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Copyright
© 1990 The
Columbia Law Review.
Columbia Law Review
Columbia Law Review
MAY, 1990
90 Colum. L. Rev. 839
LENGTH: 51646 words
ARTICLE: ON THE COMPLEX ECONOMICS OF PATENT SCOPE
Robert P. Merges * and Richard R. Nelson
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* Associate Professor, Boston University School of Law.
** Henry Luce Professor of International Political Economy, ColumbiaUniversity.
We would like to acknowledge the helpful comments and suggestions receivedfrom the following people: Harold Edgar, Donald Chisum, Rebecca Eisenberg,Joe Brodley,Steve Marks, and participants in Faculty Workshops at Boston University andColumbiaUniversity law schools. They contributed helpful advice, but none of theshortcomingsthat may remain. We are grateful for support from the Julius Silver Programin Law,Science and Technology at the Columbia Law School, and from the SloanFoundation through its funding of the Consortium on Competition andCooperation.
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SUMMARY:
... The economic significance of a patent depends on its scope: the broader the scope, the larger the number of competing products and processes that will infringe the patent. ... Two patents are said to block each tother when one patentee has a broad patent on an invention and another has a narrower patent on some improved feature of that invention. ... First, she can exclude the holder of the broad patent from practicing her improvement. ... It is rather a cautionary lesson: broad patents do have a significant impact on the development of a technology and hence on industry structure, and this should be reflected in those doctrines that collectively determine patent scope. ... The earliest radio patent was a broad patent granted to the British inventor Marconi in the field of radio transmission. ... It is sometimes possible to obtain a fairly broad patent when a new technology is invented. ... Even the holder of a basic product patent, such as Imperial Chemical with polyethylene, could probably not afford to ignore an economical improvement, even if that meant licensing the product patent to get it. ... When a broad patent is granted or expanded via the doctrine of equivalents, its scope diminishes incentives for others to stay in the invention game, compared again with a patent whose claims are trimmed more closely to the inventor's actual results. ...
TEXT:
[*839] INTRODUCTION
The economic significance of a patent depends on its scope: the broader the scope, the larger the number of competing products and processes that will infringe the patent. Many theoretical papers have tried to assess the effects of fine tuning various aspects of the patent system to make it more efficient. n1 But only a few have focussed on patent scope, n2 even though scope decisions are subject to far more discretion [*840] than most of the aspects more intensively studied.
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n1 For example, some years ago there was extensive discussion of the advantages of funneling patent claims through a special patent court. These discussions resulted in the establishment in 1982 of the Court of Appeals for the Federal Circuit. See, e.g., Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U.L. Rev. 1, 25-26 (1989); Jordan, Specialized Courts: A Choice?, 76 Nw. U.L. Rev. 745 (1981).
2 An exception to the dearth of scholarly writing on patent scope is McFetridge & Rafiquzzaman, The Scope and Duration of the Patent Right and the Nature of Research Rivalry, 8 Res. L. & Econ. 91 (1986). In addition, a number of working papers published while this article was being written suggest that the academic neglect is ending. See R. Gilbert & C. Shapiro, Optimal Patent Length and Breadth (University of California, Berkeley, Department of Economics, Working Paper No. 89-102, Jan. 1989) (on file with authors); P. Klemperer, How Broad Should the Scope of Patent Protection Be? (Feb. 1988) (Notes for private circulation, on file with authors); S. Scotchmer & J. Green, Novelty and Disclosure in Patent Law (rev. ed. Nov. 15, 1988) (unpublished manuscript, on file with authors); see also J. Shoven, Intellectual Property Rights and Economic Growth, in Intellectual Property Rights and Capital Formation in the Next Decade 46, 49-50 (1988):
As with the length issue, there are opposing factors in determining the optimal width of the protected intellectual property rights. The advantage of interpreting the properly [sic] narrowly is that it limits the monopoly power granted to the originator . . . . However, in addition to reducing the incentives faced by the originator of the real innovation, it has another potentially important adverse effect -- the coexistence of 'neighboring' technologies, which can cause significant social waste because of the lack of standardization.
There is also a wide practice-oriented literature on patent scope doctrines. See, e.g., Noonan, Understanding Patent Scope, 65 Or. L. Rev. 717 (1986).
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Furthermore, most theoretical writing on patents is directed toward issues that as a practical matter are considered largely settled. For example, several economists have explored the question of optimal patent duration. n3 Their work did have a direct impact on the decision to extend patent terms on pharmaceuticals to compensate for regulatory lag. n4 But despite the scholarly attention to patent duration, the term of most patents remains fixed at seventeen years. n5 Likewise, there has been considerable debate over the years on the merits of compulsory licensing of patents under some circumstances, n6 yet the intellectual property community has repeatedly rejected the idea. n7 Thus, while the literature continues to generate interesting questions about bedrock assumptions and practices, it has little bearing on the everyday operations of the patent system. This Article is an attempt to redress this deficiency by analyzing the economic effects of patent scope.
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n3 See, e.g., W. Nordhaus, Invention, Growth, and Economic Welfare (1969); Scherer, Nordhaus's Theory of Optimal Patent Life: A Geometric Reinterpretation, 62 Am. Econ. Rev. 422 (1972); Tandon, Optimal Patents with Compulsory Licensing, 90 J. Pol. Econ. 470 (1982).
n4 See Grabowski & Vernon, Longer Patents for Lower Imitation Barriers: The 1984 Drug Act, 76 Am. Econ. Rev. 195 (1986).
n5 35 U.S.C. § 154 (1988). See generally White, Why a Seventeen Year Patent, 38 J. Pat. Off. Soc'y 839 (1956) (describing historical basis for seventeen-year term and proposing shortened terms).
n6 The debate is aptly summarized in Staff of the Subcomm. on Patents, Trademarks, and Copyrights of the Senate Comm. on the Judiciary, 86th Cong., 2d Sess., Compulsory Licensing of Patents -- A Legislative History (Comm. Print 1958) (written by Catherine S. Corry). A good overview is provided by F.M. Scherer, Industrial Market Structure and Economic Performance 456-57 (2d ed. 1980) ("All in all, the substantial amount of evidence now available suggests that compulsory patent licensing, judiciously confined to cases in which patent-based monopoly power has been abused . . . would have little or no adverse impact on the rate of technological progress . . . .").
n7 See F.M. Scherer, supra note 6, at 456 ("[E]very attempt to alter the U.S. law in this direction has been beaten down as a result of determined opposition from industrial groups and the patent bar.") (footnote omitted). For a brief time during the heyday of antitrust enforcement, compulsory licenses were routinely ordered. See Staff of the Subcomm. on Patents, Trademarks, and Copyrights of the Senate Comm. on the Judiciary, 86th Cong., 2d Sess., Compulsory Licensing Under Antitrust Judgments 1 (Comm. Print 1960) (written by Marcus A. Hollabaugh and Robert L. Wright).
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The Patent Office and the courts are constantly making patent scope decisions. The Patent Office does so when it determines the claims it will allow on a specific patent. The courts do so in litigation, where questions of patent infringement are decided. In the former context, the applicant wants to claim as much as she can, and the Patent Office must decide what claims are allowable. While decisions regarding what to allow are constrained by a number of legal principles, and by the invention itself, in many cases the Patent Office has considerable room for discretion. Within that discretionary zone, the Office must [*841] decide which claims should be admitted and which ones pruned back or rejected.
After a patent has been issued, a patentee will often allege that her invention has been copied by competitors. In arguing the case, she will try to demonstrate that the accused infringer's product falls within the boundaries of her invention, as defined in her patent clainms, or that any differences between the infringer's device and her invention are insignificant. The challenger, meanwhile, will argue first that the patent is invalid, and second that her invention or product does not infringe the patent -- that it is different in some material respect from the invention claimed by the patentee. Again, the legal principles and objective evidence often leave considerable room for discretion. There has been surprisingly little theoretical discussion of how to exercise this discretion. This paper is concerned with the effects of these decisions, and with the policies that should influence them.
Several recent cases signal the nature and complexity of the questions involved in patent scope decisions. In 1988 the Patent Office granted a patent to the inventors of a transgenic mouse. n8 The Office accepted the inventor's argument that their procedure could be used to engineer higher order animals, and thus allowed a claim to any "non-human mammal" made with their procedure. n9 Is such a generalization of specific results consistent with what is known about this area of technology? What are the likely consequences of accepting this broad claim? Should this claim cover other transgenic animals, even if it takes a major breakthrough to create them?
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n8 U.S. Patent No. 4,736,866, issued Apr. 12, 1988, at col. 9, claim 1.
n9 See id. The specification of the patent states that "the invention features a transgenic non-human eukaryotic animal (preferably a rodent such as a mouse) . . ." Id. at col. 10. The last two of twelve claims also narrow the invention to cover only rodents (claim 11) and only mice (claim 12). But most of the claims, along with the specification, describe the invention as pertaining to all nonhuman mammals, and unless claim 1 were invalidated the patent would undoubtedly extend to any nonhuman mammal. Interestingly, similar broad claim language was eliminated from the European version of this patent after a decision that the inventors had taught only enough to engineer transgenic mice, not nonhuman mammals in general. See In re President and Fellows of Harvard College (European Patent Office July 14, 1989), reported in 20 Int'l Rev. Indus. Prop. & Copyright L. 889, 895-96 (1989) (decision not final).
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In another case a court ruled that a blood clotting protein made with recombinant DNA techniques violated a product patent held by an earlier inventor who had purified the same protein from human blood. But the court later found the original patent invalid on the grounds that the best mode of operation was not revealed by the patent. n10 Was the [*842] first decision a reasonable one? The second? How will these decisions affect future inventions in this field?
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n10 Scripps Clinic & Research Found. v. Genentech, Inc., 666 F. Supp. 1379, 1390, 3 U.S.P.Q.2d (BNA) 1481, 1488 (N.D. Cal. 1987) ("Scripps is entitled to claim purified Factor VIII:C having the characteristics of human Factor VIII:C, whether derived through its disclosed process or any other process achieving the same result."), patent invalidated, Scripps Clinic & Research Found. v. Genentech, Inc., 707 F. Supp. 1547, 1552-55, 11 U.S.P.Q.2d (BNA) 1187, 1191-94 (N.D. Cal. 1989) (patentee failed to disclose best mode known to it of carrying out its invention). The first decision is premised on the rule that products such as Factor VIII:C that occur in nature are patentable if they are so transformed by the purification process that they constitute "for every practical purpose a new thing commercially and therapeutically." Parke-Davis & Co. v. H.K. Mulford & Co., 189 F. 95, 103 (C.C.S.D.N.Y. 1911) (L. Hand, J.) (patent on purified form of adrenalin), aff'd in part and rev'd in part, 196 F. 496 (2d Cir. 1912).
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Given the issues at stake, the question of appropriate patent scope has attracted surprisingly little attention. There has been some analytic writing on the subject, n11 but in our view most of the papers do not focus on the key issues. The well known paper by Edmund Kitch is an exception. n12 Kitch has argued that our system of granting a patent early in the development process allows an inventor to invest in development without fear that another firm will steal her work, n13 thus encouraging the inventor to coordinate her activities with other firms. n14 Kitch states that this "prospect function," which necessarily implies broad patents, explains many of the doctrines and practices of the patent system. n15 Another commentator has responded that for the most part the Patent Office and courts have resisted granting broad prospects. n16
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n11 See supra note 2.
n12 Kitch, The Nature and Function of the Patent System, 20 J.L. & Econ. 265 (1977).
n13 See id. at 276-77. One comment criticizes this aspect of the prospect theory. McFetridge & Smith, Patents, Prospects, and Economic Surplus: A Comment, 23 J.L. & Econ. 197 (1980). The authors of the comment claim that the efficiency gains from delayed commercialization will be dissipated by competitive rivalry for the patent; even if a patent were an exclusive right to commercialize an invention, there would still be competition to get the patent which confers these rights. This would simply shift the competition back one stage, since there is no prepatent right to get a patent. See id. at 202. For Kitch's response, see Kitch, Patents, Prospects, and Economic Surplus: A Reply, 23 J.L. & Econ. 205, 206 (1980).
n14 See Kitch, supra note 12, at 279.
n15 Id.
n16 See Beck, The Prospect Theory of the Patent System and Unproductive Competition, 5 Res. L. & Econ. 193 (1983) (arguing, contrary to Kitch, that patent law does not protect all or even many future developments of a technology). See generally F.M. Scherer, supra note 6, at 447 (describing under what conditions firms may find investment in innovation profitable even without patent protection).
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Our own exploration of the economics of patent scope has led us to focus on very much the same kinds of issues as raised by Kitch. We proceed as follows: We begin by considering the legal doctrines that define a patent's scope, then identify the room for discretion which often exists, and point out areas of consistency and inconsistency in current practice. Next, we develop an economic analysis that illuminates the central issues at stake in varying permissible patent scope. This analysis differs from standard economic models by moving beyond the two-dimensional analysis of incentives and deadweight loss.
[*843] Much of our discussion will center on the post-invention environment for development and subsequent improvements. By contrast, the work of Nordhaus and others is concerned with conditions surrounding the initial invention. n17 One way to describe our approach is to view it as a broadening of what counts as an incentive to invent or as a social cost of issuing patents. The concept of incentives, in our view, should embrace post-invention conditions favorable to the inventor, such as extension of an initial patent to cover subsequently-developed versions of the invention. Likewise, the notion of a patent's social costs should include its potential to reduce competition in the market for improvements to the patented technology.
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n17 See generally W. Nordhaus, supra note 3, at 3-15; McFetridge & Rafiquzzaman, supra note 2.
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Like Kitch, then, we see the important question as how patent scope decisions influence the development of a technology, both in the sense of an individual invention and that of a future line of improvements extending from it. However, contrary to what Kitch suggests, we do not presume that granting broad scope to an initial inventor induces more effective development and future invention. We regard this as an open question.
Our analysis differs from the existing literature on patents in a second way as well. This literature tends to assume that invention is the same in all technologies. In contrast, we develop several models of technical advance in industry, models that differ in terms of how various inventions are related to each other. These models are designed to highlight and capture the different ways in which technical advancement proceeds in different fields. One of our major objectives is to show that the issues at stake regarding patent scope depend on the nature of technology in an industry. This dependence includes two characteristics: the relationship between technical advances in the industry, and the extent to which firms license technologies to each other.
Theoretical argument alone, however, cannot resolve the question of whether technical advance proceeds more vigorously and effectively under competition or under a regime where one person or organization has a considerable amount of control over developments. Therefore we follow our theoretical analysis with an empirical-historical examination of the course of technical advance in several industries, guided by the various models we have developed. In each industry, critical rulings regarding the scope of important early patents significantly influenced the subsequent path of the technology. Our focus will be on those critical decisions and their consequences.
We conclude with an attempt to draw lessons regarding appropriate patent scope. Our basic conclusion is this: Without extensively reducing the pioneer's incentives, the law should attempt at the margin to favor a competitive environment for improvements, rather than an environment [*844] dominated by the pioneer firm. In many industries the efficiency gains from the pioneer's ability to coordinate are likely to be outweighed by the loss of competition for improvements to the basic invention. Throughout the article we suggest ways that patent doctrine can be applied to carry out this goal.
I. PATENT LAW DOCTRINES
A. Patent Prosecution: Threshold Issues
During prosecution of a patent, a Patent Office examiner reviews an application to determine what is patentable. To be patentable an invention must meet all the statutory requirements for patentability: novelty, n18 utility n19 and non-obviousness. n20 The claims are crafted to meet these requirements. But another requirement relates more directly to the scope of the claims -- enablement, which largely concerns how the invention is described and claimed in the patent.
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n18 See 35 U.S.C. § 102 (1988).
n19 See 35 U.S.C. § 101.
n20 See 35 U.S.C. § 103. In addition, there are two types of subject matter that cannot be patented: mathematical formulas and natural laws, and products of nature. See Gottschalk v. Benson, 409 U.S. 63, 67-68, 175 U.S.P.Q. (BNA) 673, 675-76 (1972); 1 P. Rosenberg, Patent Law Fundamentals § 6.02[2] (1986). Thus, there is, in effect, a fourth requirement: that an invention not fall into one of these categories.
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A patent application has two main parts. The first is a specification of the invention, which is written like a brief science or engineering article describing the problem the inventor faced and the steps she took to solve it. It also provides a precise characterization of the "best mode" of solving the problem. n21 The second part of the patent application is a set of claims, which usually encompass more than the material set out in the specification. n22 Claims define what the inventor considers to be the scope of her invention, the technological territory she claims is hers to control by suing for infringement.
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n21 The first paragraph of § 112 of the patent statute reads:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains . . . to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.
35 U.S.C. § 112.
n22 The second paragraph of § 112 of the patent statute reads: "The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." Id. Although the statue speaks of claims as part of this specification, they are often referred to as a separate part of the application.
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The specification and claims serve quite different functions. The specification is used by the Patent Office to determine whether the inventor has made a patentable invention and, if so, whether others can make and use it. This fundamental principle -- that legal protection is [*845] premised on an adequate disclosure of the invention - is built deep into the history of patent law. n23 The patent claims serve a different function: Analogous to the metes and bounds of a real property deed, they distinguish the inventor's intellectual property from the surrounding terrain.
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n23. See, e.g., Grant v. Raymond, 31 U.S. (6 Pet.) 218, 247 (1832) (An enabling disclosure "is necessary in order to give the public, after the privilege shall expire, the advantage for which the privilege is allowed, and is the foundation of the power to issue the patent.").
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Claim breadth is largely a function of two doctrines. The enablement doctrine requires that the specification teach one skilled in the relevant art how to make and use all the embodiments of the invention encompassed by the claims. In appropriate cases, the doctrine of equivalents expands the scope of a patent beyond the literal language of the patent's claims. We consider each in turn.
B. Doctrines of Disclosure and Enablement
One important issue in patent law is how broad the knowledge communicated by the disclosure should be. Under section 112, the disclosure must be sufficient to enable someone skilled in the art to make and use all the embodiments of the invention claimed in the patent. This requirement can at times be applied rather loosely: a specification that describes only one working example of an invention but that supplies less guidance on the subject matter at the fringes of a patent's claims is often sufficient. n24
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n24. For an example, see infra notes 82-93 and accompanying text. Note that some cases have held that no working examples are required, as long as the specification is nevertheless enabling. See, e.g., In re Strahilevitz, 668 F.2d 1229, 1232-34, 212 U.S.P.Q. (BNA) 561, 563-65 (C.C.P.A. 1982) (upholding a patent where applicant failed to provide working examples). On the Strahilevitz patent and the opportunity it offers biotechnology inventors to file patents before obtaining working examples, see P. Kelly, Prophetic Patents in Biotechnology, 8 Bio/Technology 24, 25 (1990).
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At first blush it might seem to make sense to limit the rights of a patentee to only those embodiments of the invention she has disclosed in her specification, i.e., those that she has actually created at the time the patent application is filed. But imitators would soon find some minor variation over the disclosed embodiments; with such an ultra-narrow enablement principle, they would then have a nonenablement defense if the patentee tried to enforce the patent. Such a rule would soon render patents useless.
The patent system recognized this danger long ago. For example, in 1904 King Gillette received a patent for the first disposable blade safety razor. n25 One of the problems Gillette faced was how to keep a very thin, detachable blade rigid during shaving. His solution, as [*846] described in his specification, was to "'secure [the] blade to a holder . . . [so that] it receives a degree of rigidity sufficient to make it practically operative.'" n26 Claim two of the Gillette patent reads "'[I claim as] a new article of manufacture, a detachable razor-blade of such thinness and flexibility as to require external support to give rigidity to its cutting edge.'" n27
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n25. U.S. Patent 775, 134, issued Nov. 15, 1904. See Gillette Safety Razor Co. v. Clark Blade & Razor Co., 187 F. 149, 149 (C.C.D.N.J. 1911), aff'd, 194 F. 421 (3d Cir. 1912).
n26. 187 F. at 156.
n27. Id. at 149.
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Gillette's success drew imitators, including the Clark Blade and Razor Company. When Gillette sued for patent infringement, Clark claimed that Gillette's patent did not sufficiently describe all the possible embodiments of the blade and that, in particular, Clark's design fell outside the range of what Gillette's patent had described. The Third Circuit rejected this argument, quoting broad language from the Supreme Court:
[C]laim 2 is not invalid . . . for, if such were the law, patentability must have been denied to Elias Howe for "the grooved and eye-pointed needle" which constituted his seventh claim, and of which it was said [by the Supreme Court] in Deering v. Winona:
"The invention of a needle with the eye near the point is the basis of all the sewing machines used, but the methods of operating such a needle are many; and, if Howe had been obliged to make his own method a part of every claim in which the needle was an element, his patent would have been practically worthless." n28 The Gillette case illustrates that a patent's specification need not point out precisely how to make every device n29 that would fall within its claims. Disclosure of an inventive concept or principle, whose precise contours are defined by the claims, is enough. n30
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n28. 194 F. at 423 (citations omitted) (quoting Deering v. Winona Harvester Works, 155 U.S. 286, 302 (1894)).
n29. As we use the term in this article, "device" means a product, process or compound.
n30. It is important to distinguish our use of the term "principle" here from its use in other contexts. We mean "principle" in the narrow sense of an underlying characteristic that gives a family of devices an identifiable quality. We do not mean a scientific or natural principle, i.e., a broadly applicable law such as gravity or magnetism, which cannot be patented. See supra note 20.
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The infamous Selden patent episode shows the difficulty of cabining a claimed invention. n31 The Selden patent on an automobile design had as its key claim the use of a light, gasoline-powered internal combustion engine. n32 The claim was quite general, failing to specify many [*847] important details about the engine. The Patent Office allowed that claim, and district courts upheld it twice, n33 despite arguments that the broad idea was obvious, and that the engine referred to in the claim was of a particular kind not encompassing all the engines that were claimed to infringe. Eventually, the Second Circuit drastically narrowed the claim, stating that it covered only the particular kind of gasoline engine used by Selden. n34
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n31. For a further discussion of the Selden patent, see infra notes 210-218 and accompanying text.
n32. George Selden received a very broad patent in 1895 on the basic elements of the early automobile - "carriage," drive mechanism (transmission) and engine - that gave him a commanding position in the burgeoning automotive field. See U.S. Patent No. 549, 160, issued Nov. 5, 1895; Columbia Motor Car Co. v. C.A. Duerr & Co., 184 F. 893, 894 (2d Cir. 1911).
n33. See Electric Vehicle Co. v. Winton Motor-Carriage Co., 104 F. 814, 814-16 (C.C.S.D.N.Y. 1900); Electric Vehicle Co. v. C.A. Duerr & Co., 172 F. 923 (C.C.S.D.N.Y. 1909), rev'd sub nom. Columbia Motor Car Co. v. C.A. Duerr & Co., 184 F. 893 (2d Cir. 1911).
n34. Columbia Motor Car Co., 184 F. at 908-09.
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Another example of enablement at work is the recent patent granted to Doctors Phillip Leder and Timothy Stewart of the Harvard Medical School for their successful work involving transgenic mice. They isolated a gene which is associated with cancer in mammals including humans) and then injected the gene into a fertilized mouse egg, which yielded transgenic mice that are extremely sensitive to carcinogens. n35 This makes the mice excellent animal "models" for studying cancer drugs. Leder and Stewart claimed not only the technique they had used, or the particular transgenic mouse variety they had created, but rather all "non-human transgenic mammals" produced by their technique. It may well turn out that their admittedly important discovery was indeed this broad. n36 On the other hand, significant work may be required to obtain similar results in higher-order mammals. One wonders whether arguments by an accused infringer that she had to do considerable experimenting and problem-solving prior to producing a transgenic dog, or that she created a transgenic cat using a substantially different technique, would be sufficient to take her invention outside the Leder and Stuart claims. In fact, the European Patent Office cited just these concerns when it rejected those claims in the Leder and Stuart patent that went beyond mice and rodents. n37
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n35. See U.S. Patent No. 4,736,866, supra note 8.
n36. See Bozicevic, The "Reverse Doctrine of Equivalents" in the World of Reverse Transcriptase, 71 J. Pat. & Trademark Off. Soc'y 353, 358 (1989). This was the first U.S. patent on a recombinant animal and it promises greatly to assist cancer researchers in their efforts to find effective human therapies without subjecting humans to early tests.
n37. In re President and Fellows of Harvard College (European Patent Office July 14, 1989), reported in 20 Int'l Rev. Indus. Prop. & Copyright L. 889, 895-96 (1989) ("Onco-Mouse" case) (decision not final): The invention as disclosed in its broadest concept . . . relates to any oncogene and any conceivable mammalian animal. [The European Patent Code] relates to sufficiency [of disclosure] and it is important to note that this article is satisfied only if substantially any embodiment of the invention as defined in its broadest claim is capable of being realised on the basis of the disclosure.
. . . .
It is thus not believable that the skilled man would be able to transfer successfully the specific teachings of the present application to all kinds of mammalian animals . . . without applying inventive skill or undue experimentation. Animals which have been used in the prior art are mainly mice and no instructions are to be found in the specification as to how success could be achieved with other mammalian animals.
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To restrict [a patentee] to the . . . form disclosed . . . would be a poor way to stimulate invention, and particularly to encourage its early disclosure. To demand such restriction is merely to state a policy against broad protection for pioneer inventions, a policy both shortsighted and unsound from the standpoint of promoting progress in the useful arts, the constitutional purpose of the patent laws. n39
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n38. See, e.g., In re Hogan, 559 F.2d 595, 606, 194 U.S.P.Q. (BNA) 527, 537 (C.C.P.A. 1977); In re Goffe, 542 F.2d 564, 567, 191 U.S.P.Q. (BNA) 429, 431 (C.C.P.A. 1976).
n39. Hogan, 559 F.2d at 606, 194 U.S.P.Q. at 537.
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But surely one can go too far. Although as a general rule, a patentee should be able to claim beyond her precise disclosure, current practice seems to permit a range of claims that may stretch beyond the spirit of the enablement doctrine. If the patent examiner can point to something in the prior art that indicates that some embodiments of the claimed invention will be impossible to make without more information than the inventor has disclosed, then the application may be rejected. But if the examiner cannot point to such an indication in the prior art, patent office policy dictates that even very broad claims may be allowed. n40 This means that claims to pioneer inventions often are allowed to cover ground that examiners believe, but cannot prove, is well [*849] beyond the area actually explored and disclosed by the inventor. n41 The rule puts the burden of disproving enablement on the examiner. The rationale is that any other rule would leave claim scope too much in the hands of individual examiners and their technological forecasting abilities. n42 Narrowing is left to the courts in particular infringement suits.
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n40. Enablement must be established only as of the date the inventor filed for her patent. Hogan, 559 F.2d at 607, 194 U.S.P.Q. at 538. An inventor can properly claim subject matter that later turns out to be beyond her actual research, so long as her research enables one skilled in the art to make and use her claimed invention as that invention was understood as of the filing date. For example, consider an inventor who claims "crystalline polypropylene," and provides an enabling disclosure to make what everyone in the art would agree was "crystalline polypropylene" as of the filing date. After the filing date, another researcher invents a radically new family of catalysts which for the first time make possible the production of polypropylene of high molecular weight and intrinsic viscosity - two properties that make the fiber commercially useful. It has been held that the inventor's original disclosure is sufficient to sustain a patent since it was enabling as of the filing date. The result is that the inventor's claims cover the later-developed, commercially useful form of the fiber. Phillips Petroleum Co. v. United States Steel Corp., 673 F. Supp. 1278, 1286, 1292, 6 U.S.P.Q.2d (BNA) 1065, 1068, 1074 (D. Del. 1987), aff'd, 865 F.2d 1247, 9 U.S.P.Q.2d (BNA) 1461 (Fed. Cir. 1989). Note that the radically new catalysts here were the famous Ziegler catalysts. See infra notes 288-293 and accompanying text.
In cases where the subsequent modifications are minor, this approach is unobjectionable. But where the subsequent modifications are very substantial, as (arguably) in the case of polypropylene, the enablement doctrine seems to be stretched beyond credibility.
It has been argued by at least one court that the proper place to take account of this concern is at the infringement stage, when the accused infringer can argue that her invention required substantial additional research over that described in the patentee's specification, and therefore is noninfringing under the reverse doctrine of equivalents. See Hogan, 559 F.2d at 607, 194 U.S.P.Q. at 538; Texas Instruments v. United States Int'l Trade Comm'n, 846 F.2d 1369, 1372, 6 U.S.P.Q.2d (BNA) 1886, 1889 (Fed. Cir. 1988). However, as described infra at note 113 and accompanying text, this solution has little appeal because the reverse doctrine of equivalents is very rarely used.
n41 See In re Armbruster, 512 F.2d 676, 680, 185 U.S.P.Q. (BNA) 152, 155 (C.C.P.A. 1975); In re Geerdes, 491 F.2d 1260, 1265, 180 U.S.P.Q. (BNA) 789, 793 (C.C.P.A. 1974).
n42 See Winner, Enablement in Rapidly Developing Arts -- Biotechnology, 70 J. Pat. & Trademark Off. Soc'y, 608, 619-23 (1988). The author of this article summarizes the somewhat conflicting cases on the topic, and concludes that "[t]o reject claims for lack of enablement of embodiments that were only imagined by the examiner does not seem fair." Id. at 622.
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As we have seen, it is often very difficult to determine whether a patentee has enabled others to make and use all the devices that fall within the claims. One approach that has evolved to help make this determination focuses on the doctrine of "undue experimentation." Under this doctrine, an alleged infringer can argue noninfringement by showing that extensive experimentation beyond what was disclosed in the patentee's specification was required to make the allegedly infringing embodiment. We now turn to some examples of the doctrine at work.
In 1895, Thomas Edison brought a Supreme Court challenge to a very broad patent held by Sawyer and Mann for materials used in light bulb filaments. n43 The patentees had found that carbonized paper worked as an effective light-emitting conductor in light bulbs. Based on this invention, they filed a patent claiming the right to use all carbonized fibrous or textile material as an incandescing conductor. n44 Edison challenged Sawyer and Mann, contending that the claim was too broad: it did not indicate which of the thousands of "fibrous or textile material[s]" would work as conductors in light bulbs, since most do not. Nor did it describe any method for finding out. In effect Edison argued that all Sawyer and Mann had invented was a carbonized paper [*850] conductor for use in a light bulb, not a broad class of materials. Edison pointed to his own painstaking experimentation with a wide variety of materials, arguing that his discovery that a particular part of a variety of bamboo plant performed well as a filament was not made any easier by Sawyer & Mann's disclosure. The Court agreed, stating that "[i]f the description be so vague and uncertain that no one can tell, except by independent experiments, how to construct the patented device, the patent is void." n45 The patent would have been upheld, the Court suggested, if it had claimed only what Sawyer and Mann had actually invented (carbonized paper incandescence); it was invalid, however, since it would take a good deal of additional experimentation to determine whether incandescing conductors could be made out of the many materials they claimed. n46
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n43 The Incandescent Lamp Patent, 159 U.S. 465 (1895).
n44 Id. at 468.
n45 Id. at 474. Conceptually, this is closely related to another enablement doctrine, which states that patent claims covering a large number of "inoperable species" -- i.e., embodiments of the invention that do not work -- are invalid unless the specification teaches, or skilled artisans can be presumed to know, how to distinguish the embodiments that work from those that do not. See, e.g., In re Cavallito, 282 F.2d 357, 361, 127 U.S.P.Q. (BNA) 202, 205 (C.C.P.A. 1960) (claims covering generic class of several hundred thousand possible compounds invalid because the applicant had identified only thirty specific operative compounds); see also 2 D. Chisum, Patents § 7.03[7][c] (1990) ("claim will be rejected if it is so broad as to read upon inoperative as well as operative subject matter").
n46 There is some indication that contemporary cases apply a looser standard in upholding the validity of patents over undue experimentation objections. For example, in In re Wands, 858 F.2d 731, 8 U.S.P.Q. 2d 1400 (Fed. Cir. 1988), the court found enablement in a biotechnology case although any potential user of the invention would need to screen many potentially useful monoclonal antibodies for their actual utility. The court indicated in dictum that even if the applicants' disclosed screening method had yielded a success rate of only 4 working antibodies out of 143 candidates, it would not necessarily have concluded that undue experimentation was required. Id. at 740, 8 U.S.P.Q. 2d at 1406-07; see also Ex parte Jackson, 217 U.S.P.Q. (BNA) 804, 806 (Pat. Off. Bd. App. 1982) (reversing rejection of claim to three specified strains of antibiotic-producing bacterium "and mutations thereof" since "mutations can be intentionally produced [and presumably tested for efficacy] by a variety of known procedures"). A commentator recently suggested that the Board in Jackson would only require enabling screening procedures to indicate that "at least some such mutants would have the desired characteristic of producing the antibiotic." Lentz, Adequacy of Disclosures of Biotechnology Inventions, 16 Am. Intell. Prop. L.A.Q.J. 314, 324 (1989) (emphasis added).
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In an earlier case, O'Reilly v. Morse, n47 the Supreme Court considered a similar issue. The case involved a challenge to the scope of a claim in Samuel Morse's famous telegraphy patent. Morse claimed "the use of the motive power of the electric or galvanic current, which I call electro-magnetism, however developed for making or printing intelligible characters . . . at any distance []." n48 In essence, Morse declared ownership of all methods of communicating at a distance using electromagnetic waves. But since he had not actually disclosed "all methods" in his specification, much less even imagined them, the Court [*851] ruled the claim invalid. n49 As wih light bulb case, the pantantee disclosure was found to be nonenabling.
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n47 56 U.S. (15 How.) 62 (1854).
n48 Id. at 112.
n49 Id. at 119-20:
[I]f the eighth claim of the patentee can be maintained, there was no necessity for any specification, further than to say that he had discovered that, by using the motive power of electro-magnetism, he could print intelligible characters at any distance . . . . [T]his claim can derive no aid from the specification filed. It is outside of [the specification], and the patentee claims beyond it.
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We turn now to a more specialized scope issue, the patenting of natural products. Although this issue has arisen before in chemical patents, n50 it is of increasing importance because many biotechnology companies are using bacteria and other expression "vehicles" to produce purified versions of naturally-occurring proteins. n51 These patents typically claim purified versions of products that exist in nature. In these cases, it can be argued that it is stretching the concept of inventing greatly to say that the patentee really invented the products. The true invention seems to be a way of producing those products in a desirable form. But because a product claim is typically broader than one simply on a particular way of making that product, patentees seek -- and often obtain -- product patents. n52 Thus the product versus process patent issue [*852] in chemical and biological technologies is an interesting variation on the patent scope issue.
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n50 See, e.g., Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95 (C.C.S.D.N.Y. 1911) (L. Hand, J.) (upholding patent on purified form of adrenalin), aff'd in part and rev'd in part, 196 F. 496 (2d Cir. 1912).
n51 See, e.g., Genentech, Inc.'s Patent, [1987] R.P.C. 553, 596 (Pats. Ct.), aff'd, [1989] R.P.C. 613 (Ct. App.) (patent on tissue plasminogen activator (t-PA) protein); see also Mellor, Patents and Genetic Engineering -- Is It a New Problem?, 10 Eur. Intell. Prop. Rev. 159 (1988) (describing British t-PA litigation). Further examples include erythropoietin (EPO), see Amgen, Inc. v. Chugai Pharmaceutical Co., 706 F. Supp. 94, 95, 9 U.S.P.Q. 2d (BNA) 1833, 1833 (D. Mass. 1989), and the blood clotting protein Factor VIII, see Scripps Clinic & Research Found. v. Genentech, Inc., 666 F. Supp. 1379, 1382, 3 U.S.P.Q. 2d (BNA) 1481, 1482 (N.D. Cal. 1987), patent invalidated in Scripps Clinic & Research Found. v. Genentech, Inc., 707 F. Supp. 1547, 11 U.S.P.Q. 2d 1187 (N.D. Cal. 1989).
n52 In some cases a process patent can be broader than a product patent. For example, a patentee might claim a process for making products A through E; this would be broader, in some sense, than a product patent on product A only. Even here, however, the product patent has advantages, due to the patent principle that a product patent covers a product no matter how it is made. See Amgen, 706 F. Supp. at 107, 9 U.S.P.Q. 2d at 1844. Perhaps if patent scope were more effectively circumscribed by the enablement doctrine, in many of these cases process patents would be granted rather than product patents. Consider the situation where an inventor comes up with a significantly better process for making a chemical product, but the inventor of the earlier process holds a product patent. One might think that an Edison-like argument that the disclosure of the earlier product patent was no help whatsoever towards the discovery of the new process might carry weight, but in the case of chemical patents it often has not. This doctrine is now taking root in the related field of biotechnology patents, where a product produced by Genentech using recombinant DNA technology was recently found to infringe a patent covering the product, even though the recombinant version of the product was much simpler and cheaper to prepare. See also id. at 110, 9 U.S.P.Q. 2d at 1846-47 (product patent on erythropoietin covers recombinantly-produced version of the protein).
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A related question concerns what is patentable when a new use is discovered for a known, patented product, an event relatively common in chemical products. Dawson Chemical Co. v. Rohm & Haas Co., n53 a Supreme Court case, involved a patent for a new application of propanil, a chemical that had earlier been held to be unpatentable over the prior art. n54 The patentee claimed a process for using the chemical as a fungicide, a use that had not been previously known. n55 The case thus illustrates how process patents can be used to protect a newly discovered use for a known compound. It encourages patent applicants to draft claims in the form "the process of applying Old Product X to New Application Y," and thereby protect their discovery -- a new application -- in spite of the fact their applications exploits a well known compound which is not itself patentable. n56
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n53 448 U.S. 176, 206 U.S.P.Q. (BNA) 385 (1980).
n54 Monsanto Co. v. Rohn & Haas Co., 312 F. Supp. 778, 164 U.S.P.Q. (BNA) 556 (E.D. Pa. 1970), aff'd, 456 F.2d 592, 172 U.S.P.Q. (BNA) 323 (3d Cir.), cert. denied, 407 U.S. 934, 174 U.S.P.Q. (BNA) 129 (1972).
n55 Cf. 1 D. Chisum, supra note 45, § 1.03[8][c] (new use must be nonobvious).
n56 Note that even after Dawson Chem. Co. v. Rohm & Haas, a "new use" process patent would still infringe a prior product patent if the process employs the patented product. If the holder product patent wished to practice the new use, she would also have to take out a license. See infra notes 97 -- 100 and accompanying text.
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It is difficult to summarize the content of the disparate doctrines that ensure adequate disclosure. As our brief review illustrates, the factual diversity of cases involving disclosure issues leads to generalized standards that must be applied to a wide array of specific technologies. As a result, courts have a large amount of discretion in applying the doctrines. While one might note with caution certain trends in recent allowed patents, n57 our primary point is not to critique doctrine, but to point out that this discretion exists. After describing the effects of patent breadth on technical advance in Part III, we will suggest ways that courts can use this discretion in certain cases to increase the overall benefits of the patent system.
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n57 See Lentz, supra note 46, at 318:
Claims to biotechnology inventions seem uncommonly broad in comparison to typical chemical cases and, therefore, seem especially vulnerable to attack under 35 U.S.C. 112 . . . .
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C. Infringement Doctrines
Doctrines relating to enablement have provided a way of determining the appropriate scope of claims. But claims inevitably leave room for interpretation. Even when a claim is not disputed, it is not always clear on its face whether an allegedly infringing device falls within the claim. Further, in many cases an allegedly infringing device may lie lie [*853] outside the literal scope of the claims, yet a court will find that it falls so close to this scope as to be justly included as an equivalent.
1.Literal Infringement and the Interpretation of Equivalents. -- Courts analyze infringement in two steps. First, they ask whether the challenger's product falls squarely within the boundaries of the patentee's claims -- that is, whether there is "literal infringement" of the patent. n58 If the court determines that there is no literal infringement it moves on to the second question: whether the challenger infringes under the "doctrine of equivalents." The doctrine of equivalents developed because of the frequency of cases where, even though the accused product or process does not literally infringe a claim, it may be considered essentially the same device as was patented. Of the many articulations of the doctrine of equivalents, Judge Learned Hand's captures it the best:
[A]fter all aids to interpretation have been exhausted, and the scope of the claims has been enlarged as far as the words can be stretched, on proper occasions courts make them cover more than their meaning will bear. n59 What is such a "proper occasion"? The Supreme Court wrote in 1950, quoting from an earlier case:
[I]f two devices do the same work in substantially the same way, and accomplish substantially the same result, they are the same, even though they differ in name, form, or shape. n60
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n58 See, e.g., United States v. Telectronics, Inc., 857 F.2d 778, 781, 8 U.S.P.Q.2d (BNA) 1217, 1219-20 (Fed. Cir. 1988) (finding literal infringement), cert. denied, 109 S. Ct. 1954 (1989); SRI Int'l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1118, 227 U.S.P.Q. (BNA) 577, 583 (Fed. Cir. 1985) (en banc) (stating that courts will find literal infringement when the accused invention "reads directly, unequivocally, and word-for-word on [the claimed] structure").
n59 Royal Typewriter Co. v. Remington Rand, Inc., 168 F.2d 691, 692, 77 U.S.P.Q. (BNA) 517, 518 (2d Cir.), cert. denied, 335 U.S. 825, 79 U.S.P.Q. (BNA) 454 (1948).
n60 Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608, 85 U.S.P.Q. (BNA) 328, 330 (1950) (quoting Machine Co. v. Murphy, 97 U.S. 120 (1877)).
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A good application of the doctrine of equivalents is International Nickel Co. v. Ford Motor Co. n61 International Nickel obtained a patent that "cover[ed] a cast ferrous alloy" called "nodular iron." n62 The patent taught the addition to molten iron of a "'small but effective'" quantity of magnesium, fixed by the patent as "about 0.04%" as a minimum. n63 The magnesium caused "the graphite (crystallized form of carbon) to occur in spheroidal rather than flake form thereby producing a product with vastly improved physical properties." n64 International Nickel accused Ford Motor Company of infringement when Ford began making a nodular iron. Even though Ford's iron contained under 0.02% magnesium -- less than half the minimum required in International Nickel's [*854] patent -- it was judged to be an equivalent substance, and thus to infringe the patent. n65
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n61 166 F. Supp. 551, 119 U.S.P.Q. (BNA) 72 (S.D.N.Y. 1958).
n62 Id. at 552, 119 U.S.P.Q. at 74.
n63 Id. at 555, 119 U.S.P.Q. at 77.
n64 Id. at 554, 119 U.S.P.Q. at 75.
n65 Id. at 564, 119 U.S.P.Q. at 83. On the other hand, Ford might have been able to obtain a patent on its improvement of the basic International Nickel invention. If Ford could establish that its nodular iron composition met the requirement of patentability -- i.e., utility, novelty, and nonobviousness -- it would then have the right to control this improvement. Cantrell v. Wallick, 117 U.S. 689, 694 (1886). International Nickel would have had to obtain a license from Ford to use this improvement, even though it held the basic or dominant nodular iron patent. And of course Ford could not use its improvement without a license from International Nickel. This is an example of so-called "blocking patent," a situation often resolved by a cross-licensing agreement. For a discussion of improvement patents, see infra notes 96-98 and accompanying text.
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Courts have determined how broadly they see "equivalents" based on the degree of advance over the art the original patent represents. When the patent is on a "mere improvement" the courts tend not to consider as "equivalent" a product or process that is even a modest distance beyond the literal terms of the claims. n66 On the other hand, a patent representing a "pioneer invention" -- which the Supreme Court has defined as "a patent covering a function never before performed, a wholly novel device, or one of such novelty and importance as to mark a distinct step in the progress of the art" n67 -- is "entitled to a broad range of equivalents. n68 That is, when a pioneer patent is involved, a court will stretch to find infringement even by a product whose characteristics lie considerably outside the boundaries of the literal claims. n69
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n66 See Brill v. Washington Ry. & Elec. Co., 215 U.S. 527, 532-33 (1910); Kinzenbaw v. Deere & Co., 741 F.2d 383, 388-89, 222 U.S.P.Q. (BNA) 929, 932-33 (fed. Cir. 1984), cert. denied, 470 U.S. 1004 (1985).
n67 Westinghouse v. Boyden Power Brake Co., 170 U.S. 537, 561-62 (1898). Another test of pioneer status is whether the patent led to a new branch of industry. See, e.g., Ludlum Steel Co. v. Terry, 37 F.2d 153, 160 (N.D.N.Y. 1928).
n68 4 D. Chisum, supra note 45, § 18.04[2]. Inventions falling somewhere between the two extremes are given an intermediate range of equivalents. See Price v. Lake Sales Supply R.M., 510 F.2d 388, 394, 183 U.S.P.Q. (BNA) 519, 524 (10th Cir. 1974). In addition to the broad range of equivalents awarded a pioneer patent, the literal wording of its claims will likely be broad as well, since by definition there is little prior art. See Patent and Trademark Office, U.S. Dept. of Commerce, Manual of Patent Examining Procedure § 706.03(d) (5th ed. 1983 rev. 1989) ("The fact that a claim is broad does not necessarily justify a rejection on the ground that the claim is vague and indefinite or unpredictable. See id. at §§ 706.03(a), 706.0392); Levin, Broader than the Disclusire in Chemical Cases, 31 J. Pat. & Trademark Off. Soc'y, 5, 7 (1949).
n69 The patent in the International Nickel case was in this category. International Nickel Co. v. Ford Motor Co., 166 F. Supp. 551, 564, 119 U.S.P.Q. (BNA) 72, 82-83 (S.D.N.Y. 1958).
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Of course the question of infringement also turns on the precise characteristics of the allegedly infringing device. Following the test laid down by the Supreme Court in Graver Tank, n70 courts confronted with a [*885] device accused of infringing inquire whether it performs the same function and achieves the same result as the invention in the claims, and whether it does so in the same way. Where the accused device shows only minor or "insubstantial" n71 variations in one of these elements -- such as the small movement of one part or a minor change in structure -- infringement will be found even if the patentee's invention is a "mere improvement." n72 And even a pioneer patent is not infringed by a device that achieves a different result, or achieves it in a different way. n73
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n70 Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 85 U.S.P.Q. (BNA) 328 (1950).
n71 This language comes from the Graver Tank case itself, see 339 U.S. at 610, 85 U.S.P.Q. at 331, and the Federal Circuit has continued to use it in some cases. See Perkin-Elmer Corp. v. Westinghouse Elec. Corp., 882 F.2d 1528, 1532, 3 U.S.P.Q. 2d (BNA) 1321, 1324 (Fed. Cir. 1987) (equivalents cannot be used to encompass more than an "insubstantial change"); Carmen Indus. v. Wahl, 724 F.2d 932, 942, 220 U.S.P.Q. (BNA) 481, 488 (Fed. Cir. 1983) (same as to "minor modification").
n72 See, e.g., Tigrett Indus. v. Standard Indus., 162 U.S.P.Q. (BNA) 32, 36 (W.D. Tenn. 1967), aff'd, 411 F.@d 1218, 162 U.S.P.Q. (BNA) 13 (6th Cir. 1969), aff'd, 397 U.S. 586 (1970) (by equally divided court) (claim for playpen calling for "a pair of spaced openings" for two converging drawstrings to adjust side webbing infringed by device with only one hole for dawstrings); Weidman Metal Masters Co. v. Glass Master Corp., 623 F.2d 1024, 1030, 207 U.S.P.Q. (BNA) 101, 106 (5th Cir. 1980) ("even the minimum equivalency due to any patent normally forbids the mere reversal of a function of two parts and the small movement of one part of avoid literal infringement by accepting a less efficient job"), cert. denied, 450 U.S. 982, 211 U.S.P.Q (BNA) 400 (1981).
n73 See, e.g., Mead Digital Sys. v. A.B. Dick Co., 723 F.2d 455, 464, 221 U.S.P.Q. (BNA) 1035, 1042 (6th Cir. 1983) (finding that ink-jet printer patent, though a "quantum leap" in the art, was not infringed by device which used elements "in a substantially different way to achieve a substantially different result").
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One important set of cases under this doctrine has grappled with the question of whether new technologies, unforeseen at the time the patent was issued, can constitute equivalents. This issue arises when a subsequent device that uses new technology is accused of infringing the original patent. The early cases we split, but the prevailing view now is that new technology can be equivalent. n74 This is true despite the statement in Graver Tank that an important determinant in the equivalents inquiry is whether "persons reasonably skilled in the art would have known of the interchangeability of an ingredient not contained [*856] in the patent with one that was. n75 Despite this language in the leading Supreme Court case on the subject, a device performing the same function and achieving the same result in the same way as a patented invention can be found to infringe even if it uses technology developed after the patent was issued. But this observation is subject to two caveats: 1) new technologies can constitute equivalents only so long as they do not perform a different function n76 or cause the device to operate in a substantially different way: n77 and 2) a truly meritorious improvement can escape even literal infringement under the "reverse" doctrine of equivalents discussed below.
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n74 Compare Gould v. Rees, 82 U.S. (15 Wall.) 187, 194 (1872) (no infringement where accused infringer "substitutes another [ingredient] in the place of the one omitted, which is new or which performs a substantially different function, or [which] is old, but was not known at the date of the plaintiff's invention as a proper substitute") with Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 805 F.2d 1558, 1563, 231 U.S.P.Q. (BNA) 833, 835 (Fed. Cir. 1986) ("It is not required that those skilled in the art knew, at the time the patent application was filed, of the asserted equivalent means of performing the claimed functions; that equivalence is determined as of the time infringement takes place.") and Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 941-42 n.4, 4 U.S.P.Q.2d (BNA) 1737, 1745 n.4 (Fed. Cir. 1987) (en banc) ("It is clear that an equivalent can be found in technology known at the time of the invention, as well as in subsequently developed technology.") (Bennett, J., dissenting), cert. denied, 485 U.S. 961 (1988) and 485 U.S. 1009 (1988).
n75, 339 U.S. at 609, 85 U.S.P.Q. at 331. See Great N. Corp. v. Davis Core & Pad Co., 782 F.2d 159, 165, 228 U.S.P.Q. (BNA) 356, 359 (Fed. Cir. 1986) (examining "the scope and content of the prior art [and] the ordinary level of skill in the art [to determine if] . . . the patentee's product may be treated as an equivalent of what is claimed"); Thomas & Betts Corp. v. Litton Sys., 720 F.2d 1572, 1579, 220 U.S.P.Q. (BNA) 1, 6 (Fed. Cir. 1983) (noting that "the test of equivalency extends beyond what is literally stated in a patentee's specification to be equivalent and encompasses any element which one of ordinary skill in the art would perceive as interchangeable with the claimed element"). But see Adelman & Francione, The Doctrine of Equivalents in Patent Law: Questions that Pennwalt Did Not Answer, 137 U. Pa. L. Rev. 673, 696 n.103, 697 (1989) (arguing that interchangeability "should be used to reject rather than support the application of the doctrine of equivalents" because it signifies that a patentee could have, but mistakenly or intentionally did not, include this interchangeability in her original claims).
n76 See Pennwalt, 833 F.2d at 938-39, 4 U.S.P.Q.2d at 1742-43 ("[T]he facts here do not involve later-developed computer technology which should be deemed within the scope of the claims to avoid the pirating of an invention . . . . [T]he memory components of the [accused] sorter were not programmed to perform the same or an equivalent function of physically tracking the items to be sorted . . . as required by the claims.").
n77 Cf. Mead Digital Sys., 723 F.2d at 464, 221 U.S.P.Q. at 1042 (finding noninfringement under doctrine of equivalents because accused ink-jet printer used a technique for electrically charging and deflecting ink that differed from the patentee's technique). Perhaps the "different way" element of the conventional equivalents test is simply another way of stating the Supreme Court's "interchangeability" test from Graver Tank. See note supra 75 and accompanying text. If so, the "new technology" equivalents cases are not necessarily irreconcilable with Graver Tank; they simply couch their inquiry in terms of "same way," rather than "interchangeability."
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That these distinctions may not always be easy to make is demonstrated by the case of Hughes Aircraft Co. v. United States. n78 Hughes Aircraft had a patent, developed by an employee named Williams, on a means of controlling the attitude of a communications satellite. The claims called for receiving and directly executing control signals from a ground station on earth. After the patent was issued, advances in semi-conductor technologies permitted satellites to use on-board microprocessors to process and execute control signals without communicating with the ground. "Advanced computers and digital communications techniques developed since [the] Williams [patent]," said the Federal Circuit, "permit doing on-board a part of what Williams [*857] taught as done on the ground." n79 The Court concluded: "[P]artial variation in technique, an embellishment made possible by post-Williams technology, does not allow the accused spacecraft to escape the 'web of infringement.'" n80 Another case found a patented method for laying pipe, calling for a beam of light to align pipe segments, infringed by the use of later-developed laser beam technology. n81
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n78 717 F.2d 1351, 219 U.S.P.Q. (BNA) 473 (Fed. Cir. 1983).
n79 Id. at 1365, 219 U.S.P.Q. at 483.
n80 Id. at 1365, 219 U.S.P.Q. at 483 (quoting Bendix Corp. v. United States, 600 F.2d 1364, 1382, 204 U.S.P.Q. (BNA) 617, 631 (Ct. Cl. 1979)). One commentator criticized the opinion by Judge Markey in Hughes, stating that it was "a curious inversion of the patentee's burden of proving infringement . . . [to say] that the burden was on the infringer to explain why his structure was not an equivalent of the claimed satellite system," and concluding that "the Hughes approach would create an unfortunate aura of uncertainty around the scope of claims issued by the [Patent Office]." See Noonan, supra note 2, at 733.
n81 Laser Alignment, Inc. v. Woodruff 7 Sons, 491 F.2d 866, 873-74, 180 U.S.P.Q. (BNA) 609, 613 (7th Cir.), cert. denied, 419 U.S. 874, 183 U.S.P.Q. (BNA) 321 (1974). One older case with a similar holding is Edison Elec. Light Co. v. Boston Incandescent Lamp Co., 62 F. 397 (C.C.D. Mass. 1894). Here the court found that since Edison's patent was for a pioneering invention, it was entitled to a broad construction, which included finding that after-developed technology was equivalent to that specified in the claims. Id. at 398; see also 4 D. Chisum, supra note 45, § 18.04 [4] (discussing Laser Alignment and other cases involving new or unknown equivalents). Note that in each of these cases the after-developed technology might have been eligible for improvement patent. As mentioned earlier, this does not change the infringement analysis. But it could have given the accused infringer some leverage in bargaining with the holder of the underlying patent. See infra note 99 and accompanying text.
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One should note that these decisions, while we discuss them here under equivalents doctrine, come into conflict with the enablement principles discussed earlier. n82 If one adheres to the doctrine that limits claims to what is enabled by the disclosure, one would think that the doctrine of equivalents would distinguish between allegedly infringing devices that used "new technologies" basically to get around the claims from those that used the technologies to do something significantly better. In some cases, this distinction does not seem to have been made.
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n82 See In re Hogan, 559 F.2d 595, 606-07, 194 U.S.P.Q. (BNA) 527, 538-39 (C.C.P.A. 1977) (discussing relationship between enablement and infringement). But cf. Adelman & Francione, supra note 75, at 715-29 (suggesting that the doctrine of equivalents should not be applied when a patentee could have claimed known equivalents but did not, and asserting that the doctrine should be available only when a new technology is used to supply an equivalent component of a patented device).
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A recent case involving Texas Instruments' pioneering patent on the hand-held calculator shows the court applying the doctrine of equivalents in a way more consistent with the principles of enablement. n83 The Federal Circuit held that major improvements in all the essential elements of hand-held calculators rendered the improved devices [*858] noninfringing. n84 The specification supporting Texas Instruments' pioneer patent, for instance, described the use of integrated circuits containing bipolar transistors. n85 All of the improvements used integrated circuits having metal oxide semiconductor (MOS) transistors. n86
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n83 Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 805 F.2d 1558, 231 U.S.P.Q. (BNA) 833 (Fed. Cir. 1986).
n84 Id. at 1570, 231 U.S.P.Q. at 840:
It is not appropriate in this case, where all of the claimed functions are performed in the accused devices by subsequently developed or improved means, to view each such change as if it were the only change from the disclosed embodiments of the invention. It is the entirety of the technology embodied in the accused devices that must be compared with the patent disclosure.
This "invention as a whole" standard was repudiated by an en banc decision of the same court the next year calling for an "element-by-element" comparison. Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 936, 4 U.S.P.Q.2d (BNA) 1737, 1741 (Fed. Cir. 1987) (en banc) ("[I]f . . . even a single function required by a claim or an equivalent function is not performed by [an accused device], . . . [a] finding of no infringement must be upheld."), cert. denied, 485 U.S. 961 (1988) and 485 U.S. 1009 (1988). Judge Pauline Newman, who wrote the Texas Instruments opinion, dissented along with five of twelve judges and wrote separately: "One-to-one correspondence between every element of a claim and an accused device is the standard formula for inquiry into literal infringement. But this formula is an incorrect application of the doctrine of equivalents. . . ." In fact, she wrote, "the courts have avoided subjecting themselves to rigid rules, for the great variety of technological situations are not amenable to all-encompassing rules." Id. at 957, 963, 4 U.S.P.Q.2d at 1757, 1762 (Newman, J., Commentary). Perhaps this point sunk in; in a later opinion, the Federal Circuit seemed to soften its definition of "element" to allow more flexibility. See Corning Glass Works v. Sumitomo Elec. U.S.A., 868 F.2d 1251, 1259, 9 U.S.P.Q.2d (BNA) 1962, 1968 (Fed. Cir. 1989) ("In the All Elements rule, 'element' is used in the sense of a limitation of a claim. . . . [Defendant's] analysis is faulty in that it would require equivalency in components . . . . However, the determination of equivalency is not subject to such a rigid formula.").
n85 805 F.2d at 1566, 231 U.S.P.Q. at 837. The specification referred only to bipolar transistor semiconductors, but did not explicitly limit the invention to use with them.
n86 One of the original inventors, Jack Kilby, argued that MOS technology was still unreliable when the patent application was filed and Texas Instruments argued that both types of transistors perform essentially the same function. Id. at 1566-67, 231 U.S.P.Q. at 837-38. The MOS process had been around since 1962, however, when it was discovered by Fairchild Semiconductor, Inc. See J. Tilton, International Diffusion of Technology: The Case of Semiconductors 16 91971). In any event, very few firms in 1967, the year Texas Instruments filed its patent application, foresaw the rapid rise of MOS technology and its eventual application in industry sectors such as hand-held calculators. These are the very kinds of improvements that should be encouraged, not blocked by an overly broad pioneer patent. Cf. Levin, the Semiconductor Industry, in Government and Technical Progress: A Cross-Industry Analysis 9, 13, 46 (R. Nelson ed. 1982) (emphasizing advantages of MOS technology for certain applications).
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There were other improvements in the calculators as well. The improved calculators receive input via a device that scans the "matrix" under the keyboard at frequent intervals, whereas the original design had a conductive strip underneath the keypad. This is an example of an improvement that reduced the number of components in the invention. n87 [*859] Also, the original Texas Instruments display was shown in its specification as a small thermal printer that printed dots on a tape in response to output signals from the processor. The accused devices all used liquid crystal displays (LCDs), the familiar black-on-gray display that does not produce a paper copy, an example of an improvement that increases the efficiency of an individual component. n88 Finally, the internal processing elements of the original calculator were manufactured as discrete components that were electrically interconnected in the final design. The newer calculator, in contrast, had all their logic on one intergrated circuit, eliminating the necessity for many electrical interconnections. n89 This is an example of enhanced overall design.
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n87 The engineer who made the pioneering invention at issue in the case testified at the trial that "[a]s the cost of logic was reduced, it became economically desirable to reduce the interconnections required for the chip at the expense of increased logic. The scanning keyboard is one example of this practice . . . ." 805 F.2d at 1565, 231 U.S.P.Q. at 837.
n88 Id. at 1567-68, 231 U.S.P.Q. at 838-39. In addition to the fact that the LCD displays do not require paper, they also use less power than the display. Id.
n89 Id. at 1566, 231 U.S.P.Q. at 837.
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The court concluded "that the total of the technological changes beyond what the inventors disclosed transcends . . . equitable limits . . . and propels the accused devices beyond a just scope" for the Texas Instrument patent. n90 Although the mode of analysis used in Texas Instruments -- described as the "as a whole" test for equivalents -- was apparently criticized in a subsequent en banc decision, n91 it has surfaced again in more recent cases, and so apparently still lives. n92 In any event this opinion is instructive for its focus on the merits of the accused device. As we note in the Conclusion, the opinion -- especially its emphasis on changes in materials, number and simplicity of components, and increased overall efficiency -- should serve as a model for applying the doctrine of equivalents. n93
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n90 Id. at 1571, 231 U.S.P.Q. at 841. Some contend that the "as a whole" test yields unpredictable results and thus creates a great deal of uncertainty. See Bretschneider, How to Craft and Interpret Means Plus Function Claims in Light of the Pennwalt and Texas Instruments Cases, 6 Am. Intell. Prop. L.A. Selected Legal Papers 68, 73 (1988) ("the degree of uncertainty created by this 'invention as a whole' test is nearly intolerable").
n91 See supra note 84.
n92 See Sun Studs, Inc. v. ATA Equip. Leasing, 872 F.2d 978, 989, 10 U.S.P.Q.2d (BNA) 1338, 1347 (Fed. Cir. 1989) ("An apparatus claim describing a combination of components does not require that the function of each be performed by a separate structure in the apparatus. The claimed and accused devices must be viewed and evaluated as a whole."); Corning Glass Works v. Sumitomo Elec. U.S.A., 868 F.2d 1251, 1259, 9 U.S.P.Q.2d (BNA) 1962, 1968 (Fed. Cir. 1989) ("[T]he determination of equivalency is not subject to . . . a rigid formula. An equivalent must be found for every limitation of the claim somewhere in an accused device, but not necessarily in a corresponding component, although that is generally the case."). Compare Wilson Sporting Goods Co. v. David Geoffrey & Assocs., 14 U.S.P.Q.2d 1942 (Fed. Cir. 1990) (holding accused product should not be held to infringe under doctrine of equivalence if a hypothetical patent claim broad enough to literally cover accused product could not have been obtained from Patent Office).
n93 See infra text accompanying note 329.
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[*860]
There are two more limitations on the doctrine of equivalents that should be mentioned: First, just as an applicant cannot claim anything in the prior art when applying for a patent, so are the courts limited by the prior art when "stretching" claim language under the doctrine of equivalents. n94 And second, the doctrine of "prosecution history estoppel" prevents the patentee from recapturing through equivalents claimed subject matter given up during prosecution. n95
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n94 See Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 870, 228 U.S.P.Q. (BNA) 90, 96 (Fed. Cir. 1985) ("[T]he doctrine will not extend to an infringing device within the public domain, i.e., found in the prior art at the time the patent issued. . . .").
n95 See Exhibit Supply Co. v. Ace Patents Corp., 315 U.S. 126, 136, 52 U.S.P.Q. (BNA) 275, 279 (1942).
Thus a court recently dismissed an infringement action where the patentee, a biotechnology company, originally claimed a recombinant process for making erythropoietin, a polypeptide that stimulates red cell production. During prosecution of the patent the examiner rejected certain claims as obvious in light of the prior art; in response, the patentee surrendered all process claims. The patentee at trial nevertheless urged the court to interpret its claims to include the rejected material to find infringement by defendant's process for producing the polypeptide. The court declined, refusing to adopt an "interpretation [that] would 'resurrect subject matter surrendered during prosecution. . . .'" Amgen, Inc. v. Chugai Pharmaceutical Co., 706 F. Supp. 94, 110, 9 U.S.P.Q.2d (BNA) 1833, 1846 (D. Mass. 1989) (quoting Thomas & Betts Corp. v. Litton Sys., 720 F.2d 1572, 1579, 220 U.S.P.Q. (BNA) 1, 6 (Fed. Cir. 1983)). The Federal Circuit has provided a useful definition of prosecution history:
The prosecution history . . . of the patent consists of entire record of proceedings in the Patent and Trademark Office. This includes all express representations made by or on behalf of the applicant to the examiner to induce a patent grant . . . . Such representations include amendments to the claims and arguments made to convince the examiner that the claimed invention meets the statutory requirements of novelty, utility, and nonobviousness.
Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452, 227 U.S.P.Q. (BNA) 293, 296 (Fed. Cir. 1985). The question of how broadly to define prosecution history is distinct from another question that has engaged the attention of the courts: whether there can be any equivalents left for a narrower claim when the prosecution history reveals that broader claims have been rejected. See La Bounty Mfg. v. United States Int'l Trade Comm'n, 867 F.2d 1572, 1576, 9 U.S.P.Q.2d (BNA) 1995, 1999 (Fed. Cir. 1989); Comment, Patent Claims and Prosecution History Estoppel in the Federal Circuit, 53 Mo. L. Rev. 497, 509-13, 517 (1988).
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2. Blocking Patents and Revese Equivalents. -- the doctrine of equivalents helps the patentee by expanding the scope of her claims beyond their literal boundaries. In a roughly symmetrical way, two similar devices are availabel to the accused infringer: blocking patents and the reverse doctrine of equivalents.
Two patents are said to block each tother when one patentee has a broad patent on an invention and another has a narrower patent on some improved feature of that invention. The broad patent is said to "dominate" the narrower one. In such a situation, the holder of the narrower ("subsevient") patent cannot practice he invention without a license from the holder of the dominant patent. At the same time, the holder of the dominant patent cannot practice the particular improved [*861] feature claimed in the narrower patent without a license. n96
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n96 Two aspects of this situation may seem counterintuitive: that the narrower (subservient) patent could ever be issued by the Patent Office, given the existence of the broad patent in the prior art; and that once the subservient patent is issued, the holder of the dominant patent would be prevented from practicing an invention that clearly falls within the scope of her claims. Subservient patents may be issued, however, when they disclose an improved feature which meets the statutory tests of novelty and nonobviousness. See, e.g., Atlas Powder Co. v. E.I. Du Pont de Nemours & Co., 750 F.2d 1569, 1576 -- 77, 224 U.S.P.Q. (BNA) 409, 413-14 (Fed. Cir. 1984). The fact that the subservient patentee has invented a nonobvious variant of a device covered by a broad patent does not mean that the broad patent is invalid for lack of enabling disclosure under 35 U.S.C. § 112. See, e.g., B.G. Corp. v. Walter Kidde & Co., 79 F.2d 20, 22 (2d Cir. 1935) (L. Hand, J.) ("It is true that [the inventor of the spark plug] did not foresee the particular adaptability of his plug to the airplane . . . . Nevertheless, he did not shoot in the dark; he laid down with perfect certainty what he wished to accomplish and how . . . . [H]e is not charged with a prophetic understanding of the entire field of its usefulness."); Amerace Corp. v. Ferro Corp., 532 F. Supp. 1188, 1201-02, 213 U.S.P.Q. (BNA) 1099, 1109-10 (N.D. Tex. 1982). And a subservient patent can prevent a dominant patent holder from practicing the particular improved feature claimed in the subservient patent because a patent grant is a right to exclude, not an affirmative right to practice an invention. See 35 U.S.C. § 154 (1988). Thus the dominant patentee can exclude the subservient patentee from practicing her invention at all, and the subservient patentee can exclude the dominant patentee from practicing her specific improved feature. See Atlas Powder, 750 F.2d at 1580, 224 U.S.P.Q. at 416; Ziegler v. Phillips Petroleum Co., 483 F.2d 858, 871-72, 177 U.S.P.Q. (BNA) 481, 489-90 (5th Cir.), cert. denied, 414 U.S. 1079 180 U.S.P.Q. (BNA) 1 (1973); cf. Cantrell v. Wallick, 117 U.S. 689, 694 (1886) (Where one patent is an improvement on another patent, "neither of the two patentees can lawfully use the invention of the other without the other's consent."); Cochrane v. Deener, 94 U.S. 780, 787 (1877) ("One invention may include within it many others, and each and all may be valid at the same time.").
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It is of course preferable for an inventor to have her own patent free and clear of anyone else's claims. An inventor therefore will not often voluntarily characterize her invention as subservient. n97 But a court may do so in the course of litigation. Where the court upholds the validity of an accused infringer's patent on some enhanced feature, but nevertheless finds that the accused product infringes a prior, broad patent, it is in effect making the accused infringer's patent subservient to the broad patent. n98
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n97 One example of patents that are so characterized is an improvement patent whose claims are drafted in a special format called "Jepson claims." See, e.g., Pentec, Inc. v. Graphic Controls Corp., 776 f.2d 309, 315, 227 U.S.P.Q. (BNA) 766, 770 (Fed. Cir. 1985); see also R. Ellis, Patent Claims § 197 (1949) (discussing Jepson format as one type of preamble portion of patent claim). Improvement patents are specifically provided for in the patent code. See 35 U.S.C. § 101. A Jepson claim has the same effect as a judicial finding that a patented invention is "dominated" by another invention. Strictly speaking only a patent drafted in Jepson format is an improvement patent. But in this article we use "improvement patent" more loosely, to describe both consciously drafted improvement claims and patents later found to be dominated by an earlier patent.
n98 See Ziegler, 483 F.2d at 871, 177 U.S.P.Q. at 489; Bryan v. Sid W. Richardson, Inc., 254 F.2d 191, 117 U.S.P.Q. (BNA) 157 (5th Cir.), cert. denied, 358 U.S. 815, 119 U.S.P.Q. (BNA) 501 (1958).
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[*862] Even where a court finds a patent subservient to another -- thus creating blocking patents -- the holder of the subservient patent is still better off than if she had never filed a patent at all, for two reasons. First, she can exclude the holder of the broad patent from practicing her improvement. Thus, although the improver may infringe the broad patent, she may gain some bargaining leverage by obtaining the subservient patent. n99 Second, because of this, she may be able to reduce the "lost profits" component of the dominant patentee's damages in an infringement action; the dominant patentee would not have replaced all the infringer's sales, presumably, because the infringer's sales were based at least in part on her improved feature. n100
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n99 There are limits to the bargaining power an improvement patent confers, however, as described infra notes 115-119 and accompanying text.
n100 See Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 672-73, 7 U.S.P.Q.2d (BNA) 1097, 1106-07 (Fed. Cir.), cert. denied, 109 S. Ct. 498 (1988); cf. Oil Well Improvements Co. v. Acme Foundry & Mach. Co., 31 F.2d 898, 901 (8th Cir. 1929) (noting that lost profits would not include profits resulting from sales of infringing device to purchasers who selected infringing device because of its "supposed superiority"). Note that the subservient patentee would, however, be liable for damages as measured by the value of royalties to the patentee under a license agreement. See 5 D. Chisum, supra note 45, § 20.03[3], at 20-135 to 20-136 ("In a case of blocking industrial property rights, the reasonable royalty would have to reflect an appropriate apportionment of the expected economic benefits. On the other hand, the patent owner's valid claim may have stood as a sole but complete legal obstacle to the manufacture of the product by the infringer.").
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We turn now to a doctrine that can much more effectively mitigate the impact of literal infringement: the "reverse" doctrine of equivalents. Courts have long recognized that, "[c]arried to an extreme, the doctrine of equivalents could undermine the entire patent system." n101 Scope could be enlarged so far beyond the literal language of claims that patents would take on unlimited power. To check the potentially destructive impact of the doctrine and to preserve symmetry in the rules on infringement, the Supreme Court long ago ruled that
a charge of infringement is sometimes made out, though the letter of the claims be avoided. The converse is equally true. The patentee may bring the defendant within the letter of his claims, but if the latter has so far changed the principle of the device that the claims of the patent, literally construed, have ceased to represent his actual invention, he is as little subject to be adjudged an infringer as one who has violated the letter of a statute has to be convicted, when he has done nothing in conflict with its spirit and intent. n102
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n101 Borg-Warner Corp. v. Paragon Gear Works, 355 F.2d 400, 404, 148 U.S.P.Q. (BNA) 1, 5 (1st Cir. 1965), cert. dismissed, 384 U.S. 935, 149 U.S.P.Q. (BNA) 905 (1966).
n102 Westinghouse v. Boyden Power Brake Co., 170 U.S. 537, 568 (1898) (citations omitted).
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An example, drawn from the case just quoted, may help to illuminate the doctrine. In 1869 George Westinghouse invented a train [*863] brake that used a central reservoir of compressed air for stopping power. Further advances in his design, primarily the addition of an air reservoir in each brake cylinder, resulted in a brake that was patented in 1887. An improvement on this 1887 brake, invented by George Boyden, added an ingenious mechanism for pushing compressed air into the brake piston from both the central reservoir and a local reservoir in each brake cylinder. n103 With the added stopping power of the Boyden brake, engineers could safely operate the increasingly long trains of the late nineteenth century.
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n103 Westinghouse's brake required a complicated series of passageways to supply air from the two sources. Id. at 545, 562-63.
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The Westinghouse patent included a claim for "the combination of a main air-pipe, an auxiliary reservoir, a brake-cylinder, a triple valve [the device that coordinated the airflows from the main reservoir and the individual brake reservoir] and an auxiliary valve device, actuated by the piston of the triple-valve . . . for admitting air in the application of the brake." n104 The Court noted that the literal wording of the Westinghouse patent could be read to cover Boyden's brake, since it included what could be described as a "triple valve." n105 But it refused to find infringement on the ground that Boyden's was a significant contribution that took the invention outside the equitable bounds of the Westinghouse patent:
We are induced to look with more favor upon this device, not only because it is a novel one and a manifest departure from the principle of the Westinghouse patent, but because it solved at once in the simplest manner the problem of quick [braking] action, whereas the Westinghouse patent did not prove to be a success until certain additional members had been incorporated into it. n106
The Westinghouse decision has influenced a number of cases. n107 In [*864] SRI International v. Matsushita Electric Corp. of America, n108 the Federal Circuit reaffirmed the availability of the reverse doctrine of equivalents as a defense to literal infringement. The case involved a patent on a filter used to encode color information in a color television camera. The patent claimed a filter with two sets of parallel stripes of equal width "relatively angularly superimposed" over one another. n109 The accused device used a similar design to achieve the same result, but the stripes in its filters must be at forty-five degree angles to one another. n110
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n104 Id. at 561.
n105 Id. at 568.
n106 Id. at 572. On the application of this standard to specific cases, see Pigott, Equivalents in Reverse, 48 J. Pat. Off. Soc'y 291, 295 (1966) (noting that in Westinghouse "the claims literally read upon [i.e., cover] the accused structure").
n107 See, e.g., Leesona Corp. v. United States, 530 F.2d 896, 905-06, 185 U.S.P.Q. (BNA) 156, 163 (Ct. Cl. 1976); Precision Metal Fabricators v. Jetstream Sys. Co., 693 F. Supp. 814, 819, 6 U.S.P.Q.2d (BNA) 1704, 1708 (N.D. Cal. 1988) (no infringement where defendant's "machines do not operate on the same principle as plaintiff's . . . . This appears to be a case where the defendants are not gaining the benefit of plaintiff's patents, but their equipment could fall within the literal language of the patents."); Mechanical Plastics Corp. v. Unifast Indus., 657 F. Supp. 502, 504, 4 U.S.P.Q.2d (BNA) 1734, 1736 (E.D.N.Y. 1987) ("Where a device serves the same or a similar purpose to the patented invention, but functions in a substantially different way, the fact that it falls within the literal language of the claim does not warrant a finding of infringement."), aff'd, 846 F.2d 78 (1988) (without opinion); Brenner v. Recognition Equip., 593 F. Supp. 1275, 1278, 225 U.S.P.Q. (BNA) 1068, 1070 (S.D.N.Y. 1984) (alternative holding); see also Pigott, supra note 106 (collecting many cases on two related issues: narrowing claims by reference to the specification to save the claims from invalidity, and "narrowing" claims to excuse infringement under the reverse doctrine of equivalents).
n108 775 F.2d 1107, 227 U.S.P.Q. (BNA) 577 (Fed. Cir. 1985) (en banc).
n109 Id. at 1111, 227 U.S.P.Q. at 577.
n110 SRI Int'l v. Matsushita Elec. Corp. of Am., 591 F. Supp. 464, 468, 224 U.S.P.Q. (BNA) 70, 73 (N.D. Cal. 1984), rev'd, 775 F.2d 1107, 227 U.S.P.Q. (BNA) 577 (Fed. Cir. 1985) (en banc).
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The court unanimously recognized the validity of a reverse equivalents defense:
The law . . . acknowledges that one may only appear to have appropriated the patented contribution, when a product precisely described in a patent claim is in fact 'so far changed in principle' that it performs in a 'substantially different way' and is not therefore an appropriation (reverse doctrine of equivalents). n111
But the court divided sharply on the issue of whether the defendant's camera filter was "so far changed in principle" that it was excused from infringement without more factual proof. n112 It remanded the case with explicit instructions for the trial court to consider the accused infringer's reverse equivalents defense.
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n111 775 F.2d at 1123, 227 U.S.P.Q. at 587 (emphasis in original) (lead opinion, five judges joining). See id. at 1132, 227 U.S.P.Q. at 594 (Davis, J., concurring); id. at 1133, 227 U.S.P.Q. at 595 (Kashiwa, J., dissenting, five judges joining).
n112 Compare id. at 1125, 227 U.S.P.Q. at 589 (genuine issues of material fact still unresolved) (lead opinion, five judges joining); with id. at 1132, 227 U.S.P.Q. at 594 (Davis, J., concurring) (reverse equivalents is always a matter of fact, not law) and id. at 1133, 227 U.S.P.Q. at 594-95 (Kashiwa, J., dissenting, five judges joining) (no genuine factual issues left to resolve; one of two alternative legal findings is that reverse equivalents defense is valid here as a matter of law).
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These cases demonstrate the use of the reverse equivalents doctrine by the courts to limit the reach of a patentee's claims in the face of substantial technological improvements. However, use of the doctrine is fairly rare. n113 Issuance of an improvement patent, or a holding that a patent is valid but subservient to another patent, is much more [*865] common. n114
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n113 Ethyl Molded Prods. Co. v. Betts Package, Inc., 9 U.S.P.Q. 2d (BNA) 1001, 1026 (E.D. Ky. 1988) ("The reverse doctrine of equivalents, although frequently argued by infringers, has never been applied by the Federal Circuit."); Phillips Petroleum Co. v. United States Steel Corp., 673 F. Supp. 1278, 1350, 6 U.S.P.Q. 2d (BNA) 1065, 1123 (D. Del. 1987) (pointing out that reverse equivalents is rarely successfully asserted), aff'd, 865 F.2d 1247, 9 U.S.P.Q. 2d (BNA) 1461 (Fed. Cir. 1989).
n114 See United States Steel Corp. v. Phillips Petroleum Co., 865 F.2d 1247, 1253 n.11, 9 U.S.P.Q. 2d (BNA) 1461, 1466 N.11 (Fed. Cir. 1989); Herman v. Youngstown Car Mfg. Co., 191 F. 579, 584-85 (6th Cir. 1911); Bendix Corp. v. United States, 199 U.S.P.Q. (BNA) 203, 222 (Ct. Cl. Trial Div. 1978), aff'd, 600 F.2d 1364, 204 U.S.P.Q. (BNA) 617 (Ct. Cl. 1979).
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At first blush, the technical merits of the allegedly infringing device might seem to be irrelevant where literal infringement is concerned. After all, a patent is the right to exclude; an astoundingly meritorious improvement, while no doubt deserving a patent of its own, ought not escape infringement. The improver can patent the improvement, but this should not affect the original patentee's rights.
This is an appealing argument. An economic rationale for improvement patents would stress their tendency to encourage bargaining between improvers and original patentees. To the extent the improver has a very significant cost-saving technology, it would be in the interest of the original patentee to cross-license with the improver, to gain access to the improved technology.
Unfortunately, the original patentee may use her patent as a "holdup" right, in an attempt to garner as much of the value of the improvement as possible. n115 The chances of this being successful depend on the relative contributions of the original patented invention and the improvement to the "original plus improvement" combination. Where the original invention contributes most of the value, n116 or where the original and improvement inventions contribute roughly equal value, issuing an improvement patent may be a reasonable solution. But where the original patent contributes very little value compared to [*866] the improvement, the holdup problem may be significant. That is, the holder of the original patent may use it to extract much of the value of the "original plus improvement" combination from the improver. n117 The reverse doctrine of equivalents solves the problem by, in effect, excusing the improver from infringement liability -- and therefore removing the original patentee's holdup right. Reverse equivalents, of course, did not evolve in explicit recognition of this problem. n118 But [*867] the fear of the inefficient use of holdup power n119 does provide a rational account of the doctrine and might even assist courts in applying it. Note too that the same rationale could be applied to analysis of infringement under the doctrine of equivalents; the more significant the technological advance represented by the allegedly infringing device, the less willing the courts should be to find it an equivalent of the patentee's device. n120
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n115 The "holdup" problem was originally applied to situations where one buyer needs to acquire complementary assets from a number of sellers; some of the sellers may raise their prices to capture some of the value the buyer attributes to holding all the assets. See, e.g., Calabresi & Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089, 1106-07 (1972) (example of sale of small parcels of land to buyer who needs all parcels used as illustration of necessity for "liability rule" such as eminent domain). It has been extended to two-party contracts, see Klein, Crawford & Alchian, Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, 21 J.L. & Econ. 297 (1978); Klein, Transaction Cost Determinants of "Unfair" Contractual Arrangements, 70 Am. Econ. Rev. (Papers & Proc.) 356, 356-57 (May 1980), reprinted in Readings in the Economics of Contract Law 139, 139-40 (V. Goldberg ed. 1989). The paper by Klein, Crawford and Alchian presents the best analogy to the improver-original patentee bargaining situation. This paper describes the opportunities for exerting holdup rights where one firm, after investing in an asset with a low salvage value and a rent stream that is highly dependent on an asset owned by another firm, can be held up by the other firm's attempt to capture a large proportion of the rent stream of the combined assets. The owner of an improvement that contributes a very significant part of the value of the "original patent plus improvement" combination -- i.e., an improvement that represents a major technical advance -- is thus subject to "holdup" by the original patent holder.
n116 If the improvement would have been obvious to one skilled in the art, it will not be patentable at all. See 35 U.S.C. § 103 (1988).
n117 To see why this would be bad from society's point of view, consider this example. An original patent has a value of $ 100; an improvement, also worth $ 100, is invented, and its inventor wishes to obtain the right to use it by bargaining with the holder of the original patent. Here, the parties may well reach a bargain whereby the original patentee gains $ 50 of the value of the improvement and the improver keeps $ 50 of this gain, yielding a total allocation of $ 150 for the original patentee and $ 50 for the improver. (Of course, the gain may be greater if the original patentee is especially "strategic"; or it may be lower if she is exceptionally "fair"; or the parties might not reach any agreement at all, and the improvement will have to wait until the original patent expires; but the fifty-fifty allocation is a good approximation, based on empirical findings. See H. Raiffa, The Art and Science of Negotiation 48 (1982) (empirical research showing the best predictor of final agreement price was the midway point between the opening offers of sellers and buyers).) Depending of the cost of developing the improvement, this may tend to reduce the incentives to invent improvements below the optimal level, since the improver keeps only $ 50 of the $ 100 in extra value generated by the improvement. But it is a reasonable result in this case given the strong policy in favor of preserving the reward for the original patentee and, thus, incentives for future original patentees. But where the improvement adds value of $ 900, compared to the original patent's value of $ 100, the holdup problem becomes acute. Here, if the parties bargain for an equal allocation of the improvement's value, the improver keeps only $ 450 of the total value of the improvement. The reduced incentives to invent such substantial improvements are obvious from this example; not even the strong policy favoring incentives for the original patentee to invent can justify such a "windfall" to the original patentee at the expense of the improver. Note also that the social cost in those cases where the parties cannot agree, and where the very significant improvement therefore sits on the shelf for the life of the original patent, is by definition great. Such "deadlocks" do occur, and in fact a certain number of them are predictable where the bargaining parties are acting ration