Supreme Court Reduces Risk to Patent Owners Who Are Slow to Bring a Patent Infringement Lawsuit

By Robert Asher. Co-Chair of our Patent Practice Group

Upending long-settled judicial decision-making, the U.S. Supreme Court has struck down the application of laches to patent damages. Under that judge-made doctrine, a patent owner who unreasonably delays in filing suit may be denied a recovery of past damages. As of the March 21 decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, that defense against patent damages has been eliminated.

The availability of a laches defense had imposed on patent owners a sense of urgency when they learned of infringement. Waiting longer than six years to sue would have obligated the patent owner to prove that the delay was not unreasonable and did not prejudice the defendant.

If a court found that patent owner’s delay in filing suit was unreasonable and prejudicial, even a delay shorter than six years could have resulted in a dismissal of a claim for damages. Delay might cause prejudice if evidence favorable to the defendant went missing, or if helpful witnesses suffered faded memories or died, or the defendant made economic decisions that it might not have made if litigation had started earlier.

But given the exorbitant cost of patent litigation, to bring a lawsuit when the infringement was just getting started may not have offered a potential reward large enough to justify the cost. A patent owner might have found itself in a bind – file early and face the financial pressures of going after a smaller reward or delay filing and risk the potential defense of laches.

The Supreme Court’s decision removes timing of the lawsuit as a concern for patent owners. The decision reversed over a century of judicial decisions by giving new emphasis to the matter of timing as set out in the patent statute. That statute provides that damages may be awarded only for infringements taking place not more than six years before suing for patent infringement.

Acting in step with its  decision in the Raging Bull copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., which limited the laches defense in copyright cases, the Court deferred to the congressional judgment as to the limitations on damages. It ruled that Congress allows a patent owner to pursue up to six years of back damages, and the courts should not cite laches to substitute their own judgment as to the effect timing of a lawsuit should have on damages. More...