On November 29, 2000, the Court of Appeals for the Federal Circuit, sitting en banc, issued its decision in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. In a divided opinion, the majority of the Court held that: (1) an amendment that narrows the scope of a claim for any reason related to the statutory requirements for a patent will give rise to prosecution history estoppel with respect to the amended claim element; (2) a "voluntary" claim amendment that narrows the scope of the claim for a reason related to the statutory requirements for a patent will give rise to prosecution history estoppel as to the amended claim element; (3) when a claim amendment creates prosecution history estoppel with respect to a claim element, there is no range of equivalents available for the amended claim element, thereby completely barring application of the doctrine of equivalents as to the amended element ("complete bar"); and (4) failure to explain a claim amendment invokes a presumption of prosecution history estoppel, thereby providing no range of equivalents under the doctrine of equivalents as to that element. The Court did not discuss a fifth issue with respect to whether a judgment of infringement in the present case would violate the "all elements rule".

Festo Corporation ("Festo") sued Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. and SMC Pneumatics, Inc. (collectively "SMC") in the United States District Court for the District of Massachusetts alleging that SMC's products infringed two of Festo's patents. The District Court had granted Festo's motion for summary judgment that certain of SMC's products infringed claims 5, 6 and 9 of one of the patents in suit under the doctrine of equivalents. On the other patent, the Court determined that SMC's devices could not literally infringe but stated that an issue of material fact existed as to infringement of that patent under the doctrine of equivalents, concluding that the reason for an amendment effected during the prosecution of that patent was "a mystery" because it did not appear to be related to any of the examiner's rejections and did not appear to distinguish invention over prior art. The Court therefore declined to hold, contrary to SMC's assertion to the contrary, that prosecution history barred a finding that one of the patents was infringed under the doctrine of equivalents. The jury found that SMC infringed under the doctrine of equivalents and assessed damages accordingly.

On appeal, a Federal Circuit panel affirmed the District Court's decision, and SMC subsequently filed a writ of certiorari to the Supreme Court, which was granted. The Supreme Court, however, vacated the Federal Circuit's earlier opinion in the matter and remanded the case back to the Federal Circuit. The Supreme Court instructed the Federal Circuit to reconsider its prior decision in accordance with the law announced in Warner-Jenkinson v. Hilton Davis (reported in our July 1997 Newsletter).

In Warner-Jenkinson, the Supreme Court determined that where the patentee establishes no explanation for including a limiting element added by amendment, a court should presume that the patentee had "a substantial reason related to patentability" for including the limiting element. Prosecution history estoppel would therefore bar the application of the doctrine of equivalents as to that element. If the patentee demonstrates, however, that an amendment required during prosecution had a purpose unrelated to patentability, a court must consider that purpose in order to decide whether an estoppel is precluded. If the patentee is unable to establish such a purpose, the court should presume that the purpose is related to patentability and prosecution history estoppel would apply.

The Federal Circuit herein asked the parties to brief five questions for rehearing en banc. The first question addressed whether, for the purposes of determining whether an amendment to a claim creates prosecution history estoppel, a "substantial reason related to patentability" is limited to those amendments made to overcome prior art or includes any reason affecting the issuance of a patent. In the present case, the Federal Circuit majority observed that all statutory requirements for patentability (including issues of operability, clarity of claims, provision of an adequate written description and compliance with the requirements for statutory subject matter) subject pending claims to rejection or issued patents to a holding of invalidity if the claims fail to satisfy any one of the requirements. The majority concluded that an amendment related to any of these statutory requirements is an amendment made for a substantial reason related to patentability. The Court did not address the effect of amendments made in the specification.

The second question addressed whether a "voluntary" claim amendment created prosecution history estoppel. The Court majority defined a "voluntary" amendment as one that is not required by the examiner or made in response to a rejection by an examiner for a stated reason. The majority concluded that voluntary amendments are treated as other types of amendments, with the effect that a voluntary amendment that narrows the scope of a claim for a reason related to patentability gives rise to prosecution history estoppel regarding that amendment. Both types of amendments "signal to the public that subject matter has been surrendered. There is no reason why prosecution history estoppel should arise if the Patent Office rejects a claim because it believes the claim to be unpatentable, but not arise if the applicant amends a claim because he believes the claim to be unpatentable".

The third and most contentious question asked what range of equivalents is available under the doctrine of equivalents for an amended claim element if the claim amendment creates prosecution history estoppel with respect to that element. The Court majority determined that a complete bar to the application of the doctrine of equivalents is appropriate when an amendment narrows the scope of a claim for a reason related to patentability. The majority emphatically stated that there is no range of equivalents available for the amended claim element, thereby constituting a "complete bar" to application of the doctrine to the claim element. The majority looked to the Federal Circuit's own history regarding the application of a "flexible bar" in which prosecution history estoppel does not totally preclude equivalence. Finding the "the current state of the law regarding the scope of equivalents that is available when prosecution history estoppel applies is 'unworkable'", the majority reasoned that the flexible bar impedes the "realization of important objectives" of patents, notably the narrowing amendment's operation as a disclaimer of subject matter (favoring a strict construction against the inventor and in favor of the public), the preservation of the notice function of patent claims and the promotion of certainty in patent law. So as to eliminate speculation as the precise nature of the surrendered subject matter, the complete bar applies whether the amendment is explained or unexplained, and whether or not the amendment is made in response to a rejection that may be improper. The majority noted that it independently decided the issue because the Supreme Court in Warner-Jenkinson "had not fully addressed the range of equivalents that is available once prosecution history estoppel applies". Four judges dissented from this portion of the opinion, taking the view that the solution to the problem adopted by the majority would either (a) so severely limit the application of the doctrine of equivalents that its essential purpose of preventing "fraud on a patent" by permitting trivial differences from what is claimed to escape a finding of infringement would be destroyed, or (b) by encouraging applicants to file only narrow claims so as to avoid the risk of having to make amendments during prosecution and then seeking to apply the doctrine of equivalents broadly, by effectively negate the notice function of the claims and result in a reversion to the position that had existed prior to the 1870 Patent Act.

The fourth question asked what range of equivalents is available under the doctrine of equivalents for an amended claim element if no explanation for the claim amendment is established, thus invoking prosecution history estoppel. The majority cites the Supreme Court's admonition that "[w]here no explanation is established...prosecution history estoppel would bar the application of the doctrine [of] equivalents as to that element" (citing Warner-Jenkinson). The majority therefore reasserts the complete bar of the application of the doctrine of equivalents as to the amended limitation.

The majority applied its holding by making a two-part inquiry. The majority first determined whether the amendments made in Festo's patents narrowed the literal scope of the applicable claims. Two elements of the patent claim found to be infringed were elements that were added to the original claims during prosecution of the patent. In one case, the addition was made without any reason being given therefor. SMC argued that Festo had surrendered the difference between the originally claimed elements and the elements recited in the amended claims, which difference was employed in the SMC devices. The majority agreed. In the other patent, a new claim element was introduced through a new claim rather than an amended claim that narrowed the scope of the original claim. This, however, did not affect the Court's analysis.

The second part of the majority's inquiry was to determine whether Festo had established that its claim amendments were made for reasons unrelated to patentability. The majority observed that the amendments made during prosecution were not responsive to the Examiner's rejections and were not accompanied by the patentee's statement concerning why the elements were included in the independent claim. The majority applied the Warner-Jenkinson presumption that the amendment was added for a reason related to patentability.

The majority therefore concluded that since certain claim elements of Festo's patents that were found to be infringed by equivalents were added through amendments that narrowed the scope of the claims, and since Festo did not establish reasons for these amendments unrelated to patentability, prosecution history estoppel serves as a complete bar to the application of the doctrine of equivalents as to the added elements.

The United States Supreme Court has agreed to review the Federal Circuit Appeal Court's decision on a writ of certiorari. In the meanwhile, The Court of Appeals for the Federal Circuit has been applying Festo strictly. In Pioneer Magnetics Inc. v. Micro Linear Corp. the Court held that it did not matter if a claim limitation had been made "inadvertently" because the public should not be required to guess at the reasons for a limitation. In Litton Systems Inc. v. Honeywell Inc. it was made clear that the ruling in Festo applied retroactively notwithstanding a previous indication by the same court in a hearing before the Festo case that a more flexible approach should be adopted to the question of the breadth of the bar on the application of the doctrine of equivalents on the same facts. In Biovail Corp. International v. Andrx Pharmaceuticals Inc., it was made clear that where an amendment is made for reasons relating to patentability in a parent case, the effects of Festo extend not only to that case but to a patent issued on a continuation containing the same claim limitation.