Equitable Defenses in Patent Law
48 Pages Posted: 21 Oct 2020 Last revised: 3 Nov 2020
Date Written: September 3, 2020
In Merck & Co. Inc. v. Gilead Sciences Inc., a jury found Gilead liable for infringement of Merck’s patents directed to treatment for Hepatitis C and awarded Merck $200 million in damages. Three months later, however, the trial judge found that the patents were unenforceable under the equitable defense of unclean hands and rendered the damages verdict moot. In patent law, “unenforceability” carries immense force, limiting and in some cases barring all remedies for infringement of a valid patent. Five doctrines together make up the defense of “unenforceability” as it was incorporated into the Patent Act in 1952: laches, estoppel, unclean hands, patent misuse, and, according to some, inequitable conduct. Yet in the 70 years since incorporation of equitable defenses into the patent statute, the Supreme Court has not fully illuminated the reach of these equitable defenses. The Court denied certiorari in Merck & Co. Inc. v. Gilead Sciences Inc. in 2019 and sidestepped many salient issues on the equitable defense of laches in its opinion in SCA Hygiene in 2017. A significant question remains unanswered: In what contexts are equitable defenses available to bar damages at law? Several interpretive methods have been proposed for determining the reach of such generally worded statutes: Under a dynamic statutory interpretation like that proposed by Professor William Eskridge, courts would be permitted to develop such statutes in accordance with what the law ought to be. Under a traditional faithful agent approach, in contrast, courts would try to determine the scope as set forth by the legislature, piecing together context and history to frame limited words. The scope of equitable defenses in patent law is an ideal proving ground between these methods, having both historical background for use in traditional approaches and high-stakes social questions that factor into a dynamic approach—what conduct do we allow patentees to engage in before we cut off remedies for infringement on innovations that support our health and modern lifestyle?
Setting the stage of the statutory interpretive battle, this article examines the historical and statutory bases of equitable limits on patent law, with a particular focus on the substantive equitable defenses of unclean hands and patent misuse. It contrasts the history of equitable defenses such as estoppel, which crossed fully into courts of law well before the merger of law and equity and the Patent Act, with equitable defenses such as laches, unclean hands, and misuse. It also explores inequitable conduct. The article walks through these defenses’ pre-codification roots and potential statutory interpretations and presents normative and constitutional considerations under the competing interpretive approaches. It also presents a surprising approach to inequitable conduct. This article is the first to provide a comprehensive framework for the analysis of equitable defenses in patent law.
Keywords: unclean hands, equitable defenses, law and equity, patent, patents, law, misuse, inequitable conduct, estoppel, laches, interpretive, dynamic, faithful agent
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