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The United States Supreme Court recently issued a decision eagerly anticipated by patent owners, Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 122 S. Ct. 1831, 2002 WL 1050479 (2002). This e-Alert analyzes the Festo decision and addresses the impact of Festo on patent prosecution, patent litigation, and patent licensing.

I. The Issue in Festo: the Proper Scope of Patent Claims After Amendment

Festo’s significance stems from its treatment of a topic of great uncertainty for patent owners and their competitors: the effect of prosecution history estoppel on the doctrine of equivalents.¹ Under the doctrine of equivalents, a competitor who makes unimportant and insubstantial changes to a patented invention does not thereby avoid liability for patent infringement. Prosecution history estoppel requires that a patent be interpreted in light of the proceedings at the Patent and Trademark Office (PTO) during the application process, preventing patentees from saying one thing to the PTO to obtain the patent, and another to a court while the patent is litigated. The question that the Supreme Court addressed in Festo lies at the intersection of these two patent law principles: When is the doctrine of equivalents still available if the patent claim was amended during the application process?

The Federal Circuit wrestled for years with this question, causing uncertainty for patent holders, their licensees, and their competitors. The Federal Circuit’s ultimate solution was a “complete bar” to all possible equivalents to any amended claim term. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 234 F.3d 558 (Fed. Cir. 2001) (en banc). The en banc Circuit held in its Festo decision that once a claim limitation was amended during prosecution, no equivalents would be available for that limitation during any future infringement action. The Federal Circuit justified this dramatic departure from established precedent by explaining that the complete bar was necessary to decrease the uncertainty surrounding the application of the doctrine of equivalents. Under the Federal Circuit’s “complete bar,” competitors could read and rely upon the limitations to the scope of the patent claim that applicants had agreed to while amending claim limitations during prosecution. No equivalents would be available for any amended claim limitation under the “complete bar.” The Supreme Court rejected this approach, and instead outlined a new, more discriminating test for determining if the patent holder will be able to prevail on infringement by equivalents.

II. The Holding of Festo

The Supreme Court rejected the Federal Circuit’s “complete bar” to infringement by equivalents once a claim limitation is amended. In place of the complete bar, the Supreme Court outlined a two-step process for determining if prosecution history estoppel bars the application of the doctrine of equivalents after a claim limitation has been amended. The first step is determining whether prosecution history estoppel arises through a narrowing amendment made to comply with a requirement of the Patent Act. The Supreme Court agreed with the Federal Circuit that a narrowing amendment to a claim limitation made to comply with the requirements of the Patent Act may give rise to estoppel, thus limiting the equivalents available to the patentee. The second step of the analysis is determining whether the claim amendment surrendered the equivalent in question. This second step departs from the analysis that the Federal Circuit applied in its en banc decision.

Step I: Was a narrowing amendment made to comply with the Patent Act?
For prosecution history estoppel to arise, two conditions must be satisfied: (1) the amendment was made to comply with a requirement of the Patent Act; and (2) the amendment narrowed the claim. The Supreme Court addressed each of these conditions separately in Festo.

Amendments Made to Comply with the Requirements of the Patent Act: In describing the first step of this analysis, the opinion states that along with amendments to avoid the prior art (sections 102 and 103), amendments made to comply with the written description, enablement, and best mode requirements (section 112) may give rise to estoppel. Questions regarding the scope of the doctrine of equivalents have most often arisen when claims were amended to avoid the prior art cited against the patent application during prosecution. The Supreme Court had never before decided a case where prosecution history estoppel had arisen from an amendment made to comply with section 112. Now, according to Festo, section 112 amendments can be a source of estoppel.

When amendments are truly “cosmetic,” but arise as a result of a rejection based on section 112, they may still give rise to an estoppel. The Supreme Court held that where “cosmetic” amendments are made to correct the form of the patent, they are still amendments “made to satisfy [a] requirement of the Patent Act.” The harshness of this result is softened by the rest of the analysis of prosecution history estoppel in Festo. The Court stated that such “cosmetic” amendments would be unlikely to narrow the scope of the patent claim or surrender the equivalent in question, and thus would not serve to narrow the scope of equivalents available for that claim term.

Following Warner-Jenkinson Co v. Hilton Davis Chemical Co., 520 U.S. 17 (1997), the patentee clearly bears the burden to establish the first condition of prosecution history estoppel, that the amendment was not made to comply with the Patent Act.

Narrowing Amendments: As noted, not all amendments serve to narrow the scope of the claim. Some “cosmetic” amendments merely correct the form of the patent, and such an amendment may not surrender any of the claim’s “territory,” or scope. To determine whether any scope has been abandoned, the Supreme Court looks to the pre- and post-amendment scope of the claim, and the scope of the subject matter no longer covered by the claim. When an amendment narrows a claim in response to a rejection, the patentee has disavowed the broader subject matter, or abandoned the right to appeal the rejection.

In contrast to the Federal Circuit’s decision, which held that every amendment would give rise to prosecution history estoppel, the Supreme Court’s approach distinguishes amendments that surrender claim scope from those that do not. Examining the claim scope that was abandoned is a key part of this analysis, and becomes significant in determining whether the amendment has abandoned the equivalent in question.

Festo does not clearly allocate the burden for establishing the second condition of prosecution history estoppel, that the amendment narrowed the claim’s scope.

Step II: Did the amendment surrender the particular equivalent in question?
The second step of the analysis is to determine whether the amendment surrenders the equivalent in question. This analysis rests largely on the Supreme Court’s reinterpretation of the purpose of the doctrine of equivalents: “The language in the patent claims may not capture every nuance of the invention or describe with complete precision the range of its novelty.”² The doctrine of equivalents is the solution for language’s inadequacy. This “language-based” approach to the doctrine of equivalents led the Supreme Court to restate the patentee’s duty when drafting claims and making amendments. Thus, the purpose of the doctrine of equivalents is to correct for the inadequacy of language to capture the essence of the novel invention that is the subject of the claim.

Given the Supreme Court’s language-based approach to the doctrine of equivalents, and its focus on the claim scope surrendered by the amendment, the patentee has at least three ways to show that the amendment did not surrender the equivalent in question: (1) the equivalent was unforeseen; (2) the equivalent had a tangential relationship to the amendment; or (3) the language at the time of the drafting of the amendment was not adequate to capture the equivalent. These three examples may be considered “escape hatches” from the prosecution history estoppel barring the application of the doctrine of equivalents. This is not an exclusive list, and the exact parameters of these examples will be defined in subsequent cases.

However, the Supreme Court did state that the patentee could hardly argue that he did not have the language to describe the alleged equivalent where the equivalent was covered by the original scope of the un-amended claim. Because of this, as noted above, determining the scope of the claim that was surrendered or abandoned during prosecution is important to the doctrine of equivalents analysis.

Festo places the burden on the patentee to establish that the particular equivalent was not surrendered by the amendment.

III. The Impact of Festo on Patent Prosecution

As noted, the burden lies on the patentee to establish that a claim amendment was not made for reasons relating to patentability. The primary source of information for proving why the amendment was made is the prosecution history, or “file wrapper,” of the patent in question. The initial responsibility for reducing the risk of prosecution history estoppel lies with the attorney or agent prosecuting the patent. Careful drafting and creating a record during prosecution will help to prevent unnecessary estoppel during litigation. The change in law created by Festo also suggests that opinion letters of non-infringement relying on earlier law be updated.

Careful Drafting: The Supreme Court’s decision does not change a prosecutor’s responsibility to draft claims as carefully as possible to avoid those rejections that can be avoided. The Federal Circuit’s en banc decision placed just as high a value on careful claim drafting in the first instance. Claim drafting to preserve equivalents requires the drafter to define the invention as broadly and as consistently with the specification as possible, while avoiding the prior art. A broad specification combined with narrow claims will decrease the likelihood that the patentee could later argue that he did not have the language appropriate to claim the alleged equivalent.

Further, the decision in Festo increases the value of claims drafted under 35 U.S.C. § 112, ¶ 6. Claims drafted under this section receive coverage of equivalents according to the terms of section 112, without resort to the application of the doctrine of equivalents. Thus it is beneficial to include some claims drafted under this section, to preserve patent coverage of known equivalents.

Many prosecutors make it a habit not to conduct an independent search of U.S. patents for prior art before filing so that the applicant will not have to disclose these references to the patent office. Most examiners base their office action rejections on references found among issued U.S. patents. Prosecutors will have to weigh the benefits of their “no search” practice against the potential for loss of equivalents to all claim terms initially rejected based on these discoverable references.

Creating a record during prosecution: When amendments must be made, a prosecutor must carefully create a record stating why the amendment was made so that the narrowest possible scope of equivalents is affected by the amendment. In responding to rejections where multiple claims are rejected, amendments should be carefully linked to the reference or rejection argument that motivated the amendment. With such a record in the file history, competitors and courts that review the prosecution history after the patent issues will better know what the patentee was giving up, and what the patent reserved.

Opinion Letters: Letters of non-infringement relying on earlier law should be reviewed and updated to address the new standard announced by the Supreme Court in Festo. Failure to review and update such letters may support a finding of willful infringement in later patent litigation.

IV. The Impact of Festo on Patent Litigation

The Supreme Court’s clear rejection of the Federal Circuit’s complete bar indicates that the issue of prosecution history estoppel may be settled for the near future. However, the decision describes the patentee’s duty upon drafting both claims and amendments in a manner that may serve to limit the scope of available equivalents in future litigation. The opinion states:

The patentee must show that at the time of the amendment one skilled in the art could not reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent.³

This is one of three “escape hatches” from prosecution history estoppel barring the application of the doctrine of equivalents, as noted above. This statement of the patentee’s duty in drafting claim amendments may limit the equivalents available to both amended and unamended claim limitations to after-arising equivalents, and exclude existing equivalents from coverage under the doctrine of equivalents. The effect of Festo’s phrasing of the purpose of the doctrine of equivalents in the opinion will not be fully clear until additional case law refines Festo’s holding.

It is likely that this “language-based” approach to the doctrine of equivalents will encourage litigants to introduce expert testimony about two topics relating to the doctrine of equivalents: (1) the knowledge of persons skilled in the art of the alleged equivalents at the time of the amendment; and (2) the language available to the inventor at the time of the amendment, and the ability of that language to capture the alleged equivalent. References contemporary with the application and the amendment may also become critical to proving whether the patentee could have been reasonably expected to draft the claim differently to cover the alleged equivalent.

V. The Impact of Festo on Licensing

The Supreme Court’s decision in Festo makes the determination of whether a patent license is required more difficult in certain situations. Where literal infringement or non-infringement is clear, no Festo analysis may be necessary. In that situation, neither the potential licensee nor licensor will need to investigate whether the scope of equivalents for the claim terms has been limited by prosecution history estoppel. However, where literal infringement is a close call, an examination of the prosecution history to determine what claims were amended may be prudent before a license is demanded by a patent holder, or sought after by a potential licensee. Because the Supreme Court rejected the Federal Circuit’s “complete bar,” both licensors and licensees must go beyond determining which claim terms were amended, to determining whether the subject matter of the potential license was surrendered by the amendment. After this Festo analysis is conducted, licensors and potential licensees can determine whether a license is required in these close cases.

The following Gray Cary attorneys contributed to this article: John Allcock and John Kinton. For additional information, please contact one of these attorneys.

1. For a thorough discussion of the historical development of the doctrine of equivalents and prosecution history estoppel, please see John Schlicher, "The Law, History and Policy of Prosecution History Estoppel in the United States Supreme Court—Implications for Festo," forthcoming in the Journal of the Patent and Trademark Office Society.

2. 2002 WL 1050479, at *7.

3. 2002 WL 1050479, at *13.

 

 

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