The U.S. Supreme Court, in a unanimous decision on May 28, 2002, vacated the judgment of the Court of Appeals for the Federal Circuit in the long anticipated case of Festo Corp v. Shoketsu Kinzoku Kogyo Kabushiki Co. The Supreme Court found that the Federal Circuit correctly held that a narrowing amendment made to satisfy any requirement of the Patent Act may give rise to an estoppel, but that the Federal Circuit went too far when it created a per se rule, rather than only a presumption, that any such estoppel barred the application of equivalents to the narrowed element.
History of the Case
Festo Corp. ("Festo") filed suit against Shoketsu Kinzoku Kogyo Kabushiki Co. ("SMC") claiming that SMC infringed two Festo patents, not literally but under the doctrine of equivalents. A District Court jury found that the SMC accused device was "equivalent" to what the Festo patents claimed, and the Federal Circuit initially affirmed this decision. The Supreme Court granted certiorari, and relying on its ruling in Warner-Jenkinson Co. v. Hilton Davis Chemical Co., vacated the Federal Circuit's judgment and remanded. On remand, the Federal Circuit ordered a rehearing en banc and reversed the District Court's decision. It held that (1) the rule of prosecution history estoppel applies when a patentee amends a claim during patent prosecution in order to comply with the Patent Act, and (2) when prosecution history estoppel applies, the patentee is completely barred from making a claim of equivalents for the element that was amended. This was a departure from prior case law, including those cases previously reviewed by the Federal Circuit. The prior case law had established that prosecution history estoppel constituted a "flexible bar" which could be overcome by a claim of equivalents on a case by case basis. On remand, the Federal Circuit deemed that the flexible-bar rule had proved unworkable and held that a complete bar of equivalents, when based on a finding of prosecution history estoppel, would promote certainty.
Tension Between Competing Established Patent Law Concepts
In vacating the Federal Circuit's holding, the Supreme Court sought to balance the uncertainty created by the doctrine of equivalents (which "is premised on language's inability to capture the essence of innovation") with the role of prosecution history estoppel (which recognizes that an inventor who "narrowed his claims to obtain the patent ... turned his attention to the subject matter in question, knew the words for the broader and narrower claim, and affirmatively chose the latter") and the need for certainty in the scope of patents.
With respect to the doctrine of equivalents, the Court recognized that "[i]f patents were always interpreted by their literal terms, their value would be greatly diminished. Insubstantial substitutes for certain elements could defeat the patent, and its value to inventors could be destroyed by simple acts of copying.
Prosecution history estoppel, on the other hand, acknowledges that it is necessary and useful for competitors to be able to determine whether an invention is a permitted alternative to a patent or an infringing equivalent and allows competitors to make this determination based on patent prosecution history. In addressing prosecution history estoppel, the Court in Festo cited its prior decision in Exhibit Supply Co. v. Ace Patents Corp. and stated that prosecution history estoppel "requires that patent claims be interpreted in light of the proceedings before the Patent and Trademark Office (PTO). When the patentee originally claimed the subject matter alleged to infringe but then narrowed the claim in response to a rejection, he may not argue that the surrendered territory comprised an unforeseen equivalent."
The Court Establishes a Rebuttable Presumption
Following Exhibit Supply and Warner-Jenkinson, the Court recognized that by narrowing the patent claims, an applicant is conceding claims to the range of equivalents that falls between the original claim and the amended claim. However, the Court disagreed with the Federal Circuit's adoption of a per se bar to a claim of equivalents. Rather, the Court said that Warner-Jenkinson's "words do not mandate a complete bar" but that "[t]hey do provide ... that when a court is unable to determine the purpose underlying a narrowing amendment ... the court should presume that the patentee surrendered all subject matter between the broader and the narrower language."
Consistently with Warner-Jenkinson, and also with the decision of the Federal Circuit, the Court in Festo held that a "patentee's decision to narrow his claims through amendment may be presumed to be a general disclaimer of the territory between the original claim and the amended claim." However, rather than adopting the Federal Circuit's per se rule, the Supreme Court said that a "patentee might rebut the presumption that estoppel bars a claim of equivalence." To do so, "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." Other prosecution history estoppel issues were discussed in our January 3, 2002 I.P. Law Alert.
In Festo, the Court remanded for further proceedings in the Federal Circuit or the District Court to determine whether the patentee could demonstrate that its narrowing amendments did not surrender the particular equivalents at issue. The Court noted, however, that SMC may well prevail since the two narrowing limitations added were both noted expressly in the prosecution history.
Thus, while the holding in Festo removes the automatic bar to equivalents imposed by the Federal Circuit, it places a significant new burden on a patent holder seeking to show that an amended claim element should not be restricted to its literal language. The burden will likely be most easily met in circumstances where the "equivalent" is new technology that was unforeseen when the amendment was made; it will likely be very difficult to overcome the presumption when, as in Festo, the "equivalent" was shown in the prior art or considered in the course of prosecution.