By Kevin E. Noonan —

The course of litigation of Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. (SMC) has been almost as lengthy as Jarndyce and Jarndyce, having been first filed in 1988.  The case appeared again this week, when the Federal Circuit affirmed a District Court decision that prosecution history estoppel prevented Festo from asserting the doctrine of equivalents against SMC’s product.  Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. (Fed. Cir. 2007) (Festo XIII).

The patent-in-suit (U.S. Patent No. 4,354,125) claimed a "magnetically coupled rodless cylinder," in which a piston having embedded magnets contained in a shaft is magnetically coupled to a driven member on the outside of the shaft.  Movement of the piston is motivated by pressure, such as by a fluid, while movement of the driven member is motivated by magnetic forces between the magnets in the piston and the magnets in the driven member.  One issue faced by Festo is that such magnetically coupled rodless cylinders were "well-known" in the prior art; the distinction of Festo’s invention was that there was a small gap between the magnets, to maximize the magnetic motivating force.

The equivalents issue involved a sleeve on the outside of the driven member that encases the magnets, which feature was not recited in the independent claim as filed but was a limitation found in a dependent claim.  In the face of claim structure objections from the patent examiner under 35 U.S.C. § 112, the Patentees added the limitation that the sleeve was made of a "magnetizable material," as well as other amendments not at issue in the Federal Circuit’s decision.  The former amendment raised the prosecution history estoppel issue.

A review of the litigation history of the case helps delineate the questions before the District Court and Federal Circuit.  In the original District Court case (Festo I), a jury found that SMC infringed under the doctrine of equivalents, and awarded damages to Festo in excess of four million dollars.  A three-judge panel of the Federal Circuit affirmed (Festo II), but the Supreme Court granted certiorari and remanded for consideration of the extent of prosecution history estoppel in view of its decision in Warner-Jenkinson Co. v. Hilton Davis Chemical Co. (Festo III).  In Warner-Jenkinson, the Supreme Court held that claim amendments raised a presumption that prosecution history estoppel applied, which presumption a patentee had the opportunity (and the burden) to rebut.

On remand, the Federal Circuit heard the parties en banc, posing four questions to be decided.  First, were amendments that raise prosecution history estoppel limited to rejections based on 35 U.S.C. §§ 102 or 103, or did any amendment related to patentability raise the estoppel?  Second, did voluntary amendments raise the estoppel?  Third, what was the consequence of amendments having no basis on the record for the motivation behind the amendments?  And last, if prosecution history estoppel was raised by an amendment, what was the scope of equivalents available for that equivalent?

The Federal Circuit answered these questions (Festo VI) by holding that prosecution history estoppel could be raised by amendments made for any reason relating to patentability, including voluntary amendments and amendments having no motivation or basis on the record.  Significantly, the Federal Circuit also held that a claim element was entitled to no range of equivalents if an estoppel was raised.

The Supreme Court reversed in part (Festo VIII), finding that a patentee could rebut the presumption of prosecution history estoppel by establishing one of three exceptions:  1) that the equivalent was unforeseeable; 2) that the amendment had only a tangential relation to the equivalent or 3) that there was "some other reason" that suggested the patentee would not have reasonably been expected to describe the equivalent.  Relevant to the Federal Circuit’s later decision, the Supreme Court established that foreseeability depends on whether the patentee would be expected to know, and claim, the equivalent.

On remand from the Supreme Court, the Federal Circuit held en banc (Festo X) that whether a patentee had rebutted the presumption of surrender under the three exceptions was a matter of law, but that there are factual issues underlying the foreseeability exception that permitted a court to hear expert testimony in making its decision.  The Court also held that only the foreseeability exception was available to Festo, and remanded the case to the District Court for this determination.

On remand from the Federal Circuit, the District Court held (Festo XI) that Festo had failed to rebut the presumption that the equivalent, an aluminum alloy that was stipulated to be a non-magnetic material, was not foreseeable.  An important factor in this determination was that Festo had submitted two references during prosecution that disclosed using non-magnetic material in a sleeve, and the fact that using aluminum to shield magnetic fields was known in the prior art.  Festo argued that what the art did not teach was that aluminum could be used as an equivalent to the magnetizable material recited in the claim, under the theory that a foreseeable equivalent should satisfy the insubstantial differences/substantially similar function, way, result test for the doctrine of equivalents.  Festo argued that there was no inconsistency in its analysis, that the equivalent satisfied these tests with regard to infringement of the accused article under the doctrine of equivalents, while not satisfying these tests with regard to prosecution history estoppel, because the analyses are performed at different times.  Thus, while the suitability of the equivalent might not be recognized at the time the amendment was made, and thus was not foreseeable, this suitability may be known at the time the accused infringer made, used, sold, offered to sell, or imported the infringing article, thus producing infringement liability under the doctrine of equivalents.

The Federal Circuit rejected this analysis.  In rejecting Festo’s argument that foreseeability of an equivalent should be assessed using the same criteria (insubstantial differences/substantially similar function, way, result), the Court majority (Judge Dyk writing for the Court, with Chief Judge Michel joining the opinion) raised the concern that this scheme would result in inconsistent arguments by patentees, not giving credence to Festo’s argument that it is not inconsistency but rather different timing of the analysis that informs the differences in the arguments.

The Court expressly held that an equivalent is foreseeable if it is known in the "pertinent prior art" regardless of whether its applicability to the invention is appreciated.  The Court further distinguished between "new" technology and "old" technology, saying the latter is "more likely" to be foreseeable.  The Court also revisited the issue of whether the fact that an equivalent is independently patentable would preclude (or at least affect) availability of the doctrine of equivalents for finding patent infringement liability.  This discussion renewed the Court’s traditional concern that a patentee not be permitted to ensnare later-developed, independently-patentable inventions using the doctrine of equivalents.  The Court did not take the opportunity to decide this question (which was not at issue in the Festo case) but opined that a finding that the doctrine of equivalents would apply under the circumstances of independent patentability would be "considerably more difficult to make out."  Finally, the Court asserted that "an equivalent cannot be non-obvious and insubstantial" at the same time, and that the foreseeability issue should be considered with relation to the claim scope before the amendment.  Using this analysis, the issue is whether the equivalent would be foreseeable prior to patentee’s claim amendment, because if the equivalent was known in the art, an amendment excluding (or at least not including) the equivalent would raise the estoppel.

Judge Newman’s dissent focused on the unforeseeability of the functional equivalence of the non-magnetic aluminum alloy used in the sleeve, explicitly citing the differences in the timing of the analyses.  She excoriated the majority’s analysis as one that could make equivalents "retroactively foreseeable" when, as here, the equivalent was known but its usefulness as an equivalent was not appreciated.  Judge Newman stated the point of her dissent most succinctly with the aphorism "[h]indsight is not foreseeability."

This case represents yet the latest salvo in the continuing dispute over the scope of the doctrine of equivalents and prosecution history estoppel limitations of the doctrine that has played our between the Federal Circuit and the Supreme Court in the ten years since Warner-Jenkinson.  While the subject matter of the claims is a mechanical device, the Federal Circuit’s reasoning is not limited to such simple subject matter, and its applicability to biotechnology patents can be illustrated by a simple example.

For many years, the Patent and Trademark Office has been generally willing to grant claims to nucleic acids and proteins encoded thereby supported by a particular predicted protein amino acid sequence, but has been less willing to grant claims generally to protein embodiments comprising "conservative mutations" in such proteins.  The biotechnology community has accepted these claims under the belief that infringement by a protein having a sequence that differed from the disclosed sequence only by such conservative substitutions would be encompassed under the doctrine of equivalents.  As a consequence, claims to such conservative substitutions are frequently amended or cancelled in an effort to obtain patented claims.

The Federal Circuit’s latest Festo decision calls that belief into question.  For example, assume that an infringer replaces one or several valine residues in the native, disclosed protein sequence with leucine residues, a change that adds but a single methylene group to the amino acid sequence at every valine to leucine substitution position.  The structural and functional equivalence of valine to leucine are well-known, and indeed biotechnology patent specifications routinely contain references for this equivalence.  Under the Federal Circuit’s latest explication of its Festo jurisprudence, whether leucine is an equivalent to valine at any particular substitution position or positions should be irrelevant to whether there is an estoppel raised by cancelling or amending claims to eliminate conservative substitution mutants.  The equivalence of the two amino acids is appreciated in the pertinent prior art; the further demonstration that a particular substitution of a particular valine residue produces a functional protein may not be enough to avoid the estoppel.  There is no reason to distinguish this fact pattern from the situation in Festo, where the existence of aluminum alloy sleeves in the prior art was enough to raise the estoppel, despite the lack of knowledge or recognition that non-magnetic material could be used in the claimed invention.

So far, the Supreme Court has not been content to let stand the Federal Circuit’s prior decisions in Festo, and in view of the Supreme Court’s recent penchant for reviewing Federal Circuit opinions (see "Is It Time for the Supreme Court to Stop Flogging the Federal Circuit?") it is likely that the Supreme Court will once again revisit these issues.  Until then, it would be prudent for biotechnology patent practitioners to carefully assess the impact of this Festo decision on the applicability of the doctrines of equivalents and prosecution history estoppel to their clients’ claims.

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. (Fed. Cir. 2007)
Panel: Chief Judge Michel and Circuit Judges Newman and Dyk
Opinion by Circuit Judge Dyk; dissenting opinion by Circuit Judge Newman

Additional information regarding this case can be found at the Orange Book Blog and Patently-O.