FESTO CORP. v. SHOKETSU KINZOKU KOGYO KABUSHIKI CO.
Festo Corporation owns two patents for an improved magnetic rodless cylinder, a piston-driven device that relies on magnets to move objects in a conveying system. When the patent examiner rejected the initial application for the first patent because of defects in description, the application was amended to add the new limitations that the device would contain a pair of one-way sealing rings and that its outer sleeve would be made of a magnetizable material. The second patent was also amended during a reexamination proceeding to add the sealing rings limitation. After Festo began selling its device, SMC entered the market with a similar device that uses one two-way sealing ring and a nonmagnetizable sleeve. Festo filed suit, claiming that SMC's device is so similar that it infringes Festo's patents under the doctrine of equivalents. Rejecting SMC's argument that the prosecution history, or the public record of the patent proceedings, estopped Festo from saying that SMC's device was similar, the District Court ruled in Festo's favor. Ultimately, the en banc Court of Appeals held that the prosecution history estoppel applied, ruling that estoppel arises from any amendment that narrows a claim to comply with the Patent Act. The Court of Appeals also held that, when estoppel applies, it bars any claim of equivalence for the element that was amended.
Does a patentee, by narrowing a claim to obtain a patent, surrender all equivalents to the amended claim element?
Legal provision: 35 U.S.C. 112
No. In a unanimous opinion delivered by Justice Anthony M. Kennedy, the Court held that prosecution history estoppel may apply to any claim amendment made to satisfy the Patent Act's requirements, not just to amendments made to avoid the prior art, but that estoppel need not bar suit against every equivalent to the amended claim element. Noting that by amending an application the inventor is deemed to concede that the patent does not extend as far as the original claim, the Court reasoned that the patentee should bear the burden of showing that the amendment does not surrender the equivalent in question. Justice Kennedy wrote that, in cases where an equivalent was unforeseeable at the time of the application, the patentee could rebut the presumption that prosecution history estoppel barred a finding of equivalence by showing that at the time of the amendment one skilled in the art could not reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent.
Argument of Robert H. Bork
Chief Justice Rehnquist: We'll hear argument now in No. 00-1543, Festo Corporation v. Shoketsu Kinzoku Kogyo Kabushiki.
I hope I got that right. [Laughter]
Mr. Bork: Mr. Chief Justice, may it please the Court: I refer to them as SMC. [Laughter]
The Federal circuit's rules in this case ought to be reversed because it flatly contradicts this Court's decision in Warner-Jenkinson, and furthermore, it radically undermines the patent system.
I think Warner-Jenkinson should be reaffirmed because it's in keeping with the Patent Act, with the goals and policies of the patent system, and because it is much fairer than the harsh inequities of this new rule which this case presents a prime example.
Warner... let me discuss the crucial differences between Warner-Jenkinson and the Federal circuit's new rules.
In the first place, Warner-Jenkinson holds that prosecution history estoppel arises only when an amendment to a patent surrenders subject matter... and clearly surrenders it... in order to achieve patentability.
The Federal circuit holds to the contrary that any narrowing amendment, regardless of the reason for it, creates prosecution history estoppel.
Second, the Warner-Jenkinson case holds that the reason for an amendment determines whether an estoppel is created.
The Federal circuit denies that and holds that the reason is irrelevant, and if an amendment has the narrowing effect, intended or not, it creates a complete estoppel.
Thus, if the patent examiner said he found the claims to be imprecise and the applicant made an amendment to clarify what the examiner thought was imprecise, that might be held to be a narrowing amendment and the patent would be unenforceable.
And that is what happened to Festo in this case.
And those results cannot be squared with Warner-Jenkinson.
Third, the Federal circuit holds that an amendment creates an estoppel if it applies to any of the statutory requirements for obtaining a patent, not just patent... not just patentability as defined by the Patent Act, but any of the requirements for obtaining a patent.
Now, the Patent Act makes clear a distinction between patentability and other requirements.
Sections 101 through 103 come under the heading of patentability of inventions, and they state the substantive requirements for getting a patent.
The invention must be new and useful.
It must be not found in the prior art, and it must not be obvious.
Those are the only elements of patentability known in the law.
And this Court's opinion in Graham against John Deere confirms that.
No other requirement of the statute relates to patentability.
The Federal circuit holds to the contrary, that an amendment affecting any of the statutory requirements for getting a patent may generate estoppel, and those requirements include sections 111 and 112 of the act.
But those sections relate to the form of the application and not to the subject matter sought to be patented.
Justice Stevens: Is it clear most of the time, Mr. Bork, whether the amendment is for purposes of 103, 111, and 112?
Can you pick up the patent history and... and tell at a glance whether it's a 103 or a 111 and 112 purpose that generated the amendment?
Mr. Bork: I think one can.
For example, in this case you'll see in the Stoll patent... there are two patents, of course, in play here, the Stoll patent and the Carroll patent.
In this case, the patent examiner says that he objects on the grounds that the claim is stated in an improper form, is multiply dependent, and also that it's imprecise.
He's not sure what it means.
Now, that is quite clear that those are 111 and 112 objections, not to the subject matter sought to be patented.
Justice Stevens: But if you're the applicant and you get that response from the Patent Office, during the course of the amendment might you not rethink and... and clarify what you're doing under 103 as well?
Mr. Bork: Oh, if the... if the applicant decides to amend in a way that surrenders subject matter, it disclaims subject matter, the fact that the process began with a... with the examiner's on grounds of form doesn't affect it.
If he surrenders subject matter, that subject matter is gone and the equivalents to it are gone too.
Justice Stevens: --But wasn't that the argument here with reference to the seals and the magnetized or demagnetized cylinder?
Mr. Bork: There was an argument to that effect, but if you look at the patent... at the prosecution history which is of both the Stoll and the Carroll patents, which are in the volume 2 of the transcript, there is no abandonment of any subject matter.
In the Stoll patent, there is no abandonment of subject matter.
In the Carroll patent, there is.
However, the subject matter which was abandoned had no relevance to the lawsuit.
It wasn't what was... what was sued on, so that there is, in operational terms, no disclaimer or surrender of subject matter in either of these patents.
Justice O'Connor: Mr. Bork, both the Solicitor General and an amicus, the IEEE, suggest that a... a different flexible bar test would be appropriate.
Would you comment on those two proposals?
Mr. Bork: Justice O'Connor, I think they're much too narrow.
The only rationale that makes any sense as to a flexible bar proposal or any bar proposal is that if you've disclaimed something, then the equivalent of subject matter... the equivalents to the disclaimed subject matter are barred by estoppel, but other equivalents that don't go to what was surrendered are not barred.
Therefore, the... the rule of the... the bar, the question of the scope of the bar, relates closely to the question... the first question presented in this case--
Justice Stevens: Let's say there's--
Mr. Bork: --as to what was surrendered.
Justice Stevens: --Let's say there's an amendment under 103 where... where you agree that there can be an estoppel.
Should there be a presumption there?
Mr. Bork: A presumption... if there is a clear surrender, there's no presumption.
It's... it's a... it's a waiver.
It's... you've estopped yourself.
If it's unclear what... why you have done it, then this Court in Warner-Jenkinson says there be a remand under a presumption that what you did was for purposes of patentability, what you surrendered was for purposes of patentability, and if you cannot rebut that presumption, then you lose.
Justice Ginsburg: Wasn't it more, Mr. Bork, than just a presumption if you couldn't... I thought Warner-Jenkinson said where you do not establish any reason for the amendment, the Court did use the word presume.
It said the Court should presume that the patent application has a substantial reason relating to patentability.
And then the following sentence is, in those circumstances, prosecution history estoppel would bar the application of the doctrine of equivalents.
So, that sounds to me like an absolute bar rule, that if you don't... if the reason is unexplained, the consequence is a complete bar.
Mr. Bork: Oh, well, consequence is a bar as to that.
Yes, as to that area.
But I guess I perhaps didn't express myself well.
If the appellate court, this Court, looks and says, I don't know the reason... as in Warner-Jenkinson, it was unclear why there was a lower limit of pH 6 set on that process... I don't know... I don't know why you amended to set that lower limit, there is a presumption that you did it for a reason related to patentability, which would create a complete bar.
However, on remand, you get a chance to rebut that presumption with evidence.
If you don't rebut it, it's a bar.
Justice Breyer: The... the Federal circuit is supposed to be an expert in this and they say that inventors or people who are trying to invent things are supposed to be able to read the claims, and that's it.
And if you didn't make your claim properly, particularly when you had a second chance, that's your problem, and any other system... any other system is going to really go back to what used to be called central claiming where the claims point to rather than define the invention.
And that's just not workable today.
We'll get an equivalents claim in every case.
And so, let's make an exception where the lawyer couldn't really do anything about it.
That's called unforeseeability.
Mr. Bork: Well, the fact--
Justice Breyer: With that possible exception, which they maybe should have mentioned but didn't, it's up to the lawyer and it's his fault.
And the reason is if he didn't do it properly, we punish him because we have to have certainty for people who want to invent other things.
Now, that I take it is the heart of what's being said on the other side, and I'd like to know your response.
Mr. Bork: --Well, there are a couple of responses to that, Justice Breyer.
In the first place, let me say that the solution the Federal circuit has devised is... doesn't relate to the problem.
If the problem is the unworkability of the equivalents test, then the answer is to abolish equivalents, not to... and that doesn't depend on whether or not there's been an amendment.
And if you're going to abolish equivalents, the way to do it, so that you don't have this terrible retroactive effect, is to have the Patent and Trademark Office engage in a rulemaking function, a rulemaking which has a prospective effect only, or have Congress sit down and do a rule... legislate that has a prospective effect only.
Chief Justice Rehnquist: Would the PTO have authority to do that by regulation in the absence of congressional authorization?
Mr. Bork: I think it has authorization to do... to make rules of that sort, Mr. Chief Justice.
But on the... on the question that... I'm sorry, Justice Breyer.
Justice Breyer: They're not arguing for abolition.
They're not arguing for abolition.
Mr. Bork: No--
Justice Breyer: They're arguing for hold the lawyer to a very tough standard, but a small equitable exception in the instance where the lawyer really couldn't really do anything about it, namely where it's not foreseeable that this kind of really copied device is going to come about--
Mr. Bork: --Well--
Justice Breyer: --because the language isn't... you know, English doesn't work perfectly, the English language, and because there could be future inventions that might cause that to be unforeseeable.
Mr. Bork: --That is true, but what they have suggested in effect is that the lawyer put into the literal claims he files a claim for all the equivalents that he can foresee.
Now, he can't foresee most of the equivalents, and if he did that, I think you'd have a patent claim that would look roughly like the tax code.
Justice Breyer: No, because they have ways of doing it.
They say all the things like, or they say... you know, I can't remember.
There's a special technical word for it where you... you try to do it in terms of function.
There are ways of doing it.
Mr. Bork: Function, way and result.
Justice Breyer: And the briefs are filled... you know, the briefs are filled with them, how... how easy it is.
The other side says, no, no, it's very easy, and your side says, oh, really?
It isn't so easy.
Mr. Bork: Well, you're referring, I think, Justice Breyer, to the testing of... for equivalents called function, way and result?
Justice Breyer: No, no.
I'm not thinking... I'm not thinking that.
I'm thinking there's a... there is a way of drafting a claim where you put in the claim... you don't describe the thing exactly.
You describe what the thing does.
Mr. Bork: Well, if you do that, Justice Breyer, I don't think you've solved the problem of unworkability.
I don't think it's unworkable in the first place, but I don't think you've solved the problem of the litigation that's going to take place and the difficulty judges are going to have in distinguishing the case that is covered from the case that is not covered.
I think it's exactly the same problem as you'd get with the application of the doctrine of equivalents.
Justice Stevens: May I ask?
I've had a lot of trouble understanding this patent, to be very honest with you.
Some patents I can understand.
This one I found very difficult.
And one of your... the changes, as I understand it, is in the early draft of the claim there was no reference to the nonmagnetic material that was used in the tube and that that was the... that was one of the changes that... that was made.
And your suggestion is that was... had nothing to do with the subject... patentability.
It's just change of description or something like that, if I understand you.
But the patent itself seems to be a patent on a magnetic relationship between different elements of the... of the item, and just at first blush, it seemed to me that a... that a... an element that described a nonmagnetic material would be rather important.
And your position is it's of no importance.
Could you just comment a little bit on this problem for me--
Mr. Bork: Yes, the--
Justice Stevens: --so I can get a better understanding of it?
Mr. Bork: --The Festo patent specified a magnetized material in the tube, and SMC used a aluminum alloy.
Justice Stevens: This is in the Stoll patent I think, isn't it?
Mr. Bork: Yes.
And SMC used a aluminum alloy, which is not magnetizable material.
However, it does conduct magnetism well enough... very slightly, but well enough... to complete the circuit and to do what the Festo patent does so that it is an equivalent in that sense to the magnetizable sleeve.
If it were pure aluminum, it wouldn't conduct the magnetism, but it isn't.
It's an alloy.
Justice Breyer: Suppose that I was going to buy your product and I knew what the German patents contained and you were trying to sell it to me, and I asked you this.
What does your product do that the product covered by the German patents doesn't do?
What would you say?
Mr. Bork: Well, I think I would... I would point to the sealing rings and the magnetizable--
Justice Breyer: Exactly, and... and therefore, they are saying that's at the heart of this thing.
The sealing rings enabled the... enabled you to use a larger piston because it could come closer to the side of the cylinder.
And here they've copied... they... they... so, you defined it this way, we didn't follow it.
Mr. Bork: --I beg your pardon?
You defined it this way and they didn't follow it?
They did follow it.
The only difference between their... our claim said four rings: two guide rings and two sealing rings.
They had two guide rings and one sealing ring.
Justice Breyer: Exactly, but the heart of your invention was a way of wiping the inside of the tube--
Mr. Bork: The outside.
Justice Breyer: --as I understand it, so that the piston could come closer to the inside of the tube.
And you defined that by using two rings.
And they say, well, that's what the heart of the invention was, these two rings, and we didn't use two rings.
Mr. Bork: They used--
Justice Breyer: We used one ring.
Mr. Bork: --They used one ring which performed exactly the same function.
Justice Breyer: That's... you say it performed exactly the same.
They say it didn't quite work quite as well.
Mr. Bork: Well--
Justice Breyer: And now this is the heart of the problem.
Mr. Bork: --I don't know that they--
Justice Breyer: The... let me show you why.
Because the Federal circuit is saying inventors generally have to put this kind of an issue before a jury or a judge who doesn't understand it too well.
And that's why there's a lack of certainty and that's why we have to have the rule we have.
Mr. Bork: --If they put before the jury or the judge the question of whether a narrowing has taken place, they'll be litigating just as much and there will be just as much uncertainty as there is on whether this thing is substantially the same as that thing.
You... this... one thing this new rule does not do is eliminate uncertainty.
In fact, we will... it just shifts the area of litigation, so that I don't think that anything is solved by this.
It just... nothing is solved by it and you pay an enormous price in terms of future patents.
If you look at future patents, the future patentee knows he's not going to get the same protection he had before because if he dares to amend... and almost all patents are amended.
It's just inevitable.
That's the way... that's the way the process goes.
If he's... if he amends and if an amendment is requested by the examiner, he can either refuse it and appeal.
That adds about 4 years to the time, to the 2 years the prosecution history usually takes.
Now, the patent started running when you filed.
So, now you've lost 6 years, the most valuable years under your patent.
And nobody is going to like that.
Or he can turn to the trade secret system, or he can file a claim so narrow that they... they don't fully protect what he's invented but also that don't require amendments.
The... if you... if you get patents of that sort, which are of very little value, you don't protect the innovation function that patents are supposed to protect.
Pfizer and other amici have pointed out that to get a drug to market costs in excess of $100 million.
Nobody is going to spend over $100 million to commercialize a product that cannot be protected.
So, you've done... you've done an enormous amount of damage to the innovation process in this thing.
Justice Stevens: Mr. Bork,--
Mr. Bork: --the people who are really hard hit are the people,... the 1,200,000 patents that are outstanding now because those people had no warning.
When they... when they got their patents, amendments were freely made, and that was just the way it worked.
The examiner and the patent attorney sat down and they exchanged views and they worked it out and they amended to satisfy the examiner.
Now all of those patents are virtually worthless, which is a--
Justice Stevens: --May I just ask you a question about they're virtually worthless because the doctrine of equivalents is not available to those patentees?
That's... that's basically the point, is it?
Mr. Bork: --That's right.
Well, that's right.
Justice Stevens: Now, the one thing I didn't... there's a volume of briefs in the file here and I can't say I've read them all, but do the briefs anywhere tell us what percentage of all... successful infringement claims rest on the doctrine of equivalents?
Mr. Bork: I don't recall that the briefs ever do tell us that.
Justice Stevens: Because your assumption is that a very significant portion must be based on--
Mr. Bork: Oh, yes.
Justice Stevens: --Because there's a lot of... a lot of cases in which it's just an infringement, a literal infringement.
Mr. Bork: --That's true, but if a... if a--
Justice Stevens: And that area is not touched by this.
Mr. Bork: --No, but if a copyist wants to avoid literal infringement, he takes an amended element and alters it slightly, and he's home free under the Federal circuit rule.
And that's what happened here.
You have a device which, for all practical purposes, is identical to the Festo patents and has now destroyed the value of the Festo patents because Festo didn't foresee back in the 1980's, when it got these patents, that the Federal circuit was going to change the law as it has in 1997.
Justice Stevens: Or it didn't foresee that there wasn't really a big difference between nonmagnetic material and magnetic material.
I'm not using the right words, but it didn't foresee that something he... they described as significant in the claims was really not significant.
Mr. Bork: --Well, it's significant enough.
The... the fact is that the aluminum alloy... the alloy makes it perform the same function as the magnetizable material, and what they didn't foresee was that the law was going to change so that the amendment was going to destroy their patent.
Justice Ginsburg: Mr. Bork, would you... would you comment on the Federal circuit's view that they weren't really changing anything, but they had two inconsistent lines of decisions?
One was the complete bar rule and the other was the flexible rule.
Mr. Bork: I think they had two decisions that in... in some sense were regarded as... they claimed to be complete bar rules.
I think that's a... that's quite a stretch.
If you look at the uninterrupted Supreme Court precedent, there is no case like what the Federal circuit has done now.
The doctrine of equivalents has been around for over 150 years, and this Court has consistently applied it.
And they... there was no complete bar in the Supreme Court jurisprudence.
I don't think there's much... any complete bar in the Federal circuit jurisprudence either, but whatever it was, everybody went forward on the understanding that the kind of law that was reaffirmed in Warner-Jenkinson was the law.
And that's why I find it particularly odd that the Government should say that those people are charged with knowledge back then of what was going to happen now.
And that is doubly odd because the Government in Warner-Jenkinson filed a brief taking the position that we take here today, and now they say that we should have known better.
They didn't know better.
I don't know how we would know better.
I should like to reserve the remainder of my time, if I may.
Justice O'Connor: May I ask you, before you step down, whether you think there's a relevant difference between claim elements and claim limitations?
Mr. Bork: I think... I think they're two words for the same thing.
Argument of Lawrence G. Wallace
Chief Justice Rehnquist: Very well, Mr. Bork.
Mr. Wallace, we'll hear from you.
Mr. Wallace, Mr. Bork says the Government has changed its position from the time it filed its brief in Warner-Jenkinson.
Do you agree with that?
Mr. Wallace: I do not, Mr. Chief Justice.
We did say that amendments made to avoid prior art and amendments made for other purposes relating to securing the patent present different problems because amendments made to avoid prior art are almost always narrowing amendments, and we think that the Federal circuit, in speaking of narrowing amendments, really was speaking of surrendering subject matter which is the formulation that the petitioner prefers; whereas, amendments made for other purposes have to be scrutinized with particular care because they often are not narrowing amendments.
And indeed, in some of the post-Festo decisions of the Federal circuit, the court has held that there was... it was not a narrowing amendment and therefore there's no bar.
But they can be narrowing amendments.
They can be, even though in the guise of addressing the examiner's concern under 112, they could actually be narrowing the subject matter of the claim.
And in that instance, the... the estoppel would apply.
Justice Kennedy: How does one figure that out?
Give us a... an example.
Part of the argument is this is very difficult to figure out, that... that the new system that's... that's been brought in is... is as complicated to administer in... in the courts as... as the old.
Mr. Wallace: A simple example would be in Warner-Jenkinson itself.
If there was an addition of a limitation on the pH levels from 6 to 9 in the amendment, if the examiner in that case had said that the specifications are not clear enough and that amendment was added in response to that, even though the examiner had raised other concerns, but the applicant purported to add that limitation in response to the examiner's concerns about the specificity, it still would be adding a limitation and it would be an implied disclaimer of subject matter in comparison with the initial claim.
And our view would be that estoppel would apply.
Chief Justice Rehnquist: But the idea of estoppel, as I understand it, is that a person is prevented from taking contrary positions, and it seems to me in your example that it's not necessarily a contrary position.
Mr. Wallace: Well, it's contrary in the sense of what fair inferences can be drawn by the public from the record of the prosecution history.
When he started off... the applicant started off without this limitation and then added the limitation, the limitation speaks for itself in narrowing the scope of the claim elements.
And that... that is the central problem of this case.
If prosecution history estoppel is to have meaningful effect, once we settle where it applies, which seems to me to be the lesser question, it necessarily follows, if it's to have meaningful effect, that the claim elements that have been narrowed by the patent applicant, in order to secure the issuance of the patent, cannot be afforded the same or almost the same protection against non-literal infringement that would be available to them under the doctrine of equivalents if they had not been narrowed.
Justice Souter: Is there... is there a way of doing this?
Look, the Federal circuit itself thinks that its rule is a crude effort to deal with a problem that may have the adverse consequences that... that Mr. Bork predicted.
And if so, they'll want to change their minds.
Now, is there a way under the law that they could have the authority to change their minds if it turns out that this experiment doesn't work?
Mr. Wallace: Well, I... I think so.
These are doctrines that have been developed.
Prosecution history estoppel and its effects are really equitable in origin, and the courts have the authority to reexamine the application of equitable doctrines in light of experience.
The... the real question here, as we see it, is what... how do you reconcile the inferences that are legitimately to be drawn by the public with the patentholder's need for protection from unfair copying.
And this is not a matter of small moment because if... the doctrine of equivalents does not apply, but the all-elements test still is applicable, as the opinions below reflect, to claims of literal infringement or non-literal infringement.
So, we have suggested an answer that we draw directly from this Court's decisions.
We first look at Exhibit Supply, a 1942 decision, in which the Court said that when the applicant narrows the claim, he necessarily is recognizing the difference between what was originally acclaimed... claimed and what the narrowing amendment claims, and there's an implied disclaimer of all that is embraced within that difference.
And he's recognizing the significance of that difference.
And it... the Court cited a number of its prior decisions at that time.
So, we think that applicants have been fairly on notice that prosecution history estoppel does apply to narrowing amendments and that there is considerable risk in narrowing claims and that they have to do that with great care with that in mind.
Justice O'Connor: Mr. Wallace, the Government is proposing a change, a backing off from what the CAFC did, but proposing some new formulation or test.
How does the test you propose differ from that proposed by the Institute of Electrical and Electronics Engineers do you think?
Mr. Wallace: Well, I think they take... they start from what--
Justice O'Connor: They... they key it into foreseeability somehow.
Mr. Wallace: --Yes, but they start by assuming the validity of the flexible bar rule and trying to tighten it a little bit.
We think that the court of appeals was right.
Justice O'Connor: And so do you apparently.
Mr. Wallace: Well, we... we think the court of appeals was right in saying that the way the... it has been applying the flexible bar rule did not properly recognize what had been surrendered in the course of the prosecution history estoppel.
But we... we come out in much the same place at the end even though the differences between those and the Federal Bar Association also recommends a presumption and shift of the burden of proof similar to ours, but they're... they're unwilling to recognize that everything, as the Court said in Exhibit Supply, that was surrendered is necessarily part of the implied disclaimer.
They say, well, even if you went down to your 9 pH in Warner-Jenkinson, as long as you could show that you could have claimed 10, we should treat that the same as if you did claim 10.
We think that the inferences to be drawn by the public from the prosecution history estoppel are not that loose.
But we do think the court of appeals went too far in saying that applicants were on notice that an absolute bar would necessarily apply to all claims, and we have made our suggestions about burden of proof and presumptions to afford further protection in cases where the applicant... the patentholder can show that it would be unfair to treat--
Justice Souter: Mr. Wallace, with respect to that, your second possibility, the second kind of escape hatch for the patentholder, as I understand it, relates to a case in which, in effect, it was impossible to be any more precise, to exclude any more precisely than they did.
My question is, doesn't that in effect invite the patentholder to make that kind of a claim in every case?
And if that is, in fact, going to be an exception to absolute bar, doesn't it mean that we're going to litigate it in every case?
Mr. Wallace: --Well, we're quite worried about that.
We caution that the versatility of language requires skepticism about that, but we... we were also sensitive about the difficulties in some particular areas of new technology, biotechnology, and the like, although I pressed the Patent Office and they couldn't come up with a concrete example.
Argument of Arthur I. Neustadt
Chief Justice Rehnquist: Thank you, Mr. Wallace.
Mr. Neustadt, we'll hear from you.
Mr. Neustadt: Mr. Chief Justice, and may it please the Court: First, I'd like to direct a response to Justice Breyer's question concerning that section of the statute that... that you were looking for.
That's 112, paragraph 6, which says that you can claim the function of an element and you get protection for everything that has that function if it is the same as what's in the specification or its equivalent.
Next, I'd like to address my attention to Justice Stevenson's question with respect to literal infringement and doctrine of equivalents infringement.
We were faced with the same question and we made an analysis of all the cases that were decided by the Federal circuit in the year 2000.
We found that there were 31 cases that either held for the patentee or indicated they were going to hold for the patentee with respect to preliminary injunction.
With respect to those cases, all but four were literal infringement.
So, the answer to your question, for the year 2000, is that 27 of the 31 cases were directed to literal infringement and not... not doctrine of equivalents infringement.
And you must keep in mind that the Federal circuit in this case, with respect to the doctrine of equivalents, didn't rule on the doctrine of equivalents in general.
They only ruled on the doctrine of equivalents with respect to when a patentee switches from one position to another.
He starts with one claim.
For some reason he sees that in order to get his patent, he is going to have to narrow.
A good example is the example that Festo uses, going from adhesives to glue.
You claim adhesives broadly when you start.
You're going to get protection for all adhesives.
Then you find there's prior art or something else, maybe your specification isn't enabled, and you say I'm going to have to go to glue.
What the Federal circuit says for that particular claim element, when you go from adhesives to glue, you are telling the public that you're going to rely--
Justice Stevens: But may I just interrupt with this--
Mr. Neustadt: --Yes.
Justice Stevens: --this observation?
But... but the result of your rule is that if you do make that change and go to... to glue, you lose the doctrine of equivalents with respect to that element, but someone who originally framed the claim in the way that you ended up with does not have the same opportunity to rely on equivalents that you do.
Would you comment on that?
Mr. Neustadt: That is correct.
This was a point that this Court addressed in Exhibit Supply and that is because claims are not interpreted just as they stand.
They're interpreted in accordance with their prosecution history.
Where you have an original claim that has no prosecution history, then it's much tougher for the public to read and figure out what... what glue or adhesives mean.
But where you have this change from one position to another, a change that every patent attorney resists, then the Federal circuit says this is a narrowing that the public is entitled to rely upon.
So, there... there is a very significant change even though you have the exact same words.
To refer to Mr. Breyer's question about whether or not the Federal circuit has the power to change what they've done, the answer is, of course, prosecution history estoppel is judge-made law.
There is no statute concerning it.
Chief Justice Rehnquist: This is scarcely an encouraging view.
Unknown Speaker: [Laughter]
Chief Justice Rehnquist: I mean, if... if we're looking for some sort of certainty in the area, to say that the Federal circuit has now come up with a relatively new doctrine but they're free to change it if it doesn't work is not the most auspicious recommendation for that doctrine.
Unknown Speaker: [Laughter]
Justice Scalia: I presume it would be changed retroactively, just as it was introduced retroactively.
Mr. Neustadt: Well, I don't... I don't think it's going to be changed, and I don't think there's anything retroactive because the Federal circuit decision was entirely consistent with this Court's precedent in Exhibit Supply and also Warner-Jenkinson.
In Exhibit Supply, this Court said that where a patentee makes a change to avoid prior art for that particular element, he disclaims and abandons everything between--
Chief Justice Rehnquist: But the Federal circuit went further than that here.
It doesn't have to be a change just to avoid prior art, does it?
Mr. Neustadt: --That is correct, Your Honor.
But what they did was follow what this Court said in Warner-Jenkinson concerning what relates to patentability.
The Court in Warner-Jenkinson said... this Court... that... that we have used this with respect to prior art, citing Exhibit Supply, but they didn't say it is limited to prior art.
What the Federal circuit then said--
Chief Justice Rehnquist: But in... in the John Deere case, certainly the term patentability was used just for that purpose.
Mr. Neustadt: --For prior art?
Chief Justice Rehnquist: Yes.
Mr. Neustadt: I'm not sure, Your Honor.
What the Federal circuit did was they said... and there was almost virtually unanimity on the court, 11 to 1... that when you make this narrowing for a purpose related to patentability or for a statutory requirement for patentability, then the public can view that and recognize and rely upon it.
So, the extension from, if you will, 102 and 103 to 112 was of very little extension at all.
Justice Scalia: Well, are you using the term patentability to include 112?
Mr. Neustadt: Yes.
Justice Scalia: I mean, that's part of the problem here.
Mr. Neustadt: Yes, yes.
Justice Scalia: Well, I... I think that's one of the issues in this case.
Mr. Neustadt: Well, 112 is not just a matter of form.
112 is addressed to some of the most important issues for a patent application, such as whether or not the application enables the invention.
The quid pro quo for the public with respect to giving the exclusivity to the patentee is they get an enabling disclosure.
If there is no enabling disclosure, then the public gets nothing.
Enabling disclosure is 112, so 112 is just not form.
If you are talking about form and clarification, usually when you clarify a claim, you don't narrow it and so the result is that would not be controlled by the Federal circuit rule.
What the Federal circuit--
Justice Souter: Well, is... is that really so?
I mean, every time you have a vague claim, you at least have an opportunity to say, well, it covers more than a contrasting narrow claim would be.
So, I'm not sure that you can draw this categorical distinction.
Mr. Neustadt: --Usually when a patent attorney wants to... is concerned with narrowing his claim, he doesn't want to narrow his claim because he gets less for his client.
He will try to clarify it in a way that doesn't narrow, if that is the examiner's concern.
So, usually clarifications are not narrowings and are not affected by the Federal circuit rule.
What the Federal circuit issue is... is directed to is actually changing a position for a statutory requirement for patentability.
That can be prior art.
It can be non-enabling disclosure.
For example, this Court has held in Crawford v. Heysinger in the 1800's... applied prosecution history estoppel to a inoperability rejection which was a 112 rejection.
And so, this is the reason why the Federal circuit had very little difficulty and ended up with an 11-to-1 vote when they said that, yes, amendments are not limited to avoid prior art.
They cover other instances where you narrow.
And the key... the key is narrowing.
Patent attorneys hate to narrow.
It gives their clients less protection.
They don't want to narrow unless the only choice is not getting a patent.
So, they put that narrowing language in there.
And all that the Federal circuit is saying when they put that narrowing language in there, they should be held to it.
And the reason they're held to it is because of the public--
Justice Kennedy: Well, they're saying more than that.
They're saying they're held to it for the entire element, and that's where I have... have great problems with... with what the circuit does.
And... and it seems to me a vast extension over what we thought about in Warner-Jenkinson.
Mr. Neustadt: --In... in Warner-Jenkinson this Court said that if we do not know the reason for the amendment, we're going to presume that it relates to patentability, and when we make that presumption, if it's not rebutted, it will act as a bar.
So, this Court in Warner-Jenkinson set forth a complete bar.
Complete bar is nothing new.
Justice O'Connor: Well, why isn't that enough?
Why... why is an additional rule sought?
Mr. Neustadt: The... the additional rule relates to the fact that in the Federal circuit, not in this Court, there was what was called a flexible bar rule, and what they did was if you initially claimed glue and came back to adhesives and then... I'm sorry... you claimed adhesives and then you had to narrow it to glue, then in a lawsuit you found someone using adhesives, you would then say, well, my glue is really the same as adhesives under the doctrine of equivalents.
And the Federal circuit in this decision is saying that you can't do that.
But previously the Federal circuit had the flexible bar rule, and the flexible bar rule said that if you went from adhesives to glue, and you didn't have to go all that way to glue... maybe you could have stopped somewhere in between... they say you can then look at where you might have been able to stop.
This is in the Intel brief, could have, should have, and would have.
And they say we can take it back to something in between adhesives and glue.
And the problem with that is that the public has no notice of what the claim covers.
Someone out there who wants to innovate in the area between glue and adhesives has to know what he can do, and the Federal circuit rule enables them now to say that, yes, that claim means glue and we don't have to worry about something if we don't use glue.
Justice O'Connor: How would the SG's test apply to that, do you think?
Mr. Neustadt: --The... the SG's test and also the IEEE test that you referred to... the SE says... and his... his rule is a little better than the flexible bar rule.
The SG says we're going to have a complete bar presumption, and the presumption is going to have to be overcome by the patentee, and he's going to have to show that this was unforeseeable.
But this rule has all of the uncertainties that create all the problems with the flexible bar rule, and therefore it really is not an improvement.
The court's decision has been in effect for 13 months.
It's really worked just fine.
There have been really no problems.
Patent prosecution hasn't changed at all.
There haven't been any cases that follow that--
Justice Kennedy: Can you give me... can you give me some sense as to how often patent applications are amended?
Mr. Neustadt: --I don't think there are any statistics.
Patent applications... I'd say 50 percent, maybe more.
But... but that doesn't distinguish between amendments and narrowing amendments.
Usually it's the narrowing amendments that... that trigger the Federal circuit rule.
And with respect to--
Justice Kennedy: Because Mr. Bork says you're just going to transfer now the load to the appeals within the Patent Office and we're going to have this long, long running time.
Mr. Neustadt: --No.
Justice Kennedy: And it seems to me that that... that's a... a very serious consequence if... if it in fact will follow.
Mr. Neustadt: We haven't notice that consequence and that just isn't happening in the PTO.
You see nothing in the SG PTO brief.
Justice Kennedy: Well, maybe everybody is waiting for this case.
Unknown Speaker: [Laughter]
Mr. Neustadt: The... that may be but the Federal circuit has... has been applying this case in all of its cases.
It's simplified a lot of the decisions.
What it's meant is that patent attorneys can now advise their clients that, yes, you can do this; no, you can't do that.
Whereas, under the flexible bar rule, they were unable to do so.
In... in... when you claim, the claiming is central to... to the system... to our system.
The applicant has a disclosure.
From that disclosure, he can decide what it is he wants to claim, and he can claim various elements and he usually does it as broadly as possible.
The examiner then examines the claim on exactly what he claims, not the disclosure.
The patentee is master of his claims.
He decides what the issue is going to be.
If the examiner rejects the claim that was selected by the patentee, then... then the patentee or the applicant says, well, there's nothing I can do now.
I either have a choice of not getting a patent or I've got to limit my patent.
So, he comes in and he limits his patent.
He goes from adhesives to glue.
That patent issues and the public can then look at it.
The patent tells you what you can't do, but more importantly, it tells you what you can do.
And the public can do no better than look at the claim and its prosecution history, and when it does that, it can look and decide what it can do.
And this results in increased innovation.
This Court in Markman, interpreting claims, said that claims, if they are uncertain... and this was the need for judges rather than juries to interpret them.
If they're uncertain, they foreclose an area of technology.
If you have uncertainty between here and here, no one will innovate in that area because they recognize, if they're successful, they're just going to be sued for infringement under the doctrine of equivalents.
They may have an injunction entered against them, which is going to stop their production line, and they're going to have to give back profits which the patentee is going to ask for in lost profits.
So, everything really turns on the claims, and the patent attorney has the tools to do it.
He can use 112, paragraph 6.
He always claims as broadly as possible.
All that the Federal circuit has--
Justice Breyer: The argument you're now making is a wonderful argument against the whole doctrine of equivalents, which I thought we had rejected.
Mr. Neustadt: --The difference... the difference between that is that the Federal circuit has limited its holding to the time when the patent applicant goes from one claim to another claim where he narrows the claim.
If he doesn't narrow the claim, there's no problem with the doctrine of equivalents.
Also, if he doesn't narrow an element, there's no doctrine of equivalents.
All that the Federal circuit has said here is that the balance shifts with respect to the point that you're referring to when the patent applicant, with his eyes open, knows that he's got a problem and he's going to have to narrow.
Justice Breyer: Well, that may well be.
But... but if... if the considerations that you're raising now are as forceful as you think they are, we should simply abolish the doctrine of equivalents.
That... that would give great certainty to the patent law, and all of the... all of the things that you assert would be achieved.
The patentee is on notice and he should be as precise as possible, blah, blah, blah.
Mr. Neustadt: Well, that's not an issue before the Court.
But the... the Federal circuit does restrict the doctrine in... doctrine of equivalents in other areas.
For example, you can have an argument that you make in your... in your amendment, and that argument can then be used against you as an estoppel.
That's not an issue in this case.
The Federal circuit also handled an issue where an applicant will disclose, say, three things, A, B, and C, and he'll only claim A. And then he'll come back and he'll say, under the doctrine of equivalents, A covers B and C. And the Federal circuit deals with that.
But that's not an issue in this case.
What the Federal circuit has done is they've handled the exact issue that this Court handled in Exhibit Supply and in Warner-Jenkinson.
And that is that the balance shifts when you make an amendment that relates to patentability and--
Justice Ginsburg: Mr. Neustadt, would you... would you tell us why the approach of a complete bar is consistent with the approach taken in Warner-Jenkinson where the Court did not want to have a rigid... a rule with no flexibility, and so it created this rebuttable presumption?
Mr. Neustadt: --Yes.
The Court in Warner-Jenkinson was trying to decide between amendments that relate to patentability and amendments that do not relate to patentability.
And the petitioner in that case was asserting that that distinction was not an important distinction.
The Court in Warner-Jenkinson said we're not going to have a bright line rule that this complete bar is going to apply to every single amendment.
It's only going to apply to those amendments that relate to patentability.
And the Court said in the past we've used prior art as relating to patentability, but the Court did not limit it to that.
The Federal circuit then came back and one of the questions they had, they said, is 102 and... is relates to patentability under this Court's decision limited to 102 and 103.
And this is question one in the Federal circuit.
And the Federal circuit held virtually unanimous, 11 to 1, that relates to patentability is not limited to 102 and 103.
Chief Justice Rehnquist: But that's simply an interpretation of our cases.
Or it should have been at any rate.
And I dare say we're in a better position to interpret our cases than the Federal circuit.
Mr. Neustadt: Well, I think the... the Federal circuit was saying that the cases of this Court were not absolutely controlling, but what they would do would be consistent with this Court.
And that was... that was the effect of their holding.
But if you look carefully... look more carefully at this Court's cases, this Court's cases we submit in our brief actually do control and would have necessitated the Federal circuit to reach that verdict.
This Court, as I said--
Chief Justice Rehnquist: Well, there is an... I think I agree with Justice Ginsburg, as she suggested.
I think there is an inconsistency between Warner-Jenkinson and the position you're taking.
Mr. Neustadt: --An inconsistency?
Chief Justice Rehnquist: Yes.
Mr. Neustadt: I don't think so because the... the--
Chief Justice Rehnquist: Well, the remand in Warner-Jenkinson.
Mr. Neustadt: --Yes.
The remand in Warner-Jenkinson, as specifically defined there, was for the Federal circuit to determine whether or not the amendment that was made to change the pH to 6 related to patentability.
The petitioner was saying you don't have to determine whether it relates to patentability.
The remand said, Federal circuit, you now look and tell us whether or not it relates to patentability, and that's what the Federal circuit did.
And then as they had a few more cases after Warner-Jenkinson... and they had... they had disputes among the judges... they said we're going to resolve this in this... in this case.
And they not only said they're going to rehear it en banc, but they said we're going to have five questions.
And the first question was... was Justice Ginsburg's question.
Justice Ginsburg: But I didn't mean it to be.
I meant to focus you on the second question which you say is the more important of the two, and--
Mr. Neustadt: The complete bar, yes.
Justice Ginsburg: --and just saying that in Warner-Jenkinson, the Court didn't want to freeze things, so it had this rebuttable presumption.
You do want to, when you get to your question two, say absolute bar.
Mr. Neustadt: The absolute bar was in Warner-Jenkinson.
In Warner-Jenkinson, this Court said if the amendment relates to patentability, then there's going to be an absolute bar.
The words this Court used was bar.
They didn't use absolute bar because a bar is a bar.
But... but... and this Court was just following Exhibit Supply which had that same bar in that.
Justice Ginsburg: Well, I thought everybody agreed that the question was open, that this Court did not decide.
Mr. Neustadt: The Federal circuit said that their decision was not controlled by Exhibit Supply.
Both our side and the Government side said that it is controlled by Exhibit Supply and that the Federal circuit would have had to have reached that conclusion anyway.
And... and the... the very plain language of Exhibit Supply is that when a patentee chooses to go from the claim as unamended to make a narrow limitations in there, there's a complete bar with respect to the amended element.
And Exhibit Supply, of course, talks about there is an abandonment and disclaimer of everything between the element as unamended and as amended.
Justice Breyer: Could you explain to me a little more clearly what... what you assert relates to patentability means?
I mean, if... if you narrow the phrase to mean it... it relates only to prior art or to any impediment to getting the invention accepted as novel or whatever, I understand what it means.
But if it... if it includes any change that is made in order to get the examiner to accept the patent, then what change does not relate to patentability?
If... if, as you assert, patent attorneys are so reluctant to make any changes, what change would not relate to patentability?
The only reason they're doing it is to get the patent.
Mr. Neustadt: --Yes.
It's not changes.
It's the narrowing changes.
You can make a lot of changes.
Justice Breyer: Fine.
What narrowing changes would not relate to patentability?
Mr. Neustadt: There are very few changes where you have significant narrowing that do not relate to patentability.
Justice Breyer: I can't imagine any because why would you do it unless--
Mr. Neustadt: Oh, well--
Justice Breyer: --unless to get the examiner to accept... to accept your patent?
Mr. Neustadt: --If you take out narrowing, you can have a lot of changes.
For example, you may file an application and then broaden your claim.
Justice Breyer: But... but why... why talk about changes that relate to patentability?
Why not just say all narrowing changes?
Let's make it clear what we're talking about.
You're saying all narrowing changes.
Mr. Neustadt: And this is why the Federal circuit had such virtual unanimity because--
Justice Breyer: And... and you think that that's... that's what we meant in... in Warner-Jenkinson by... by changes that relate to patentability.
All narrowing changes.
Mr. Neustadt: --I think in Warner-Jenkinson the subject wasn't specifically addressed.
The Court recognized that you have narrowing changes with respect to prior art.
Justice Breyer: It would be a very strange terminology to use to refer to all narrowing changes.
Mr. Neustadt: Yes.
Justice Breyer: You know, it doesn't seem to me synonymous with patentability.
Mr. Neustadt: To... to a certain extent, the... the Federal circuit rule is even narrower than... than Warner-Jenkinson because this Court in Warner-Jenkinson did not refer to narrowing.
It just referred to amendments that relate to prior art, and there must have been an implicit assumption that that was... that was narrowing.
The Federal circuit, since they hear a lot of patent cases, focused more in on the fact that it really wasn't the fact that it was prior art.
What you wanted to get at was important changes, and they... they used the language statutory requirements of patentability.
For example, one of the most important things is your claim being supported by the disclosure.
You can't claim what you don't invent.
So, if your claim is real broad, the examiner says, but you've only disclosed this, so you can't foreclose all of this.
And so then you have to narrow it down to this.
And that's a 112 change, and a 112 change is just as important as a 102 and a 103 change.
And so the Federal circuit says if it's for a statutory requirement for patentability.
And these are not trivial changes.
A patent attorney, when an examiner makes a change... a suggested change, says, well, how can I do that without narrowing.
The same thing with respect to clarity.
You can make changes with respect to clarity.
Maybe the examiner likes 12 feet rather than 144 inches.
Maybe there are other things that he thinks will be more clear.
As long as they're not narrowing, the patent attorney is happy to make them, but as soon as he... he narrows, he knows that he's getting his client less.
With respect to foreseeability, I just wanted to make one comment.
Patent attorneys, when they draft broad claims, they draft broad claims because they don't know what is going to happen in the future.
They want the broad claim because if something happens in the future, they're going to be covered for it.
Also, the patent attorney doesn't know everything that's happened in the past, and so he wants the broad claim because he gets much better coverage.
For example, you don't want to go to... from adhesives to glue, because if you do that... I'm sorry.
Rebuttal of Robert H. Bork
Chief Justice Rehnquist: Thank you, Mr. Neustadt.
Mr. Bork, you have 2 minutes remaining.
Mr. Bork: I wish to address this question of narrowing.
The concept of narrowing has no limits.
In this case, the Stoll patent moved one element... an element from one claim to another.
No change, just moved from one claim to another.
That was held to be a narrowing.
Now, if that's a narrowing, nothing is unrelated to patentability.
That... that's the extreme to which the Federal circuit takes this case.
Now, as far as the Government is concerned, the Government I think didn't quote you the relevant language from their brief.
They approvingly quoted as the law in Warner-Jenkinson... that is, in filing in Warner-Jenkinson... whenever a prosecution history estoppel is invoked, there's a limitation to infringement under the doctrine of equivalents.
A close examination must be made as to not only what was surrendered but also the reason for such surrender.
That's the position that the... this Court adopted in Warner-Jenkinson.
It's the position that Festo takes before this Court today.
I should say that I don't... when I answered you, Justice O'Connor, I did not mean to say that a limitation was the same as an amendment.
It's just a statement of the claim.
A limitation is where the claim is when you first make it.
This case... if what happened to Festo here and what's going to happen to other patentholders continues, this case, were it not done by a court, were it done by any other agency, would be a taking under the Constitution.
And that's why it's important that you... this Court not approve a retroactive application of this drastic new rule but require that it be done by Congress or by rulemaking by the Patent and Trademark Office.
Justice Stevens: May I ask, since you do have a second left, what... what case of ours does... other than Warner-Jenkinson, does the new rule repudiate?
Mr. Bork: Almost all of them.
For example, the doctrine of equivalents goes back well into the last century.
Winans against Denmead, 1853.
There's an argument there about... they don't call it the doctrine of equivalents then, but there's an argument there about whether something fell under a patent claim and they say that it's really the same thing, same principle as involved, and therefore--
Chief Justice Rehnquist: Thank you, Mr. Bork.
The case is submitted.
Argument of Speaker
Mr. Bork: The opinion of the Court in No. 00-1543, Festo Corporation versus Shoketsu Kinzoku Kogyo Kabushiki Limited will be announced by Justice Kennedy.
Argument of Justice Kennedy
Mr. Kennedy: This case involves the Patent Laws of the United States.
Festo Corporation is the petitioner in the case.
It claims that respondents whom we call SMC infringed Festo’s patents.
The Festo has two valid patents there is no doubt about that and the patents cover a conveying device that is used in certain machinery.
If you want to read about rodless cylinders that is a very interesting subject.
SMC started manufacturing and selling a similar device when Festo suit SMC for infringement, SMC said well our device is different from yours.
Festo said yes it is different but in such trivial respects, that it is an equivalent and under the Patent Laws, an equivalent device still infringes.
SMC then said the difference in your device and our device, the differences you say you are so trivial but the very difference is that you added to your claims when you amended your patent application.
You cannot amend an application in order to obtain the patent and then rely on the Doctrine of Equivalents.
The very fact that you amended the claim in question means that you are barred or in the law's term, stopped from relying on the Doctrine of Equivalents.
The Court of Appeals for the Federal Circuit agreed with SMC and in the course of granting judgment for SMC, the Court adapted a new rule, which is that once a claim is amended in the patent application process, the patent holder is stopped from relying on the Doctrine of Equivalents for any aspect of the amended claim elements, and this has come to be known as the complete bar rule.
We address two questions in this case: the first is what kind of amendments brings the stop of doctrine into play at all.
On this point, we agree with the Court of Appeals that the stop of doctrine is brought into play by amendments related to any of the law’s requirements for patent ability, not just by amendments related to the prior art.
On the second question though concerning the complete bar rule, we disagree with the Court of Appeals.
We hold that the complete bar rule is inconsistent with our previous cases and with the purpose underlying prosecution history estoppel.
To adapt it now would have set settled expectation of countless patent owners who relied on our earlier cases in amending their patents.
In the course of our opinion, we do say that when an amendment has been made to the patent application, the patent holder bares the burden of proving that the amendment was not made for a reason that would give rise to an estoppel.
This is the approach advanced to us by the United States which filed an amicus brief in the case and we regard that approach to be sound.
On the record before us, we cannot say that Festo has rebutted the presumption that the equivalents at issue have been surrendered so further proceedings are in order.
The judgment of the Court of Appeals of the Federal Circuit is reversed.
The case is remanded so that the Court of Appeals or the District Court in the first instance can determine the remaining questions.
The opinion of our court is unanimous.