Today, the Court of Appeals for the Federal Circuit issued its opinion in SCA Hygiene v. First Quality Baby Products, a case about adult diapers that had the potential to harm myriad small business owners and innovators.
At issue in the case was the legal doctrine of “laches.” As we explained in a previous post, laches is a legal doctrine that penalizes a rightsholder who “sleeps on their rights” by waiting a long time to file a lawsuit after learning of a possible infringement. It protects those that would be harmed by the assertion of rights after that delay. For example, laches would work against the patent owner that saw an infringing product emerge in 2000 yet waited until 2015 to sue, after significant investment of time and resources had been put into the product.
The Federal Circuit had long recognized laches as a limitation on patent owners’ rights. But a recent Supreme Court case, Petrella v. MGM, called the doctrine into question. In Petrella, the Supreme Court held that laches was not a defense in copyright cases. Given Petrella, the Federal Circuit went en banc to determine whether laches should still be a defense in patent cases.
Today, they held that it is, and we’re glad that it did. As we explained in the friend-of-the-court brief we filed, patent defendants and copyright defendants are in very different positions when it comes to defending against stale claims. Patent defendants, unlike their copyright counterparts, often defend themselves by showing that the patent owner’s claimed invention was obvious at the time of filing (thus making the patent invalid). But by delaying a lawsuit, a patent owner can make it difficult for the defendant to find evidence of what people in the field knew about or would have found obvious back when the application was filed. This is especially true in the Internet age. Websites are constantly rewritten. Software code gets lost or is not documented. In sum, without the defense of laches, patent owners can sit and wait for time to destroy the evidence an alleged infringer needs to defend herself.
The decision came out 6-5, meaning 5 judges of the Federal Circuit think Petrella changed the law. Given the closeness of the decision, this case may go to the Supreme Court. If it does, we hope that the Supreme Court recognizes the importance of laches and does not give patent trolls even more ammunition by taking away this important defense.
Even as the courts are taking action to strengthen the rights of those fending off patent lawsuits, there’s still a lot to be done. An innovator bringing a new product to market who gets hit with a patent lawsuit could face the better half of a decade in court and bleed out millions of dollars in attorneys' fees, even if she’s done nothing wrong. This forces countless innovators to settle, paying substantial settlement fees (often with agreements that bar them from ever speaking about the details). While every pro-defendant court rule helps correct this imbalance, we also need Congress to enact substantial patent reform legislation. And that starts with supporting the Innovation Act.
