 2) where established, damages prior to suit may be barred (§ 286); 3) it must be shown that the patentee’s delay was unreasonable and inexcusable and the alleged infringer must have suffered material prejudice attributable to the delay; 4) a presumption of laches arises from a delay of more than six years after the patentee knew or should have known of the alleged infringer’s activities; and 5) the presumption in point 4 shifts the burden of going forward with evidence, not the burden of persuasion. The opinion explains that § 286 “does not preclude brining a claim-instead, it limits a patentee’s damages recovery to compensation for only the last six years infringement” (Standard Oil, FC 1985). On the “critical question” of whether § 282 applies to both equitable and legal relief, the court found both are encompassed (“If…Congress decides that the § 286 damages limitation and the § 282 laches defense are incompatible, it can change the law.”) The court also found the “eBay framework” applies to equitable relief (“a patentee is not automatically entitled to an injunction-the patentee must prove that the equities favor an injunction…We…reject Aukerman’s bright line rule regarding the interplay between laches and injunctive relief.”) It explained that “[w]hereas estoppel bars the entire suit, laches does not” and “laches in combination with the eBay factors may in some circumstances counsel against an injunction” but “absent extraordinary circumstances, laches does not preclude an ongoing royalty”. The dissent argues that the majority misread the pre-1952 cases, “limits the scope of its review to favorable patent cases” and “ignores Supreme Court precedent and other federal court decisions holding that laches does not bar claims for legal relief filed within a statutory limitations period.”

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