Patents are notoriously full of legalese. Just fully understanding what each claim covers (and the sub-claims under each one), it helps to be an expert in the field that the patent is in. I can do a decent job decoding patents on a lot of circuits, but diaper construction is out of my scope. I can't argue the points of which patent covers what in this instance with any confidence.
What I find interesting is that (from the court documents) SCA first sent the cease-and-desist letter regarding what they saw as the '646 patent infringement On October 31, 2003 and FQ responded on November 21, 2003, after which communication ceased. It wasn't until July of 2004 that SCA asked for the review of the '646 patent, and I find their view that the PTO reexamination being public as reason to not communicate the matter to FQ as ridiculous, though it will be up to the courts to truly decide. I can accept FQ's attitude that the matter with SCA was settled--as someone who works in an industry where patents (and protecting them) are important, we are instructed to NOT do patent searches when creating a new product. If we were to see a patent on something and then use that in our design, we are willfully violating that patent. However, if we create the same thing that is already covered by a patent (and can prove we created it without knowledge of the patent), things are much easier. I see no reason why FQ would actively watch to see if a patent they consider invalid (and the patent holder dropped the communication regarding) is being re-examined and the end results of said re-examination.
Given these facts together with the three year delay in filing the complaint, I can see the argument FQ makes regarding laches. The argument I see against laches reflects judgments made on copyrighted material. Considering the complaint is regarding patent infringement, I consider the argument weak.
Of course, I could be completely wrong in the way I think, considering I am not a patent attorney nor a specialist in patent law in any fashion.