En Banc Federal Circuit to Consider Impact of Petrella in Patent Cases

Back in September, I wrote about the Federal Circuit’s opinion in SCA Hygiene v. First Quality.1 There, the circuit panel rejected the appellant’s argument that the Supreme Court’s opinion in Petrella2 —a copyright case—implicitly overruled the en banc Federal Circuit’s opinion in Aukerman3 —a patent case—insofar as the availability of the laches defense to claims for monetary damages is concerned. Earlier this year, the Supreme Court in Petrella held that laches could not be invoked to bar claims for legal remedies, such as monetary damages, within the statutory limitation period for copyright claims. The Federal Circuit in Aukerman, by contrast, had held in 1992 that laches could be invoked to bar claims for monetary damages within the statutory limitation period for patent claims. In my previous post, I argued that the circuit panel in SCA Hygiene should have recognized that Aukerman is no longer good law in light of Petrella—the reasoning of the Aukerman court was explicitly rejected by the Supreme Court in Petrella.

The only conceivable difference between the two cases, I think, is in the statutes limiting claims for monetary damages. The Copyright Act provides: “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”4 And the Patent Act provides: “[N]o 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.”5 The former bars all actions for infringement, while the latter bars only recoveries in actions for infringement. I argued that both represent Congress’s determination of timeliness in such actions, and if it violates separation-of-powers to apply laches with the former—as the Supreme Court indicated in Petrella—then by implication it does so with the latter—though the circuit panel in SCA Hygiene thought otherwise.

Yesterday, the Federal Circuit announced that the circuit panel’s opinion has been vacated because the appellant’s petition for rehearing en banc has been granted. The Court of Appeals requested the parties to file briefs addressing the following two issues:

(a) In light of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, 134 S. Ct. 1962 (2014) (and considering any relevant differences between copyright and patent law), should this court’s en banc decision in A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), be overruled so that the defense of laches is not applicable to bar a claim for damages based on patent infringement occurring within the six-year damages limitations period established by 35 U.S.C. § 286?

(b) In light of the fact that there is no statute of limitations for claims of patent infringement and in view of Supreme Court precedent, should the defense of laches be available under some circumstances to bar an entire infringement suit for either damages or injunctive relief? See, e.g., Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893).

The first issue simply reiterates what I blogged about previously: Does Petrella implicitly overrule Aukerman? The second issue, citing the Supreme Court’s opinion from 1893 in Lane & Bodley,6 is perhaps just as interesting. I don’t think the Court in that opinion simply permitted the laches defense “to bar an entire infringement suit for either damages or injunctive relief,” as the Federal Circuit now frames it. The defendant there argued that it, as the successor-in-interest to the former employer of the patentee, held an indefeasible implied license to use the patented invention under the shop-right doctrine.7 The Circuit Court below had held that such a license would have been nontransferable, if it ever existed, such that the predecessor-in-interest could not have transferred it to the defendant.8

Given its holding that the defendant could not step into the shoes of its predecessor-in-interest vis-à-vis the patentee, the Circuit Court rejected the defendant’s laches argument:

But it is said that the complainant’s suit must fail, and the complainant be remitted to whatever rights he may have at law, by reason of his laches in pursuing his equitable remedy, the estoppel by conduct constituting a waiver of his equitable rights. These propositions are based upon evidence tending to prove that, although complainant knew that the defendant was making, using, and selling his improvement, he made no objection, set up no claim, made no demand for royalties, but was silent and acquiesced until 1884. It is not necessary to consider the evidence, which is conflicting, in reference to the complainant’s silence and acquiescence. In any light in which it may be viewed, it is insufficient, upon this whole case, inasmuch as the patent and the complainant’s title to it are sustained. . . . The decree will be for an injunction and account, with costs.9

Note the last sentence: The Circuit Court granted the patentee an injunction and an accounting. These were equitable remedies because the patentee brought a suit in equity. The defendant argued that, since the patentee slept on his rights, his only remedies were in an action at law. But since the Circuit Court rejected the laches defense, the patentee was entitled to equitable remedies. Note how this tracks Petrella perfectly: Laches could bar the equitable claims, but not the legal ones.

The Supreme Court reversed, holding that the defendant could step into the shoes of its predecessor-in-interest.10 Given this holding, the laches defense was then back on the table:

Courts of equity, it has often been said, will not assist one who has slept upon his rights, and shows no excuse for his laches in asserting them. The plaintiff’s excuse in this instance, that he preferred for prudential reasons to receive a salary from the defendant rather than to demand a royalty, is entitled to a less favorable consideration by a court of equity than if his conduct had been that of mere inaction.

We are therefore of opinion that the decree of the court below should be reversed, and the record remanded to that court, with directions to dismiss the bill of complaint, and it is so ordered.11

The Supreme Court held that the patentee was not entitled to any equitable remedies because he had slept on his rights. Since the two remedies sought were equitable, laches barred them both. The Court’s holding in Lane & Bodley, however, said nothing about laches being available to bar the patentee’s potential claims for legal remedies. Legal remedies were not discussed because it was not a court of law; it was a court of equity.

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  1. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 767 F.3d 1339 (Fed. Cir. 2014). 
  2. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). 
  3. A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc). 
  4. 17 U.S.C.A. § 507(b) (West 2014). 
  5. 35 U.S.C.A. § 286 (West 2014). 
  6. Lane & Bodley Co. v. Locke, 150 U.S. 193 (1893). 
  7. See, e.g., United States v. Dubilier Condenser Corp., 289 U.S. 178, 188-89 (1933) (“Recognition of the nature of the act of invention also defines the limits of the so-called shop right, which, shortly stated, is that, where a servant, during his hours of employment, working with his master’s materials and appliances, conceives and perfects an invention for which he obtains a patent, he must accord his master a nonexclusive right to practice the invention. . . . This is an application of equitable principles. Since the servant uses his master’s time, facilities, and materials to attain a concrete result, the latter is in equity entitled to use that which embodies his own property and to duplicate it as often as he may find occasion to employ similar appliances in his business.”) (citations omitted); see also McClurg v. Kingsland, 42 U.S. 202 (1843); Solomons v. United States, 137 U.S. 342 (1890). 
  8. See Locke v. Lane & Bodley Co, 35 F. 289, 294 (C.C.S.D. Ohio 1888). 
  9. Id. (citation omitted). 
  10. Lane & Bodley, 150 U.S. at 194-201. 
  11. Id. at 201.