Federal Circuit decision could give patent owners more leverage

Can patent owners who waited more than six years to sue a competitor still obtain damages for the past six years? 

In patent law, if you knew of a patent infringement but waited more than six years to bring a lawsuit against the accused infringer, a theory called laches could apply against your claim and bar you from obtaining any damages for an activity prior to the date you filed your suit. This means that a patent owner could lose out on significant damages for the past six-plus years for infringement by a competitor.

However, the Supreme Court recently determined that under copyright law, a copyright owner may seek damages for the statutory three years prior to filing of a lawsuit even if that owner waited many years before asserting a claim against the accused infringer. Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). In Petrella, the copyright owner waited 18 years before asserting a claim, but could seek damages for the preceding three years. This is because a statute entitled copyright owners to three years of damages. The Supreme Court reasoned that each act of copyright infringement was its own separate claim. Thus, the Supreme Court determined that the 18-year delay did not trigger laches, or preclude that three-year damages statue from applying.

Similarly, the patent law includes a six-year damages period. 35 U.S.C. § 286. Because the patent and copyright statutes are similar in this context, it begged the question of whether the Supreme Court’s Petrella decision also applied to patent law.

The Court of Appeals for the Federal Circuit did not take long to place this question before it. The Federal Circuit agreed to review en banc whether it should overrule the current law and allow patent owners to claim patent infringement damages for the past six years – even if that owner waited more than six years to bring suit.

If the Federal Circuit adopts the Supreme Court’s decision in Petrilla, then patent owners would be able to claim damages for the past six years of infringement prior to the date of the lawsuit – even if the owner knew about infringing activity for more than six years. Of course, this would mean that patent owners would have more teeth in bringing an action against accused infringers.

The Supreme Court, however, did identify that there may be circumstances where the damages could nevertheless be curtailed depending on the facts. For example, a defense such as equitable estoppel (which also applies in patent cases) could still apply and potentially bar damages during that statutory period. Also, the Supreme Court determined that the laches defense itself could limit certain equitable relief during the statutory period if it would prejudice the accused infringer.

We will continue to watch this case closely and provide you with updates as they come.