Argument analysis: Justices seem untroubled by concerns about patent plaintiffs “lying in wait” for innocent defendants
on Nov 2, 2016 at 9:05 am
The principal question in yesterday’s argument in SCA Hygiene Products v. First Quality Baby Products is whether the court’s decision three terms ago in Petrella v. Metro-Goldwyn-Mayer should be extended from copyright law to patent law. In Petrella, Justice Ruth Bader Ginsburg wrote for a majority of the court, holding that because Congress wrote a specific statute of limitations for copyright cases, courts should not use vague equitable doctrines like laches to bar suits as untimely even if brought before the deadline set in the statute. The U.S. Court of Appeals for the Federal Circuit in this case declined to apply that same rule to the Patent Act, prompting attention from the justices.
I suggested in my preview that the most important question for the argument would be whether First Quality Baby Products, represented at the argument by Seth Waxman, could persuade any of the justices in the majority in Petrella that patent law differs in any relevant way from copyright law. If the argument is any indication, the answer is no, which bodes well for SCA Hygiene, represented at the argument by Martin Black.
Giving a little attention to the personalities clarifies the point. Justice Stephen Breyer dominated the argument; my rough guess is that he talked more than all the remaining justices put together. For much of the argument, he seemed to be trying to persuade himself that he had a colorable basis for distinguishing the case from Petrella. Talking with his typical candor, Breyer said, “I dissented in Petrella, and I thought to myself, I lost. Okay? I lost that case. How right I was, but nonetheless. So I don’t want … in this case just to repeat [what I said in Petrella], so I’ll take Petrella as the law, at least I’m tentatively doing that.”
Having said that, he tried mightily to identify some cogent bases for distinguishing Petrella. Two are salient. First, he suggested that cases under the precursor to the Patent Act might have established a sufficiently regular use of laches to justify concluding that Congress incorporated laches into the Patent Act adopted in 1952. Second, and plainly of much greater interest to him, he pressed the idea that the risk that plaintiffs might “lie in wait” to entrap defendants is much more serious in the patent context than it is in the copyright context. Referring repeatedly to a “friend of the court” brief filed by Dell and a group of technology companies, he explained that “it is 40 times more difficult for a company that has relied on [patentholders] not suing to change the hundreds of billions of dollars in investment” than it would be for a similarly situated copyright holder. In his view, the brief established that the technology defendants “spent close to billions knowing there was somebody out there who might sue, but [reasonably thinking that] he wasn’t going to.” In Breyer’s view, that problem identifies “a big difference” between this case and Petrella.
The problem for Waxman and First Quality is that Breyer’s apparent ability to justify his own departure from Petrella does not seem to extend to any of the justices from the Petrella majority. Rather, apparently defending her opinion in Petrella, Ginsburg intervened on several occasions to support the idea that there is nothing inherently improper about a plaintiff “lying in wait.” As she put it most pointedly, “Petrella explained, in the context of that case, that it wasn’t unscrupulous for this woman to wait to see whether there was anything in it for her. Why should she spend her money on a lawsuit when there wasn’t anything in the bank?” Speaking more broadly at the end of the argument, she commented: “Frankly, I don’t see a big difference between the way the patent statute of limitations works and the way the copyright statute did in Petrella.”
Justice Elena Kagan also seemed to view Petrella as controlling. Acknowledging the strength of Waxman’s historical argument, she nevertheless wondered – tracking the reasoning of Petrella – whether history standing alone should be enough without some evidence in the language of the statute. As she put it, in discussion with Waxman, “wouldn’t we expect that if Congress wanted to make an exception for patent law, or wanted to continue an exception that existed as a result of the preexisting practice, that Congress actually would have said so?”
Indeed, it even seemed hard for Waxman to win over Chief Justice John Roberts, one of the dissenters in Petrella. In one notable interchange, Waxman emphasized “a literal mountain of cases” that applied laches in the patent context before 1952. Roberts interrupted to elicit Waxman’s concession that the “mountain of cases were in equity, right” (which would make them less relevant as precedents for the modern statute). When Waxman replied that some of the cases were in law (the relevant area of inquiry), Roberts quipped: “But that’s where your mountain becomes a mole hill, right? I mean, the cases in which laches was applied at law were insignificant, certainly not enough to support a consensus that Congress could be understood to have adopted.”
In the end, given how few of the justices spoke at length yesterday, it probably would be rash to conclude much from the argument. It is fair to say, though, that the defendants walked away from the argument with a tough row to hoe if they expect to preserve the Federal Circuit’s refusal to extend Petrella to the Patent Act. Five of the six justices in the Petrella majority remain on the bench (all but the late Justice Antonin Scalia), and if all of them view the case as controlled by Petrella, then laches in patent cases will become, at least in suits for damages, nothing more than the historical relic it is in the post-Petrella world of copyright.