Under § 286, a defendant’s liability for patent infringement is limited to the preceding six years. Laches used to be a defense that would cut that six year time period even shorter. However, in SCA Hygiene Products v. First Quality Baby Products, LLC (S. Ct. 2017), the Supreme Court held that laches is no longer a defense to patent infringement. This means that the six year time period under § 286 that the alleged infringer would be liable for patent infringement cannot be further shortened under the defense of laches. Nevertheless, the Supreme Court left intact the alleged infringer’s ability to limit patent infringement liability under a different theory, namely, the defense of equitable estoppel to provide protections against unscrupulous patentees.
I. Section 286 limits damages to preceding six years
35 U.S.C. § 286: Time limitation on damages:
Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.
35 U.S.C. § 286 is a complete bar to recover for damages more than six year ago.
II. Laches further limits damages to a period shorter than six years
Laches, if it was allowed, cuts short the six year time period so as to provide even more protection to defendants against untimely claims. In SCA Hygiene, the lower court (Federal Circuit) held in a 6-5 decision that laches was available. However, upon appeal, the Supreme Court of the United States decided that laches was no longer a defense to patent infringement.
Laches was used as a defense to patent infringement by alleged infringers to limit liability for damages due to timeliness issues caused by the patent owner. From an alleged infringer’s perspective, timeliness issues can be identified when the alleged infringer ask questions such as “Why did the patent owner wait so long to file the lawsuit?” If laches were a defense to patent infringement, then the defendant could consider whether the delays caused by the patent owner prejudiced the defendant and thus implicate the defense of laches to limit liability.
The problems for alleged infringers caused by the timeliness of the patent owner is illustrated by the following scenario. If a patent owner notifies a competitor of its patent, then the notification may place the competitor in limbo as to whether the patent owner will sue the competitor in the future for patent infringement.
Laches would be a way for the law to deal with this issue of placing the alleged infringer in limbo while doing business by forcing the patent owner to sue the alleged infringer sooner than later or be barred from seeking recovery. Section 286 sets the minimum expectation of what the law expects from patent owners that want to pursue a claim for patent infringement against an alleged infringer.
Section 286 sets the maximum time period that the patent owner can sue the competitor at a later date (e.g., seven or more years) by limiting damages to the preceding six years. Section 286 does not provide the time period in which the patent owner can sue the alleged infringer because the Supreme Court left open the possibility that the alleged infringer can use the defense of equitable estoppel to cut short the six year maximum time period for which the alleged infringer would be liable for patent infringement.
If the alleged infringer (i.e. potential defendant or competitor) wants to resolve the dispute sooner, then the competitor may force the issue by filing a declaratory judgment action where the competitor requests the court to declare the rights and responsibilities of the patent owner and the competitor with respect to the patent. Alternatively, as the defendant attempted to do in the instant case, the defendant can attempt to invalidate the patent through a post grant proceeding at the United States Patent and Trademark Office (USPTO).
III. Fact Pattern of SCA Hygiene v. First Quality
In the instant case, SCA Hygiene (patent owner) sent a letter to the defendant (First Quality) in October 2003. First Quality (defendant and alleged infringer) responded that SCA’s patent was invalid because of its own patent, namely, U.S. Pat. No. 5,415,649 (hereinafter Watanabe patent) antedated the patent owner’s patent and disclosed the same subject matter. In July 2004, SCA Hygiene, the patent owner, requested re-examination of its patent based on the Watanabe patent. In March 2007, the USPTO issued a certificate confirming the validity of the SCA Hygiene patent over the Watanabe reference. In August 2010, SCA Hygiene filed the instant patent infringement action against First Quality. From October 2003 to August 2010, First Quality was operating under the threat of litigation for patent infringement by SCA Hygiene.
During litigation, First Quality (alleged infringer) argued that the time delay caused by the patent owner should work against the patent owner so that the damages available to the patent owner for patent infringement would be shorter than the six years under § 286. The Supreme Court of the United States disagreed noting that laches is no longer a defense to patent infringement to cut short or cut off damages to the patent owner.
IV. Equitable Estoppel is still available to limit liability to a period shorter than six years
Importantly, the Supreme Court specifically mentioned the availability of the defense of equitable estoppel to alleged infringers. This defense may be harder to prove and use as a defense to limit patent infringement liability. The Supreme Court left this defense in tact for the reason that it does provide some measure of protection to alleged infringers against unscrupulous patent owners (patent trolls come to mind) that might use certain delay tactics to gain an unfair advantage over alleged infringers.
The defense of equitable estoppel requires the alleged infringer to prove that the patent owner made misleading statements that the patent owner knew to be false and the alleged infringer detrimentally relied on those misleading statements.
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