137 S. Ct. 954 | SCOTUS | 2017
Lead Opinion
We return to a subject that we addressed in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ----,
I
Petitioners SCA Hygiene Products Aktiebolag and SCA Personal Care, Inc. (collectively, SCA), manufacture and sell adult incontinence products. In October 2003, SCA sent a letter to respondents (collectively, First Quality), alleging that First Quality was making and selling products that infringed SCA's rights under
In July 2004, without notifying First Quality, SCA asked the Patent and Trademark Office (PTO) to initiate a reexamination proceeding to determine whether the '646 patent was valid in light of the Watanabe patent. Id ., at 49a-51a. Three years later, in March 2007, the PTO issued a certificate confirming the validity of the '646 patent.
In August 2010, SCA filed this patent infringement action against First Quality. First Quality moved for summary judgment based on laches and equitable estoppel, and the District Court granted that motion on both grounds.
SCA appealed to the Federal Circuit, but before the Federal Circuit panel issued its decision, this Court decided Petrella. The panel nevertheless held, based on a Federal Circuit precedent, A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
The Federal Circuit then reheard the case en banc in order to reconsider Aukerman in light of Petrella . But in a 6-to-5 decision, the en banc court reaffirmed Aukerman 's holding that laches can be asserted to defeat a claim for damages incurred within the 6-year period set out in the Patent Act. As it had in Aukerman, the en banc court concluded that Congress, in enacting the Patent Act, had "codified a laches defense" that "barred recovery of legal remedies."
II
Laches is "a defense developed by courts of equity" to protect defendants against "unreasonable, prejudicial delay in commencing suit." Petrella,
Petrella arose out of a copyright dispute relating to the film Raging Bull. 572 U.S., at ----,
Petrella 's holding rested on both separation-of-powers principles and the traditional role of laches in equity. Laches provides a shield against untimely claims,
*961Applying laches within the limitations period would also clash with the purpose for which the defense developed in the equity courts. As Petrella recounted, the "principal application" of laches "was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitation."
With Petrella 's principles in mind, we turn to the present dispute.
III
A
Although the relevant statutory provisions in Petrella and this case are worded differently, Petrella 's reasoning easily fits the provision at issue here. As noted, the statute in Petrella precludes a civil action for copyright infringement "unless it is commenced within three years after the claim accrued."
The same reasoning applies in this case. Section 286 of the Patent Act provides: "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." By the logic of Petrella, we infer that this provision represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.
B
First Quality contends that this case differs from Petrella because § 286 of the Patent Act is not a true statute of limitations. A true statute of limitations, we are told, "runs forward from the date a cause of action accrues," but § 286"runs backward from the time of suit." Brief for Respondents 41.
Petrella cannot reasonably be distinguished on this ground. First Quality thinks it critical that § 286"runs backward from the time of suit," Brief for Respondents 41, but Petrella described the Copyright Act's statute of limitations in almost identical terms. We said that this provision "allows plaintiffs ... to gain retrospective relief running only three years back from the date the complaint was filed ."
*962572 U.S., at ----,
First Quality contends that the application of a true statute of limitations, like the defense of laches (but unlike § 286 ), takes into account the fairness of permitting the adjudication of a particular plaintiff's claim. First Quality argues as follows: "When Congress enacts [a true statute of limitations], it can be viewed as having made a considered judgment about how much delay may occur after a plaintiff knows of a cause of action (i.e., after accrual) before the plaintiff must bring suit-thus potentially leaving no room for judges to evaluate the reasonableness of a plaintiff's delay on a case-by-case basis under laches." Brief for Respondents 42. According to First Quality, § 286 of the Patent Act is different because it "turns only on when the infringer is sued, regardless of when the patentee learned of the infringement." Ibid .
This argument misunderstands the way in which statutes of limitations generally work. First Quality says that the accrual of a claim, the event that triggers the running of a statute of limitations, occurs when "a plaintiff knows of a cause of action," ibid., but that is not ordinarily true. As we wrote in Petrella, "[a] claim ordinarily accrues 'when [a] plaintiff has a complete and present cause of action.' " 572 U.S., at ----,
For these reasons, Petrella cannot be dismissed as applicable only to what First Quality regards as true statutes of limitations. At least for present purposes, nothing depends on this debatable taxonomy. Compare Automobile Workers v. Hoosier Cardinal Corp.,
C
The Federal Circuit based its decision on a different footing. Section 286 of the Patent Act begins with the phrase "[e]xcept as otherwise provided by law," and according to the Federal Circuit, § 282 of the Act is a provision that provides otherwise. In its view, § 282 creates an exception to § 286 by codifying laches as a defense to all patent infringement claims, including claims for damages suffered within § 286's 6-year period.
*963
"The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:
"(1) Noninfringement, absence of liability for infringement or unenforceability."
The en banc majority below never identified which word or phrase in § 282 codifies laches as a defense, but First Quality argues that laches falls within § 282(b)(1) because laches is a defense based on "unenforceability." Brief for Respondents 28-33.
SCA disputes this interpretation of § 282(b)(1), arguing that laches does not make a patent categorically unenforceable. Reply Brief 6-8; see Aukerman,
D
In holding that Congress codified a damages-limiting laches defense, the Federal Circuit relied on patent cases decided by the lower courts prior to the enactment of the Patent Act. After surveying these cases, the Federal Circuit concluded that by 1952 there was a well-established practice of applying laches to such damages claims and that Congress, in adopting § 282, must have chosen to codify such a defense in § 282(b)(1).
The Federal Circuit and First Quality dismiss the significance of this Court's many reiterations of the general rule because they were not made in patent cases. But as the dissenters below noted, "[p]atent law is governed by the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation."
In light of the general rule regarding the relationship between laches and statutes of limitations, nothing less than a broad and unambiguous consensus of lower court decisions could support the inference that § 282(b)(1) codifies a very different patent-law-specific rule. No such consensus is to be found.
IV
The pre-1952 cases on which First Quality relies fall into three groups: (1) cases decided by equity courts before 1938; (2) cases decided by law courts before 1938; and (3) cases decided after the merger of equity and law in 1938. We will discuss each group separately.
A
Pre-1938 equity cases
The pre-1938 equity cases are unpersuasive for several, often overlapping reasons. Many do not even reveal whether the plaintiff asked for damages. Indeed, some say nothing at all about the form of relief that was sought, see, e.g., Cummings v. Wilson & Willard Mfg. Co.,
First Quality argues that courts sometimes used the term "accounting" imprecisely to refer to both an accounting of profits and a calculation of damages, Brief for Respondents 19-20, but even if that is true, this loose usage shows only that a reference to "accounting" might refer to damages. For that reason, the Federal Circuit did not rely on cases seeking only *965an accounting,
Turning to the cases that actually refer to damages, we note that many of the cases merely suggest in dicta that laches might limit recovery of damages. See, e.g., Hartford-Empire Co. v. Swindell Bros.,
As for the cases in which laches was actually held to bar a claim for damages, e.g., Wolf, Sayer & Heller v. United States Slicing Mach. Co.,
Moreover, the most that can possibly be gathered from a pre-1938 equity case is that laches could defeat a damages claim in an equity court, not that the defense could entirely prevent a patentee from recovering damages. Before 1870, a patentee wishing to obtain both an injunction against future infringement and damages for past infringement was required to bring two suits, one in an equity court (where injunctive relief but not damages was available), and one in a court of law (where damages but not injunctive relief could be sought). See Beauchamp, The First Patent Litigation Explosion,
This argument overlooks the fact that a patentee, during the period in question, could always sue for damages in law, where the equitable doctrine of laches did not apply, and could thus avoid any possible laches defense. Thus, accepting First Quality's argument would not return patentees to the position they held from 1897 to 1938. Instead, it would go much further and permit laches entirely to defeat claims like SCA's.
B
Pre-1938 claims at law
First Quality cites three Court of Appeals cases in which laches was raised in a proceeding at law and in which, according to First Quality, the defense was held to bar a damages claim. See Universal Coin *966Lock Co. v. American Sanitary Lock Co.,
In any event, these cases, like the equity cases, offer minimal support for First Quality's position. Not one of these cases even mentions the statute of limitations. One of the three, Ford, is not even a patent infringement case; it is a breach-of-contract case arising out of a patent dispute,
First Quality protests that the paucity of supporting cases at law should not count against its argument since very few patent-infringement cases were brought at law after 1870. Brief for Respondents 25-26. But the fact remains that it is First Quality's burden to show that Congress departed from the traditional common-law rule highlighted in our cases.
C
Post-merger cases
First Quality claims that courts continued to apply laches to damages claims after the merger of law and equity in 1938, but First Quality's evidence is scant. During this period, two Courts of Appeals stated in dicta that laches could bar legal damages claims. See Chicago Pneumatic Tool Co. v. Hughes Tool Co.,
After surveying the pre-1952 case law, we are not convinced that Congress, in enacting § 282 of the Patent Act, departed from the general rule regarding the application of laches to damages suffered within the time for filing suit set out in a statute of limitations.
V
First Quality's additional arguments do not require extended discussion. First Quality points to post-1952 Court of Appeals decisions holding that laches can be invoked as a defense against a damages claim. Noting that Congress has amended § 282 without altering the " 'unenforceability' " language that is said to incorporate a laches defense, First Quality contends that Congress has implicitly ratified these decisions. Brief for Respondents 35-36.
We reject this argument. Nothing that Congress has done since 1952 has altered *967the meaning of § 282. See Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N. A.,
First Quality and its supporting amici also make various policy arguments, but we cannot overrule Congress's judgment based on our own policy views. We note, however, as we did in Petrella, that the doctrine of equitable estoppel provides protection against some of the problems that First Quality highlights, namely, unscrupulous patentees inducing potential targets of infringement suits to invest in the production of arguably infringing products. 572 U.S., at ----,
* * *
Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by § 286. The judgment of the Court of Appeals is vacated in part, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
The panel reversed the District Court's holding on equitable estoppel, concluding that there are genuine disputes of material fact relating to that defense.
The dissenting judges concurred in the portion of the majority opinion relating to the application of laches to equitable relief.
"The federal courts always had equity powers as well as law power, but they operated, until the Federal Rules of Civil Procedure, by distinctly separating equity cases and even had separate equity rules." 1 Dobbs § 2.6(1), at 148, n. 2; see also Gulfstream Aerospace Corp. v. Mayacamas Corp.,
The dissent argues that there is a "gap" in the statutory scheme because the Patent Act's statute of limitations might permit a patentee to wait until an infringing product has become successful before suing for infringement. Post, at 967 - 968 (opinion of BREYER, J.). We rejected a version of this argument in Petrella, 572 U.S., at ---- - ----,
Because we conclude that First Quality fails to show that there was a special laches rule in the patent context, we need not address whether it is ever reasonable to assume that Congress legislated against the background of a lower court consensus rather than the contrary decisions of this Court. Cf.
See
The dissent misunderstands this point and thinks that we dismiss the relevance of the equity cases because they applied laches "to equitable claims without statutes of limitations." Post, at 969. But we are well aware that a statute of limitations applied in equity when these cases arose. See supra, at 965.
For the same reason, the dissent misses the mark when it demands that we cite cases "holding that laches could not bar a patent claim for damages." Post, at 971.
Dissenting Opinion
Laches is a doctrine that bars a plaintiff's claim when there has been unreasonable, prejudicial delay in commencing suit. See 1 D. Dobbs, Law of Remedies § 2.3(5), p. 89 (2d ed. 1993). The question before us is whether a court can apply this doctrine in a patent infringement action for damages brought within the statute of limitations. The Court holds that a court cannot. Laches, it says, is a "gap-filling doctrine," generally applicable where there is no statute of limitations. But the 1952 Patent Act contains a statute of limitations. Hence there is "no gap to fill." Ante, at 961.
In my view, however, the majority has ignored the fact that, despite the 1952 Act's statute of limitations, there remains a "gap" to fill. See infra, at 968. Laches fills this gap. And for more than a century courts with virtual unanimity have applied laches in patent damages cases. Congress, when it wrote the 1952 statute, was aware of and intended to codify that judicial practice. I fear that the majority, in ignoring this legal history, opens a new "gap" in the patent law, threatening harmful and unfair legal consequences.
I
Consider the relevant statutory language. Section 286 of the Patent Act says: "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."
Two features of this statutory language are important. First, the limitations provision, unlike those in many other statutes, does not set forth a period of time in which to sue, beginning when a claim accrues and then expiring some time later. (The False Claims Act, for example, gives a plaintiff six years from the date of the violation or three years from the date of discovery to file his suit,
This fact creates a gap. Why? Because a patentee might wait for a decade or more while the infringer (who perhaps does not know or believe he is an infringer) invests heavily in the development of the infringing product (of which the patentee's invention could be only a small component), while evidence that the infringer might use to, say, show the patent is invalid disappears with time. Then, if the product is a success, the patentee can bring his lawsuit, hoping to collect a significant recovery. And if business-related circumstances make it difficult or impossible for the infringer to abandon its use of the patented invention (i.e., if the infringer is "locked in"), then the patentee can keep bringing lawsuits, say, in year 10 (collecting damages from years 4 through 10), in year 16 (collecting damages from years 10 through 16), and in year 20 (collecting any remaining damages). The possibility of this type of outcome reveals a "gap." Laches works to fill the gap by barring recovery when the patentee unreasonably and prejudicially delays suit.
Second, the Patent Act's language strongly suggests that Congress, when writing the statutory provisions before us, intended to permit courts to continue to use laches to fill this gap. The statute says that there are "except[ions]" to its 6-year damages limitation rule. It lists "unenforceability" as one of those exceptions. At common law, the word "unenforceability" had a meaning that encompassed laches. See, e.g., United States v. New Orleans Pacific R. Co.,
II
The pre-1952 case law that I shall discuss is directly relevant because, as this Court has recognized, the 1952 Patent Act was primarily intended to codify existing law. See Halo Electronics v. Pulse Electronics, Inc., 579 U.S. ----, ----,
Now consider the existing law that the Patent Act's drafters intended the Act to reflect. The decisions that find or say or hold that laches can bar monetary relief in patent infringement actions stretch in a virtually unbroken chain from the late 19th century through the Patent Act's enactment in 1952. They number in the dozens and include every federal appeals court to *969have considered the matter. (We have found only two contrary decisions, both from the same District Court: Thorpe v. Wm. Filene's Sons Co.,
Here are the cases from the Federal Courts of Appeals alone: Lukens Steel Co. v. American Locomotive Co.,
The majority replies that this list proves nothing. After all, it says, nearly all of these decisions come from courts of equity. Courts of equity ordinarily applied laches " 'to claims of an equitable cast for which the Legislature ha[d] provided no fixed time limitation,' " ante, at 961 (quoting Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ----, ----,
Good reply. But no cigar. Why not? (1) Because in 1897 Congress enacted a statute of limitations -very much like the one before us now-for patent claims brought in courts of equity . Ch. 391, § 6,
(2) Because in 1870 Congress enacted a statute that gave courts of equity the power to award legal relief, namely, damages, in patent cases. Act of July 8, 1870, § 55,
(3) Because Congress recognized that damages suits for patent infringement took place almost exclusively in equity courts, not law courts. Whenever Congress wished to modify patent damages law, it rewrote the statutory provisions governing damages in equity, not law. See, e.g., § 8,
(4) Because, in any event, in those few pre-law/equity-merger cases in which courts of law considered whether laches could bar a patent damages action, they, like their equity counterparts, held that it could. See Universal Coin,
Does the majority have any other good reason to ignore the mountain of authority recognizing laches as a defense? It refers to many general statements in opinions and treatises that say that laches is "no defense at law." United States v. Mack,
The majority also tries to discredit the persuasiveness of the pre-Patent Act case law authority. It goes through the lengthy list of decisions, finding some judicial statements too vague, others just dicta, and still others having confused an equitable claim for "accounting" with a legal claim for "damages." I agree that it has found weaknesses in the reasoning of some individual cases. But those weaknesses were not sufficient to prevent a 1951 treatise writer from concluding, on the basis of the great weight of authority, that in patent cases, "[l]aches ... may be interposed in an action at law." 3 A. Deller, Walker on Patents 106 (Cum. Supp. 1951).
*971In any event, with all its efforts, the majority is unable to identify a single case-not one-from any court of appeals sitting in law or in equity before the merger, or sitting after the merger but before 1952, holding that laches could not bar a patent claim for damages. Furthermore, the majority concedes that it is unable to distinguish, by my count, at least six Court of Appeals cases directly holding that laches could bar a patent claim for damages. See Wolf, Sayer & Heller,
The majority tries to minimize the overall thrust of this case law by dividing the cases into subgroups and then concluding that the number of undistinguishable precedents in each subgroup is "too few to establish a settled, national consensus." Ante, at 965. The problem with this approach is that, once we look at the body of case law as a whole, rather than in subgroups, we find what I have said and repeated, namely, that all the cases say the same thing : Laches applies. The majority's insistence on subdivision makes it sound a little like a Phillies fan who announces that a 9-0 loss to the Red Sox was a "close one." Why close? Because, says the fan, the Phillies lost each inning by only one run.
For the sake of completeness I add that, since 1952, every Federal Court of Appeals to consider the question has held that laches remains available for damages claims brought under the Patent Act. See A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
III
The majority's strongest argument is Petrella . There, the Court held that laches could not bar a damages claim brought within the Copyright Act's limitations period. The present case holds roughly the same in respect to the Patent Act, providing a degree of consistency.
There are relevant differences, however, between patent law and copyright law. For one thing, copyright law, unlike patent law, does not contain a century and a half of history during which courts held that laches and a statute of limitations could coexist. When Congress enacted the Patent Act in 1952, patent statutes had already contained a 6-year statute of limitations for 55 years (since 1897), during which time courts had continued to apply laches to patent damages cases. Copyright law, on the other hand, contained no federal statute of limitations until 1957. See Petrella, 572 U.S., at ----,
For another thing, the Copyright Act, unlike the Patent Act, has express provisions that mitigate the unfairness of a copyright holder waiting for decades to *972bring his lawsuit. A copyright holder who tries to lie in wait to see if a defendant's investment will prove successful will discover that the Copyright Act allows that defendant to "prove and offset against ... profits 'deductible expenses' incurred in generating those profits."
Further, the Court, in Petrella, pointed out that the evidentiary loss that occurs while a copyright holder waits to bring suit is "at least as likely to affect plaintiffs as it is to disadvantage defendants." 572 U.S., at ----,
At the same time, the passage of time may well harm patent defendants who wish to show a patent invalid by raising defenses of anticipation, obviousness, or insufficiency. These kinds of defenses can depend upon contemporaneous evidence that may be lost over time, and they arise far more frequently in patent cases than any of their counterparts do in copyright cases. See Brief for Electronic Frontier Foundation et al. as Amici Curiae 23 (reporting that of all copyright cases pending as of January 2009, only 2.7% of judgment events resulted in a finding of a lack of ownership or validity of the copyright at issue); Allison, Lemley, & Schwartz, Understanding the Realities of Modern Patent Litigation,
Finally, there is a "lock-in" problem that is likely to be more serious where patents are at issue. Once a business chooses to rely on a particular technology, it can become expensive to switch, even if it would have been cheap to do so earlier. See Lee & Melamed, Breaking the Vicious Cycle of Patent Damages,
I recognize the Majority's suggestion that the doctrine of "equitable estoppel" might help alleviate some of these problems. See ante, at 967. I certainly hope so. But I would be more "cautious before adopting changes that disrupt the settled expectations of the inventing community." Festo Corp. v. Shoketsu Kinzoku Kogyo *973Kabushiki Co.,
I add or confess that I believe that Petrella too was wrongly decided. Today's case helps illustrate why I think that Petrella started this Court down the wrong track. I would stop, finding adequate grounds to distinguish Petrella. But the majority remains "determined to stay the course and continue on, travelling even further away," Mathis v. United States, 579 U.S. ----, ----,
With respect, I dissent.