On Tuesday, May 28, 2002, the U. S. Supreme Court handed down its long awaited decision in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. case. The case has occupied the limelight in intellectual property circles since the Federal Circuit issued its en banc decision in 2000, because it goes to the heart of patent law: The balance between the patent owner's right to pursue those who have made minor changes to avoid infringement versus the public’s right to certainty in determining what a patent covers and what it does not.
The Supreme Court's Festo opinion reinforces the reality that amending a patent claim during patent prosecution always risks a loss of legal rights for the client. Its rule of reason approach in determining the existence and the extent of the estoppel also reinforces time-honored practices of competent patent practitioners:
(1) Know and write claims to the potential commercial activity against which the patent rights will operate, not simply a verbal description of a piece of technology sitting on a table.
(2) Be aware of the state of the art against which patentability will be measured, rather than finding out first in a written rejection from the Patent Office.
(3) Establish a working relationship with the patent examiner to verify that he/she has the information needed and clearly understands your position.
(4) Advise your client at every step and get a meeting of minds before introducing amendments that could alter scope and enforcement of patent rights.
In Festo, the patent owner had amended claim language during the application process to add new limitations required by the Patent Office. The defendant commercialized a device which did not fall literally within the scope of the patent claims, but which the district court ruled constituted infringement by equivalents. The Federal Circuit ultimately reversed, finding among other things that when a patent applicant amends claims for a reason "substantially related to patentability," the doctrine of "prosecution history estoppel" precludes the patent owner from contending that any technology beyond the amended, limited claim is covered by the patent. The Federal Circuit recognized in doing so that it reversed a number of its earlier decisions and that this new, absolute rule of prosecution history estoppel would be counter to the expectations of inventors and patent holders who had amended claims in obtaining their patents for years. However, the Federal Circuit believed that the additional certainty to the public outweighed this potential harm.
The Supreme Court unanimously reversed the Federal Circuit on this issue. The Court adopted a rule of reason approach: prosecution history estoppel does not bar the inventor from asserting infringement against every equivalent to the narrowed claim element. Though prosecution history estoppel can preclude enforcement against a wide range of equivalents, its reach nevertheless requires an examination of the subject matter surrendered by the narrowing amendment. The Supreme Court eschewed the Federal Circuit's complete bar to equivalents as resorting "to the very literalism the equivalents rule is designed to overcome."
The Supreme Court, consistent with expectations, also recognized that prosecution history estoppel can arise not only when an amendment is made to overcome prior art, but also for other "substantial reasons related to patentability" and even, in some cases, where the amendment's purpose was not related to patentability. The Court acknowledged the potential uncertainty created as compared to the Federal Circuit rule, but found a more flexible approach to estoppel issues was the "price of ensuring the appropriate incentives for innovation."
From a practical point of view, the Supreme Court's decision is in many ways a "return to normalcy." In the months since the Federal Circuit’s Festo decision, patent prosecutors had resorted to prophylactic measures such as pursuing (at least initially) only very narrow claims which were calculated not to engender amendments of any sort during prosecution. After allowance of those narrower claims, a new application could be filed which presented broader claims that, if amended, would result in the amendments having no effect on the original claims. Such practices were not only inefficient on occasion but could exalt form over substance, as well as create additional enforcement issues and potential litigation.
As a result of the Supreme Court's ruling, any claim amendment can be expected to raise the potential of a prosecution history estoppel defense when infringement according to the doctrine of equivalents is asserted. The patent’s prosecution history must be examined in order to determine if the amendment is (1) made to secure the patent and (2) narrows the patent's scope and thus creates the estoppel. Although "truly cosmetic" amendments may not raise an estoppel, ones that narrow the patent's scope and are necessary for issuance do. The patent owner has the burden to rebut the presumption in favor of prosecution history estoppel created by the claim amendment. In addition, the Supreme Court also makes clear that the patent owner bears the burden of showing that an amendment does not surrender the particular equivalent in question in the enforcement context.
Legal Alert is a bulletin of new developments and is not intended as legal advice or as an opinion on specific facts. For more information on Intellectual Property law issues, please call any of the attorneys in the Intellectual Property Practice Group, including Jim Ewing at 404.815.6500 or JEwing@KilpatrickStockton.com, or contact us through our website, www.KilpatrickStockton.com.
