Keeping Laches: the loss of the Laches Defense in copyright infringement cases does not mean depriving patent attorneys of the time-honored defense.

Author:McCormick, Madelyn S.
 
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"[E]quity aids the vigilant, not those who sleep on their rights." (1) "In those few and unusual cases where a plaintiff unreasonably delays in bringing suit and consequently causes inequitable harm to the defendant, [laches] permits a court to bring about a fair result." (2)

  1. INTRODUCTION

    Defendants use laches, an ancient equitable doctrine, as an affirmative defense in patent infringement suits. (3) Laches applies when a patent owner, referred to as the patentee, unreasonably delays in filing suit against the alleged infringing defendant. (4) Defendants in patent infringement suits invoke laches by showing not only that the patentee unreasonably and inexcusably delayed filing, but that the delay caused "material prejudice" to the defendant. (5) While the laches defense is infrequently raised, it is helpful when eliminating damages awarded to the patentee. (6) Laches remains a powerful tool for defendants by completely barring recovery for infringement before suit. (7)

    Recently, in Petrella v. Metro-Goldwyn-Mayer* the Supreme Court put patent litigation attorneys on notice that the laches defense for patent infringement may be on its way out. (9) The Court in Petrella held that laches is no longer a viable defense in copyright infringement cases because the copyright statute of limitations appropriately takes into account any delay in bringing suit, and allowing laches as a defense conflicts with congressionally specified time bars. (10) Some--including the dissent in a recent split Federal Circuit in the SCA Hygiene decision--argue that copyright law has statutory limitations similar to patent law, so laches should also be barred from use in patent infringement suits in light of the Supreme Court's Petrella decision. (11) Thus, the issue is whether the Petrella holding baring laches reaches beyond copyright infringement cases into the realm of patent law. (12)

    Despite the ruling in Petrella barring the laches defense, the Federal Circuit narrowly upheld the laches defense against patent infringement claims. (13) The Supreme Court, however, has frequently admonished the Federal Circuit for creating rules that are unique to patent law. (14) For example, in Medtronic, Inc. v. Mirowski Family Ventures, LLC, (15) the Supreme Court held that the Federal Circuit erred in holding the alleged infringer, instead of the patentee, had the burden to prove patent infringement when the potential infringer was seeking a declaratory judgment establishing no infringement. (16) The Court reasoned that a declaratory judgment is only "procedural," and leaves substantive rights, like the burden of proof, unchanged. (17) The Court concluded that the public's interest in maintaining a well-functioning patent system is, at most, in balance, and does not favor changing the ordinary burden of proof rule. (18)

    This Note examines the laches defense in recent Federal Circuit and Supreme Court copyright and patent infringement cases, and evaluates whether the Supreme Court should uphold the use of laches in patent infringement cases. (19) Part II.A provides a background of the laches defense, predominantly in patent infringement cases. (20) Part II.B describes, compares, and contrasts United States copyright and patent statutory time limitations on recovery. (21) Part II.C examines the recent Federal Circuit court decision upholding laches in patent infringement suits, as well as the Supreme Court decision barring the laches defense in copyright infringement cases. (22) Finally, Part III advocates for maintaining the laches defense in patent infringement cases because, unlike the statute of limitations in the copyright statute, the patent statutory damages limitation does not function as a bar to bringing suit. (23)

  2. HISTORY

    1. Laches Background and Definition

      The Supreme Court of Alabama described laches as "a creature of courts of equity, founded upon common sense and natural justice." (24) Laches is meant to address the legal concern that a plaintiff's cause of action should eventually expire for absence of timeliness. (25) The theory behind the application of laches in patent infringement cases is that those who are granted a lawful, limited monopoly under the patent system are then obligated to enforce their rights in a judicious fashion. (26)

      A defendant invokes a laches defense by showing the plaintiff unreasonably delayed bringing suit, thereby causing material prejudice to the defendant. (27) In patent law, the "laches clock" starts running at the time the patentee knew or reasonably could have known of the defendant's potential infringement. (28) The clearest example of unreasonable delay arises when a patentee threatens immediate suit for patent infringement, followed by a period of inaction. (29) Such inaction implies that the accused infringer is safe to continue without fear of suit because the patentee appears to agree that there was no infringement, or decided asserting his or her rights would be unsuccessful. (30)

      A court generally looks to all of the "particular facts and circumstances" in a laches defense case, and balances the equities between the parties. (31) Courts have not allowed the laches defense if the delay resulted from certain situations, including: the patentee was unaware of the defendant's infringement; the patentee's ongoing "litigation on the same patent against other infringers"; the patentee's desire to avoid litigation by settling the claims amicably; or existing wartime conditions. (32) Alternatively, defendants successfully invoked laches where the patentee failed to notify the defendant due to other affairs; the patentee suffered from poor health; the patentee lacked sufficient funds to bring suit; and where the patentee refrained from bringing a premature suit after a considered decision. (33)

      In addition to considering the reason for delay, courts examine the facts and circumstances of each case to determine whether the length of the delay was unreasonable or inexcusable. (34) Nevertheless, a presumption of laches arises when the delay in filing suit exceeds six years--the time limit for damages as specified in the patent statute. (35) The Federal Circuit explained that the six-year delay presumption "provides a yardstick for reaching comparable results in comparable circumstances rather than leaving the matter without any guidelines to a district court's exercise of discretion." (36)

      The second element of a laches defense is met by proving evidentiary or economic prejudice. (37) Evidentiary prejudice occurs when the defendant is unable to present a full and fair defense on the merits due to the loss of critical records, death of a material witness, or fallibility of memories of long past events. (38) This type of evidentiary problem prejudices the defendant by undercutting the court's ability to decide the facts appropriately. (39)

      Alternatively, economic prejudice occurs when the defendant would suffer a monetary loss or incur damages that likely would have been avoided had the plaintiff filed the suit earlier. (40) Economic prejudice requires more than mere damages a court may award after a finding for the plaintiff. (41) Instead, courts look to the alleged infringer's change in economic position during the period of delay. (42) Further, the loss of investments or damages must have occurred because of the delay and not simply because the alleged infringer attempted to "capitalize on a market opportunity." (43)

      The Federal Circuit in A.C. Aukerman Co. emphasized that establishing undue delay and prejudice does not require recognition of laches in every case. (44) The court clearly reiterated: "[l]aches is not established by undue delay and prejudice"; undue delay and prejudice "merely lay the foundation for the trial court's exercise of discretion." (45) The court concluded by stressing that the application of laches might be denied when some facts would make it unfair to recognize the defense. (46) For instance, the doctrine of "unclean hands" may bar the alleged infringer's successful application of laches. (47)

      The flexible nature of the applicability of laches likely supports the defense's popularity with courts today. (48) To be sure, it is appealing to have a mode of decision making that allows for an equitable result in light of case-specific facts. (49) Nevertheless, laches provides structure and guidance to judges by focusing attention on properly resolving cases where plaintiffs abuse the court system by causing material prejudice to defendants through undue delay. (50) The dissent in Petrella acknowledged that the legal system contains principles that help courts avoid any unfairness that may arise when rules are applied strictly to every case. (51)

      Because laches is an unpredictable principle, with outcomes dependent on facts and circumstances, potential litigants may not be able to predict future behavior. (52) Advocating that courts should provide and apply general rules and guidance instead of evaluating the totality of the circumstances or employing a balancing approach, the late Justice Scalia urged courts to avoid doctrines that leave too much discretion in the hands of the judiciary wherever possible. (53) In certain areas of copyright jurisprudence, the Supreme Court has rejected doctrinal formulations, seeking to minimize judicial discretion. (54) Furthermore, legislators are likely to favor a rule-like statute of limitations to maintain homogeneous case outcomes, restrict adjudicators who do not maintain the same values as lawmakers, and limit judges' decisions that cannot be easily overturned. (55)

    2. Copyright and Patent Statutes: Focusing on Statutory Limitations

      1. Patent Statute

        The U.S. Constitution grants Congress the power "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (56) Congress exercises this power through the...

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