November - December 2001

Supreme Court Reviews Seismic Shift in Patent Protection Under The Festo Decision

by Christopher A. Monsey

IEEE-USA recently filed a court document with the U.S. Supreme Court to encourage restoration of the protection of nearly 1.2 million unexpired U.S. patents that were adversely affected by a recent decision made by the U.S. Federal Circuit Court of Appeals. The decision, Festo Corporation v. Shoketsu Kinzoku Kogyo Kabushiki Co.¹, imposed a rule — effective retroactively — that revises the somewhat obscure doctrine of "prosecution history estoppel."

Designed to improve the clarity of a patent's scope, the Festo decision effectively gives competitors greater ability to copy many patented inventions while reducing patent owners' ability to prove infringement.

A Quick-Study Patent Primer

A patent's claims determine its scope. Before the Festo decision, patent owners could choose one of two approaches to demonstrate that an activity or product infringed a claim: "literal infringement" and "infringement under the doctrine of equivalents."

To find liability under a literal infringement argument, every element of the patented invention's claims must be found in the potentially infringing process or device in question. A competitor can avoid liability by modifying the process or device so that it doesn't have the exact elements disclosed in the patent's claims. Those differences between the claims and the process or device in question negate a literal infringement finding.

The Supreme Court recognized that patent owners didn't receive adequate protection against competitors who made minor design changes to patents, thereby avoiding liability under the literal infringement doctrine². Consequently, the Court established the principle of infringement under the doctrine of equivalents. This doctrine allows a court to find infringement if the elements of the device in question are "insubstantially" different from those disclosed in the patent. For example, Festo Corporation's patent claimed a device with a pair of sealing rings, while the defendant's device used only one sealing ring. The District Court found this difference to be insubstantial, ruling the defendant liable for patent infringement under the doctrine of equivalents.

The doctrine of equivalents created a problem with interpretation of issued patents. The scope of protection for a patent's claims extend to both their literal elements as well as their unstated equivalents. The issue of equivalents are proven during an infringement trial, which creates uncertainty as to how far a patent claim extends. Property law has historically attempted to ensure that ownership rights are clearly defined in advance of litigation in order to ensure predictable results with respect to ownership rights. However, a patent owners' need to prevent competitors from designing "around" the literal elements of their patent created a situation where members of the public didn't know precisely what would subject them to liability.

Were Matters Made Worse?

In response to the uncertainty created by the doctrine of equivalents, courts attempted to limit the scope of equivalents through a doctrine called prosecution history estoppel. Prosecution history estoppel is triggered by amendments, arguments and representations that a patent applicant makes to obtain a patent. Any statement made for a reason related to patentability that limits the scope of the patent is binding; the applicant is forbidden — or estopped — from attempting to reclaim a lost claim or disclaimed scope during litigation in the future. 

For example, Festo Corporation limited the scope of their patent application by amending the application so that one of the claim elements had to be made of a magnetizable material. The Federal Circuit Court ruled correctly that since Festo had limited the scope of its patent by requiring a magnetizable material in its patent claims, it could not later recover the lost claim scope during litigation by arguing that use of non-magnetizable material infringed its patent.

The Federal Circuit in Festo went one step further in an attempt to create a bright line standard for determining when to use the doctrine of prosecution history estoppel. The Court stated that all amendments that narrow the scope of the patent claims, or change the claims during the patent application process to comply with one of the statutory requirements for patenting, trigger the prosecution history estoppel bar. This estoppel applies to all amendments, even if the applicant did not state a reason for the amendment, or submitted an amendment that was not required by the examiner or made in response to a rejection of the patent application.

Complete Bar of Equivalents

More significantly, under Festo, if prosecution history estoppel applies from an amendment to a specific element in a claim, no range of equivalents is available for the amended claim element under a doctrine of equivalents infringement analysis. In other words, the Federal Circuit adopted a complete bar test: if an amendment has created prosecution history estoppel, the patent owner is completely barred from asserting a claim of infringement with respect to the amended elements under the doctrine of equivalents. In determining infringement, courts are required by the Festo decision to ascertain whether the amendment created prosecution history estoppel. If the court finds that it did, the court cannot find infringement under the doctrine of equivalents, leaving patent owners with one option for claiming infringement in a lawsuit: literal infringement. And we've already learned how well this option protects patent owners.

The practical difficulty with the Festo decision is that a vast number of patent applications are amended during prosecution for convenience in expediting patent prosecution or to avoid a costly appeal rather than a real concern about patentability. Most of the amendments previously made would likely trigger the complete bar of equivalents rule.

After-the-Fact Rules Change Affects Current Patent Owners

All of the pre-Festo application amendments were made based on the assumption that the doctrine of equivalents would be available for equivalents that were not specifically disclaimed by amendments. Now, the rules for how much protection is provided for a set of claims have changed, well after current patent owners made critical decisions between amendments and appeals. As a result of this sweeping change being applied retroactively, current patent owners are now faced with an enormous loss of patent scope — and therefore protection — provided by their patents. 

The Festo decision also has a tremendous impact on decisions related to current and future patent applications that the U.S. Patent and Trademark Office (USPTO) is currently reviewing. The Federal Circuit's scaling back of patent owners' ability to obtain doctrine of equivalent coverage changes the foundations of patent law, and it has resulted in significant disagreement about how to protect against loss of claim protections as a result of amendments or responses to the USPTO. Patent agents, attorneys or inventors will be much less willing to agree to borderline or questionable rejections of patent applications by the USPTO, with the impact of the absolute bar being a consequence of an amendment.

IEEE-USA's Views on the Matter

IEEE-USA believes that the virtual elimination of the doctrine of equivalents will seriously impair the patent system's protective value. It will also compromise inventors' and patent owners' ability to receive adequate returns on their investments. In this light, IEEE-USA's request to the Supreme Court calls for adopting a foreseeable bar standard by which the doctrine of equivalents should apply.

IEEE-USA is also urging Congress to change patent law to overturn the Festo decision and reinstate a version of the doctrine of equivalents. IEEE-USA believes other tests could be developed that would preserve the doctrine of equivalents as a tool used to enforce the rights of patentees. Finally, IEEE-USA believes that when ambiguity exists between the scope of the patent and the notice to potential infringers, the patent owner should always be favored.

References

1. Festo Corporation v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d 558 (Fed. Cir. 2000).

2. Warner-Jenkinson Co. v. Hilton-Davis Chemical Co., 520 U.S. 17 (1997).