Thursday, January 8, 2015

CAFC - SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC - Reviewing Laches and Equitable Estoppel

The Federal Circuit agreed to review en banc SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC to determine whether the Supreme Court's copyright laches decision in Petrella v. Metro-Goldwyn-Mayer affects the Federal Circuit's law for patent laches and equitable estoppel set forth A.C. Aukerman Co. v. R.L. Chaides Constr. Co.

In Petrella, the Supreme Court examined whether the defense of laches (unreasonable, prejudicial delay in commencing suit) may bar relief on a copyright infringement claim brought within 17 USC §507(b)'s three-year limit.  The Court held that laches cannot be invoked to preclude adjudication of a claim for damages brought within the three-years, but copyright owner's delay in bringing the suit may be relevant to  injunctive relief and in assessing profits of the infringer.

In contrast, the defense of patent laches says if (1) the patent owner unreasonably delays filing its patent infringement suit; and (2) the alleged infringer (defendant) was materially prejudiced by the delay, the patent owner may not recover damages prior to filing the suit, but may get an injunction. It is an equitable defense, and once the patent owner is aware or should have known of infringement, the clock is running. If, for example, the defendant can prove the delay is greater than six years, the patent owner has the burden to show the delay was not unreasonable.

The defense of equitable estoppel says if (1) the patent owner misleads defendant it will not enforce the patent; (2) the defendant relies on it; and (3) the defendant will be materially prejudiced by allowing the patent owner to enforce the patent, the patent owner may not recover any damages.

This case is important, because it may enhance (or detract from) defenses that can reduce or eliminate patent damages.

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