Ruling muddles scope of technology patents

Ruling muddles scope of technology patents
By Margaret Quan, EE Times
February 9, 2001 (2:47 p.m. EST)
URL: http://www.eetimes.com/story/OEG20010209S0018

NEW YORK — A federal circuit court decision delivered in a patent infringement case late last year may have profound implications for companies in the electronics industry, where patents are strategic assets, patent attorneys and intellectual-property experts contend.

Indeed, some sources in the legal community believe the decision in the case of Festo Corp. vs. Shoketsu Kinzoku Koygo Kabushiki Ltd. represents a complete reversal of U.S. patent law, to the point of potentially encouraging patent infringement and making it harder for small companies and individuals to obtain patents.

But other lawyers said they welcomed the ruling as a needed clarification of just how broadly patent claims could be interpreted. It's "a light in the darkness" that surrounds the so-called "doctrine of equivalents" in patent law, said Kevin Rivette, president of Aurigin Systems, a Cupertino, Calif., supplier of software for intellectual-property analysis and management.

Legal experts see the Nov. 29, 2000, decision by the U.S. Court of Appeals for the Federal Circuit as the death knell for the doctrine of equivalents, a practice that allows patent owners to extend a patent's claim beyond its literal language. The doctrine has been in use since the 19th century to prevent copycats from usurping inventions by making small changes — for example, replacing a screw with a rivet — and claiming them as their own.

The effect has been to let patent owners broaden the scope of their patents, building a wall of intellectual property that's hard for wannabes to penetrate.

A company that holds the patent on a system design based on a DSP and other components, for example, could under the doctrine of equivalents broaden it after the fact to cover a similar system built with an ASIC instead of a digital signal processor — even if the ASIC wasn't mentioned in the original claim. Adding or changing items in a patent application after filing is a stand ard procedure among businesses.

That practice is barred under Festo, which bans the use of the doctrine of equivalents to virtually every claim element changed or added after the initial filing of the patent application.

This blow to the doctrine of equivalents creates a "profound change" in patent law, said Alexander I. Poltorak, chairman and chief executive officer of General Patent Corp., an intellectual-property management firm based in Suffern, N.Y.

"We [in the patent law community] don't think it is a fair decision and are scratching our heads to figure out how to deal with it," said Poltorak. Not only does the decision affect new patents, it is retroactive to existing ones as well, Poltorak said. "People who hold patents could lose a good deal of intellectual property and part of the territory previously covered by their patent rights," he said. Patent holders might find the scope of their patents is considerably narrower than they believed.

A spokeswoman for the U.S. Patent and Tra demark Office in Washington said that it's "too early to assess [the decision's] impact," since the case is still in litigation. Festo's lawyers plan to appeal the ruling to the U.S. Supreme Court.

Similarly, the Intellectual Property Owners Association (Washington) is studying the implications of the case, said executive director Herbert C. Wamsley, to determine whether the decision strikes the best balance between patent owners and the interests of manufacturers.

Origins in 1988

The case originated with a patent infringement suit filed in 1988 by Festo Corp. (Hauppague, N.Y.), a branch of the industrial equipment maker The Festo Group (Esslingen, Germany). Festo claimed that products of the Japanese pneumatics manufacturer Shoketsu Kinzoku Koygo Kabushiki, also called SMC Corp., infringed on two of its patents for magnetically coupled rodless pistons.

The Japanese company's devices had two main structural differences from those of Festo. Festo amended its original patent applica tion to cover those two differences, in accordance with the doctrine of equivalents.

The New York company won judgments in several courts, including the District Court of Massachusetts and the U.S. Court of Appeals for the Federal Circuit. SMC filed for a hearing with the U.S. Supreme Court, but the high court declined to hear the case and kicked it back to the appeals court. There, a 12-judge hearing in November reversed the previous decisions.

In a highly detailed document that ran more than 150 pages, the appeals court ruled that the doctrine of equivalents did not hold with regard to Festo's two claim amendments, and that its patents were narrower than previously believed.

That decision "severely limits the strength of patents by narrowing their scope," Gerald T. Bodner, an attorney with Hoffman & Baron LLP of Syosset, N.Y., who litigated on behalf of Festo, told EE Times. "[It] affects patent licenses and allows imitators or foreign companies to make insubstantial changes in existin g inventions and get patents [on them]." Bodner maintained that if the Festo decision stands, it could stifle innovation. The Festo legal team is hoping for a reversal: Hoffman & Baron will file a petition with the U.S. Supreme Court on Festo's behalf by Feb. 27, Bodner said.

Also, he said several corporations and associations would submit amicus curiae ("friend of the court") briefs within 30 days of that filing to express why they think the Festo decision is harmful for the U.S. business community. The Supreme Court is expected to decide in midsummer whether it will hear the case.

The appeals court decision has so far remained off the radar screens of many corporations. But if left standing, legal experts said, Festo could have a major impact on the way they do business in the age of intellectual property.

Most patents are altered during what's called the "prosecution" phase, when a U.S. Patent Office examiner works on and checks, the application. The examiner may accept or reject claims, and may suggest that changes be made before a patent is issued. This is part of the common give and take of the patent process.

But under Festo, companies and the attorneys who write patents for them would not be able to make changes once the patent application is filed. They would have to spend more time doing their homework, legal experts said, researching the patents thoroughly to cover all the bases upfront. This would make patent filing potentially more difficult and expensive — or possibly even prohibitive for small companies and individuals.

Every variation

Besides conducting more exhaustive prior-art searches before filing, said Poltorak of General Patent, attorneys must attempt to foresee every possible variation of the invention the patent covers, starting out with a broad claim and following it with successively narrower claims that cover every new twist. This way, he said, if the broad claims are rejected, many of the detailed claims may still make the cut.

Rivette o f Aurigin Systems believes the upshot would be to clarify the process, injecting "predictability, consistency and precision" into patent law — and eventually making it easier for companies to license their technology and determine if a competitor is infringing it.