Supreme Court gets rid of delay defense in patent cases

(Reuters) - A U.S. Supreme Court ruling on Tuesday in a lawsuit over adult diapers will make it more difficult for companies accused of patent infringement to shoot down lawsuits because the plaintiffs waited too long to bring them.

In a 7-1 decision, the justices said SCA Hygiene Products AB, based in Stockholm, did not unreasonably delay in filing a lawsuit accusing First Quality Baby Products of copying its patented adult diapers.

The ruling is a blow to technology, pharmaceutical and other companies frequently targeted in patent lawsuits, including many brought by so-called “non-practicing entities” (NPEs) which buy and assert patents but do not make their own products.

In a jointly filed brief supporting Great Neck, New York-based First Quality’s position, Google Inc, Samsung Electronics Co Ltd and more than a dozen other companies said NPEs often delay bringing a claim until a patents become more valuable through the defendants’ labors. The so-called laches defense allowed judges to dismiss cases in which the plaintiff was determined to have strategically delayed their claims.

But Justice Samuel Alito said in the majority opinion on Tuesday that the motives behind the delay are irrelevant as long as the patent owner’s lawsuit was filed within the six-year time limit from the date when its patent is first infringed.

“When Congress enacts a statute of limitations, it speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief,” Alito wrote.

Justice Stephen Breyer wrote in a dissenting opinion that he believed Congress intended to allow the laches defense when it created the modern-day patent system in the 1950s.

The ruling reverses a September 2015 decision by the U.S. Court of Appeals for the Federal Circuit.

Michael Risch, a law professor at Villanova University School of Law, said the ruling was not unexpected, based on a similar 2014 decision banning the defense in copyright cases.

Ashok Ramani of Keker Van Nest & Peters, a patent lawyer not involved in the case, said the ruling would have had more impact on NPEs if it had come out five years ago. The Supreme Court has already clamped down on the NPE business model in recent years through prior rulings that have limited both damages in patent cases and the types of ideas that can be patented, he said.

The case is SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 15-927, at the U.S. Supreme Court.

Reporting by Jan Wolfe; Editing by Anthony Lin and Jonathan Oatis