Reconsidering estoppel: patent administration and the failure of Festo.

AuthorWagner, R. Polk

Last Term, in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., the United States Supreme Court missed perhaps the most important opportunity for patent law reform in two decades. At the core of the failure to grasp the implications of "prosecution history estoppel"--a judicially crafted principle limiting the enforceable scope of patents based on acts occurring during their application process--is the heretofore universal (but ultimately unsupportable) view of the doctrine as an arbitrary ex post limitation on patent scope. This Article demonstrates the serious flaws in this traditionalist approach, and develops a new theory of prosecution history estoppel based on its ex ante effects. This shift of focus from the allocation of liability during infringement (ex post) to the way the rule generates incentives both during and before inventors apply for patents (ex ante) offers substantial insights into the central role that this venerable doctrine plays in the modern patent administrative system. In particular, the Article argues that prosecution history estoppel is best viewed as an information-forcing default penalty rule, where the possibility of lost patent scope induces patentees to produce socially valuable information early in the life of the patent. Other benefits include the internalization of costs related to certain activities during patent prosecution, and increased enforcement of the institutional arrangements between the Patent Office and the judiciary. Indeed, the considerable analytic advantages observed in this context strongly suggest that the Article's methodological approach of reconsidering the patent law in an explicitly ex ante framework has applications well beyond prosecution history estoppel.


Last Term, the United States Supreme Court considered perhaps the most important issue of patent law reform in two decades. (1) In Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. ("Festo VII"), (2) the Court opined upon the venerable and seemingly obscure doctrine of "prosecution history estoppel," a judicially crafted rule that limits the enforceable scope of patents based upon activities during their application process (their "prosecution," in patent parlance). (3) Yet the important tale here is not the Court's foray into "this most metaphysical branch of modern law," (4) nor even the wisdom of the decision on its own terms. The significance of Festo is that--despite the enormous implications of the decision for our modern system of patent administration--the opportunity for meaningful reform of the patent prosecution process went unrecognized and unmentioned, swept aside by a narrow, statist, and ultimately illogical approach to the central issue involved. Indeed, the failure of the Court to even seriously consider the real (as opposed to the illusory) implications of the doctrine of prosecution history estoppel is all the more ironic in an era when the patent administration system is increasingly under fire for the very problems that Festo could have addressed. (5)

The frustration of this most recent effort to clarify and stabilize the administration of the patent system (6) stems from the (remarkable) fact that neither the courts nor the commentators, to date, have recognized the incompleteness of the contemporary view of prosecution history estoppel and the deficient theoretical cul-de-sac into which the current debate leads. That is, the conventional--and apparently universal--approach to the issue is directed to the purported interplay between prosecution history estoppel and the "doctrine of equivalents" (7) (another judicially created canon, allowing infringement to be found on the basis of an "equivalent" of a patented invention). (8) As such, contemporary analyses of prosecution history estoppel have become hopelessly entangled with the policy bases underlying the doctrine of equivalents, rather than addressing estoppel on its own terms. (9) This "equivalents-centered" approach to prosecution history estoppel--which considers the rule through the monochromatic lens of patent scope--views the debates over the doctrine as simply a manifestation of an ongoing ideological struggle over the contours of optimal patent protection. (10)

This Article takes issue with the traditional, equivalents-centered view of prosecution history estoppel, reconceptualizing the doctrine within the framework of incentives and strategic choices involved in the modern patent administration system. Indeed, I contend that prosecution history estoppel cannot be viewed solely in terms of the doctrine of equivalents. The relationship between the two doctrines is entirely instrumental; that prosecution history estoppel implicates patent scope is not the end of the analysis, but the beginning. For it is this effect on patent scope (and thus the underlying value of the patent grant) that supports a broader, incentives-oriented role for the canon. Accordingly, this Article offers a theory of prosecution history estoppel as significant to the central goal of the patent administration system: producing information related to the crucial relationship between innovation, disclosure, and patent scope. (11)

This theory is supported by two insights into the functional characteristics of the doctrine. The first is that prosecution history information generated prior to and during the prosecution of the patent is enormously important to the system of patent administration. A major concern in the modern patent system is uncertainty surrounding the ultimate coverage of a patent; that is, the relationship between invention, disclosure, and patent scope that is at the core of the social compact of the patent system. (12) Ambiguity in this context makes evaluating patentability difficult, undermines financial valuations, results in confusion concerning potential infringement, and requires costly ex post generation of information, often as part of litigation. (13) This is, above all, an informational problem--of timing, quality, and quantity. Importantly, the contemporaneous, patentee-provided information related to prosecution history (and induced by estoppel, as noted below) is likely to be the best possible source of information, and thus reveals the doctrine as critical to the informational challenges at the heart of the patent system.

The second insight supporting a reevaluation of prosecution history estoppel is that the potential for lost patent scope coverage (as a result of the application of prosecution history estoppel) (14) generates incentives for the patentee to act in socially beneficial ways, such as: developing and disclosing additional information; (15) seeking an appropriate amount of coverage, given the invention's significance; (16) and enhancing the importance of the role of the United States Patent and Trademark Office (PTO), thus maintaining the institutional arrangements established by the patent system itself. (17) The dual roles for prosecution history estoppel--providing information and creating incentives--directly support the patent administration system's goal of maintaining the relationship between innovation, disclosure, and patent scope. A robust theory of prosecution history estoppel, then, offers a significant contribution to the understanding and analysis of the modern patent system.

The theory of prosecution history developed by this Article greatly informs the continuing debate--recently illustrated by the series of Festo opinions (18)--concerning the specific form of the rule. (19) Only a strong form of prosecution history estoppel--one that clearly reduces the potential scope of a patent when triggered--adequately supports the information-production and incentive-creation roles of the doctrine; weaker forms, including the Supreme Court's "presumptive bar" (20) or the foreseeable bar" rule offered as an intermediate position, (21) fall well short of these goals. (22) And yet the traditional analyses of the doctrine, by failing to consider prosecution history estoppel in its broader role, have missed the opportunity to achieve the significant patent law reforms that this rule provides.

Finally, the Article's theoretical relocation of the classic doctrine of prosecution history estoppel within the system of incentives and strategic choices that drive patent administration is significant in an illustrative sense as well. The basic insight here--the benefits that flow from shifting the analytic focus from the doctrine as an ex post (after the patent issues) attempt to cabin patent scope to an instrumental tool with important ex ante effects--is generalizable. That is, features of the patent administration system make many of the doctrines particularly amenable to a similar form of exegesis, where a legal rule is evaluated by its impact on ex ante incentives rather than solely on the basis of ex post factors. Accordingly, the analysis here might be seen as a template, suggesting further avenues of inquiry across the patent law.

This Article moves in five parts. In Part I below, I introduce prosecution history estoppel, in particular exploring the incompleteness of the current equivalents-centered view. Here I note that contrary to common understanding, the information generated via the prosecution history process is widely used throughout the patent law, casting doubt on the narrow view of prosecution history estoppel as merely a limitation on patent scope. Further, the historical development of prosecution history estoppel does not support this equivalents-centered view, as the rule is rooted in the concept of patent disclaimers rather than being associated with the doctrine of equivalents. And finally, I note that the logical bases of many of the objections to the strong form of prosecution history estoppel (as seen in the Supreme Court's Festo VII opinion) are unsatisfactory and based on fundamental misunderstandings of the real effect and nature of prosecution...

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