[This piece has been authored by Ishita Chandra, a student at the Dr. B.R. Ambedkar National Law University, Sonepat, Haryana.]
INTRODUCTION
It is a fundamental principle of administration of justice that the courts will aid those who are vigilant and who do not sleep on their rights. Claims which have been delayed unreasonably in being brought forward may be rejected. However, this rule is not absolute. Delays which have caused no harm to the other party to the proceedings may not be considered such “unreasonable” delays. Only if the delay has changed the situation so that such late enforcement of rights will be unfair, it will disentitle the party to relief. This, of course, requires exercise of sound judicial discretion.
The doctrine of laches is an equitable principle that precludes stale claims from emerging after ¯a due course of time. The Latin proverb “vigilantibus non dormientibus aequitas subvenit”, which means “justice supports the vigilant, not those who sleep on their rights”, is the basis for this philosophy. The Laches theory is typically a strong defence against intellectual property infringement.
Following Article I, Section 8, Clause 8 of the United States Constitution, Congress passed the Copyright Act. This Act facilitated the protection of authors’ rights in their creative and imaginative work. If a piece of writing satisfies the requirements of the Copyright Act, the author may apply for a copyright to protect it. A copyright owner may file a lawsuit for copyright infringement if they have good reason to suspect that another’s work violates or infringes their work.
The U.S. Constitution’s Article 1, Section 8, Clause 8 established the Patent law in 1789. By giving innovators a certain degree of exclusivity over their inventions, the patent system aims to promote innovation. Without a patent system, people and companies would be less motivated to invest in research and development since they wouldn’t be protected against rivals attempting to steal their successful ideas and products.
In the case of in SCA Hygiene Products v. First Quality Baby Products (Hereinafter SCA), the court compared Section 286 of the Patent Act (“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”) with Section 507(b) of the Copyright Act (“No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.”).
BACKGROUND
The Supreme Court made a decision in Petrella v. Metro-Goldwyn-Mayer (Hereinafter Petrella), regarding the application of laches to a copyright claim made within the three-year limitations period specified in the Copyright Act. The Court determined that the Copyright Act’s express statute of limitations, which only permits remedy within a three-year window, adequately accounts for a plaintiff’s delay; laches can therefore be used only in exceptional situations. The Supreme Court also observed that since the Copyright Act’s statute of limitations already contains provisions dealing with delay in filing a suit, thus the defence of laches cannot be used to bar a copyright infringement claim within the Copyright Act.
In the decision of the Federal Circuit in 1992, it was held that laches is a cognizable defence for defendants seeking damages in patent infringement cases. This observation was made in the case of Aukerman v. Chaides Construction (Hereinafter Aukerman). The court further declared that “presumption of laches arises where a patentee delays bringing suit for more than six years after the date the patentee knew or should have known of the alleged infringer’s activity”. Additionally, the Federal Circuit in Aukerman outlined the elements for laches in the context of patents as unreasonable and inexcusable delay by the patentee; and serious harm sustained by the claimed infringement. Even though the Aukerman case was later reversed, there are still valid arguments in favour of allowing laches in situations where a statute of limitations applies to the same remedy.
CURRENT SCENARIO IN USA
In March 2017, the Supreme Court established that the defence of laches could not be invoked to bar damages within the six-year limitations period set forth in Section 286. The Court heavily relied on Petrella and categorized Section 286 as a statute of limitations enacted by Congress that “speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief”. Where there is a statute of limitations, “there is no gap to fill.”
The primary goal of intellectual property law is to promote innovation. A patentee’s right to exclude others from making, selling and using the patented item creates dangers like monopoly loss which hinder downstream innovation. Thus, limitations on patent rights, such as equitable defenses, are essential to a balanced patent system.
A successful laches defence bars a plaintiff from bringing suit due to the plaintiff’s unreasonable delay in bringing that suit. The same policy purpose may also be addressed by statutes of limitations. Thus, a laches defence is not traditionally available to the defendant when a statute of limitations applies to the cause of action. The central question in SCA was whether the common law defence of laches can be applied to bar a patent infringement claim for damages within the Patent Act’s six-year limitations period. The Supreme Court held that laches cannot be applied against patent infringement damages due to the existence of a federal patent statute of limitations.
COPYRIGHT VS. PATENT CASES
While there is a place for laches in both copyright and patent law, the need is greater in the patent context. First, innocent infringers are more likely to exist under patent law than under copyright law. Plaintiffs claiming copyright infringement must prove that the defendant had access to and copied the copyrighted material. Thus, independent creation of a copyrighted work is a complete defence under copyright law. However, such a defence does not exist under patent law. Innocent inventors that happen to arrive at the same invention without any knowledge of the patent owner’s invention are still liable for infringement. Since the purpose of patent law is to “promote the progress of science and useful arts,” innocent patent infringers should have the opportunity to alter their design and reconsider hefty investments before wasting resources in litigation.
Second, patents can cause unfair “lock-in” scenarios in ways that copyrights cannot. Companies may choose between similar competing technologies for their product line. As companies continue to build on that technology, it becomes tightly integrated with the end product, making it difficult for the company to switch to alternatives. This lock-in problem is particularly strong when the technology has been incorporated into an industry standard, which many industry participants have invested time and money to conform to. The patent holder of that technology has massive bargaining power to “extract supercompetitive royalties” from the industry players. Laches would deter such behaviour, because it would prevent patentees from deliberately waiting for an industry to grow in order to acquire unfair bargaining power.
Third, Section 286’s longer limitations period (six years compared to three years in Section 507(b)) gives plaintiffs significantly more time to bring suit after a single infringement event.
At first glance, the Patent Act’s Section 286 seems different from the Copyright Act’s Section 507(b) since Section 286 defines the statutory period by counting backward while Section 507(b) defines the statutory period by counting forward. However, the Supreme Court concluded that “although the relevant statutory provisions in Petrella and this case are worded differently, Petrella’s reasoning easily fits the provision at issue here.” While the Court was right to conclude that the two provisions are more alike as a practical matter than their language suggests, it failed to fully explain why this is the case.
In copyright law, the limitations period is three years, which begins to run when a copyright claim accrues. By contrast, in patent law, the limitations period is six years, which does not begin to run at any point. Instead, Section 286 counts backward from the date of filing to determine whether the infringement event falls within the limitations period.
CONCLUSION
Long acknowledged as a viable and successful means of preventing the recovery of legal damages, the equitable defence of laches can be a lifeline for defendants who would otherwise lack compelling noninfringement claims. However, the availability of this defence is now in question. The stage is today set for the Supreme Court to weigh in on the future of laches in patent litigation. It is possible that the Court will overturn the Federal Circuit and rule that laches cannot prevent claims for damages within the six-year term specified in Section 286 if it closely follows its thinking in the Petrella decision.
Given the decision, it is doubtful that the Court would grant certiorari in order to merely affirm that Aukerman remains good law. Additionally, the Patent Act glaringly omits any mention of “laches” or any other equitable defences. However, the notion of laches still remains a crucial idea to preclude stale claims, as was demonstrated in the recent case of adidas America Inc. v. Thom Browne Inc.