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

Suareree Court, Ug.

pus 31 2001 @)|

as AUG 31 2001

In The : CLERK

SUPREME COURT OF THE UNITED STATES

FESTO CORPORATION

Petitioner,

v.

SHOKETSU KINZOKU KOGYO

KABUSHIKI CO., LTD., a/k/a

SMC Corp. and SMC Pneumatics, Inc.,

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF THE AMERICAN BAR ASSOCIATION

AS AMICUS CURIAE IN SUPPORT OF

‘ PETITIONER

Robert E. Hirshon*

President

American Bar Association

750 N. Lake Shore Drive

Chicago, IL 60611

(312) 988-5000

E. Anthony Figg

Minaksi Bhatt

Robert H. Cameron

Counsel for Amicus Curiae

*Counsel of Record

05 Pt

i

QUESTION PRESENTED

Whether a finding of prosecution history estoppel

completely bars application of the doctrine of equivalents.

li

TABLE OF CONTENTS

Page

QUESTION PRESENTED ...............c0eeeeees

TABLE OF AUTHORITIES .................00e0- iv

STATEMENT OF INTEREST ..............-.0000- 1

SUMMARY OF ARGUMENT ..............-000 eee 2

ABSGURGEINT « .. . . . <ss000vidneunnennnenennn 3

I. | BACKGROUND OF THE DOCTRINE

OF EQUIVALENTS AND PROSECUTION

HISTORY ESTOPPEL .................000- 3

Il. THE “COMPLETE BAR” RULE CONFLICTS

WITH THIS COURT’S DECISIONS .......... 6

Ill. THE “COMPLETE BAR” RULE IS

CONTRARY TO PUBLIC POLICY .......... 10

A. THE “COMPLETE BAR” RULE ALL

BUT ABOLISHES THE DOCTRINE

OF EQUIVALENTS FOR MORE THAN

1.2 MILLION ISSUED PATENTS ..... 10

ill

B. THE “COMPLETE BAR” RULE WILL

SUBSTANTIALLY AND UNDULY

BURDEN PATENT PROSECUTION .. 16

1. The Decision Below Fails to Take

into Account the Realities of

2. The Federal Circuit’s New Ru'e

Will Increase The Cost

And Complexity of Patent

cece ébendeee 19

C. THE FEDERAL CIRCUIT HAS UPSET

THE BALANCE BETWEEN

ENCOURAGING INNOVATION

AND PROVIDING NOTICE TO THE

PUBLIC OF THE SCOPE OF AN

ISSUED PATENT .......-.ccccceee. 20

DEED Soc ccccecococcccccccccocbcccesce 25

iv

TABLE OF AUTHORITIES

Page(s)

Cases

Altech Controls Corp. v. EIL Instruments, Inc.,

No. 00-1216, 2001 U.S. App. LEXIS 8089

See ee ML EET “So cn ddubdedteednidene icon 15

Control Res., Inc. v. Delta Elecs., :

133 F. Supp. 2d 121 (D. Mass 2001) .............. 6, 12

Creo Products Inc. v. Dainippon Screen Mfg. Co., Ltd.,

No. 00-1536, 2001 U.S. App. LEXIS 9302

(Fed. Cir. May 14, 2001), petition for cert. filed,

70 U.S.L.W. 3130 (U.S. August 21, 2001) (No. 01-269) 15

Exhibit Supply Co. v. Ace Patents Corp.,

RR RE enn 11

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

Se ED Secccdecénecessedivacas 3, 14, 21

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

62 F.3d 1512 (Fed. Cir. 1995),

rev'd on other grounds, 520 U.S. 17 (1997) .......... 20

Hughes Aircraft Co. v. United States,

BGO 56 BOPO Gee. Coe, DGGE oc ccc ccccccccccccces 11

Hughes Aircraft Co. v. United States,

VOU eae Cae Os Gt HOD boc ccecccccccccvscces 9

v

Insituform Techs., Inc. v. Cat Contracting, Inc.,

161 F.3d 688 (Fed. Cir. 1998),

cert. denied, 526 U.S. 1018 (1999) .............. 12, 13

Insituform Techs., Inc. v. Cat Contracting, Inc.,

99 F.3d 1098 (Fed. Cir. 1996) ,

cert. denied, 520 U.S. 1198 (1997) ............2455. 12

Insituform Techs., Inc. v. Cat Contracting, Inc.,

No. 00-1005, 2001 U.S. App. LEXIS 4570

(Fed. Cir. March 26,2001) ................. 12, 13, 15

Litton Sys., Inc. v. Honeywell Inc.,

238 F.3d 1376 (Fed. Cir. 2001),

petition for cert. filed, 69 U.S.L.W. 3702

(U.S. April 23, 2001) (No. 00-1617) ................ 15

Lockheed Martin Corp. v. Space Sys./Loral, Inc.,

249 F.3d 1314 (Fed. Cir. 2001) ................. 12, 15

Mycogen Plant Science, Inc. v. Monsanto Co.,

Be eae CP Ge BOEED cc ccccdccccccccccccs 15

Pennwalt Corp. v. Durand-Wayland, Inc.,

833 F.2d 931 (Fed. Cir. 1987) (en banc),

cert. denied, 485 U.S. 961, 1009 (1988) .............. 5

Pharmacia & Upjohn Co. v. Mylan Pharms., Inc.,

170 F.3d 1373 (Fed. Cir. 1999) ................. 5,11

Pioneer Magnetics, Inc. v. Micro Linear Corp.,

238 F.3d 1341 (Fed. Cir. 2001),

petition for cert. filed, 69 U.S.L.W. 3756

(U.S. May 23, 2001) (No. 00-1765) ................. 15

vi

Semitool, Inc. v. Novellus Sys., Inc.,

No. 00-1375, 2001 U.S. App. LEXIS 11986

Sa, dee bebbestes 15

Warner-Jenkinson Co. v. Hilton Davis

Chem. Co., 520 U.S. 17 (1997) ............ 4, 5, 7-9, 11

Wilson Sporting Goods Co. v. David Geoffrey

& Assocs., 904 F.2d 677 (Fed. Cir. 1990),

cert. denied, 498 U.S. 992 (1990) .............00005. 5

Statutes

NI oe aw tok ol Tees head Ne 16

I i en conan ed 16

Other Materials

Atkinson, William M.., et al., Was Festo

Really Necessary?, 83 J. Pat. & Trademark

ee ee ED. wb cnc cacccaccaccccecss 20

Ayers, Peter J., Federal Circuit's Festo is

Unfriendly Toward Patent Rights,

Texas Lawyer, Jan. 8, 2001, at53 .................. 16

Besen, Stanley M. & Leo J. Raskind,

An Introduction to the Law and Economics

of Intellectual Property, 5 J. Econ. Perspectives 3

ST 4 Ka 6 cee cbddsiee es ntebehiadiatencs 23

Vii

Fehlner, Paul F., A New ‘Biohazard’ for

Patent Applicants: Broad Biotechnology

Patent Claims, The Metropolitan Corporate

I AE a 16

Grady, Mark F. & Jay I. Alexander,

Patent Law and Rent Dissipation,

78 Va. L. Rev. 305 (Feb. 1992) ............. ccc eee 22

Gressel, Gerry, Claim Drafting and Claim

Amendment to Reduce the Festo Effect,

Intell. Prop. Today, Apr. 2001, at 24 ................ 17

Hanish, Marc S. & Adrienne Yeung,

Patent Practitioners Beware: The Federal

Circuit Releases a Manifesto,

9 Nevada Lawyer 18 (Mar. 2001) ............... 14, 19

James, William, Ensuring Broad Claim

Coverage After Festo, The Computer &

Internet Lawyer, May 2001, at 13 ...............45. 10

Kitch, Edmund W., The Nature and

Function of the Patent System, 20

i he <tr deeb cabestectecdebess 22

Koffs, Steven E., What's Left of the

Doctrine of Equivalents?, The Legal

Intelligencer, Jan. 4, 2001, at5 ............ cece cues 19

Matutes, Carmen, et al., Optimal Patent

Design and Diffusion of Innovations,

27 RAND J. Econ. 60 (Spring 1996) ................ 21

Merges, Robert P. & Richard R. Nelson,

On the Complex Economics of Patent Scope,

90 Colum. L. Rev. 839 (May 1990) ................. 13

Otterstedt, Paul J., Unwrapping File Wrapper

Estoppel in the Federal Circuit,

67 St. John’s L. Rev. 405 (Spring 1993) ............. 20

Plager, S. Jay, Challenges for Intellectual

Property Law in the Twenty-First Century:

Indeterminacy and Other Problems,

2001 U. Ill. L. Rev. 69(2001) ................. 18, 19

Rose, Bruce J., et al., The Value of Quality

Patent Preparation and Prosecution Increases

under Festo, 8 Elec. Banking L. and

Com. Rep. 26 (Feb. 2001) 2... 2.0... cece eee eens 17

Rose, Simone A., Patent “Monopolyphobia”’:

A Means of Extinguishing the Fountainhead?,

49 Case W. Res. L. Rev. 509 (Spring 1999) .......... 22

Scotchmer, Suzanne, Standing on the

Shoulders of Giants: Cumulative Research

and the Patent Law, 5 J. Econ. Perspectives 29

SE MEd a dodccdbodaddbessedd cavesnetecenes 21

Wasleff, John A., et al., Festo Opens the Door,

Bee” B Gan BU BD Seeee BGE c ccc ccccccccccvccese 13

ix

Wegner, Harold C., Equitable Equivalents:

Weighing the Equities to Determine Patent

Infringement in Biotechnology and Other

Emerging Technologies, 18 Rutgers Computer

Oy Te Eads BOGE ok evn ccestccecccecccess 3, 22, 24

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

in Shareholder Value: Patent Rights Take a Hit,

Mealey’s Litig. Rep. Intell. Prop., Apr. 2, 2001,

WOE 60bc506 bdetkedNencdekecdsessssceesssknede 14

l

STATEMENT OF INTEREST

The American Bar Association (“ABA”), with more

than 400,000 members, is the leading national membership

organization of the legal profession. Its members come from

each of the fifty states, the District of Columbia, and the U.S.

territories. Membership is voluntary and includes attorneys

in private practice, government service, corporate law

departments and public interest organizations, as well as

legislators, law professors, law students, and non-lawyer

associates in related fields’ |The ABA’s Section of

Intellectual Property Law is the largest organization of

intellectual property lawyers in the world, with more than

20,000 members. The Intellectual Property Law Section has

contributed significantly to the development of the systems

for the protection of intellectual property rights in the United

States.

The ABA has consistently supported a strong patent

system, recognizing the important incentives that it provides

for technological progress. It has reoognized that an

important part of the patent system is a well-defined and

consistently applied doctrine of equivalents.

' This brief is filed with the consent of both Petitioners and

Respondent. Letters of consent have been filed with the Clerk. Pursuant

to Rule 37.6, the ABA states that this brief has not been authored in whole

or in part by counsel for a party and that no person or entity, other than

amicus, its members, or its counsel, has made a monetary contribution to

the preparation or submission of this brief. Neither this brief nor the

decision to file it should be interpreted to reflect the views of any judicial

member of the American Bar Association. No inference should be drawn

that any member of the Judicial Division Council has participated in the

adoption of or endorsement of the positions in this brief. This brief was

not circulated to any member of the Judicial Division Council prior to

filing.

2

In February, 2001, the ABA House of Delegates

adopted the following resolution as ABA policy:

RESOLVED, that the American Bar

Association opposes in principle that an

amendment to a patent claim shall necessarily

operate as a bar as to all equivalents with

respect to the amended language of the claim.

This brief is submitted in accordance with this policy and to

assist in securing implementation of the principle that it

supports.

SUMMARY OF ARGUMENT

The ABA respectfully submits that the Federal Circuit,

in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. ,234

F.3d 558, 576-77 (Fed. Cir. 2000), erred in its formulation of

the so-called “complete bar” rule, precluding any reliance on

the doctrine of equivalents with respect to a patent claim

limitation that was the subject of a narrowing amendment

made during prosecution for a reason relating to patentability.

The “complete bar” rule is inconsistent with precedent of this

Court. It also is contrary to sound public policy for at least

the following reasons: First, the new rule all but abolishes the

doctrine of equivalents for a large proportion of the more than

1.2 million unexpired patents, unfairly denying many

patentees a scope of protection that they had every reason to

expect and that they did not voluntarily relinquish to secure

issuance of their patents. Second, the new rule placesanes ‘y

impossible burden on patent applicants and their counsei .o

draft and prosecute patent claims that achieve the broadest

literal coverage to which they are entitled, while avoiding

amendments that will result in forfeiture of all rights under

the doctrine of equivalents. Third, the substantial erosion of

3

the patent right that will result from the new rule, coupled

with the increased complexity and cost of patent application

preparation and prosecution, will diminish the incentive that

fuels innovation in this country. It will discourage use of the

patent system and will encourage reliance on trade secret

protection.

For these reasons, the ABA respectfully urges this

Court to reject the “complete bar” rule in favor of a “flexible

bar” rule.’

ARGUMENT

I.

BACKGROUND OF THE DOCTRINE

OF EQUIVALENTS AND PROSECUTION

HISTORY ESTOPPEL

The doctrine of equivalents has been an important part

of the patent law of this country for more than one hundred

years. Harold C. Wegner, Equitable Equivalents: Weighing

the Equities to Determine Patent Infringement in

Biotechnology and Other Emerging Technologies, 18 Rutgers

Computer & Tech. L.J. 1, 7-8 (1992). This Court succinctly

reiterated the rationale behind the doctrine in its 1950

decision in Graver Tank & Mfg. Co. v. Linde Air Prods.

Co., 339 U.S. 605, 607 (1950):

2 The ABA takes no position on the issue of whether or

not the Petitioner has met its burden of proving infringement of the

patents in suit.

4

[Cjourts have also recognized that to permit

imitation of a patented invention which does

not copy every literal detail would be to

convert the protection of the patent grant into

a hollow and useless thing. Such a limitation

would leave room for -- indeed encourage --

the unscrupulous copyist to make unimportant

and insubstantial changes and substitutions in

the patent which, though adding nothing,

would be enough to take the copied matter

outside the claim, and hence outside the reach

of law.

In applying the doctrine of equivalents, courts recognize the

real-life difficulties of describing in words the precise

boundaries of an invention or discovery. So the words are

given leeway, and one who appropriates the invention, yet

makes insubstantial changes to avoid the literal language of

the patent claim, nevertheless is liable as an infringer. The

constitutionally recognized incentive of the patent system is

fortified--indeed, is made real rather than illusory--in no small

part by the doctrine of equivalents. It is presumably for this

reason that this Court recently declined a suggestion that it

should abolish the doctrine altogether. Warner-Jenkinson Co.

v. Hilton Davis Chem. Co., 520 U.S. 17, 21 (1997).

It is fair to say, however, that the doctrine is subject to

abuse. Once untethered from the literal claim language,

patent holders are tempted to stretch their lawful right to

exclude to unreasonable extremes. Competitors are forced to

defend against expensive, protracted patent litigation based on

theories of infringement that are not recognizable from the

claim language or the patent specification. Jd. at 28-29 (“We

do, however, share the concern . . . that the doctrine of

equivalents, as it has come to be applied since Graver Tank,

5

has taken on a life of its own, unbounded by the patent

claims.”).

To balance fairness to the patentee against certainty

and reasonable public notice of the scope of the patent right,

limits have been established on the application of the

doctrine. These limits fall into three main categories. First,

the scope of protection cannot be expanded so as to

encompass subject matter that would have been unpatentable

over the prior art. Wilson Sporting Goods Co. v. David

Geoffrey & Assocs., 904 F.2d 677, 683-85 (Fed. Cir. 1990),

cert. denied, 498 U.S. 992 (1990). Second, if an element of

the patent claim is omitted from the accused device or process

and an equivalent element is not substituted for it, there can

be no infringement under the doctrine of equivalents.

Warner-Jenkinson, 520 U.S. at 31; Pennwalt Corp. v.

Durand-Wayland, Inc., 833 F.2d 931, 934 (Fed. Cir. 1987)

(en banc), cert. denied, 485 U.S. 961, 1009 (1988). Third, the

patentee may not recapture subject matter that was

relinquished during patent prosecution to secure the grant of

the patent. Pharmacia & Upjohn Co. v. Mylan Pharms.,

Inc., 170 F.3d 1373, 1376 (Fed. Cir. 1999).

The last limitation, known as “prosecution history

estoppel,” and its effect on the scope of protection available

to a patentee are issues presented by this case. Frustrated by

what it perceived as an “unworkable” and unpredictable

“flexible” approach in determining the range of permissible

equivalents following an estoppel-creating amendment of a

claim limitation, the Federal Circuit radically altered the

landscape for patent owners, patent applicants, and the public.

In a split decision that one district court has recently

6

characterized as “jarring,”’ the Federal Circuit announced its

“complete bar” rule. This rule denies the patentee any

protection under the doctrine of equivalents with respect to a

claim limitation that was narrowed by amendment during

prosecution for any reason related to a statutory requirement

for patentability. Although the Federal Circuit found some

authority for the “complete bar” rule in its prior cases, the

court acknowledged that it overruled a long line of precedent

that employed a “flexible” approach to determining the range

of equivalents remaining after a finding of prosecution history

estoppel. Festo, 234 F.3d at 574-75.

II.

THE “COMPLETE BAR” RULE CONFLICTS

WITH THIS COURT’S DECISIONS

The Federal Circuit’ s “complete bar” rule means that

prosecution history estoppel precludes any range of

equivalents for an amended claim element. Festo, 234 F.3d

at 569 (“When a claim amendment creates prosecution history

estoppel with regard to a claim element, there is no range of

equivalents available for the amended claim element.”). This

rule forecloses further consideration of the prosecution record

in any particular case where an amendment triggering

prosecution history estoppel has occurred. Jd. at 600 (Michel,

J., concurring in part, dissenting in part).‘

> Control Res., Inc. v. Delta Elecs., 133 F. Supp. 2d 121,

135 (D. Mass 2001).

* Thorough discussions of precedential decisions of this

Court and of the Federal Circuit are set forth in the Federal

Circuit’s majority opinion and in Judge Michel’s dissenting

opinion, and will not be repeated here.

7

The Federal Circuit held that an estoppel is triggered

“when an amendment has narrowed the scope of a claim for

a reason related to patentability.” Id. at 574. The net effect

is that a narrowing amendment for any reason related to

patentability -- whether substantial or insubstantial -- deprives

the patentee of any protection under the doctrine of

equivalents with respect to the amended claim element. It is

difficult to reconcile these holdings with this Court’s

precedent.

The Federal Circuit’s “complete bar” rule proceeds

from the premise that this Court has never addressed the

range of permissible equivalents that remains after an

estoppel-creating amendment. /d at 569. In Warner-

Jenkinson, however, this Court left no room for the

conclusion that all equivalents to an amended claim element

are forfeited regardless of the reasons for an amendment.

Instead, it ruled that the nature of the Patent and Trademark

Office’s objection and the rationale for the amendment were

subject to a court’s examination before determining the range

of equivalents. Warner-Jenkinson, 520 U.S. at 33 and n. 7.

In Warner-Jenkinson, the Court referred to its own

precedent and pointed out that, in each of its prior cases

dealing with prosecution history estoppel, the prosecution

record was examined and the reasoning behind an amendment

was probed before applying prosecution history estoppel as a

limitation on the doctrine of equivalents. /d. at 30-31. “What

is permissible for a court to explore is the reason (right or

wrong) for the objection and the manner in which the

amendment addressed and avoided the objection.” /d. at 33

n.7 (emphasis in original). Such inquiries would be useless

acts under a “complete bar” rule.

Moreover, this Court placed the burden on the

patentee to establish that the rationale for a limiting

amendment to the claims during prosecution would not

preclude infringement by equivalents to that element. Jd. at

33 (The court then would decide “whether that reason is

sufficient to overcome prosecution history estoppel as a bar

to application of the doctrine of equivalents to the element

added by that amendment.”) (emphasis added). This

evidentiary burden would be meaningless if the “complete

bar” rule were applied, because, under that rule, whenever a

claim amendment creates prosecution history estoppel, no

scope of equivalents is available. The Federal Circuit’s new

rule circumvents this Court’s approach to the scope of

equivalents available after claim amendments.

The diminution of patent protection resulting from the

“complete bar” rule is exacerbated by the Federal Circuit’s

relatively low threshold for determining when an amendment

results in an estoppel. The court held that amendments made

for any reason related to patentability give rise to estoppels.

Festo, 234 F.3d at 576. In Warner-Jenkinson, this Court held

that failure to establish a reason for a claim amendment leads

to a presumption that the amendment was made for a

“substantial” reason related to patentability. Warner-

Jenkinson, 520 U.S. at 33-34. This holding suggests that

estoppels arise only from amendments made for “substantial”

reasons related to patentability. The Federal Circuit rule omits

any requirement of substantiality.° The “complete bar” rule,

* For example, in the case at bar, certain amendments were

made for purposes of clarification (responding to an examiner’s

- inquiry as to whether the claimed device is a true motor or a

magnetic clutch) and for purposes of eliminating improper multiple

claim dependencies (resulting from the foreign origin of the

—— ~— — -— we

9

together with the court’s low standard for determining when

an amendment gives rise to an estoppel, creates a regime that

virtually eliminates the doctrine of equivalents. It is,

therefore, inconsistent with this Court’s admonition that “to

change so substantially the rules of the game ... could very

well 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.”

Warner-Jenkinson, 520 U.S. at 32 n.6. The Federal Circuit’s

ruling vitiates this Court’s careful balancing of the competing

needs of meaningful patent protection and adequate public

notice in fashioning limits on the doctrine of equivalents. See

id. at 34 (The presumption places “reasonable limits” on the

doctrine of equivalents and “further insulates the doctrine

from any feared conflict with the Patent Act.”).

It was this very kind of balancing that was reflected in

the Federal Circuit’s own decisions prior to the ruling below.

See Festo, 234 F.3d at 609-10, 611 (Michel, J., concurring in

part, dissenting in part). In more than fifty decisions spanning

nearly two decades, with few exceptions, the Federal Circuit

utilized a flexible, case-by-case approach in determining the

extent to which prosecution history estoppel acted as a legal

limitation on the doctrine of equivalents. See, e.g., Hughes

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

1983) (prosecution history estoppel may limit application of

the doctrine of equivalents “within a spectrum ranging from

application). See Festo, 234 F.3d at 583. Both amendments were

related to statutory requirements of patentability (35 U.S.C. §

112). The court did not, however, address whether the reasons for

the amendments were so substantial that they should create

estoppels precluding all application of the doctrine of equivalents

to the amended limitation.

10

great to small to zero,” depending on the reasons for the

positions taken during prosecution). Because of the Federal

Circuit’s exclusive jurisdiction over appeals in patent cases

from the Patent and Trademark Office and the district courts,

its long-standing “flexible” approach has guided both the

procurement and enforcement of the vast majority of

unexpired patents.

THE “COMPLETE BAR” RULE IS

CONTRARY TO PUBLIC POLICY

A. THE “COMPLETE BAR” RULE ALL BUT

ABOLISHES THE DOCTRINE OF

EQUIVALENTS FOR MORE THAN 1.2

MILLION ISSUED PATENTS

More than 1.2 million patents have been issued and

remain in force in the United States. These patents were

prosecuted based on reasonable an@ settled expectations as to

the effect of narrowing amendments on the scope of

equivalents for a claim element. See Festo, 234 F.3d at 618-

19 (Michel, J., concurring in part, dissenting in part). During

the process of negotiating with the Patent and Trademark

Office to procure the allowance of claims, many patentees

accepted limiting amendments without intending to surrender

the entire coverage afforded by the doctrine of equivalents.

See William James, Ensuring Broad Claim Coverage Afier

Festo, The Computer & Internet Lawyer, May 2001, at 13, 13-

14.

Under then-existing and well-established law, a range

of equivalents remained available to an applicant who

narrowed a claim by amendment, limited only by the scope of

1]

the prior art and a determination of what was relinquished

based on the reason for the amendment. See Festo, 234 F.3d

at 612-15 (Michel, J., concurring in part, dissenting in part)

(collecting Federal Circuit cases applying the “flexible bar”

rule). The inventor’s reliance on the doctrine of equivalents

formed part of the consideration for the inventor’s disclosure

of the invention to the public; hence, the retroactive effect of

the “complete bar” rule upsets the basic assumptions

underlying the bargain between the public and the inventor.

Warner-Jenkinson, 520 U.S. at 32 and n.6; Festo, 234 F.3d at

618-619 (Michel, J., concurring in part, dissenting in part).

A rationale for the application of prosecution history

estoppel is that a patentee should be precluded from

recapturing, through the doctrine of equivalents, subject

matter that was relinquished during prosecution to obtain the

patent. Exhibit Supply Co. v. Ace Patents Corp., 315 U.S.

126, 136 (1942). A patentee might, for example, amend an

aspect of a claim element to avoid prior art. The patentee

may not recapture the surrendered subject matter. Pharmacia,

170 F.3d at 1376. However, under the pre-Festo “flexible

bar” rule, a copyist could not, despite such an amendment,

avoid infringement by making minor changes to a different

aspect of the amended element, because the patentee had not

secured allowance of the patent by relinquishing the coverage

of the subject matter modified by the copyist. See, e.g.,

Hughes Aircraft Co. v. United States, 140 F.3d 1470, 1476

(Fed. Cir. 1998). Following the Federal Circuit’s ruling, that

protection is eliminated, because prosecution history estoppel

precludes any range of equivalents for the amended claim

element. See, e.g., Control Res., 133 F. Supp. 2d.at 136-37.°

® See also Lockheed Martin Corp. v. Space Sys./Loral,

Inc., 249 F.3d 1314, 1326-27 (Fed. Cir. 2001), which involved a

12

The effect of the “complete bar” rule on existing

patents is illustrated by the Federal Circuit’s post-Festo

decision in /nsituform Techs., Inc. v. Cat Contracting, Inc.,

No. 00-1005, 2001 U.S. App. LEXIS 4570 (Fed. Cir. March

26, 2001). The lengthy history of the litigation, summarized

in the court’s opinion (id., at *4 - *8), involved the Federal

Circuit’s twice finding that prosecution history estoppel did

not preclude the application of the doctrine of equivalents

with respect to one of the processes used by the accused

infringers (“Process 1”). See Insituform Techs., Inc. v. Cat

Contracting, Inc., 99 F.3d 1098, 1109 (Fed. Cir. 1996)

(“Insituform I”), cert. denied, 520 U.S. 1198'(1997), and

Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688,

692 (Fed. Cir. 1998) (“Insituform IT”), cert. denied, 526 U.S.

1018 (1999). In Jnsituform II, the Federal Circuit concluded

that this Court’s decision in Warner-Jenkinson did not affect

the earlier decision that prosecution history estoppel did not

preclude application of the doctrine of equivalents to Process

claim to a system for controlling the orientation of a

communications satellite. The Federal Circuit, applying Festo,

held that no range of equivalents is available with respect to a

claim limitation requiring a “means for rotating [a gyroscopic ~

wheel] in accordance with a predetermined rate schedule which

varies sinusoidally over the orbit at the orbital frequency of the

satellite.” The language “at the orbital frequency of the satellite”

was added by amendment to distinguish over prior art that

disclosed sinusoidal variation over a period of minutes, rather than

over the orbital frequency of 24 hours. The patentee argued that

this amendment had nothing to do with the issue of equivalence,

because the accused infringer’s satellite employed substantially the

24-hour sinusoidal! variation of the claim, not the short periods of

variation described in the prior art. Nonetheless, because the

limitation was amended to overcome the prior art, it was accorded

no range of equivalents.

13

1. 161 F.3d at 692. The court reasoned that although the

pertinent claim limitation had been narrowed during

prosecution to distinguish over prior art, the patentee did

explain the reason for the amendment, and a scope of

protection encompassing Process | was not surrendered.

After the decision in the case here under review, the

Federal Circuit addressed /nsituform a third time, on appeal

from the district court’s final judgment entered after a

bifurcated trial on daiuages. The Federal Circuit held that its

ruling in the present case, revisiting the issue of prosecution

history estoppel, compelled the conclusion that prosecution

history estoppel barred any range of equivalents. 2001 U.S.

App. LEXIS 4570, at *22-*24. The judgment of infringement

was, therefore, reversed.

As a consequence of patentees’ reliance on then-

existing and well-settled law, the vast majority of issued

patents have been significantly diminished in value by the

“complete bar” rule. The value of a patent is tied directly to

the scope of its claims. Robert P. Merges & Richard R.

Nelson, On the Complex Economics of Patent Scope, 90

Colum. L. Rev., 839, 839 (May 1990). If the decision below

were permitted to stand, it is likely that in many cases an

inventor would be found to have sacrificed a key claim

element of the invention by making an amendment, opening

up to competitors the area just outside the literal scope of this

element. See John A. Wasleff, et al., Festo Opens the Door,

Nat'l. L.J., Feb. 5, 2001, at Cl, C21. The retroactive

application of the “comp!ste bar” rule would provide a safe

harbor to competitors and copyists -- they can “read the

prosecution history to identify amendments made for

patentability reasons ... copy every other limitation exactly,

but substitute any known interchangeable structure, matters or

step for any limitation that has been amended.” Festo, 234

14

F.3d at 616 (Michel, J., concurring in part, dissenting in part).

The substance of an invention would be subordinated to its

form, and the patent holder would be deprived of the benefit

of the inventive efforts--a benefit that the doctrine of

equivalents was designed to protect. See Graver Tank, 339

U.S. at 607; Kevin A. Wolff, et al., Zhe Unspoken Loss in

Shareholder Value: Patent Rights Take a Hit, Mealey’s Litig.

Rep. Intell. Prop., Apr. 2, 2001, at 41, 48 (“. .. Festo places

greater emphasis on the public notice function of the claims

to put would-be infringers on notice, but in the process

trump[s] the patentee’s equitable interests.”).

The value of the patent is also tied directly to the

ability of its owner to enforce it against infringers and

copyists. Under the decision below, the existence of a minor

amendment to a claim element in the prosecution record will

lead judges to dismiss what otherwise would have been

meritorious patent infringement cases. See Marc S. Hanish &

Adrienne Yeung, Patent Practitioners Beware: The Federal

Circuit Releases a Manifesto, 9 Nevada Lawyer 18, 21 (Mar.

2001). Furthermore, many pending lawsuits were initiated by

parties and their counsel on the basis of the same reasonable

and well-settled expectations regarding the relationship

between pro.ecution history estoppel and the doctrine of

equivalents. Many of these suits will now be barred by the

decision below.’

? The impact of the “complete bar” rule on litigation

involving issued patents is highlighted by the significant number

of post-Festo Federal Circuit decisions in which the “complete

bar” rule was invoked to eliminate any scope of equivalents for an

amended claim limitation. As of this writing, the “complete bar”

rule has been applied in the following post-Festo decisions of the

Federal Circuit:

Pioneer Magnetics, Inc. v. Micro Linear Corp., 238 F.3d

15

The diminution of value of existing patents will also

have a disproportionate effect on smaller companies and

individual inventors who rely on only a small number of

patents to cover the fruits of their research and development.

These patents may serve as their only source of leverage

against much larger competitors with superior resources.

Peter J. Ayers, Federal Circuit's Festo is Unfriendly Toward

Patent Rights, Texas Lawyer, Jan. 8, 2001, at 53, 54.

1341, 1345-47 (Fed. Cir. 2001), petition for cert. filed, 69

U.S.L.W. 3756 (U.S. May 23, 2001) (No. 00-1765);

Litton Sys., Inc. v. Honeywell Inc., 238 F.3d 1376, 1380

(Fed. Cir. 2001), petition for cert. filed, 69 U.S.L.W. 3702

(U.S. April 23, 2001) (No. 00-1617);

Insituform Techs., 2001 U.S. App. LEXIS 4570, at *22-

*23;

Lockheed Martin, 249 F.3d at 1326-27;

Altech Controls Corp. v. EIL Instruments, Inc., No. 00-

1216, 2001 U.S. App. LEXIS 8089, at *12 (Fed. Cir.

May 2, 2001);

Mycogen Plant Science, Inc. v. Monsanto Co., 252 F.3d

1306, 1319-1320 (Fed. Cir. 2001);

Semitool, Inc. v. Novellus Sys., Inc., No. 00-1375, 2001

U.S. App. LEXIS 11986, at *22 (Fed. Cir. sune 8, 2001);

Creo Products Inc. v. Dainippon Screen Mfg. Co., Lid.,

No. 00-1536, 2001 U.S. App. LEXIS 9302, at *4-*5 (Fed.

Cir. May 14, 2001), petition for cert. filed, 70 U.S.L.W.

3130 (U.S. August 21, 2001) (No. 01-269).

16

B. THE “COMPLETE BAR” RULE WILL

SUBSTANTIALLY AND UNDULY BURDEN

PATENT PROSECUTION

l. The Decision Below Fails to

Take into Account the Realities

of Claim Drafting and

Patent Prosecution

The patent examination process ideally results in

allowance of claims whose literal scope is fully

commensurate with the applicant’s inventive contribution and

the descriptive and enabling support provided by the

specification. The Federal Circuit’s “complete bar” rule has

dramatically altered the process used to achieve that result

and places unrealistic burdens on applicants and their patent

counsel. Applicants are now required to present claims that

are precisely drafted as broadly as the disclosure supports (35

U.S.C. § 112) and the prior art permits (35 U.S.C. §§ 102 and

103), yet not so broad as to provoke a rejection that may,

during prosecution, require an amendment that will foreclose

any subsequent reliance on the doctrine of equivalents. The

alternative is to present narrow claims, thus relinquishing

literal coverage, in hopes of avoiding an estoppel. Applicants

and their counsel! will find this dilemma difficult to resolve.

Paul F. Fehiner, A New ‘Biohazard’ for Patent Applicants:

Broad Biotechnology Patent Claims, The Metropolitan

Corporate Counsel, Mar. 2001, at 4, 4.

The expectation that applicants and their counsel can

determine with precision the broadest claim language that will

not provoke a rejection is unrealistic. Bruce J. Rose, et al.,

The Value of Quality Patent Preparation and Prosecution

Increases under Festo, 8 Elec. Banking L. and Com. Rep. 26,

17

28 (Feb. 2001). Patent prosecution involves human

interactions that are not predictable. Language that one

examiner might find clear and unobjectionable may be found

by another examiner to be defective. Judge Linn succinctly

described the impact of the new rule (of the decision below)

on claim drafting: “Tie new regime also places greater

emphasis on literary skill than on an inventor’s ingenuity.”

Festo, 234 F.3d at 620 (Linn, J., concurring in part, dissenting

in part).

Patent applications, particularly in highly competitive

emerging technologies, are often filed as early as possible.

Knowledge about the invention and the prior art changes over

the course of prosecution. Even the most thorough pre-filing

search typically does not unearth every piece of prior art, and

the patent attorney cannot confidently anticipate the prior art

on which the examiner will focus during prosecution. Gerry

Gressel, Claim Drafting and Claim Amendment to Reduce the

Festo Effect, Intell. Prop. Today, Apr. 2001, at 24, 24.

Before the Federal Circuit decision in this case,

applicants could advance patent prosecution and allowance by

offering amendments to overcome examiners’ objections.

They now have a strong incentive to resist such changes and

to traverse and appeal rejections that they might otherwise

readily accept. The Federal Circuit’s new rule “creates a

disincentive for the present system of negotiation between

applicant and PTO examiner in arriving at agreed upon claim

language, with probably some as of yet unforeseen

consequences.” S. Jay Plager, Challenges for Intellectual

Property Law in the Twenty-First Century: Indeterminacy

and Other Problems, 2001 U. Ill. L. Rev. 69, 74 (2001).

The resulting increased burdens on both applicants and the

Patent and Trademark Office are apparent.

18

Although it is true that assessing what the patentee has

relinquished and what remains under the doctrine of

equivalents after an amendment is neither easy nor precise,

this task is not substantially different from many other

disputes that courts must resolve. Indeed, determining the

permissible scope of equivalents that remain after a narrowing

amendment is not more difficu!t, and may be less difficult,

than determining the range of equivalents to which an

unamended claim is entitled. The amendment and

accompanying dialogue between the applicant and the patent

examiner are likely to provide some information that assists

in ascertaining the appropriate range of equivalents. The

problems identified by the Federal Circuit are not so much a

result of the fact that a claim has been narrowed by

amendment as they are of problems inherent in determining

where the equivalency line should be drawn.

19

2. The Federal Circuit’s New Rule Will

Increase The Cost And Complexity of

Patent Prosecution _

The new rule announced by the Federal Circuit has

spawned prosecution strategies that add to the burdens of the

applicant and the Patent and Trademark Office. Time-

consuming and expensive pre-filing searches are more

important now to ensure that the claim drafter has reviewed

as much of the prior art that the examiner may consider

important during prosecution as possible. Of course, “there

is no guarantee that the examiner will recognize the

distinguishing features of even the most carefully crafted

claim.” Steven E. Koffs, What’s Left of the Doctrine of

Equivalents? , The Legal Intelligencer, Jan. 4, 2001, at 5, 7.

The applicant also may choose initially to draft and

file numerous independent claims of varying scope, so that if

the broader claims are rejected, the narrower claims may be

allowed without the need for amendment. Hanish & Yeung,

supra, 9 Nevada Lawyer at 21. If the examiner is not

convinced by the applicant’s arguments, the applicant will

then have to spend additional time and resources to appeal the

examiner’s decision to the Board of Patent Appeals and

Interferences.

The “complete bar” rule increases the costs of patent

prosecution, a result that is not in the public interest. Plager,

supra, 2001 U. Ill. L. Rev. at 73-74 (Federal Circuit should

ask whether its decisions “achieve the goal sought with the

least cost to other parts of the system?””). Commentators have

suggested that other, less draconian solutions that take into

account the limitations of the English language and the

realities of patent preparation and prosecution are available

and should be considered. William M. Atkinson, et al., Was

20

Festo Really Necessary?, 83 J. Pat. & Trademark Off. Soc’y

111, 141-42 (Feb. 2001) (demonstrating that alternatives to

the “complete bar” rule provide public notice and certainty).

Cc. THE FEDERAL CIRCUIT HAS UPSET

THE BALANCE BETWEEN ENCOURAGING

INNOVATION AND PROVIDING NOTICE

TO THE PUBLIC OF THE SCOPE

OF AN ISSUED PATENT

The significantly greater contentiousness, expense and

duration of patent prosecution and likelihood of increased

free-riding on patented innovations by competitors and

copyists under the Federal Circuit’s new rule will undermine

the substantial contribution of the patent system to economic

growth in the United States. One of the primary functions of

the patent system is to encourage innovation and investment

in research and development to foster economic growth as

well as technological advance. Festo, 234 F.3d at 639

(Newman, J., concurring in part, dissenting in part). The

doctrine of equivalents plays an important role in this function

of the patent system. /d. at 641; see also Hilton Davis Chem.

Co. v. Warner-Jenkinson Co., 62 F.3d 1512, 1533-34 (Fed.

Cir. 1995) (Newman, J., concurring) (“[T]he doctrine of

equivalents, on balance, serves the interest of justice and the

public interest in the advancement of technology, by

supporting the creativity of originators while requiring

appropriators to adopt more than insubstantial technologic

change.”), rev'd on other grounds, 520 U.S. 17 (1997); Paul

J. Otterstedt, Unwrapping File Wrapper Estoppel in the

Federal Circuit, 67 St. John’s L. Rev. 405, 422 (Spring 1993)

(doctrine of equivalents ensures adequate patent protection for

inventors, which encourages innovation, economic growth

and American competitiveness). The Federal Circuit's

dramatic change in its view of the law thus negatively affects

21

incentives for investment in research and development of new

technology. Carmen Matutes, et al., Optimal Patent Design

and Diffusion of Innovations, 27 RAND J. Econ. 60, 61-62

(Spring 1996) (strong scope of protection benefits public

welfare because inventor has more flexibility to exercise his

or her property rights and will more readily disclose

knowledge derived from basic innovation); Suzanne

Scotchmer, Standing on the Shoulders of Giants: Cumulative

Research and the Patent Law, 5 J. Econ. Perspectives 29, 31

(Winter 1991) (first innovators will have incentives to invest

only where they can benefit from surplus provided by second

generation products).

Moreover, inventors, faced with the prospect of

obtaining a scope of protection limited to the strict, literal

language of their amended claims, will have a strong

incentive to rely on trade secret protection. See Graver Tank,

339 U.S. at 607 (noting that limiting scope of claims to their

literal language would “foster concealment rather than

disclosure of inventions,” and thus would run counter to one

of the primary purposes of the patent system). Judge Michel

in his dissent stated that the Federal Circuit’s “complete bar”

rule would create:

a perverse incentive for patent applicants,

particularly those who are financially unable

to invoke the appeals process, to simply

abandon their applications. In many cases, it

may be more effective to protect an invention

by maintaining it as a trade secret than by

accepting a patent that will publicize the

invention, but provide protection only from

literal infringement.

22

Festo, 234 F.3d at 618 (Michel, J., concurring in part,

dissenting in part). Judge Michel’s views are shared by

others. See, e.g., Simone A. Rose, Patent

“Monopolyphobia”: A Means of Extinguishing the

Fountainhead? , 49 Case W. Res. L. Rev. 509, 523-24 (Spring

1999); Mark F. Grady & Jay I. Alexander, Patent Law and

Rent Dissipation, 78 Va. L. Rev. 305, 318 (Feb. 1992). This

result described by Judge Michel--inhibiting the disclosure of

new technology--will significantly reduce society’s gain from

research and development for at least three reasons. First,

knowledge derived from new technological innovations will

not enter the public domain. Quick access to that knowledge

facilitates research and development of follow-on

improvements. See Wegner, supra, 18 Rutgers Computer &

Tech. L.J. at 31. Second, the cost of maintaining a trade

secret to the innovating firm may come close to or equal the

public benefit derived from the innovation. See Grady and

Alexander, supra, 78 Va. L. Rev. at 318. Third, resort to

trade secret protection in the early stages of development of

a new technology will often result in wasted resources and

additional costs, thus further reducing the overall public

benefit of the innovation. Competitors would waste

resources, because they would likely invest research and

development dollars in redundant efforts to derive the same

new technology as that maintained in secrecy by the

innovator. See Edmund W. Kitch, The Nature and Function

of the Patent System, 20 J.L. & Econ. 265, 278 (1977).

Another goal of the doctrine of equivalents is to

prevent copyists from avoiding infringement by making

insubstantial changes to a patented invention through the use

of after-arising technology. The Federal Circuit’s “complete

bar” rule nullifies this goal if the competitor or copyist is

employing after-arising technology. Judge Rader commented

that “this result defies logic.” Festo, 234 F.3d at 619 (Rader,

23

J., concurring in part, dissenting in part). Judge Rader also

correctly observed that the Federal Circuit’s application of the

“complete bar” rule to after-arising technology conflicts with

an important principle underlying prosecution history

estoppel:

Estoppel prevents a litigant from denying an

earlier admission upon which another has

already relied. In the case of patent law, the

admission is the applicant’s surrender of claim

scope to acquire the patent... By definition,

applicants could not have surrendered

something that did not even exist at the time

of the claim amendment, namely after-arising

technology.

Id. at 619-20 (internal citation omitted).

By removing an important check on the behavior of

the competitor or copyist -- a step taken by the Federal Circuit

to provide clearer notice to the public -- the Federal Circuit

failed to accord adequate weight to the need to provide

requisite incentives for inventors “to bear the commercial risk

in developing and disclosing new technology.” Festo, 234

F.3d at 627 (Linn, J., concurring in part, dissenting in part).

Scholars’ analyses of the doctrine of equivalents from both a

legal and an economic perspective support this view. See,

e.g., Stanley M. Besen & Leo J. Raskind, An Jntroduction to

the Law and Economics of Intellectual Property, 5 J. Econ.

Perspectives 3, 5 and n.2 (Winter 1991) (“The legal treatment

of related innovations will also influence the ability of

producers to capture sufficient revenues to justify undertaking

research and development. If the law permits others easily to

‘innovate around’ an innovation, or to produce complements

to it, the incentives to create the innovation may be reduced

24

significantly.”); Wegner, supra, 18 Rutgers Computer &

Tech. L.J. at 31 (“Patent protection that can be easily

circumvented is antithetical to building a strong research-

based industrial economy.”).

Finally, the increased costs of obtaining patent

protection as a result of the “complete bar” rule may become

prohibitively high for individual inventors and start-up

companies. Festo, 234 F.3d at 624 (Linn, J., concurring in

part, dissenting in part). Patent protection for key technology

often is a major asset that high-technology start-ups have to

attract investors. The success of such start-ups has been a

major factor in this country’s dominant positions in

biotechnology, microelectronics, and information technology.

surrounding amendments to claims as a result of the decision

below likely will discourage innovation and investment in

research and development by these entities. See id.

25

CONCLUSION

The judgment of the Court of Appeals should be

reversed.

Respectfully submitted,

6 Ath Pn

Robert E. Hirshon*

President

American Bar Association

750 N. Lake Shore Drive

Chicago, IL 60611

(312) 988-5000

E. Anthony Figg

Minaksi Bhatt

Robert H. Cameron

Counsel for Amicus Curiae

*Counsel of Record

Dated: August 31, 2001