In a continuing drama concerning the rights of inventors to protect their creations by employing the doctrine of equivalents, the Federal Circuit applied the flexible standard mandated by the U. S. Supreme Court last year. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. Ltd. (SMC) 344 F.3d 1359 (2003). This is our first opportunity to see the application of the Supreme Court's newly created rebuttal criteria governing how patent holders can use the doctrine of equivalents as a method of finding patent infringement.
The Federal Circuit's decision is instructive in delineating what evidence is admissible concerning issues relating to the presumption of surrender. Importantly, we learn that it is the court, and not the jury, that makes the determinations concerning whether the presumption of surrender has arisen, and whether it has been rebutted by the patentee.
Background: The Festo Case
The subject litigation started in 1988 when the Festo Corporation filed suit against SMC for infringement of patents relating to magnetically coupled rodless cylinders used in conveyor-like systems. SMC's product differed from Festo's only in the sealing rings and the use of a different alloy for its metal sleeve. Festo won a $4 million jury verdict against SMC after a jury found that SMC's accused device infringed Festo's patent under the doctrine of equivalents.
On appeal, the Federal Circuit shocked the patent community by imposing a "bright line" test, thereby reversing the jury award. The appeals court found that Festo had limited the scope of its patents when it filed amendments narrowing the description of the sealing rings and sleeve, such that no range of equivalents was available for the amended claim.
In rejecting this approach, the U.S. Supreme Court restored a more flexible standard, suggesting that the circumstances of each amendment have to be examined on a case-by-case basis to determine whether the doctrine of equivalents applies. The high court ruled that while amending a patent claim creates a presumption that the amendment narrows the claim, the presumption could be rebutted to justify the amendments.
The Supreme Court's Rebuttal Criteria
The Supreme Court places the burden on the patent holder to rebut the presumption that the patentee surrendered all subject matter between the original, broader claim and the narrower, amended claim in any one of three ways:
1. by demonstrating that the equivalent would have been unforeseeable at the time of the amendment ("foreseeability");
2. by proving that the rationale underlying the amendment bears no more than a tangential relation to the equivalent ("tangentialness"); or
3. by establishing that there was some other reason that the patentee could not reasonably be expected to have described the alleged equivalent in question ("reasonable expectations").
The Roles of Judge and Jury
In applying the standard set forth by the U.S. Supreme Court, the Federal Circuit initially had to address what role a jury should play in determining whether a patent owner can rebut the presumption. They agree with defendant SMS that determinations concerning the rebuttal of the presumption of surrender, including issues of foreseeability, tangentialness and reasonable expectations, are questions of law to be determined by the court, not a jury.
The Range of Admissible Evidence
The Federal Circuit opinion also provides some general guidance relating to what evidence a court can consider in determining whether a patentee has rebutted the presumption of surrender. With regard to the first criterion of "foreseeability", a district court may hear expert testimony and may consider other extrinsic evidence relating to the relevant factual inquiries. The court justifies additional evidence since, by its very nature, objective unforeseeability depends upon factual issues such as the state-of-the-art to one of ordinary skill in the art at the time of the amendment.
With regard to the second criterion of "tangentialness", the court instructs that examination of the prosecution history should be sufficient to determine whether the reason for the narrowing amendment was peripheral, and not directly relevant, to the alleged equivalent. The only extrinsic evidence that would be allowed in this context would be expert testimony used to interpret the prosecution record.
The court leaves open the question as to what exactly could be considered with regard to the third criterion of "reasonable expectations". They do suggest, however, that "[w]hen at all possible, determination of the third rebuttal criterion should also be limited to the prosecution history record." Id. at 1369.
Application to the Festo Case
In applying these criteria to the specific facts of the case, the Federal Circuit decided as a matter of law, based on the prosecution history record, that Festo cannot demonstrate that the amendments were tangential or were made for other reason. So in this case, the second and third exceptions would not apply to overcome the presumption of surrender.
However, the court did believe that there were factual issues which related to the objective unforeseeability of the alleged equivalents. Therefore, the case is remanded to the district level for further factual evidence relating to whether Festo can uphold its burden of proof on the first exception of "foreseeability". Thus, in order for Festo to recover the original $4 million award, it will need to rebut the presumption of surrender by demonstrating that SMC's aluminum sleeve and sealing ring elements would have been "unforeseeable" to a person of ordinary skill in the art at the time that it issued the narrowing amendments.
The Practical Effects of the Festo Decisions
Philip Albert, a litigation partner in Townsend and Townsend and Crew's San Francisco office, explained the importance of the Festo decisions:
Albert emphasized the importance of employing patent prosecutors that are proficient and prescient in the applicable areas of science, technology and the law. "Patents are among a company's most valuable assets, and can have tremendous proprietary significance," he reminds us. He also underscored another obvious point in the case: "With careful patent prosecution at the outset, Festo might have avoided the cost and distress of over 15 years of litigation." Of course, the litigation is not yet over, as the parties will now have to return to another proceeding at the district level.