Supreme Court Contemplates Patent Obviousness and Equivalents, Contributed by Erika H. Arner and Justin R. Lowery, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Over the last decade, the Supreme Court has shown an increased interest in patent law, taking up cases to answer fundamental questions such as the types of inventions eligible for patents in Bilski v. Kappos,1 the international reach of U.S. patents in Microsoft v. AT&T,2 and the deference that should be accorded issued patents at trial in Microsoft v. i4i.3 In the current term alone, the Court has heard arguments in three patent cases, Mayo v. Prometheus Labs.,4 Kappos v. Hyatt,5 and Caraco v. Novo Nordisk,6 and it appears that they are considering taking on a fourth. The Court has expressed some interest in a petition to review a Federal Circuit decision in Saint-Gobain v. Siemens,7 so this case may present another opportunity for the Court to weigh in and change the landscape in patent law.
The Penumbras Presented by Obviousness and Equivalence
Saint-Gobain v. Siemens presents issues from two areas of patent law which can potentially intersect. Under the judge-made “doctrine of equivalents,” patents are given an exclusive penumbra which extends beyond their plain language. The doctrine prevents a patent infringer from avoiding liability through insubstantial changes or substitutions to the patented invention. An equivalent element which performs substantially the same function, in substantially the same way, to achieve substantially the same result, is thus considered to infringe the patent, despite not falling within the actual language of the claim.8 Commonly the doctrine is used to protect inventions from after-arising standards or technology which do not affect the substance of the invention, but could otherwise be used to avoid infringement. In this case, Siemens’s patented radiation scanners consist of cerium-doped lutetium oxyorthosilicate (“LSO”), while Saint-Gobain sells crystals consisting of cerium-doped lutetium-yttrium orthosilicate (“LYSO”), specifically 10 percent Y LYSO crystals, meaning that 10 percent of the lutetium atoms are substituted for yttrium atoms. Siemens thus argued to the jury that its patent’s claim of scanners containing LSO crystals was equivalent to scanners containing Saint-Gobain’s 10 percent Y LYSO crystals.
The second patent doctrine involved in this case is obviousness, the statutory requirement that an invention be more than an obvious variation of the prior art in order to merit patent protection. Obviousness analysis of patents often presents many of the same questions as the doctrine of equivalents. In determining whether an invention is non-obvious, and thus deserving of patent protection, the Patent Office and the courts must look to, among other things, the substantiality of the difference between the patented claims and the prior art. The smaller the difference between the prior art and the patented claims, the more likely the claims are obvious and ineligible for patent protection.
“Separate Patentability” at the Intersection of Obviousness and Equivalence Intersect
While the doctrine of equivalents and obviousness present similar questions, the analyses intersect in a situation known as separate patentability. Here, Siemens argued that the difference between the patent and the accused infringing device was insubstantial and thus equivalent to its patent, essentially that the claimed LSO crystals were an equivalent to Saint-Gobain’s 10 percent Y LYSO crystals. However, Saint-Gobain countered that a scanner utilizing 10 percent Y LYSO crystals was already covered by a separate patent, a patent which Saint-Gobain had a license to. Saint-Gobain was nonetheless found to have infringed Siemens’s patent by the jury under the doctrine of equivalents, necessarily finding that Saint-Gobain’s technology was an equivalent covered by Siemens patent.
Saint-Gobain argued to the Federal Circuit that this presented a logical impossibility: that Siemens’s patent could cover a product which was both insubstantially different enough to be viewed as an equivalent and non-obvious enough to be eligible for and covered in a separate patent. Saint-Gobain further argued that the jury’s finding that the difference was an equivalent has rendered the later issued patent “constructively invalidated,” running contrary to the PTO’s allowance of the later patent and that patent’s presumption of validity. Statutorily, issued patents are presumed valid, requiring a heightened evidentiary showing to invalidate an issued patent, a requirement recently affirmed by the Supreme Court in Microsoft v. i4i.9 As a result of this tension, Saint-Gobain argued that the jury should have been instructed on a heightened evidentiary standard to find that the difference was an equivalent of Siemens’s patent.
Dissent in the Initial Federal Circuit Decision
A panel of the Federal Circuit10 rejected Saint-Gobain’s argument in a 2-1 decision. Judges Lourie and Linn wrote in the majority and acknowledged the tension between the doctrines, but stated that, nonetheless, they were separate analyses. While separate patentability of an alleged equivalent may be argued to the jury as evidence for non-equivalence, it does not present any legal presumption against equivalence. The majority noted the presumption of validity enjoyed by issued patents and the flexibility of both the equivalence and obviousness doctrines as supporting the result in this case. The majority thus affirmed the verdict, finding the jury had been properly instructed as to all issues.
Judge Prost argued in dissent that this case presented a “unique circumstance” in which the two doctrines “crash into” one another. Judge Prost agreed that the doctrines were separate, but stated in this case there was inevitable area of overlap, with the Supreme Court and Federal Circuit’s obviousness precedent almost requiring an insubstantial equivalent to be found to be a non-obvious difference. Judge Prost thus argued that the jury should be presented with some instruction on how to navigate the tension between these two areas of the law, with a requirement that “a separately-patented (and presumptively non-obvious) substitution cannot be ‘insubstantial’ unless some fact distinguishes the equivalence finding from the PTO’s earlier nonobviousness determination.”11
Dissent from the Denial of En Banc Review
Saint-Gobain moved for rehearing and en banc review of the panel decision. This review was denied, but again sharp division among the judges resulted.12 Judges Lourie, Newman, Linn, Moore, O’Malley, and Chief Judge Rader all argued that this was a straightforward application of the obviousness and equivalence doctrines, and that the dissenting judges were attempting to argue about broader issues that were not properly presented by the case.
Judges Dyk, Gajarsa, and Prost wrote in dissent that this situation presented greater implications and reflected an improper usage of the doctrine of equivalents. In the dissent’s view, the current decision allows a patent-holder to cover a “new and separately patented (or patentable) invention,” potentially enabling a “patent-holder to secure the rights to a new invention that the inventor did not create.” The dissent called for a further intersection between equivalence and non-obviousness, agreeing with Saint-Gobain that “a product cannot be insubstantially different if it is nonobvious and separately patentable.” The dissent argued that the majority’s approach will deter innovation and hamper otherwise legitimate competition.
Chief Judge Rader and Judge Newman further wrote separate opinions providing additional support for the majority view, each joined by several members of the majority. Chief Judge Rader emphasized the importance of protecting issued patents and the role that the doctrine of equivalents plays in protecting an inventor’s creation from after-arising technology. Judge Newman likewise argued that the dissenters called for an improper and unnecessary adjustment to the balance between inventor and copyist, potentially wholly changing the doctrine of equivalents. Both countered the dissent’s overall argument, emphasizing the importance of these doctrines to the heart of the patent system and our national economy, and the danger in limiting or otherwise tinkering with the doctrine of equivalents.
The multiplicity of opinions likely reflects two things. First, the obvious fractured thought among the Federal Circuit judges, with great division among the judges with respect to the implications of the decision, the understanding of the role of the doctrine of equivalents, and the view of the proper balance between patent-holders and their competitors. These opinions also reflect many of the larger arguments that have permeated many recent Federal Circuit and Supreme Court decisions, including the role of patents in innovation, the rights and power of patent-holders, and the effects of patents and patent lawsuits on the larger economy. The majority took the view of patent-holders attempting to protect their inventions, while the dissent took the view of competitors caught by a patent-holder attempting to stretch claims too far.
Second, the many opinions reflect positioning of the case and the judges’ views on the issues with an eye to potential Supreme Court review. Concurrences and dissents often are written as much for the clerks and justices of the Supreme Court than for other judges of the circuit court, both to attract the justices’ attention to the case and to otherwise get their views before the Court. This may be particularly true in patent cases, where the judges of the Federal Circuit are the only appellate voices that can be heard on the issue. The numerous broad opinions likely indicate the Federal Circuit judges’ acknowledgment of the strong possibility of review.
Petition and Possible Supreme Court Review
Following the en banc denial by the Federal Circuit, Saint-Gobain petitioned the Supreme Court for certiorari, essentially asking the Court to take up the case and review the Federal Circuit’s opinion. In recent years the Supreme Court has addressed obviousness in KSR v. Teleflex13 and the presumption of patent validity in Microsoft v. i4i, showing an interest in reviewing the power that issued patents have and how they are treated in litigation. This interest could lead to review here, with a chance to help define the scope of patents and proof of infringement. Review of this case could result in a change in how courts treat this particular situation of a collision between separate patentability and the doctrine of equivalents, or a larger rethinking of how obviousness and infringement interact and are treated in trial.
The Supreme Court has complete control over its own docket. The Court usually looks to two primary concerns in deciding to take up a case―a division among appellate courts on the issue and that the issue is of national importance. This is done to ensure the Supreme Court uses its resources where they are most needed, to weigh in on issues where uniformity is needed and prevent splits below, and to address only the most important cases and issues.
Given that the Federal Circuit is the only court which reviews patent law decisions, the sharp divisions among the judges of that court will often be an indicator that a decision is ripe for review. In cases such as Bilski v. Kappos or Microsoft v. AT&T, strong dissents have likely resulted in more careful scrutiny by the high court. In a case such as this with a dissent in the initial decision and many concurring and dissenting opinions in an otherwise standard request for rehearing, multiple red flags are raised to the Supreme Court. Saint-Gobain thus has a strong argument for Supreme Court review based on a split among the only judges that hear patent cases. Further, in the Federal Circuit’s rehearing denial itself, opinions for both the majority and the dissent acknowledged the importance of this case and the larger effects a rebalancing of these doctrines could create.
After a first review, the Supreme Court asked the Solicitor General to weigh in on behalf of the United States on the merits of Saint-Gobain’s petition. This brief will often act as a neutral arbiter on the petition, as well as an indicator on the true national importance an issue has. The request for this brief alone indicates interest from the Court, and the Court often, though not always, follows the Solicitor General’s guidance on whether to take up particular cases.
The Solicitor General has yet to file a brief, but we can anticipate that the government’s position will have a large impact on whether the case ultimately gets Supreme Court review. We expect the government’s brief to be filed in the next few months, and the Supreme Court to decide whether to hear the case shortly thereafter. If the Supreme Court takes the case, it likely will be added to the Court’s docket for the next term starting in October 2012, and we have the potential for another wide-ranging patent decision that shakes up the balance between patent-holders and alleged infringers and analyses of obviousness and equivalence.
Erika H. Arner is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Ms. Arner practices patent prosecution management, client counseling, and litigation, with an emphasis on electronic technology, computer software, and the Internet. Ms. Arner can be reached at email@example.com or 571.203.2754.
Justin R. Lowery is an attorney at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Mr. Lowery focuses on patent litigation in district and appellate courts, and the preparation and prosecution of patent applications. Mr. Lowery can be reached at firstname.lastname@example.org or 202.408.4298.
Disclaimer: Finnegan represented petitioners in Bilski v. Kappos and respondents in Microsoft v. i4i.
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