Hunton Retail Law Resource

The en banc US Court of Appeals for the Federal Circuit issued its opinion today in SCA Hygiene Products Aktiebolag, et al. v. First Quality Baby Products, LLC, et al., Case No. 2013-1564. In a 6-5 decision, the court reaffirmed that laches is a defense to a suit for damages for patent infringement. In reaching this decision, the Federal Circuit distinguished Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014), in which the US Supreme Court held that laches is not a defense to a suit for damages under the Copyright Act.

Background

SCA Hygiene Products owns U.S. Patent No. 6,375,646 (the ‘646 patent), which relates to certain adult incontinence products. In October 2003, SCA Hygiene sent a letter to First Quality Baby Products suggesting that First Quality’s products infringe the ‘646 patent. First Quality responded in writing a month later and advised SCA Hygiene that its research indicated that there was a prior patent, U.S. Patent No. 5,415,649, that invalidated the ‘646 patent. The two companies corresponded for several more months about other products and patents, but had no further discussion regarding the ‘646 patent.

In July 2004, SCA Hygiene filed an ex parte reexamination request for the ‘646 patent. It did not advise First Quality of this action. In March 2007, the PTO confirmed the patentability of all 28 of the original claims of the ‘646 patent as well as several new claims.

Meanwhile, starting in 2006, First Quality began expanding its line of adult incontinence products. Its expansion continued for several years, with an investment of more than $10 million.

In August 2010, SCA Hygiene filed an infringement suit against First Quality. SCA Hygiene claimed that during the three-year period –– from the conclusion of the reexamination to the filing of suit –– it was implementing new business management structures, evaluating outside counsel and examining potentially infringing products on the market.

A total of six years and nine months passed from the time SCA Hygiene first notified First Quality of a potential infringement to the time SCA Hygiene filed suit. First Quality filed a motion for summary judgment on several grounds, including laches. The district court granted the laches motion, and the Federal Circuit affirmed. The Federal Circuit then granted SCA Hygiene’s petition for rehearing en banc to determine whether, and to what extent, laches remains a defense in a patent infringement action in light of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014).

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