Amicus Curiae Brief — Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.

AUG $/ 2e0_ (6) “FILED”

AUG 31 200!

OFFIGE OF Fal CLERK

IN THE

Supreme Court of the Anited States

FESTO CORPORATION,

Petitioner,

v.

SHOKETSU KINZOKU KOGYO KABUSHIKI Co., LTD., A/K/A

SMC CORPORATION AND SMC PNEUMATICS, INC.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

BRIEF FOR LITTON SYSTEMS, INCORPORATED

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

FREDERICK A. LORIG JOHN G. ROBERTS, JR.*

SIDFORD L. BROWN CATHERINE E. STETSON

BRIGHT & LORIG HOGAN & HARTSON L.L.P.

633 West Sth Street 555 Thirteenth Street, N.W.

Los Angeles, CA 90071 Washington, D.C. 20004

(213) 627-7774 (202) 637-5810

* Counsel of Record Counsel for Amicus Curiae

(additional counsel on inside cover)

oH PP

Additional counsel for amicus curiae:

Rory J. RADDING

PENNIE & EDMONDS L.L.P.

1155 Avenue of the Americas

New York, NY 10036

(212) 790-9090

STANTON T. LAWRENCE, III

CARL P. BRETSCHER

PENNIE & EDMONDS L.L.P.

1667 K Street, N.W.

Washington, D.C. 20006

(202) 496-4400

I.

i

TABLE OF CONTENTS

THE DECISION BELOW RAISES

GRAVE CONSTITUTIONAL

CONCERNS UNDER THE TAKINGS

THE DECISION BELOW, IF AFFIRMED,

SHOULD APPLY PROSPECTIVELY

‘i

TABLE OF AUTHORITIES

Page

CASES:

American Trucking Ass’ns, Inc. v. Scheiner, 483

UB. BEG (IDB 7) ccccccccccscscsccesensscsssrenssscesecsensnnsscsssssessnsssensese 21

American Trucking Ass'ns, Inc. v. Smith, 496 U.S.

BGT CIRDBGD cccecccconisncsecesescsnsessesessnsnsssssssssssssssssnsenesse 21, 23, 24

Bloomer v. McQuewan, 55 U.S. (14 How.) 539

| ae 10

Bonelli Cattle Co. v. Arizona, 414 U.S. 313 (1973) ............ 14

Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489

UB. 141 (19GB) .ncccccccccccsccescssccsccssrerssnssscsssscssssocesnssscesssesecs 10

Cherry v. Steiner, 716 F.2d 687 (9th Cir. 1983),

cert. denied, 466 U.S. 931 (1984) ........cccsceceeeseeeeseeneeneeees 14

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) ........+-+. passim

Cipriano v. City of Houma, 395 U.S. 701 (1969) ........-0-000+ 23

Control Res., Inc. v. Delta Elecs., Inc., 133 F. Supp.

24 121 (D. Mass. 2001) ......ccccsccsccscrscsseseccccseccosscosessccseosess 17

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki

Co., 234 F.3d 558 (Fed. Cir. 2000) ..........ccceeeereeereees passim

First English Evangelical Lutheran Church v.

County of Los Angeles, 482 U.S. 304 (1987) .........-..0s0+-00 14

Graver Tank & Mfg. Co. v. Linde Air Prods. Co.,

VF |. 7, 11, 12

TABLE OF AUTHORITIES—Continued

Page

CASES:

Harper v. Virginia Dep't of Taxation, 509 U.S. 86

EL AEE ec a ee er 21

Hartford-Empire Co. v. United States, 323 U.S. 386

oar aa inessncinincncesiiitiaiiieamtiniinitaaidiiiaaaaaaaaaaimsstasaase| 9-10

Hollister v. Benedict & Burnham Mfg. Co., 113

ee icancaitaeintnttiieienatsiitiaa titi iitnsaaitirssarmsaaanai 10

Hughes Aircraft Co..v. United States, 717 F.2d

EE a 11

Hughes v. Washington, 389 U.S. 290 (1967)........... 13, 14, 15

James B. Beam Distilling Co. v. Georgia, 501 U.S.

EU echinersinsoneettahintantnesecelpeenitnabinegeincnaiaaaiitiassiatansmsesas 21

Kaiser Aetna v. United States, 444 U.S. 164 (1979)............ 10

Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90

Se scscecetetsttasiemseseeiieceiiennteieibatinnnenalinmatetaetictaesecesiaiassemtamees 6

Landgraf v. USI Film Prods., 511 U.S. 244 (1994) coco... 24

Lebron v. National R.R. Passenger Corp., 513 U.S.

EE oe 7

Litton Sys., Inc. v. Honeywell, Inc., 238 F.3d 1376

8 ES I ae a 2,5

Litton Sys., Inc. v. Honeywell, Inc., 140 F.3d 1449

eee 3

Litton Sys., Inc. v. Honeywell, Inc., 87 F.3d 1559

8 NS ae 3, 6, 16

TABLE OF AUTHORITIES—Continued

Page

CASES:

Litton Sys., Inc. v. Honeywell, Inc., 1995 WL

Co lw OEE 6

Lucas v. South Carolina Coastal Council, 505 U.S.

ee 14

Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803)............ 17

Muhlker v. New York & Harlem R.R., 197 U.S. 544

I ecco nsnsnnnntnessstccmmninenmeianmptecigmnmcnnimemanasen 14

Oregon v. Corvallis Sand & Gravel Co., 429 U.S.

ee 14

Patterson v. Colorado, 205 U.S. 454 (1907) ...........ccceecceees 13

Penn Central Transp. Co. v. New York City, 438

ee 12

Photo Elecs. Corp. v. England, 581 F.2d 772 (9th

ee 10

PruneYard Shopping Center v. Robins, 447 U.S. 74

CD ccccennssensnntnesnsennsinsanecemintpenieniianitieiesinennnnnen 16

Reynoldsville Casket Co. v. Hyde, 514 U.S. 749

I ccnecccnternsstinemnenenteamminrniennatisimnnsinniiiienestannnnne 21

Richmond Screw Anchor Co. v. United States, 275

2 0 ee 12

Rogers v. Tennessee, 121 S. Ct. 1693 (2001)...........00+5 16, 24

v

TABLE OF AUTHORITIES—Continued

Page

CASES:

Sotomura v. County of Hawaii, 460 F. Supp. 473

EEE a oe aE Se 15

Stevens v. City of Cannon Beach, 510 U.S. 1207

Supra Taa wteiincenetaneaittiltepaibinedbinaiaindansiainniiaatiaaaestatasstitaaacanitiaaan 14

Transparent Wrap Mach. Corp. v. Stokes & Smith

OE ee 10

Ultimate Sportsbar, Inc. v. United States, 48 Fed.

SS 14

Union Paper-Bag Mach. Co. v. Murphy, 97 U.S.

ST i icinistdlicsiirieeaenediniiiarieiaaeiatapiataatiataiiatlitaaaecenasiniaes 10

United States v. Williams, 504 U.S. 36 (1992)........ccccccccceeoe. 7

Warner-Jenkinson Co. v. Hilton Davis Chem. Co.,

ee Se ariredlasinceatinichidinsehiensttaseatenamesiind passim

Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449

ee Ga a N chcetsctnervesesorceternstenensescensnesbenstnmeesstnesentesseesen 12

William Cramp & Sons Ship & Engine Bldg. Co. v.

International Curtis Marine Turbine Co., 246

eta eesiidrrietatas te acaiamratasiataastaaas 10

Winans v. Denmead, 56 U.S. (15 How.) 330 (1854) ....... 7, 23

CONSTITUTION:

8 RT a Te passim

vi

TABLE OF AUTHORITIES—Continued

Page

STATUTES:

BS CEB B YG ss cntanveececeeeeececcecsecesvscvecvccscseccccscvsncsnvscssnescves 2,5

BS UBC. § 1BAGAI RY «...0.0..cececrccscscsereccccscscccccecscsesonsessscsscsees 10

BS U.B.C. GBI vececrcrvececcceececesesececevsccecssvecevencessscnscncnscssscensees 10

SS UBC. © BIBI. .cecceccceesesccssessecescscsscesnscssnsenssesesessscsesssouse 10

RULE:

8 l

OTHER AUTHORITIES:

Barton H. Thompson, Jr., Judicial Takings, 76 Va.

L. Rev. 1449 (1990) ........cccccccsssssessereessenseesensennenes 13, 16, 18

Kevin A. Wolff, et al., The Unspoken Loss In

Shareholder Value: Patent Rights Take A Hit,

Vol. 8, No. 21 Mealey’s Litigation Reports:

Patents (Apr. 2, 2001) ...........sssssssseressereseneesnnenensnnsnnenensnnens 16

IN THE

Supreme Court of the United States

No. 00-1543

FESTO CORPORATION,

Petitioner,

Vv.

SHOKETSU KINZOKU KoGYO KABUSHIKI Co., LTD., A/K/A

SMC CORPORATION AND SMC PNEUMATICS, INC.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

BRIEF FOR LITTON SYSTEMS, INCORPORATED

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

STATEMENT OF INTEREST OF AMICUS CURIAE

Litton Systems, Incorporated (“Litton”) is a high-

technology corporation holding a diverse portfolio of patents

and other intellectual property rights.' Among the industrial

2

products Litton manufactures are navigation systems for

commercial aircraft. In 1978, Litton inventors developed a

pioneering method for producing near-perfectly reflective

mirrors for use in ring laser gyroscopes (“RLGs”), instru-

ments used to calculate an aircraft’s position and attitude.’

Litton sought and was granted a patent on its new method in

1979. In 1985, Litton applied to reissue its patent. After the

Patent and Trademark Office (“PTO”) rejected Litton’s

application on Section 112 grounds,’ Litton amended its

claims to answer the Section 112 rejection. Its reissue patent

issued in 1989.

In 1990, Litton sued its sole competitor, Honeywell, after

Honeywell began to manufacture RLG mirrors by unlawfully

copying Litton’s patent and proprietary information. Litton

had previously commanded a substantial portion of global

market share, but after Honeywell began copying Litton’s

mirror-making process, Honeywell cornered a large portion

of the market, precluding Litton from profiting from its

invention and nullifying its substantial investment. A jury

returned a verdict for Litton on its infringement claims and

awarded $1.2 billion in es fe yap 0 be a

Court subsequent! ted Honeywell’s motion for judg-

ment as a matter vin oe on Litton’s appeal, the Federal

Circuit reversed the District Court's judgment and reinstated

dC 3001) (Litton II?”) Perea: wwe dae ‘l mara

(Fed. Cir. 2001) (“Litton III”). Section the inver ‘or

include claims which “particularly point out and distinctly . |aim

the subject matter [he] regards as his invention. See 35 U.S.C.

§ 112.

3

v. Honeywell, Inc., 87 F.3d 1559 (Fed. Cir. 1996) (“Litton

I’).

Honeywell petitioned this Court for a writ of certiorari.

While Honeywell’s petition was pending, this Court decided

Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520

U.S. 17 (1997), in which it reaffirmed the vitality of the

doctrine of equivalents. The petitioner in Warner-Jenkinson

offered various policy arguments for abrogating the doctrine,

but this Court refused to entertain them, stressing that they

were more appropriately addressed to Congress—which

could “legislate the doctrine of equivalents out of existence

any time it chooses.” Jd. at 28. The Court also noted that

“chang[ing] so substantially the rules of the game,” as

petitioner had urged, could “subvert the various balances the

PTO sought to strike when issuing the numerous patents

which have not yet expired and which would be affected by

its decision.” /d. at 32 n.6.

After Warner-Jenkinson issued, this Court granted Honey-

well’s petition for certiorari, vacated Litton I, and remanded

for consideration in light of Warner-Jenkinson. 520 U.S.

1111 (1997). Back before the Federal Circuit, Honeywell

claimed that Litton was completely barred from invoking the

doctrine of equivalents, arguing that after Warner-Jenkinson,

“if a claim amendment has been added for reasons of patent-

ability, prosecution history estoppel automatically bars all

equivalents for that element.” Litton Sys., Inc. v. Honeywell,

Inc., 140 F.3d 1449, 1455 (Fed. Cir. 1998) (“Litton IT’). The

Federal Circuit rejected that approach, noting that Honey-

well’s argument would “bar after-arising equivalents ex-

pressly approved by the Supreme Court and bar any equiva-

lents whatsoever to the vast majority of claim limitations

amended during patent prosecution.” Jd. The court explained

that Warner-Jenkinson “did not in fact effect such a sweep-

ing change;” rather, the “entire context of the Warner-

Jenkinson opinion shows that the Supreme Court approved

the PTO’s practice of requesting amendments with the

4

understanding that the doctrine of equivalents would still

apply to the amended language.” Jd. Far from creating a

new, rigid estoppel rule, Warner-Jenkinson “adhered to the

long standing doctrine that estoppel only bars recapture of

that subject matter actually surrendered during prosecution.”

Id.

The Litton Ii panel concluded, however, that the jury in

Litton’s case had employed an improper claim construction

which may have “propagate[d] into [its] equivalence deter-

mination,” and that factual questions remained underlying the

scope of prosecution history estoppel. Jd. The court accord-

ingly vacated the jury’s verdict on infringement by equiva-

lents and remanded the case to the District Court for, inter

alia, a determination of the facts underlying the scope of

prosecution history estoppel. Jd. at 1465.

Back in the District Court, Honeywell resubmitted its mo-

tions for judgment as a matter of law and for summary

judgment. The District Court granted Honeywell’s motions,

and Litton appealed once again.

_ After Litton’s appeal had been briefed and argued, the

Federal Circuit issued its splintered en banc decision in Festo

Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d

558 (Fed. Cir. 2000) (reprinted at Pet. App. la). The Festo

majority held that prosecution history estoppel applied

whenever a claim was amended “fez any reason related to the

statutory requirements for a patent,” and that if prosecution

history estoppel applied to a claim element, “there is no

range of equivalents available for the amended claim ele-

ment. Application of the doctrine of equivalents to the claim

element is completely barred.” Jd. 9a, 14a (emphasis addec

The consequences of the new Festo rule for Litton were

immediate and dramatic. On February 5, 2001, the Federal

Circuit issued a terse decision affirming judgment for Hon-

eywell on Litton’s patent claims—not on the grounds the

parties had been litigating, but solely on the strength of the

5

intervening decision in Festo. Litton Sys., Inc. v. Honeywell,

Inc., 238 F.3d 1376 (Fed. Cir. 2001) (“Litton IIT’). The

Federal Circuit noted that Litton had amended a claim term

for patentability reasons—specifically, in response to the

PTO’s rejection of its reissue patent under 35 U.S.C. § 112,

92. 238 F.3d at 1380. Accordingly, the Federal Circuit

ruled, the Section 112 amendment Litton made to “more

particularly point out” its invention, 35 U.S.C. § 112, gave

rise to prosecution history estoppel under the new Festo rule,

completely barring Litton from invoking the doctrine of

equivalents. Jd.

The Federal Circuit acknowledged that it had specifically

reaffirmed the “flexible bar” approach to prosecution history

estoppel in Litton IJ. Id. The court concluded, however, that

because it had now adopted a “contrary rule of law regarding

the scope of prosecution history estoppel for amended claim

limitations, the law of the case doctrine does not preclude us

from applying the complete bar adopted en banc in Festo.”

Id. Litton was consequently “completely barred as a matter

of law from asserting that [Honeywell’s] accused devices

meet the [amended] limitation under the doctrine of equiva-

lents.” Jd. Thus, the same claims on which a jury had

previously found in Litton’s favor—and had awarded Litton

$1.2 billion in compensatory damages—were reduced to

nothing.

Litton filed a petition for certiorari questioning the Festo

rule and its retroactive application in Litton’s case. No. 00-

1617 (filed April 23, 2001). That petition is pending.

Even aside from the disappearing $1.2 billion verdict,

Litton’s circumstances present a particularly compelling case

for application of the doctrine of equivalents as it existed

before Festo rewrote the rule book. Litton challenged two of

Honeywell’s processes for making RLG mirrors; one such

process, the District Court concluded, infringed Litton’s

patent either literally or “within the narrowest range of

6

.” Litton Sys., Inc. v. Honeywell, Inc., 1995 WL

366468, at *45 (C.D. Cal. 1995) (emphasis added). Yet even

in a case where the infringing process fell within the “nar-

rowest range” of equivalents, Festo’s new estoppel rule still

completely barred any recourse to the doctrine—and did so

retroactively.

Honeywell was also not some blameless innovator trying to

stay on the right side of Litton’s patent but uncertain of its

bounds. Honeywell knew precisely what it was doing when

it modeled its process on Litton’s. Its own documents

acknowledge that it would face a “large lawsuit!” if it appro-

priated Litton’s proprietary information, but it nonetheless

induced a Litton consultant to share that information, prom-

ising to indemnify him for legal costs and damages after he

expressed the fear that what Honeywell had in mind would

infringe Litton’s patent rights. Litton I, 87 F.3d at 1573. All

these facts and more amply supported the jury’s finding that

Honeywell had willfully infringed Litton’s patent. See id. at

1573-74. But because Festo cut off all recourse to the

doctrine of equivalents for amended claims, Honeywell can

now escape liability for its calculated decision to copy

Litton’s process with only the most insignificant alterations.

Litton accordingly has a compelling interest in this Court’s

disposition of the Festo case. Litton appreciates that the

parties and numerous other amici will fully brief the pertinent

issues of patent law. Litton’s participation as amicus will

instead focus on the legal implications of the adoption of the

new Festo rule for those who—like Litton—had valuable

property rights taken from them as a result of the Federal

Circuit’s change in “the rules of the game.” Warner-

Jenkinson, 520 U.S. at 32 n.6.4

4 We recognize that this Court “dofes not ordinarily address

issues only raised by amici.” XAamen v. Fin. Servs., Inc.,

500 U.S. pebedenah ont nd mens Seas

settled ni re)

oo sites prea agp ot teeny ee

-

SUMMARY OF ARGUMENT

The doctrine of equivalents is a fundamental principle of

patent law. Developed a century and a half ago, the doctrine

was designed to protect a patentee against unscrupulous

copyists who follow a patent’s claims almost—but not

quite—to the letter. See Winans v. Denmead, 56 U.S. (15

How.) 330, 343 (1854) (“The exclusive right to the thing

patented is not secured, if the public are at liberty to make

substantial copies of it, varying its form or proportions.”). A

hundred years after Winans, this Court reaffirmed the doc-

trine in Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339

U.S. 605, 607 (1950), explaining that the “essence of the

doctrine is that one may not practice fraud on a patent,” and

that to prohibit nothing other than “[oJutright and forthright

duplication” would “foster concealment rather than disclo-

sure of inventions, which is one of the primary purposes of

the patent system.” This Court again reaffirmed the doctrine

in Warner-Jenkinson, 520 U.S. 17, in which the petitioner

had asked the Court to hold that application of the doctrine

was completely barred whenever a patentee amended his

claims to surrender subject matter, whatever the reason for

the amendment. Citing the doctrine’s long history, this Court

refused “[t]o change so substantially the rules of the game

now.” Id. at 32 & n.6.

In Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,

however, the en banc Federal Circuit retroactively changed

the rules of the game in emphatic fashion. Relying almost

App. outa (Michel, J., dissenting), id. 148a, 155a

com t , and were implicitly rejected by the

majority ciamel National RR. Passenger Corp., 513 US.

374, 379 (1995) (“Our practice ‘permit{s] review of an issue not

pressed so long as it has been passed upon.’ ”) (quoting United

States v. Williams, 504 U.S. 36, 41 (1992)). And in any event, the

constitutional and equitable issues we address simply underscore

the fundamental unfairness of the Festo decision—an issue central

to petitioner’s arguments below and in this Court.

exclusively on the perceived policy need for more definite

notice in patent claims, at the expense of established prece-

dent and competing policy considerations, the Festo major-

ity—over four separate dissents—declared that claims

amended to meet any statutory requirement relating to

patentability completely barred the patentee from invoking

the doctrine of equivalents as to the amended claim. A panel

of the Federal Circuit subsequently applied Festo to Litton,

holding that Litton—which had previously obtained a billion-

dollar jury verdict on its patent claims—was completely

barred from arguing that its competitor Honeywell had

infringed its patent by equivalents.

The decision in Festo divested thousands of patent holders

like Litton of long-held property rights and amounts to an

unconstitutional taking. Inventors sought patents—and the

PTO granted them—knowing that under settled Supreme

Court and Federal Circuit precedent, if claim terms were

amended, as commonly occurs during prosecution, only

subject matter actually surrendered by amendment would be

off-limits in a subsequent action for infringement by equiva-

lents. Patentees thus understood that the property for which

field encircled by the literal terms of the patent; holders also

had a right, before Festo, to protect their patent from in-

fringement by products that departed from their invention in

insubstantial ways. Based on that understanding, and on

their corresponding assessment of their patents’ value,

patentees also entered into relationships with licensees that

took into account the entire field of their patent rights.

The Festo majority’s sudden departure from this settled

line of precedent retroactively changed the terms of the

bargains struck by patent holders with the PTO by effectively

reducing the scope of their patents to their literal terms. After

the Federal Circuit’s decision, patentees who had amended

their claims for patentability reasons were stripped of the

9

value of their patents, and their carefully negotiated license

agreements were rendered valueless.

Such an action—if undertaken by the legislative or execu-

tive branch—would plainly constitute a taking of private

property without just compensation in violation of the Fifth

Amendment’s Takings Clause. The Festo majority’s forced

reallocation of property rights should be treated just the

same. The Festo majority self-consciously acted as a legis-

lative policymaking body in crafting its new rule, and it

should be bound by the same constitutional constraint.

Even if this Court is inclined to affirm Festo on the merits,

moreover, it should avoid the serious constitutional question

presented by the retroactive divestment of settled patent

rights and hold that the decision should apply prospectively

only. The Festo decision readily satisfies the three-factor test

for prospective application announced in Chevron Oil Co. v.

Huson, 404 U.S. 97 (1971). The Federal Circuit’s decision

was a sudden and unpredictable departure from prior Federal

Circuit precedents; purely prospective application of the new

rule would not defeat—and in fact would enhance—its

announced purpose; and retrospective application of the rule

would have unduly harsh consequences for those who

sought, amended, and received their patents before Festo’s

radical new edict. Prospective application is the norm for a

new legislative rule, and that—in its provenance, scope, and

impact—is what the Festo majority has announced.

ARGUMENT

I. THE DECISION BELOW RAISES GRAVE

CONSTITUTIONAL CONCERNS UNDER THE

TAKINGS CLAUSE.

It has “long been settled” “[tJhat a patent is property,

protected against appropriation both by individuals and by

government.” Hartford-Empire Co. v. United States, 323

10

U.S. 386, 415 (1945) (citing cases); see Union Paper-Bag

Mach. Co. v. Murphy, 97 U.S. 120, 121 (1877) (“[rjights

secured to an inventor by letters-patent are property”); 35

U.S.C. § 261 (“patents shall have the attributes of personal

property”). Over a hundred years ago, the Court specifically

declared that “the right of the patentee * * * [i]s secured, as

against the government, by the constitutional guaranty which

prohibits the taking of private property for public use without

ion.” Hollister v. Benedict & Burnham Mfg. Co.,

113 U.S. 59, 67 (1885); see William Cramp & Sons Ship &

Engine Bldg. Co. v. International Curtis Marine Turbine Co.,

246 U.S. 28, 39-40 (1918) (“rights secured under [a] * * *

patent” are “property and protected by the guarantees of the

Constitution and not subject therefore to be appropriated

even for public use without adequate compensation”).

As this Court observed in Kaiser Aetna v. United States,

444 U.S. 164, 176 (1979), the “right to exclude” is “one of

the most essential sticks in the bundle of rights that are

commonly characterized as property.” The very “essence of

the patent privilege” is the “right to exclude everyone

from making * * * the thing patented, without the permission

of the patentee” during the term of the patent. Bloomer v.

McQuewan, 55 U.S. (14 How.) 539, 549 (1852); see Trans-

parent Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S.

637, 643 (1947); 35 U.S.C. §§ 154(a){1), 271(a). That, after

all, is part of the “carefully crafted bargain” of the patent

system: a patent holder is entitled to exclusive use of his idea

for a period of years, in exchange for making that idea public

and conferring on the public the right to practice the inven-

tion at the end of the period of exclusive use. Bonito Boats,

Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150-151

(1989).

The bargain created by the patent statutes is renewed each

time a patent is granted, because every patent is a “contract

between the government and the patentee.” Photo Elecs.

Corp. v. England, 581 F.2d 772, 776 (9th Cir. 1978). When

11

an inventor submits a patent application to the PTO, he

negotiates with that Office the scope of his patent protections

and thus the terms of his bargain with the government. That

process of negotiation is a meticulous back-and-forth, and

applications are commonly—in some fields, almost al-

ways—amended during patent prosecution. See Hughes

Aircraft Co. v. United States, 717 F.2d 1351, 1363 (Fed. Cir.

1983) (“Amendment of claims is a common practice in

prosecution of patent applications”); Pet. App. 148a n.21

(Newman, J., dissenting) (“For complex inventions the

At the end of the process—the PTO having sought various

clarifications, concessions, and amendments from the puta-

tive patent holder—the bargain is struck, and a patent issues.

For decades, that contract has been understood by all in-

volved—including those at the PTO, see Warner-Jenkinson,

520 U.S. at 32 n.6—to include something more than the

literal terms of the patent. See Graver Tank, 339 U.S. at 607.

As the Federal Circuit explained countless times before

Festo, a patentee was entitled to claim not only literal in-

fringement but infringement by equivalents as well, so long

as he did not recapture through his equivalents claim any

subject matter expressly surrendered during prosecution. See

Pet. App. 97a-103a (Michel, J., dissenting) (citing fifty-two

cases articulating this principle). Accordingly, before Festo,

patent holders—the vast majority of whom had amended

claims during prosecution—possessed enforceable property

rights in their inventions extending to a field outside the

literal claim language, but insubstantially different from it,

provided that they had no‘ specifically disclaimed such

subject matter during prosecution.

Those rights do not exist any more. Festo erased them by

whittling back to their literal terms the scope of patent claims

amended for patentability reasons. As the dissenters noted

12

below, the new rule has the most pernicious impact on the

holders of “most of the 1,200,000 patents that are unexpired

and enforceable,” because it substantially reduced the “effec-

tive scope, and thus, the value,” of those patents, disrupting

innumerable existing commercial relationships. Pet. App.

110a (Michel, J., dissenting). Put another way, when the

Festo majority changed the terms of the thousands of careful

bargains patent holders had struck with the government years

before, it eradicated part of the consideration for those

bargains. See Richmond Screw Anchor Co. v. United States,

275 U.S. 331, 345 (1928) (elimination of infringement action

“would seem to raise a serious question * * * under the Fifth

Amendment”).

Festo directs that the thousands of patentees who amended

their claims during prosecution in reliance on settled patent

law will receive virtually no value from their patents,

thwarting their expectations that they would be able to

protect their patent, and insubstantial changes thereto, from

“unscrupulous copyist[s].” Graver Tank, 339 U.S. at 607.

The patentees’ expectations that they would receive value

from their patents were reasonable —the doctrine of equiva-

lents was alive and well for a century and a half before

Festo—and they were investment-backed: those patentees

poured innumerable resources into securing the patents now

subject to only literal infringement analysis, and they negoti-

ated countless license arrangements operating on the as-

next to nothing. See Penn Central Transp. Co. v. New York

City, 438 U.S. 104, 124 (1978) (extent to which governmen-

tal action interferes with “investment-backed expectations” is

relevant consideration in takings analysis).

That the taking was accomplished in this instance by a

court rather than Congress makes it no less an affront to the

Fifth Amendment. See, e.g., Webb’s Fabulous Pharmacies,

Inc. v. Beckwith, 449 U.S. 155, 164 (1980) (“Neither the

Florida legislature by statute, nor the Florida courts by

13

judicial decree, may accomplish [a taking] simply by rechar-

acterizing” private property as a public asset); Hughes v.

Washington, 389 U.S. 290, 298 (1967) (Stewart, J., concur-

ring) (“{T]he Due Process Clause of the Fourteenth Amend-

ment forbids * * * confiscation by a State, no less through its

courts than through its legislature”); Barton H. Thompson,

Jr., Judicial Takings, 76 Va. L. Rev. 1449, 1500 (1990).

While a court’s incremental changes in law may not often

implicate the Constitution, see Patterson v. Colorado, 205

U.S. 454, 461 (1907), when a court departs in an “utterly

unpredictable” way from prior precedent, Pet. App. 110a

(Michel, J., dissenting), destroying long-held property rights

and expectations, the Takings Clause is directly put at issue.

Justice Stewart made exactly this point in his concurring

opinion in Hughes, 389 U.S. at 294-298. That case involved

the question of ownership of accreted shorelands—land

deposited over time by the ocean—adjoining the petitioner’s

beachfront property. The Supreme Court of Washington

to the State; this Court reversed, concluding that the issue

was one of federal law and that under federal law, the accre-

tion belonged to Hughes. Jd. at 293. Concurring, Justice

Stewart observed that the state supreme court had held

twenty years earlier that accretions belonged to the owner of

the adjoining land—not the State—and that the court’s abrupt

departure from its earlier precedent implicated the Takings

Clause:

To the extent that the decision of the Supreme Court of

Washington * * * arguably conforms to reasonable ex-

pectations, we must of course accept it as conclusive. But

to the extent that it constitutes a sudden change in state

law, unpredictable in terms of the relevant precedents, no

such deference would be appropriate. For a State cannot

be permitted to defeat the constitutional prohibition

against taking property without due process of law by the

simple device of asserting retroactively that the property

14

it has taken never existed at all. [Jd. at 296-297 (empha-

sis added).

Justice Stewart further explained that while the state supreme

court “[o]f course * * * did not conceive of this action as a

taking” when it departed from its earlier precedent, the

“Constitution measures a taking of property not by what a

State says, or by what it intends, but by what it does.” Id. at

298 (emphasis in original). See also Muhlker v. New York &

Harlem R.R., 197 U.S. 544, 570 (1905) (power of state courts

to “declare rules of property or change or modify their

decisions” may not be “exercised to take away rights which

have been acquired by contract and have come under the

protection of the Constitution of the United States”). These

principles should apply with equal force to decisions of

federal courts, just as the Takings Clause applies equally to

the federal and state governments. See Thompson, 76 Va. L.

Rev. at 1513.

This Court, and its individual members, have often ac-

knowledged the force of Justice Stewart’s approach. See,

e.g., Stevens v. City of Cannon Beach, 510 U.S. 1207, 1211-

12 (1994) (Scalia and O’Connor, JJ., dissenting from denial

of certiorari); Lucas v. South Carolina Coastal Council, 505

U.S. 1003, 1030 (1992); First English Evangelical Lutheran

Church v. County of Los Angeles, 482 U.S. 304, 334 n.11

(1987) (Stevens, J., dissenting); Bonelli Cattle Co. v. Ari-

zona, 414 U.S. 313, 331 (1973), overruled on other grounds

by Oregon v. Corvallis Sand & Gravel Co., 429 U.S. 363

(1977) (all citing with approval Justice Stewart’s concurrence

in Hughes). The lower courts have followed Justice Stew-

art’s lead as well. See, e.g., Cherry v. Steiner, 716 F.2d 687,

692 (9th Cir. 1983) (citing Hughes concurrence and con-

cluding that decision in question was not a “startling and

unpredictable change” from prior precedent and thus did not

implicate the Takings Clause), cert. denied, 466 U.S. 931

(1984); Ultimate Sportsbar, Inc. v. United States, 48 Fed. C1.

540, 550 (Fed. Cl. 2001) (“A judicial taking occurs where a

15

court’s decision that does not even ‘arguabl conform[] to

reasonable expectations’ in terms of relevant law of property

rights effects a ‘retroactive transformation of private into

public property’ ”) (quoting Hughes, 389 U.S. at 297 (Stew-

art, J., concurring)); Sotomura v. County of Hawaii, 460 F.

Supp. 473, 481, 482-483 (D. Haw. 1978) (citing Hughes

concurrence and holding that “[t]he Hawaii Supreme Court’s

retroactive application [of standards setting boundary of

property at vegetation line, rather than high water mark], was

so radical a departure from prior state law as to constitute a

taking of the Owners’ property by the State of Hawaii

without just compensation”).

Justice Stewart’s concurring statement applies by its terms

to exactly these circumstances. The Federal Circuit’s “ut-

terly unpredictable” decision, Pet. App. 110a (Michel, J.,

dissenting), all but eliminated recourse to the doctrine of

equivalents, demolishing the property interests of thousands

of paient holders. And as even the majority recognized, its

holding was a substantial change of course from its

in cases decided as recently as three months before Festo and

dating back to the creation of the Federal Circuit. See Pet.

App. 25a (“In reaching our holding, we are mindful of the

Supreme Court’s teaching that binding precedent is not to be

lightly discarded.”); id. 97a-103a (Michel, J., dissenting)

(listing over fifty prior cases overruled by Festo, dating from

1983 to August 2000). The Federal Circuit’s sudden depar-

ture from its prior precedent, so completely “unpredictable in

terms of the relevant precedents,” Hughes, 389 U.S. at 296

(Stewart, J., concurring), divested patent holders of their

settled property rights, renders! their license arrangements

practically valueless, and worked a taking of patent holders’

property for public use.

Festo’s unconstitutional impact is readil in

Litton’s case. Seven years before Festo issued, : Line ted

its infringement claims to a jury. The jury found Honeywell

to have willfully infringed Litton’s patent by equivalents,

16

awarding Litton $1.2 billion in compensatory damages. That

$1.2 billion is no more after Festo; it has gone the way of

Litton’s patent rights. Instead, Honeywell—clearly on notice

that it was treading on Litton’s patent and proprietary rights,

Litton I, 87 F.3d at 1573—has been accorded the privilege of

copying every element of Litton’s patented mirror-coating

process by merely changing an insubstantial detail. Litton’s

loss is what Festo has wrought, in concrete terms. See Kevin

A. Wolff, et al., The Unspoken Loss In Shareholder Value:

Patent Rights Take A Hit, Vol. 8, No. 21 Mealey’s Litigation

Reports: Patents 26, 31 (Apr. 2, 2001) (noting that “the

value of Litton’s patent * * * drop[ped] to nothing” after

Festo).

We recognize, of course, that while this Court has not

definitively rejected the proposition that the Takings Clause

can apply to judicial decisions, it has also yet to find that

such a decision violated the Clause.’ The issue rarely sur-

faces, which is understandable; the Clause is not implicated

when courts merely apply settled law to the facts, and rarely

comes into play even when courts reinterpret the law. See

Patterson, 205 U.S. at 461 (noting that “in general, the

decision of a court upon a questiou of law, however wrong

and however contrary to previous decisions, is not an infrac-

tion of the Fiurteenth Amendment merely because it is

wrong or because earlier decisions are reversed”—but that

“{e]xceptions have been held to exist”). Put another way, the

17

Takings Clause hardly ever comes into play when a court

acts like a court.

Here, however, the Festo majority quite self-consciously

acted like a legislative or rulemaking body—or as one court

has put it, “a substantive policymaker, a court with a mis-

sion”*—when it jettisoned its settled “flexible bar” estoppel

principle and crafted a new rule to take its place. To begin

with, the court sua sponte posed five broad questions for the

parties to address on rehearing en banc, as if the procedure

were akin to notice-and-comment rulemaking. See Pet. App.

2a-3a. In answering those questions, the majority invoked

“Its special expertise” and “role as the sole court of appeals

for patent matters,” id. 19a, 24a, see also id. 66a (Lourie, J.,

concurring) (“Our court was created with the opportunity and

mandate to observe such problems and to act upon a possible

solution.”), suggesting that the majority conceived its charter

as somewhat broader than the constitutional one of deciding

the case before it. Cf Marbury v. Madison, 5 US. (1

Cranch) 137 (1803). ‘he majority rather blithely dismissed

applicable Supreme Court precedent as insufficiently “ex-

plicit and carefully considered,” Pet. App. 18a—apparently

adopting the notion, as one concurring judge put it, that this

Court would not “wish{ ] to stand in the way of a sensible

solution” to the problem the majority perceived. Jd. 62a

(Plager, i, concurring). It just as cavalierly rejected its own

compelling body of precedent, see id. 97a-103a (Michel, J.,

dissenting), engaging instead in a remarkably candid weigh-

ing of policy alternatives. Jd. 24a-30a.

Indeed, Festo’s new rule is predicated on the majority’s

conclusion that one aspect of patent policy—the “notice

function” of the patent laws—was of “paramoun*” impor-

tance compared to other countervailing policies—such as the

need, expressed in 150 years of Supreme Court precedent, to

© Control Resources, Inc. v. Delta Elecs., h

121, 123 (D. Mass. 2001). a ee

18

give a patentee “meaningful protection” from infringers. Jd.

24a (majority), 70a (Michel, J., dissenting). As Judge

Newman explained in dissent, the majority chose to effect “a

change in industrial policy,” “legislat{ing] a new balance

between inventor and imitator.” Jd. 154a, 149a. Rather than

applying its expertise to formulate a balanced “test for

equivalence in the orderly course of case-by-case determina-

tions,” Warner-Jenkinson, 520 U.S. at 40—the way courts

proceed—the Festo majority instead made a sweeping policy

pronouncement of Ge oon this Court found was best left to

Congress. Jd. at 28.7? When it chose to act as a legislative,

policymaking body, the Festo majority forfeited whatever

claim it had not to be bound by the Takings Clause.

Il. THE DECISION BELOW, IF AFFIRMED,

SHOULD APPLY PROSPECTIVELY ONLY.

If this Court affirms Festo, it should avoid the intractable

constitutional problem presented by the Federal Circuit’s

decision and hold that Festo should apply prospectively only.

See Thompson, 76 Va. L. Rev. at 1500. Indeed, the Warner-

Jenkinson Court recognized that a rigid estoppel rule, if

retroactively applied, would subvert patentees’ nights and

expectations when it stressed the importance of maintaining

the established “rules of the game” for the benefit of those

already on the playing field.

The petitioner in Warner-Jenkinson had pressed for a rule

announcing a strict application of prosecution history estop-

pel, such that any claim amendment, regardless of the reason,

gave rise to estoppel. See 520 U.S. at 30. This Court rejected

that approach, noting that case law had consistently probed

7 To the problem further, the Federal Circuit

on rules in an area where participants’ property rights are

particularly concrete—and where the government takes an overt

role in the process of establishing those rights. Especially in these

= a policy-driven overturning of settled doctrine

constitutes a taking.

19

the reasons behind the surrender of subject matter dcring

prosecution and finding “no substantial cause for requiring a

more rigid rule invoking an estoppel regardless of the reasons

for the change:”

That petitioner’s rule might provide a brighter line for

determining whether a patentee is estopped under certain

circumstances is not a sufficient reason for adopting such

a rule. This is especially true where, as here, the PTO

may have relied upon a flexible rule of estoppel when

deciding whether to ask for a change in the first place.

To change so substantially the rules of the game now

could very weil subvert the various balances the PTO

sought to strike when issuing the numerous patents which

have not yet expired and which would be affected by our

decision. [/d. at 32 n.6.]

Although it declined to create a hard-line rule against prose-

cution history estoppel in all cases where a claim was

amended during prosecution, this Court held that with respect

to the narrow category of unexplained claim amendments, a

rebuttable presumption arose that the amendment was made

for a substantial reason related to patentability. Jd. at 32. If

that presumption were not overcome, “prosecution history

estoppel would bar the application of the doctrine of equiva-

lents as to that element.” Jd.

Justice Ginsburg, joined by Justice Kennedy, added an

additional “cautionary note” in her concurrence, concerning

application of the rebuttable presumption in cases “in which

patent prosecution has already been completed.” /d. at 41.

Justice Ginsburg observed that “wooden[ ]” application of

the presumption “might in some instances unfairly discount

the expectations of a patentee who had no notice at the time

of patent prosecution that such a presumption would apply,”

and who weuld have had “little incentive” at the time of

patent prosecution to create a record in the file wrapper to

satisfy this later-arising clarification. Jd. Justice Ginsburg

20

noted that the Court’s opinion was “sensitive to this prob-

lem,” id. (quoting opinion of the Court, 520 U.S. at 32 n.6),

and encouraged the Federal Circuit on remand to consider

whether the patent holder in that case had offered rea-

sons—or could now establish such reasons—for its amend-

ment, “bearing in mind the prior absence of clear rules of the

game.” Jd. at 42.

The Festo majority, however, concluded without discussion

that it would retroactively apply its new estoppel rule—one

that sweeps far more broadly, and does far more damage,

than Warner-Jenkinson’s carefully circumscribed rebuttable

presumption. That irony was not lost on the dissenting

judges. See Pet. App. 148a (majority ignored Warner-

Jenkinson’s “warnings against derogation of vested rights

and expectancies, and has declined to make this decision

applicable only prospectively”) (Newman, J., dissenting); id.

110a (“Today’s ruling offers no ‘grandfathering’ provision

for the vast numbers of unexpired patents that contain

amended claim repeayeti A hag itbn poccapacy A

creasingly susceptible to copying under y’s new rule.

(Michel, i. dissenting). Even if this Court affirms Festo, it

should hold that the new rule should apply prospectively

only, to patent applications submitted after Festo issued.

Otherwise the Court will be imposing on patentees a bargain

far different from that into which they entered when they

disclosed the details of their inventions.

In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), this

Court laid out a three-part test for examining whether a new

rule of law should be applied prospectively:

First, the decision to be applied nonretroactively must

establish a new principle of law, either by overruling

clear past precedent on which litigants may have

relied, or by deciding an issue of first impression whose

resolution was not clearly foreshadowed. Second,

* * * we must * * * look{] to the prior history of the rule

21

in question, its purpose and effect, and whether retro-

spective operation will further or retard its operation. Fi-

nally, we have weighed the inequity imposed by retroac-

tive application, for where a decision of this Court could

produce substantial inequitable results if applied retroac-

tively, there is ample basis in our cases for avoiding the

injustice or hardship by a holding of nonretroactivity. [Jd.

at 106-107 (quotations omitted and emphasis added). ]

See also American Trucking Ass'ns, Inc. v. Smith, 496 U.S.

167, 179-183 (1990) (plurality) (applying Chevron test and

concluding that decision in American Trucking Ass’ns, Inc. v.

Scheiner, 483 U.S. 266 (1987), would not apply retroactively

in the case before it).

This Court narrowed Chevron’s holding somewhat in

Harper v. Virginia Department of Taxation, 509 U.S. 86, 90

(1993), which held that “this Court’s application of a rule of

federal law to the parties before the Court requires every

court to give retroactive effect to that decision.” Harper

leaves open the question here, which is when it may be

proper for the first case to announce a new rule to apply that

tule prospectively only. See James B. Beam Distilling Co. v.

Georgia, 501 U.S. 529, 544 (1991) (opinion of Souter, J.)

(distinguishing between “pure prospectivity” and “selective”

prospectivity); Harper, 509 U.S. at 97; cf. Reynoldsville

Casket Co. v. Hyde, 514 U.S. 749, 761-763 (1995) (Ken-

nedy, J., concurring). That question is still controlled by

Chevron, and application of Chevron’s three-step test indi-

cates that Festo should be applied prospectively only.

Festo clearly satisfies the first Chevron test of nonretroac-

tivity, as even the judges in the majority seemed to appreci-

ate. The majority’s new, sweeping principle of law—a

patentee who amended a claim for any reason related to

patentability is barred from recourse to the doctrine of

equivalents as to that element—undercut Supreme Court

precedent dating to the mid-nineteenth century and overruled

22

a slew of precedent dating from the earliest days of the

Federal Circuit to decisions announced just prior to Festo.

See Harper, 509 U.S. at 112 (Kennedy, J., concurring)

(applying Chevron and asking whether decision in question

represented an “avulsive change which caused the current of

the law thereafter to flow between new banks”) (quotation

omitted). The Festo majority took pains, in fact, to explain

that in its view, the principle applied in the fifty-odd deci-

sions overruled by Festo had become “unworkable”—

standard argot when the doctrine of stare decisis is declared

to be overcome in a particular case. See Pet. App. 25a.®

The second part of Chevron is easily satisfied as well. The

“purpose and effect” of the new Festo rule, Chevron, 404

U.S. at 107 (internal quotation omitted), as the majority saw

it, was to further the “notice function” of patents by provid-

ing the public with a clear view of the scope of patent pro-

tection. See Pet. App. 24a-25a. But the majority’s stated

purpose can best be furthered, and the “notice function”

satisfied, by prospective application of the new rule. As the

Festo majority put it, prosecution history estoppel embodies

the notion that “the patentee, during prosecution, has created

a record that fairly notifies the public that the patentee has

surrendered the right to claim particular matter as within the

reach of the patent.” Jd. 6a. But patentees who received

their patents under the prior regime of course had no oppor-

tunity before the PTO to create the record Festo now re-

a second “line” of precedent

which supported its new rule. See id. 20a; but see id.

93a (Michel, J., dissenting) ( that the two cases em-

Support the yajority’s powition, ere a meager fig lef thet cannot

alter the conclusion that Chevron’s first test is plainly met.

23

id. 113a (Linn, J., dissenting) (rigid estoppel principle

une Gis tabie water aitth qrmeten Genake were

formulated for thousands of extant patents no longer subject

to correction”).

Construing the new rule to apply retroactively furthers the

“notice” function in only one undesirable way: it encourages

potential infringers to take advantage of the newly “para-

mount” notice function of patent claims, id. 24a, by poring

over extant patents, looking for claims amended for patent-

ability reasons (or for no discernible reason), and making

insubstantial changes to those claims. See id. 126a (Linn, J.,

dissenting) (“{TJhe majority’s new rule hands the unscrupu-

lous copyist a free ride on potentially valuable patented

technology, as long as the copyist merely follows the prose-

cution history road map and makes a change, no matter how

trivial or insubstantial, to an element otherwise covered

by * * * a narrowed claim limitation”).

Finally, it would be inequitable to apply Festo retroactively

to patent holders who relied on the long-settled “flexible bar”

in prosecuting their patents before the PTO. See American

Trucking Ass'ns v. Smith, 496 U.S. at 185 (“In determining

whether 4 decision should be applied retroactively, this Court

has consistently given great weight to the reliance interests of

all parties affected by changes in the law.”) (citing Cipriano

v. City of Houma, 395 U.S. 701, 706 (1969)). Before Festo,

an inventor sought a patent from the PTO with the under-

standing that if he chose to amend his claims for patentability

reasons, he could still make later use of the doctrine of

equivalents to defend against an infringer—as long as he did

not recapture in the process the prior art he had surrendered

by amendment. That mutual understanding rested not only

on the raft of settled Federal Circuit precedent applying the

“flexible bar” rule, but on a comparable host of Supreme

Court precedent dating back a century and a half to Winans,

which first articulated the doctrine. See Pet. App. 74a-9la

(Michel, J., dissenting, citing cases). But that is no longer

24

the law. After Festo, claims amended for any reason relating

to patentability—five, ten, or fifteen years ago—are now ripe

for the picking; all but the dullest infringer will design

around those amended claims, knowing that the patent holder

is powerless to use the doctrine of equivalents to keep blatant

infringement in check. Applying Festo to those patent

holders would produce the “harsh and disruptive effect” of

agreements—useless and valueless. American Trucking

Ass'ns v. Smith, 496 U.S. at 191.

Chevron prospectivity may not be available when a court

announces a new interpretation of the Constitution, because

the court’s new reading of the law is presumed always to

have been the law. See American Trucking Ass'ns v. Smith,

496 U.S. at 201 (Scalia, J., concurring in judgment) (“To

hold a governmental act to be unconstitutional is not to

announce that we forbid it, but that the Constitution forbids

it; * * * the notion that our interpretation of the Constitution

in a particular decision could take prospective form does not

make sense”). The issue here is quite different. The Festo

majority’s new rule was not compelled by the dictates of the

Constitution or by the terms of a statute; the court simply

discarded the old rule and adopted a new one after weighing

policy issues and deciding to “legislate{] a new balance

between inventor and imitator.” Pet. App. 149a (Newman,

J., dissenting). Again, the election to engage in such legisla-

tive activity suggests that the legislative model including

the norm that legislation operates prospectively only, see,

e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 265-266

(1994)}—-should apply to the court’s action. See also Rogers,

121 S. Ct. at 1705 (Scalia, J., dissenting) (“retroactive

revision of a concededly valid legal rule is extremely rare”).

In any event, that the Chevron test is so clearly satisfied

here—coupled with the fact that Festo bears all the charac-

teristics of an unconstitutional taking—at least highlights the

~

— — ee -

25

fundamental unfairness of the new rule crafted by the Festo

and received patents prior to Festo have already fixed the

terms of their bargains. They cannot renegotiate them now,

nor can they make their patents’ claims more clear: and it

See EEE a8 Ge gaee tale, ont

not lic—to force patentees to accept the substantial ly

enn ee ho cw Senge cllinas ty ho Peas afer

CONCLUSION

For the foregoing reasons, the judgment below should be

reversed.

FREDERICK A. LORIG

SIDFORD L. BROWN

BRIGHT & LORIG

633 West Sth Street

Los Angeles, CA 90071

(213) 627-7774

Rory J. RADDING

PENNIE & EDMONDS L.L.P.

1155 Avenue of the Americas

New York, NY 10036

(212) 790-9090

STANTON T. LAWRENCE, III

CARL P. BRETSCHER

PENNIE & EDMONDS L.L.P.

1667 K Street, N.W.

Washington, D.C. 20006

(202) 496-4400

* Counsel of Record

Respectfully submitted,

JOHN G. ROBERTS, JR.*

CATHERINE E. STETSON

HOGAN & HARTSON L.L.P.

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 637-5810

Counsel for Amicus Curiae