United States: Festo And Its Aftermath

As a young lawyer working for a prominent Philadelphia IP boutique, I learned to close opinion letters with a number of prophylactic legal disclaimers. One of those disclaimers which I have long made it a practice to use is: "unanticipated changes in the law could affect the conclusions of this opinion." I harkened back to those days and that disclaimer as I reviewed the United States Court of Appeals for the Federal Circuit’s decision in Festo Corp. v. Shoshetsu Kinzokyu Kogyo Kabushiki Co., Ltd., et al., 234 F.3d 558 (Fed. Cir. 2000) (en banc). The Festo case potentially constitutes a sea change in the law which could affect virtually every opinion and patent I have drafted over my 15 year career.

In a nutshell, the Festo case addresses the effect of prosecution history estoppel on the doctrine of equivalents. The case completes an approximate 14-year odyssey in which the doctrine of equivalents has been gradually whittled down to the bone by the Federal Circuit. Relying upon the twin goals of "public notice" and "certainty", first set forth in Pennwalt v.Durand-Wayland, the Court adopted a so-called "absolute bar" rule which mandates that the narrowing of a claim limitation for any reason related to patentability precludes the application of the doctrine of equivalents to that claim limitation. The decision highlights divisions in the Federal Court over the proper role of the doctrine of equivalents in a patent infringement analysis, with the majority holding that the decision to limit the application of the doctrine of equivalents will add certainty to the patent system by enhancing "public notice" goals. The dissenters criticized the majority for reasons ranging from increased patent prosecution costs to an improper limit on the protection afforded to patents.

The Festo case involved two patents for magnetic rodless cylinders used as part of the mechanism for moving an object along a conveyor. Both patents were amended during prosecution and the defendant asserted that the amendments created prosecution history estoppel which barred Festo’s claims of infringement under the doctrine of equivalents. The issue was heard by a special master in the context of a summary judgment motion, who ruled that the prosecution history did not bar the application of the doctrine of equivalents. A jury finding ultimately found infringement. The Federal Circuit affirmed. The Supreme Court, in light of its recent decision in Warner Jenkinson Co. v. Hilton Davis Chemical Company, 520 U.S. 17 (1997), reversed and remanded. The Federal Circuit heard the remand en banc.

In the Opinion of the Court, Judge Schall addressed the "doctrine of equivalents" in the context of four questions specifically briefed for the en banc hearing. The first question was whether an amendment to a claim creating prosecution history estoppel arising from a "substantial reason related to patentability" is limited to those amendments made to overcome prior art under Sections 102 and 103, or does "substantial reason related to patentability" mean any reason affecting the issuance of a patent. The Court ruled that the "substantial reason related to patentability" is not limited to overcoming or avoiding prior art, but includes any reason which relates to the statutory requirements for patentability, including rejections under §§ 101 and 112 of the statute. Thus, narrowing amendments entered for any reason related to the statutory requirements for a patent grant, will give rise to prosecution history estoppel with respect to the amended claim element.

The second question was whether under Warner Jenkinson, a "voluntary" claim amendment, i.e., one not required by the examiner or made in response to rejection by an examiner for a stated reason, creates a prosecution history estoppel. There also, the Court ruled that so-called "voluntary" amendments should be treated the same as any other amendment. Thus, a voluntary amendment that narrows the scope of a claim for any reason related to the statutory requirements for patent will also give rise to prosecution history estoppel as to the amended claim.

The Court then addressed the rhetorical question of assuming that a claim amendment creates prosecution history estoppel, what range of equivalents, if any, is available under the doctrine of equivalents for the claim elements so amended. In response, the Court held that when a claim element creates prosecution history estoppel with regard to a claim element, there is no range of equivalents available for the amended claim element. Application of the doctrine of equivalents to the claim element is completely barred.

Finally, the Court addressed the question of when "no explanation for claim amendment is established, thus invoking the presumption of prosecution history estoppel under Warner Jenkinson," what range of equivalents, if any, is available under the doctrine of equivalents for the claim elements so amended. The Court answered by stating that when no explanation for claim amendment is established, no range is available for the claim element so amended.

In applying the new rules to the facts of the case, the Court reversed the jury verdict of infringement in light of an estoppel created by amendments in the prosecution history of both patents. In the District Court, the jury had found that two of the critical elements of the one of the patents, a magnetizeable sleeve and a sealing ring, were met in the accused device by equivalents even though both were added during prosecution. Despite Festo’s argument that the limitations were added by voluntary amendments unrelated to patentability, the Federal Circuit held that they, in fact, gave rise to prosecution history estoppel and that the absolute bar precluded the application of any scope of equivalents to those elements. The Court also ruled similarly as to the second patent, holding that the addition of a claim element during a reexamination proceeding was also related to patentability and further triggered an absolute bar.

The decision was marked by the inclusion of several thoughtful concurring and dissenting opinions. In one of two concurring opinions, Judge Plager stated that the majority arrived at the "second best solution". According to Judge Plager, in light of the majority ruling, more patent applicants will now choose to file narrow claims which are more likely never to be amended. As a result, to enforce these narrow claims, patentees will be forced to assert infringement under the doctrine of equivalents more frequently. Judge Plager also argued that the better solution would have been to declare the doctrine of equivalents an inequitable issue to be resolved by the court.

Judge Lourie in his concurrence, effectively put the onus on the patent bar to be more careful and aggressive in prosecution. The judge noted that the PTO does not render judgments relating to the doctrine of equivalents and that attorneys are ill advised to address prosecution matters with a view toward the doctrine of equivalents.

The four judges who wrote dissenting opinions disagreed strongly with the majority’s absolute bar rule. Judge Michel, joined by Judge Rader, argued that the majority’s decision was contrary to the precedent of the Supreme Court and the Federal Circuit. He warned of upsetting the balance between the competing needs of meaningful patent protection and adequate public notice, stating that the complete bar approach will allow potential infringers to "review the prosecution history to identify patentability-related amendments and then make conceivable trivial modification to that part of its product corresponding to an amended claim limitation."

In an independent concurring opinion, Judge Rader stated that the Court’s holding did not account for the role of the doctrine of equivalents in protecting "after-arising technology which by definition cannot surrender protection for something that didn’t exist at the time of amendment." Judge Lynn argued that the new rule would increase costs associated with obtaining patents by requiring applicants to conduct exhaustive pre-filing searches and to undertake appeals. The judge also noted that the majority opinion was in conflict with the streamlining procedures put in place by the PTO in order to expedite prosecution. He opined that rather than promoting technological growth, the new rigid rule would impact the patentee’s security of receiving the full benefit of his invention and is likely to be a disincentive to early disclosure of new inventions and discoveries. Finally Judge Newman, concurring in part and dissenting in part criticized the decision for promulgating a rule which precludes the admission of rebuttal evidence not in the prosecution record.

At the time of writing, Festo has hired Kenneth Starr to handle the preparation and filing of the certiari petition before the Untied States Supreme Court. It is anticipated that the Supreme Court will likely hear the appeal.

It left intact, the impact of the Festo decision on day-to-day patent prosecution could be substantial, albeit not for reasons related to prior art based amendments. For at least the last 13 years, the proverbial writing has been on the wall regarding the doctrine of equivalents and the doctrine of prosecution history estoppel regarding prior art based claim amendments. The Federal Circuit, while strongly tending to uphold the validity of patents, has gradually limited the breadth of patent protection relying upon concepts of public notice and the desirability of tight claim drafting. Most seasoned patent attorneys have recognized that the doctrine of equivalents will not save them from unnecessary amendments made in the face of prior art.

However, it is totally unclear as to why the doctrine of prosecution history estoppel would ever need to be applied to the case of a Section 112 rejection. Such rejections, by their nature, are wholly unrelated to prior art and are wholly technical in nature. In some cases, these rejections are based upon minor misunderstandings regarding claim terminology. Many examiners are of foreign origin and rejections for claim indefiniteness are frequently the result of communication problems.

Further "absolute bars," while seemingly simple to apply, create a host of problems in practice. As suggested by the dissenters, the ruling if left in tact, will tend to hold up prosecution and cut against the goals of the AIPA, which are to streamline and expedite prosecution. Practitioners will file applications containing dozens of claims having minor and trivial differences, leading to protracted prosecution and appeals as suggested in the dissent. Attorneys may draft narrow claims to avoid this issue or attempt to wear examiners down.

As suggested by the dissenters, the decision does not address the problem of later developed technology which cannot by definition be explicitly covered by the claims of a patent. It is also unclear as to how the decision will impact the question of broadening reissues and the doctrine of intervening rights. Finally, from a purely public policy standpoint, one is left to seriously question whether such a substantial change in the law should be initiated absent Congressional action.

Festo is clearly one of the two or three most significant decisions in the history of the Federal Circuit. It remains to be seen how the matter is resolved by the Supreme Court. In any event, anticipate some Congressional action by this Summer.