This year, the tree at Rockefeller Center has only red, white, and blue lights, and the gold banners have been replaced by U.S. flags. In contrast to past polite introspection, tree visitors manifest outgoing friendliness. Things are different.
As to Festo, now before the U.S. Supreme Court, over 20 amici lined up against the en banc decision of the Federal Circuit and thus with petitioner Festo. Only about three amici stand behind the en banc decision, which supercedes the past flexible bar of Hughes-I. These amici argue that things should be different.
Briefs Supporting the En Banc Festo Decision
There is a combined brief of IBM, Ford, Kodak, DuPont, Agere, and the Financial Services Roundtable which begins with a statement of the strong interest in patents of the amici:
As a result of their commitment to technological research and development, these Amici have received tens of thousands of United States patents including many patents universally recognized as pioneering. IBM alone has received more United States patents than any other assignee in each of the last 8 years. These Amici also manufacture, distribute and sell products resulting from their investment in research and development. As manufacturers, distributors and sellers of products, these Amici are often involved in granting licenses to others under their own patents, evaluating the patents of others, obtaining licenses under patents of others and litigating their own patents as well as patents asserted by others. In each of these endeavors, the potential applicability of the doctrine of equivalents -- particularly under the Federal Circuit's previous "flexible" approach to prosecution history estoppel -- had been an important consideration. As a result, these Amici have had substantial practical experience in dealing with the interplay between the doctrine of equivalents and prosecution history estoppel.
As leading recipients, licensees, licensors and litigants of patents, Amici are committed to maintaining the integrity of United States patent law and to its proper interpretation and application. By virtue of their broad practical experience both from the perspective of a patentee and from the perspective of the public trying to gauge the scope of a patent, Amici believe their views can aid this Court in the resolution of the issues raised in this appeal. Amici submit this brief in support of Respondents and urge this Court to affirm the decision of the Federal Circuit.
The amici highlight the problem of uncertainty which inheres in the flexible approach of Hughes-I:
As research and development organizations that own and license significant patent portfolios and as manufacturers, distributors and sellers/providers of products and services that evaluate the patents of others, Amici agree with the Federal Circuit that the workability of the "flexible" approach to prosecution history estoppel is flawed. ( . . . ) The "flexible" approach and the unpredictable results arising from its variable application to claim amendments created substantial uncertainty surrounding the scope of patent claims.
The zone of uncertainty that resulted from application of the "flexible approach" led to substantial difficulty in planning product launches and other commercial activities, and, in some cases had a chilling effect on the commercialization of technological innovation. For example, bringing a new product or service to market requires massive investment in research, development, manufacturing, distribution and sales. Before making such an investment, companies like Amici encounter situations where they evaluate the patents of others in order to assess the potential risk of an injunction or a damages judgment that could result from patent litigation. Under the "flexible" approach to prosecution history estoppel, Amici and other companies similarly situated could not confidently proceed without risking an adverse judgment based on application of the doctrine of equivalents, even when the patentee narrowed a claim element by amendment to avoid prior art.
Moreover, for many Amici, after they decided to launch a new product or service, the success of that new offering all too often was followed by overbroad allegations of patent infringement. Such allegations were maintained even when literal infringement was unquestionably absent and the claim element required to cover the new product by equivalents was substantively narrowed by amendment.
An interesting argument made within the IBM brief is that the briefs siding with petitioner (against the en banc holding) imply that patent attorneys are incompetent.
Petitioner's argument rests on the false assumption that little thought goes into drafting and amending patent claims. Again, this is simply not true. Patent attorneys have every incentive, and the specialized expertise, to approach claim drafting and amending with utmost care. ( . . . )
This argument, and other arguments of Petitioner and its proponents, incorrectly presumes widespread incompetence on the part of patent attorneys. On the contrary, the patent bar is a highly skilled and highly trained group which does not haphazardly make amendments without consideration of their limiting effect. ( . . . )
Perhaps, as some have suggested, the Federal Circuit's decision will raise the stakes of patent prosecution and will result in tougher battles in the Patent Office over patentability. If that is the case, so be it.
This comment from the IBM brief perhaps does not give full recognition to both economic and time limitations in prosecuting applications. In the Festo case itself, there may have been a pass-through of a poor translation from the German as to "magnetizable sleeve," which translation has created much of the issue as to the Stoll patent. Even large corporations sometimes allocate only minimal amounts, such as $ 3,000, to the drafting of applications, which amount does not provide for detailed analysis. Separately, it may sometimes be that patent attorneys, who typically possess only B.S. level degrees, do not fully appreciate the technology. In Festo, the actual phenomenon/process sought to be protected in the claim far transcended the concept of "magnetizable." Separately, this author was recently involved in a discussion about ionization of matter via radiation, which turned on an understanding of the principles of Einstein's analysis of the photoelectric effect (which analysis was the basis of Einstein's Nobel Prize). Although Einstein did the work in 1905, and it forms the basis for undergraduate texts in physics and chemistry, its somewhat counterintuitive result remains elusive to some, especially in a situation wherein decisions must be made quickly. To put it differently, if Milliken, who himself won a Nobel Prize, didn't believe the result for ten years, should we be surprised that a patent attorney in 2001, doesn't believe the result on ten minutes reflection?
Aligned with IBM was a brief by the Consumer Project on Technology. Rather than arguing from experience with patents, the brief did bring up various academic arguments. For example:
A patent will inhibit sequential invention because competitors will fear an infringement suitor will recognize that even if research is successful a license must be obtained from the patent holder in order to profit from the invention. Accordingly, patent scope at some point becomes overbroad: The prospect of a broad patent monopoly will provide less net incentive to innovate than the prospect of a more narrow patent grant. In such cases, competitors will fear to lose their research investments from patents more than patentees will fear to lose their research investments from competition. See generally F. M. Scherer, Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation, 62 Am. Econ. Rev. 422 (1972); W. D. Nordhaus, The Optimum Life of a Patent: Reply, 62 Am. Econ. Rev. 428 (1972); cf. Market Structure at 208 ("technical advance has been very rapid under a regime where intellectual property rights were weak or not stringently enforced. We think [such a] regime is the better social bet."). [footnotes deleted]
The brief also states:
The most comprehensive recent study documents that as patent protections and the number of patents have increased, competitors have increasingly obtained "defensive" patents to protect their research investments against potential infringement challenges and to assure their ability to obtain reasonable licenses from earlier patentees. [Wesley M. Cohen et al., Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not), Nat'l. Bur. of Econ. Res. Working Paper 7552, 16-24 (Feb. 2000)] The potential to prevent copying remains the principle motivation for patenting, but patent protection nevertheless provides only a weak incentive for investment in innovation (with pharmaceuticals, medical equipment, special purpose machines, and computers as the only exceptions). [F. M. Scherer, Industry Structure, Strategy, and Public Policy 361-62 (Harper Collins 1996)] For most industries, patents now rank far below secrecy, lead time advantage, and other measures in regard to inducing research and development investments, and for all industries patents rank below at least one other measure. [See Mark A. Lemley, The Economics of Improvement In Intellectual Property Law, 75 Tex. L. Rev. 989, 998-1013 (1997)] These concerns are even more salient for small firms and individual inventors, which are more sensitive to the costs of infringement litigation and patenting than are large firms.
As a separate matter, Genentech also aligned with the en banc decision. In the summary of argument, Genentech stated:
In Festo, the en banc Federal Circuit established objective, precise, and "workable" standards to govern the effect of prosecution history estoppel in connection with the doctrine of equivalents. Its prior precedent held that a narrowing claim amendment could have widely varying effects on the scope of relief available under the doctrine of equivalents. As a consequence, the literal terms of amended patent claims had become one of the less important indicators of the scope of the patentee's enforceable rights.
Clarity and legal certainty promote innovation and investment. Festo advances these objectives. It relies on a straightforward indicator, amendments made for reasons substantially related to patentability, that can be reliably evaluated in light of the objective evidence in the prosecution history. ( . . . )
The biotechnology industry will thrive under Festo. Federal Circuit precedent and PTO practice allow biotechnology patent applicants to claim their inventions broadly, provided that they fully describe and enable the public to practice the invention. This incentive reinforces a sound business strategy: reliance on literal claim coverage to protect important inventions, rather than a mere possibility that equitable relief will be available under the doctrine of equivalents. The predictability gained from the new rule will lead to more informed business decisions and will stimulate investment in the industry.
In Passing
In an article in the New York Times n2 on September 11, 2001, Kenneth Chang wrote:
In a surprise to many, molecules of carbon in the shape of soccer balls have been turned into superconductors that can carry electricity with virtually no resistance at temperatures higher than even many of the so-called high-temperature superconductors.
This text pertained to the bromoform/buckyballs which we discussed in IPT, p. 44ff (Oct. 2001). Of analysis, one notes that electron doped buckys (C60K3) have been known to superconduct for some time. Separately, bromoform/buckyballs have a Tc well below that of known 1-2-3 superconductors. This Times article is but one of many touting the fullerenes. n3 However, an interesting article, n4 more remininscent of the Wall Street Journal's "Whatever Happened to the Buckyball?", discussed the nexus of venture capitalists and buckys, and contained the following text:
Despite predictions that the market for nanotechnology - microscopic devices and chemical compounds - will take off in the next 15 years, most ideas are still too under-developed to warrant funding, venture capitalists and other investors said Nov. 30 at the Nanotech Planet conference in Boston.
Universities and the federal government, which has set aside $ 500 million for nanotech research, should continue to fund projects because most applications are still too costly to be commercially successful, they said.
"Venture capitalists are not interested in funding science projects," said R. Stanley Williams, director of quantum science research at Hewlett-Packard Co. and the conference's keynote speaker. ( . . . )
Rather than try to raise venture capital, speakers at the conference said many scientists should continue to tap the National Nanotechnology Initiative, a $ 500 million government fund set up earlier this year. The National Science Foundation, one of the federal agencies that oversee the NNI, believes nanotechnology will be a $ 1 trillion market by 2015. But to make that prediction come true, more work needs to be done at universities and government laboratories, they said.
"The first question we ask is, 'Is this technology still appropriate to the university setting?'" said Kevin Lalande, a senior associate at Austin Ventures, an Austin, Texas-based firm.
Separately, a significant case on the Digital Millennium Copyright Act, Felten v. Recording Industry Association of America Inc., D.N.J. 01-2669, was decided adversely to the challenger of the act, Professor Felten. The case arose when the RIAA requested that Felten not publish his research on how to crack watermarks used to protect digital music. The intimidation aspect reminds one of portions of the Gordon & Breach v. AIP case in SDNY and CA2.
On December 12, twenty-nine states and Puerto Rico sued Bristol-Myers Squibb (BMS) concerning actions allegedly taken to keep generic counterparts of BuSpar (buspirone hydrochloride) off the market. [See also "A Tale of Conflicting Models," Int. Prop. Today (July 2001), which discusses an earlier suit by states against BMS over BuSpar.] Curiously, the December 12 suit was filed after the decision, favorable to BMS, in Mylan v. Thompson, 60 USPQ2d 1576 (CAFC 2001).
Endnotes
n1 The opinions are those of only the author and should not be imputed to any employer, past, present, or future. The text is to foster scholarly debate. Quotation of text does not imply endorsement by the author of the text, or agreement of the author with the text. The author may be reached at Lebert@ReedSmith.com or at 609-514-5951.
n2 Kenneth Chang, "Buckyball Success May Lead the Way to Practical New Superconductors," New York Times, Section F; Page 4; Column 2 (September 11, 2001).
n3 Business Week, November 5, 2001, DEVELOPMENTS TO WATCH; Number 3756; Pg. 74; New Scientist, November 3, 2001, This Week: Frontiers, Pg. 26; Advanced Ceramics Report, November 1, 2001, Pg. 5; American Scientist, November 1, 2001, No. 6, Vol. 89; Pg. 532; Electronics Times, October 22, 2001, Pg. 12; New Scientist, October 20, 2001, This Week, Pg. 6.
n4 Charles Sisk, "VCs see slow start to nanotech investing," The Daily Deal, Nov. 30, 2001.