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Overturning a 17-year-old precedent, a federal appeals court last week cut back on a key legal protection that inventors use against would-be patent infringers. The 8-4 vote by the full U.S. Circuit Court of Appeals for the Federal Circuit bars inventors from invoking the “doctrine of equivalents” under certain circumstances. The doctrine is the legal argument that patent holders use to fight off competitors who sell knock-off products that are slightly modified versions of patented inventions. The Nov. 29 decision in Festo Corp. v. Shoketsu Kinzoki Kogyo Kabushiki Co. “fundamentally changes the way people will prosecute patents,” said Edward Reines, a Silicon Valley-based partner at Weil, Gotshal & Manges. Reines isn’t involved in the 12-year-old case, but, like many intellectual property lawyers around the country, he had been following it closely. Barring a reversal from the Supreme Court, Japan-based manufacturer Shoketsu has won the dispute over a machine part called a “magnetically coupled rodless cylinder.” The majority opinion by Judge Alvin Schall did not do away with the doctrine of equivalents, but it rendered it toothless for certain plaintiffs in patent infringement cases: inventors who narrowed the claims of their inventions to convince patent examiners that their creation is unique and deserving of a patent. In those cases, the majority held that the doctrine of equivalents cannot prevent a competitor from making a virtually identical product that — in the area covered by the narrower claim — slightly differs from the patented product. While some observers, as well as the four dissenters on the Federal Circuit, say the ruling will make patented inventions highly vulnerable to copycats, the majority asserted that its ruling will encourage innovation. Under the new approach, Schall wrote, “[t]he public will be free to improve on the patented technology and design around it without being inhibited by the threat of a lawsuit because the changes could possibly fall within the scope of equivalents… . This certainty will stimulate investment in improvements and design-arounds because the risk of infringement will be easier to determine.” Schall was joined by Chief Judge Robert Mayer and Judges S. Jay Plager, Alan Lourie, Raymond Clevenger III, William Bryson, Arthur Gajarsa, and Timothy Dyk. Judge Paul Michel, one of the dissenters, predicted that the decision would threaten the value of more than a million patents. “Under the majority’s approach, anyone who wants to steal a patentee’s technology need only review the prosecution history to identify patentability-related amendments, and then make a trivial modification to that part of its product corresponding to an amended claim limitation.” Michel wrote, in an opinion joined by Judge Randall Rader. The case has a tortured history, and Michel wrote two previous panel decisions in favor of Festo. Both have now been overturned. Judges Richard Linn and Pauline Newman offered separate dissents. Like Michel, they decried the majority ruling as unfair to current patent holders — who drafted their patents without knowing that amended claims would not be protected by the equivalents doctrine. They also complained that the majority decision goes against established Supreme Court and Federal Circuit precedent. In fact, Schall plainly points out in the majority opinion that the court was overturning its 1983 decision in Hughes Aircraft Co. v. United States. The Hughes case occurred just a year after Congress had created the Federal Circuit with the aim, among others, of making patent law more predictable by consolidating its appellate review in one court. In Hughes, the court adopted a flexible approach to applying the equivalents doctrine to amended patent claims. It allowed trial judges to decide how similar to the original invention an accused infringer had to make his product before it violated the doctrine of equivalents.

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