807 F.3d 1311 (Fed. Cir. 2015), 2013-1564, SCA Hygiene Products Aktiebolag v. First Quality Baby Prods., LLC
|Citation:||807 F.3d 1311, 116 U.S.P.Q.2d 1541|
|Opinion Judge:||Prost, Chief Judge.|
|Party Name:||SCA HYGIENE PRODUCTS AKTIEBOLAG, SCA PERSONAL CARE, INC., Plaintiffs-Appellants v. FIRST QUALITY BABY PRODUCTS, LLC, FIRST QUALITY HYGIENIC, INC., FIRST QUALITY PRODUCTS, INC. AND FIRST QUALITY RETAIL SERVICES, LLC, Defendants-Appellees|
|Attorney:||MARTIN J. BLACK, Dechert LLP, Philadelphia, PA, argued for plaintiffs-appellants. Also represented by TERILYNN A. EVANS, KEVIN MARK FLANNERY, SHARON K. GAGLIARDI. KENNETH GEORGE, Amster Rothstein & Ebenstein LLP, New York, NY, argued for defendants-appellees. Also represented by MARK BERKOWITZ, S...|
|Judge Panel:||Before PROST, Chief Judge, NEWMAN, LOURIE, DYK, MOORE, O'MALLEY, REYNA, WALLACH, TARANTO, CHEN, and HUGHES, Circuit Judges.[*] OPINION filed by Chief Judge PROST in which Circuit Judges NEWMAN, LOURIE, DYK, O'MALLEY, and REYNA join. Opinion concurring-in-part, dissenting-in-part filed by Circuit ...|
|Case Date:||September 18, 2015|
|Court:||United States Courts of Appeals, Court of Appeals for the Federal Circuit|
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Appeal from the United States District Court for the Western District of Kentucky in No. 10-CV-0122, Chief Judge Joseph H. McKinley, Jr.
[116 U.S.P.Q.2d 1543]
We convene en banc to resolve whether, in light of the Supreme Court's recent decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014), laches remains a defense to legal relief in a patent infringement suit. We conclude that Congress codified a laches defense in 35 U.S.C. § 282(b)(1) that may bar legal remedies. Accordingly, we have no judicial authority to question the law's propriety. Whether Congress considered the quandary in Petrella is irrelevant--in the 1952 Patent Act, Congress settled that laches and a time limitation on the recovery of damages can coexist in patent law. We must respect that statutory law.
Nevertheless, we must adjust the laches defense in one respect to harmonize it with Petrella and other Supreme Court precedent. We emphasize that equitable principles apply whenever an accused infringer seeks to use laches to bar ongoing relief. Specifically, as to injunctions, considerations of laches fit naturally within the eBay framework. In contrast, Menendez v. Holt, 128 U.S. 514, 9 S.Ct. 143, 32 L.Ed. 526, 1889 Dec. Comm'r Pat. 344 (1888), and Petrella counsel that laches will only foreclose an ongoing royalty in extraordinary circumstances.
The present dispute arose out of litigation concerning adult incontinence products. SCA alleges that First Quality, a competitor in the adult incontinence products market, infringes U.S. Patent No. 6,375,646 ('646 patent). SCA first contended that First Quality's Prevail® All Nites[TM] product infringes the '646 patent in a letter sent to First Quality on October 31, 2003. The correspondence explained:
It has come to our attention that you are making, selling and/or offering for sale in the United States absorbent pants-type diapers under the name Prevail® All Nites[TM]. We believe that these products infringe claims of [the '646 patent].
We suggest that you study [the '646 patent]. If you are of the opinion that the First Quality Prevail® All Nites[TM] absorbent pants-type diaper does not infringe any of the claims of this patent, please provide us with an explanation as to why you believe the products do not infringe. If you believe that the products do infringe, please provide us with your assurance that you will immediately stop making and selling such products.
First Quality responded on November 21, 2003 and claimed the patent was invalid:
As you suggested, we studied [the '646 patent]. . . . In addition, we made a cursory review of prior patents and located U.S. Patent No. 5,415,649, (" the '649 Patent" ), which was filed in the United States on October 29, 1991 and is therefore prior to your client's '646 Patent. A review of Figs. 3 and 4 of the prior '649 Patent reveals the same [116 U.S.P.Q.2d 1544] diaper construction claimed by the '646 Patent. Thus, the prior '649 Patent invalidates your client's '646 Patent. As you know, an invalid patent cannot be infringed.
J.A. 547. SCA and First Quality ceased communications regarding the '646 patent after First Quality's response. However, on July 7, 2004, SCA requested reexamination of the '646 patent in light of the '649 patent. SCA did not notify First Quality of the reexamination because, in SCA's view, U.S. Patent and Trademark Office (" PTO" ) reexaminations are public and First Quality could follow the proceedings itself. Yet, from First Quality's point of view, SCA dropped its infringement allegations
against First Quality after First Quality argued the patent was invalid in the November 21st letter.
The PTO instituted reexamination on the '646 patent and, on March 27, 2007, confirmed the patentability of all twenty-eight original claims and issued several other claims SCA added during reexamination. Meanwhile, First Quality invested heavily in its protective underwear business. In 2006, First Quality expanded its line of adult incontinence products. In 2008, First Quality acquired Tyco Healthcare Retail Group LP, which had several lines of competing products, and in 2009 First Quality spent another $10 million to purchase three more lines of protective underwear products. SCA was aware of First Quality's activities, but never...
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