Laches, Limitations and Infringement

Patents Tags: infringement, laches

Laches (lach-iz) “is the legal doctrine that an unreasonable delay in seeking a remedy for a legal right or claim will prevent it from being enforced or allowed if the delay has prejudiced the opposing party” [1]. Delaying an attempt at resolution puts the one side at a disadvantage and might injudiciously manufacture a greater reward for the claimant. Laches deems the issuing party negligent and therefore not eligible for full amends. For example, for a case in which one parent owes another child support, if the potential recipient waits a decade to press for owed money and claims that 10 years’ worth of interest is also owed, then the court might not award the interest amount under the laches rule: by waiting 10 years, the claimant caused the accrual of additional owed money in interest. The defendant would owe less if the parent seeking child support had brought the problem to the courts sooner. In other cases, a delay in seeking resolution could mean lost witnesses, obscured accounts of events, and weakened testimonies. The potential payee might no longer have the sought-after funds or assets, which puts them in a very difficult position. Laches attempts to ensure that both sides have an equitable opportunity to prepare and present their case and either receive the deserved restitution and/or remain protected from excessive repayment amounts.

However, laches is no longer available as a defensive for patents or copyright infringement. Patent law can get complicated, but at the base it seeks to protect the rights of the inventors and assignees and ensure equal opportunities for monetization and further innovation. To build solid and profitable portfolios, companies work to secure their freedom to operate and avoid (and block others’) patent infringement. Because time frames in the patent world are highly critical, you’d think that any budding infringement issue must be nipped before it becomes an overgrown thick of weeds. While this may be true and a prudent course of action for many reasons, you can often reduce your damage recovery for patent infringement.

One of those critical time frames is the statute of limitations for seeking damages due to patent infringement. Time limitation on damages, 35 U.S. Code § 286, states: “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” [2].

Now, in the courtroom, how do laches and the time conditions interact? If you wait too long to bring an infringement claim forward, can the opposing side invoke laches? If it is beyond the statute of limitations, do you forgo “recovery”, anyway? If the infringement accusation is brought forward in, say five years, instead of 18 months, can the defendant use laches?

This issue was addressed in March 2017 (SCA Hygiene Products Aktiebolag et al. v. First Quality Baby Products, LLC, et al.) when the Supreme Court found that the defense of laches did not apply to infringement claims brought within the six-year statute of limitations. [3] Copyright infringement claims also fall under this rule. Basically, this leaves the laches defense unavailable to infringers. The key phrase in 35 U.S. Code § 286 is, “prior to the filing of the complaint”. As long as the patent remains valid, the patent holder can call out a patent infringer at any time and go back six years from that date for restitution, without the defendant invoking laches.

In 2018, courts continued utilizing the March 2017 decision. One case originated in 2014, with the infringement seed having been planted in 2002. Two manufacturers of poultry chillers, John Bean Corp. and Morris & Assoc., Inc. were disputing patent rights after Bean received a patent on the mechanism and then accused Morris of infringement. Bean did not move the issue to the court system for 12 years, following a re-examination of the patent claims and subsequent issuance of new claims. In defense of the infringement suit, which seemingly took a dozen years to evolve, Morris used the laches defense. The district court accepted that defense, ruling in Morris’ favor. Bean appealed this decision in the Federal Circuit in 2018.

Based on the precedent set in the March 2017 case, the Federal Circuit reversed the district court’s decision. Specifically, the reasons for reversing the decision and discounting the laches defense were: “(because) a reexamined claim cannot be broader than its original, because John Bean could not recover damages for infringement prior to the reexam certificate issuance date, and because any delay in bringing suit could not be attributed to the reexam itself…” [4].

A case involving trademark infringement occurred in the spring of 2018. In Cosmetic Warriors v. Pinkette Clothing, Cosmetic Warriors (CWL) and Pinkette disputed the rights to the term, LUSH. CWL, operating LUSH retail stores since 2002, held a trademark for the term as it applied to cosmetics, perfumes, and hair services. Pinkette also used the LUSH name, but for clothing, obtaining trademark registration for that application in 2010. In 2014, Cosmetic Warriors, now retailers of a clothing line, sought to register LUSH as a trademark for their clothing; the request was rejected because of Pinkette’s existing trademark. In 2015, CWL petitioned the Trademark Trial and Appeal Board to have Pinkette’s trademark cancelled (five years after issuance). In the end, Pinkette raised the laches defense against infringement, showing that CWL unnecessarily waited to bring forth their claim of rights to the LUSH trademark as it related to clothing. The federal district court sided with Pinkette.

Why did laches work for Pinkette? Because trademark law does not contain a statute of limitations provision as patent law does. CWL appealed, but in June 2018, the United States Court of Appeals for the Ninth Circuit upheld the district court’s judgement. “As a result of laches, CWL can neither enforce its trademark rights against Pinkette’s use of the LUSH mark on clothing nor cancel Pinkette’s registration for use of the mark on clothing” [5].

To best protect your intellectual property, it is essential to which strategies and tactics will work for you and which might work against you — and when.

References
[1] https://definitions.uslegal.com/l/laches/
[2] https://www.law.cornell.edu/uscode/text/35/286
[3] http://www.ipwatchdog.com/2017/03/22/supreme-court-says-laches-no-defense-patent-infringement/id=79750/
[4] https://www.finnegan.com/en/insights/blogs/federal-circuit-ip/its-not-too-late-federal-circuit-reverses-equitable-estoppel-and-laches-judgements.html