Bleak House Redux?

Festo v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd.

The name "Jarndyce" appears nowhere in the Federal Circuit's recent decision in Festo v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd.  Still, the multiple decisions (this most recent opinion will be known as Festo XIII) and the dispute's very long litigation history evokes that Dickensian lawsuit.  Maybe the beleaguered ghost of Chancery is to blame.  Festo involves a claim of patent infringement based upon the doctrine of equivalents.  The alleged infringer asserted the defense of prosecution history estoppel.  Both claim and defense are grounded upon equitable considerations of fairness, and-at least here-equity has moved no more swiftly than its long-gone forebearer.

The alleged equivalency occurred in devices using magnetically coupled rodless cylinders as part of a drive assembly.  The patented device used a magnetizable metal sleeve on the outside of the drive to encase the magnets within.  Part of the function of the magnetized metal sleeve was to shield against magnet field leakage.  Six years later, due to advancements in magnet technology, the alleged infringer was able to use a non-magnetizable aluminum alloy sleeve both to encase its similar magnetized drive assembly and to shield magnet field leakage. 

Festo, the patent holder, sued for infringement under the doctrine of equivalents.  The doctrine of equivalents protects inventions against devices which do not literally infringe patent claims but utilize insubstantial changes or similar means in order to produce the same technology.  Festo's amendment of its claims during patent prosecution complicated the issue.  The claim amendment, added after the original filing of the patent application, required the use of magnetizable material for the cylinder sleeve. 

Prosecution history estoppel limits the doctrine of equivalents by preventing a claim of equivalency when the patent holder has surrendered the claimed equivalent subject matter during prosecution of the patent.  Typically, the surrender happens through a claim amendment made to overcome questions of patentability.  Festo I-VIII addressed whether Festo's amendment limited or even barred it from resorting to the doctrine of equivalents.  After the Supreme Court ultimately clarified that the doctrine was still available in limited circumstances, the Federal Circuit remanded the case to the lower court to determine whether one of those exceptions - whether the equivalent was "unforeseeable at the time of the application" - applied.  Festo IX-XII sought to answer that question and Festo XIII purports to do conclusively.

But we're not sure it does.

Instead, a panel of the Federal Circuit reached a standard on foreseeability, which, in the words of the dissent, may serve as "a complete bar by another name."  Specifically, the Festo XIII court concluded that an equivalent is "foreseeable" if one skilled in the art would have known that the alternative existed in the field (as defined by the original claim scope) even if the suitability of the alternative for the particular purpose as defined by the amended claim scope were unknown.  In this instance, the fact that non-magnetized aluminum alloys for use on assembly sleeves was well known was determinative.  The court found that the future use of assembly sleeves made of that alloy was foreseeable, even though the alloy's ability to perform an essential function-protection against magnetic field leakage-was unknown at the time Festo filed its patent.

To get to that holding, the court had to reject Festo's argument that foreseeability should be assessed by the same tests employed under the doctrine of equivalents-either the "insubstantial differences test" or the "function/way/result test."  The panel's majority concluded adopting such a standard would serve as invitation to parties to confuse the record by taking inconsistent positions depending upon the relevant point in time.  By focusing on alternatives existing before the limiting claim amendment, the Festo panel creates a bright-line rule regarding foreseeability, that, while easily applied, may not take into consideration all the context of the amendment at issue.

As Judge Newman points out in her vigorous dissent, this standard allows the use of hindsight to determine foreseeability.  By allowing consideration of future advancements on existing technologies, Festo requires inventors to anticipate the unknown if and when claim amendment occurs.  The panel's decision leaves no room for amendments primarily driven by functional considerations.  For example, what if Festo had amended its claims by using language which focused on the functional characteristics of the sleeve, rather than its material composition? Would the fact that the functional potential of an aluminum alloy was not yet known have led to a different result?

Unchallenged, Festo will certainly embolden defendants' efforts to limit a patentee's access to the doctrine of equivalents wherever a narrowing amendment has occurred.  Given the vehemence of the dissent though, we expect an en banc review to harmonize the discordant views of the panel majority and Judge Newman.  If we're right, Festo XIII will not serve as the conclusion of this ongoing saga; it will merely be the latest installment.

The next chapter and the story's end?  Another twenty years?

Who can say? And who wouldn't pine--just a little--for Chancery?

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