BASICS: Laches: “To successfully invoke laches, a defendant must prove that the plaintiff delayed filing suit an unreasonable and inexcusable length of time after the plaintiff knew or reasonably should have known of its claim against the defendant and that the delay resulted in material prejudice [either economic or evidentiary] to the defendant. Once those factual premises are established, the court weighs the equities in order to assess whether laches should apply to bar those damages that accrued prior to suit…. Economic prejudice arises when a defendant suffers the loss of monetary investments or incurs damages [but not merely increased damages for patent infringement] that likely would have been prevented by earlier suit. A nexus must be shown between the patentee’s delay in filing suit and the expenditures; the alleged infringer must change his position ‘because of and as a result of the delay.’ … (‘… the infringer must prove that the change in economic position would not have occurred had the patentee sued earlier.’).” State Contracting (Fed. Cir. 10/07/03) (citing Aukerman (Fed. Cir. 05/19/92) (en banc) (rev’g Summ. J. of laches and equitable estoppel)). When asserting laches, consider also asserting failure to mitigate damages.
Laches Cannot Bar Damages For Infringement Occurring Within Six Years Before Suit Filed Even If Infringement Began Earlier: “Laches cannot be interposed as a defense against damages where the infringement occurred within the [six-year pre-suit] period prescribed by § 286,” even if infringement began before that six-year period. SCA Hygiene III (U.S. 03/21/2017) (7-1) (relying on Petrella, Sec. 286, common-law rule, and “presumption that Congress legislates against the background of general common-law principles”), vacating, SCA Hygiene II (Fed. Cir. 09/18/15) (en banc) (6-5) (Patent Act “codified a laches defense” and laches “may bar legal remedies” despite Sec. 286’s six-year limitation on pre-suit patent damages) and SCA Hygiene (Fed. Cir. 09/17/14) (aff’g Summ. J. of laches; suit filed 6 yrs., 9 mos. after first written charge of infringement, patent owner unreasonably delayed filing suit post reexamination, and defendant would not have increased its capital expenditures had suit been filed earlier).
SCA Hygiene Follows Petrella Precluding Laches As Defense to Pre-Suit Damages Within Six-Year Window Of Sec. 286: S. Ct. ruled that Copyright Statute’s 3-year statute of limitations (which runs separately from each violation) bars reliance on laches as bar to legal relief or, absent extraordinary circumstances, equitable relief, during that 3-year window. Petrella (U.S. 05/19/2014) (“this Court has cautioned against invoking laches to bar legal relief”; “the dissent has come up with no case in which this Court has approved the application of laches to bar a claim for damages brought within the time allowed by a federal statute of limitations.”). S. Ct. then extended the legal remedies part of this ruling to patent cases. SCA Hygiene III (U.S. 03/21/2017) (7-1) (“By the logic of Petrella, we infer that this provision [35 U.S.C. § 286] represents a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.”), vacating, SCA Hygiene II (Fed. Cir. 09/18/15) (en banc) (6-5).
Laches Now May Bar Ongoing Injunction, But Subject To eBay Equitable Considerations: Many facts relevant to laches are relevant to eBay’s balance of the hardships and irreparable injury factors. SCA Hygiene II (Fed. Cir. 09/18/15) (en banc) (unanimous on this issue) (“We … reject Aukerman’s bright line rule regarding the interplay between laches and injunctive relief”) [vacated on other grounds, SCA Hygiene III (U.S. 03/21/2017) (7-1)], modifyingAukerman (Fed. Cir. 05/19/92) (en banc) (“Laches bars relief on a patentee’s claim only with respect to damages accrued prior to suit.”) “Whereas estoppel bars the entire suit, laches does not. [L]aches in combination with the eBay factors may in some circumstances counsel against an injunction.” Id. This part of Fed. Cir. expressly not address by S. Ct. SCA Hygiene III (U.S. 03/21/2017).
Laches Now May Bar Ongoing Royalty (But Unlikely): “Laches will only foreclose an ongoing royalty in extraordinary circumstances.” SCA Hygiene II (Fed. Cir. 09/18/15) (en banc) (unanimous on this issue) [vacated on other grounds, SCA Hygiene III (U.S. 03/21/2017) (7-1)], modifyingAukerman (Fed. Cir. 05/19/92) (en banc) (“Laches bars relief on a patentee’s claim only with respect to damages accrued prior to suit.”) “Delay in exercising a patent right, without more, does not mean that the patentee has abandoned its right to its invention. Rather, the patentee has abandoned its right to collect damages during the delay. Equitable estoppel, on the other hand, is different—the patentee has granted a license to use the invention that extends throughout the life of the patent.” Id., granted (U.S. 05/02/2016).
Delaying More Than Six Years Creates Presumption Of Undue Delay: A delay greater than six years gives rise to “a presumption that the delay is unreasonable, inexcusable, and prejudicial,” shifting the burden of production to the patent owner, and an intervening reexamination does not toll that six-year period. SCA Hygiene (Fed. Cir. 09/17/14), vacated on other grounds, SCA Hygiene III (U.S. 03/21/2017) (7-1).
Knowledge Of Infringement (For Laches Purposes) Is Sufficient When Meets Rule 11 Standard: The knowledge required has been compared to the Rule 11 standard for asserting infringement. Ultimax (Fed. Cir. 12/03/09).
Alleged Economic Prejudice Must Be Material To Infringement Allegation: Alleged economic prejudice must be material; if, for example, the allegation of economic prejudice relates only to indirect infringement, then there is no support for upholding a laches defense to alleged direct infringement. Vita-Mix (Fed. Cir. 09/16/09).
Court Has Discretion Even If Elements Of Laches Met: Even if elements met laches court must weigh equities and exercise its discretion. Carnegie Mellon (Fed. Cir. 08/04/15) (aff’g rejection of laches defense despite threshold requirements being met by six-year delay and some evidentiary (but no economic) prejudice, because of the defendant’s “blatant and prolonged copying” of the patented invention, even though copying did not cause the delay.)
Relying On Clearance Opinion Factors Against Laches: “Shure knew about the patents in suit long before suit was filed, and the court permissibly found that Shure had relied on noninfringement opinions of counsel, such that it would not have acted differently if it had been sued earlier.” Hearing Components (Fed. Cir. 04/01/10).
Laches Applies To Suits To Correct Inventorship: Lismont (Fed. Cir. 02/16/16) (aff’g Summ. J. of laches due to delay more than six years after patent issued with knowledge of challenged claim of inventorship).