There is venerable doctrine of patent claim construction that says the patent claim covers not only what is literally recited in the claim, but also any equivalents thereof that perform the same function to achieve the same result in substantially the same way. This is called the "doctrine of equivalents." There is another equally venerable doctrine that says the patentee cannot recapture that which he gave up or surrendered by narrowing the scope of his patent claim. This is called "prosecution history estoppel" (formerly known as "file wrapper estoppel").

So what happens when these two patent doctrines collide? That's what the Supreme Court had to resolve in the recent case of Festo Corp. v Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. (2002). In Festo, the Supreme Court partially affirmed (and partially overturned) a decision by the Court of Appeals for the Federal Circuit, 234 F.3d 558 (Fed. Cir. 2000), that had held prosecution history estoppel barred an assertion of patent infringement based on the doctrine of equivalents whenever there was any amendment that narrowed the patent claim at issue.

The Festo case has a rather long and tortured history. The patentee (Festo) had obtained two patents (one in 1973, the other in 1982) for an improved magnetic rodless cylinder that relied on magnets to move objects in a conveying system. This device has many uses and can be found in machines as diverse as sewing equipment to the Thunder Mountain ride at Disney World.

One of the patents (the Stoll patent) was amended during its original prosecution. The other patent (the Carroll patent) was amended as a result of reexamination in 1988. Both patents were amended to require: (1) the cylinder contain a pair of sealing rings; (2) the outer shell of the cylinder (the sleeve) be made of a magnetizable material.

The alleged infringer in Festo (SMC) made a similar device but with a cylinder that had only one sealing ring (not a pair) and a sleeve made of a nonmagnetizable alloy. Festo sued SMC for infringement, arguing that SMC's device was sufficiently similar to infringe the two patents under the doctrine of equivalents. SMC argued that Festo was estopped from making this argument because of these two amendments to the patent claims.

The district court (District of Massachusetts) ruled in favor of Festo, holding that Festo's claim amendments were not the kind to give rise to estoppel. (Festo had argued that these two claim amendments were not for the purpose of avoiding prior art, the traditional basis for prosecution history estoppel.) A three-judge panel of the Federal Circuit initially affirmed the district court's ruling. 172 F.3d 1361 (Fed Cir. 1999). However, the Supreme Court granted certiorari, vacated this initial decision and remanded it to the Federal Circuit for further consideration in light of Warner-Jenkinson v. Hilton Davis Chemical Co., 520 U.S. 17 (1997), the Supreme Court's previously most recent foray into this problematic area of patent law.

The Federal Circuit then ordered an en banc rehearing before all twelve judges. 187 F.3d 1381 (Fed. Cir. 1999). The en banc Federal Circuit first ruled (one judge dissenting) that prosecution history estoppel could arise from any amendment that narrowed the patent claim to comply with the patent statutes, not just an amendment to avoid prior art. More controversially, the Federal Circuit next ruled (four judges dissenting) that whenever estoppel applied, there would be no range of equivalents for the amended element. In other words, the patentee (Festo) could not stretch the patent claim beyond the literal language of the amended element. Because SMC's device avoided not one, but two amended claim elements, this doomed Festo's patent infringement case.

The Supreme Court unanimously affirmed the Federal Circuit's first ruling, i.e., prosecution history estoppel can arise from any amendment that narrows the patent claims. The Supreme Court acknowledged that estoppel had most often occurred in the context of amendments made to avoid prior art, and was the emphasis of its decision in Warner-Jenkinson. However, the Supreme Court said that the rationale for prosecution history estoppel, "does not cease simply because the narrowing amendment, submitted to secure the patent, was for some purpose other than avoiding prior art." In other words, "estoppel arises when an amendment is made to secure the patent and the amendment narrows the patent's scope."

The Supreme Court also unanimously reversed the Federal Circuit's second ruling, i.e., estoppel was a complete bar to any equivalents. The distress felt by the Supreme Court with the Federal Circuit's bright line, but inflexible second rule, could be seen early in the Festo opinion: "the clearest rule of patent interpretation, literalism, may conserve judicial resources but is not necessarily the most efficient rule." Indeed, the Supreme Court found the Federal Circuit's approach "inconsistent with the purpose of applying the estoppel in the first place-to hold the inventor to the representations made during the application process and to the inferences that may reasonably be drawn from the amendment." Instead, the Supreme Court held that such narrowing amendments do not necessarily preclude an assertion of infringement against all equivalents of the amended element when: (1) the equivalents asserted are "unforeseeable at the time of the amendment and beyond a fair interpretation of what was surrendered;" or (2) the aspect of the invention in question has "only a peripheral relation to the reason the amendment" was made.

While chastising the Federal Circuit for "ignoring the guidance of Warner-Jenkinson," the Supreme Court in Festo also warned that amended patent claims posed a serious risk of prosecution history estoppel being applied. The Supreme Court further held that the patentee (e.g., Festo) would bear the burden of showing that the amendment did not surrender the particular equivalent in question. Indeed, the Supreme Court said, "courts may presume the amended text was composed with awareness of this rule and that the territory surrendered is not an equivalent of the territory claimed." That can be a particularly ominous threat if the patentee is unable to come up with a good explanation (preferably one in the patent prosecution record) for why the amendment did not give up the full range of equivalents.

For the potential infringer, the Festo case now means each patent must be carefully evaluated to assure avoidance of infringement, even if the patent claims have been amended. The Supreme Court has made clear that there may be some latitude as to the range of equivalents that will still be encompassed by the amended element(s).

Conversely, the patentee must still be extremely cautious whenever amending the patent claims. While replacing the rigid, draconian rule of the Federal Circuit with a more flexible rule, the Supreme Court has firmly placed the burden on the patentee to show that any claim amendments did not give up all equivalents to the amended element(s).

What should be of particular concern to the Federal Circuit is how many patentees affected by prior rulings based on its overturned Festo decision may now request reconsideration. Given that there are about two years worth of such rulings, the Federal Circuit may have its work cut out as it tries to deal with such requests. They certainly won't find too much sympathy from the Supreme Court, who was pretty blunt about saying, "we told you so."

Published as When Patent Doctrines Collide: A Look at the Supreme Court's Recent Festo Ruling, Cincinnati Bar Association Report, page 16 (September 2002)