Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.

Questions presented: (1) Does every claim-narrowing amendment designed to comply with any provision of the Patent Act automatically create prosecution history estoppel regardless of the reason for the amendment? (2) Does a finding of prosecution history estoppel completely bar the application of the doctrine of equivalents?

BY PAMELA ZERBINOS, MEDILL NEWS SERVICE

Thomas Edison. Henry Ford. The Wright brothers. Inventors all, these men personify the American entrepreneurial spirit.

Today, the successors of those men and their work are protected by some of the most esoteric branches of law, those governing patents and intellectual property. As technology has changed and grown more complex, so too has patent law, and in the Information Age, intellectual property has more value than ever, as both Festo Corp. and Shoketsu Kinzoku Kogyo Kabushiki Ltd. are coming to recognize.

The case originated in 1988, when the industrial equipment maker Festo Corp., a New York branch of Germanys The Festo Group, filed a patent infringement suit against Shoketsu Kinzoku Kogyo Kabuishiki (SMC). SMC is a Japanese pneumatics manufacturer that Festo alleges infringed on two of its patents for magnetic rodless cylinders.

Festo's device, which is used on assembly lines to move objects down conveyor belts, consists of three basic parts: a piston, a cylinder and a sleeve. The piston, which is inside the cylinder, is moved by pressurized fluid. The sleeve is outside the cylinder, magnetically coupled to the piston, which includes magnets and two "elastomeric sealing rings" to keep impurities off the piston.

SMC's device, the one being called a copycat, is not magnetized and has only one sealing ring.

When Festo sued in 1988, it did so under what is known as the doctrine of equivalents, which has traditionally extended patent protection beyond the literal words on the claim. Simply put, one person cannot take the design and engineering of a patented device, change the screws to rivets, and call it a new device. Festo felt that SMC took their device, took away a ring and the magnetic material, and called it new.

A federal judge in Massachusetts agreed with Festo and found that SMCs device performed substantially the same function in substantially the same way and was therefore an infringement.

Where Festo ran into difficulty was a second doctrine of patent law known as prosecution history estoppel, which places important limits on the otherwise unstable equivalents doctrine.

Obtaining a patent these days is not so simple as filling out a form. Its a lengthy process of back-and-forth between the inventor and the patent office. During this process, the claim is typically amended several times before the patent is granted. What the doctrine of prosecution history estoppel says is any change that limits the scope of the patent for "a reason related to patentability" is binding and the applicant will be forbidden (estopped) from later trying to argue that the limit does not exits.

An example: Festo limited the scope of its original patent by amending the claim so that one of the elements had to be made of magnetic material. The doctrine of prosecution history estoppel says that, because Festo made that change, it cannot go back later and say that use of non-magnetic material infringed the patent.

That, however, is exactly what Festo did.

Although the doctrines of equivalents and prosecution history estoppel seem to complement one another, there are a host of questions that remain unanswered. A few of them: If a claim has been amended, is prosecution history estoppel a complete bar on all possible equivalents, or are some still protected under the equivalents doctrine? If a change is made voluntarily and not for "a reason related to patentability," does estoppel still apply? Is an equivalent structure discovered after the submission of the amendment also barred by prosecution history estoppel, or does the estoppel only apply to those equivalents specifically disclaimed in the amendment?

The United States Court of Appeals for the Federal Circuit, which has jurisdiction over all patent cases, has addressed these issues several times and managed to find itself going down two different roads. In most cases, the court has accepted the conclusion reached in Hughes Aircraft Co. v. United States (717 F.2d 1351), which says a "flexible bar" is created by prosecution history estoppel. If the equivalent was not directly surrendered during the application process, a patent owner can still sue under the equivalents doctrine.

However, three cases the most notable of which is Kinzenbaw v. Deere & Co. (741 F.2d 383) have gone in the opposite direction and stated that there is a "complete bar" to all equivalents.

Obviously, patent law is in need of some clarification.

After the district court ruled in Festos favor in 1988, SMC appealed to the Federal Circuit, which affirmed. SMC appealed again, this time to the U.S. Supreme Court, which granted certiorari in 1997 but remanded the case in light of Warner Jenkinson Company, Inc. v. Hilton Davis Chemical Co. (520 US 17). In that opinion, Justice Clarence Thomas wrote, "Petitioner...asks us to speak the death of that [equivalents] doctrine. We decline that invitation." On remand, the appeals court once again affirmed the Festo decision. However, when SMC petitioned for a rehearing in front of the entire appeals court normally cases are decided by a three-judge panel the court found for SMC.

In its holding, the appeals court adopted the "complete bar" standard of Kinzenbaw, and in doing so, eviscerated the equivalents doctrine. If the appeals court decision stands, any change made for any reason during the application process will give rise to prosecution history estoppel and therefore will not be protected by the equivalents doctrine.

The consequences are far-reaching, and will affect the way that patents are filed. Prior practice has been to file an initial claim that is very broad, and then negotiate with the patent examiner until all parties are satisfied. If, as would be the case under Festo, each change will give rise to prosecution history estoppel, most filers will not want to risk amending their patent and will therefore be forced to draft narrow, more specific claims. These claims will be clearer and easier to understand, which will speed up the application process a drastically needed change to the patent system.

In addition to speeding up the process, Festo will provide increased protection to industry newcomers. As Judge Alvin Schall wrote in the opinion, the newcomers "will be free to improve on the patented technology and design around it without being inhibited by the threat of a lawsuit because the changes could possibly fall within the scope of equivalents left after a claim element has been narrowed by an amendment. The risk of infringement will be easier to determine."

On the down side, Festo has drastically reduced the rights of patent owners and created a foolproof method for copyists to steal patented material. All that is required is to search the published history of a patent for an amended element, copy the design exactly except for that element, and then metaphorically change the screws to rivets.

This problem is worsened by the fact that the Festo decision applies to all patents, including 1.2 million that have not expired and were granted before Festo. Patent holders who submitted amendments under the old rules will now find their patents reduced in value because theres no way to stop copyists from stealing their inventions.

Although the Festo decision did manage to clear some of the mud from the water of patent law, it is clear that not all the changes will benefit everyone. The cost of doing the research required to write a patent narrow enough to avoid amendments will likely be prohibitive for individuals or small firms. Petitioners will be more likely to treat their inventions as trade secrets rather than disclose them, which will defeat the patent offices goal of fostering public disclosure.

In addition, there are still more questions to be answered. Does cancellation of a claim constitute an amendment, and therefore bring up the complete bar? What if there are multiple claims covering the same invention and one is amended but the other is not? Does the complete bar cover just the claim, or the invention in general? Do arguments made to the Federal Circuit instead of the Patent Office also give rise to prosecution history estoppel?

It is these questions, among others, that experts hope the Supreme Court will answer.

Certiorari was granted in this case for the second time on June 18, 2001. The U.S. Solicitor General was allowed participate in the oral argument as "friend of the court."

On May 28, 2002, the Court unanimously sided with Festo Corp. holding that prosecution history estoppel does not bar Festo from asserting infringement against every equivalent.

Writing for the Court, Justice Anthony Kennedy said that Festo should have a chance to rebut the presumption that prosecution history estoppel bars a finding of equivalence by showing that at the time of its amendment, one skilled in the art could not reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent.

The case was remanded for such a determination.