Festo In Litigation

1. ACI’s Eighth National Advanced Forum on Litigating Patent Disputes Festo In Litigation What Festo and Its Progeny Mean for Litigation Today . . . and Tomorrow Richard S. Meyer Mary T. Huser February 2003

2. The Bold Agenda • Let’s Get Grounded -- Festo II review • When Festo applies • Impact of Festo Precedent in District Courts • Greater Burden on Patentees • Rebutting the Festo presumption • Federal Circuit Insights • Amendment v. argument-based estoppel • Festo II on Remand in the Federal Circuit • Tips, Takeaways & Strategies ACI's Eighth National Advanced Forum On Litigating Patent Disputes

3. The Supreme Court’s May 28, 2002 Decision • Festo forecloses use of Doctrine of Equivalents (DOE) for amended claim elements due to Prosecution History Estoppel (PHE) • Applies when: • Any narrowing claim amendment • Including voluntary and involuntary amendments • Is made for any statutory requirement of patentability • Avoid prior art • Comply with 35 U.S.C. 112 • Unless the amendment is “truly cosmetic” ACI's Eighth National Advanced Forum On Litigating Patent Disputes

4. Effect of Festo • Amendment is presumed to be a “general disclaimer of territory between the original claim and amended claim” • Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722 (2002) • Creates rebuttable presumption that the patentee surrendered the particular equivalent in question • Burden of proof now on patentee to prove no PHE where amended claim element not literally present ACI's Eighth National Advanced Forum On Litigating Patent Disputes

5. How to Rebut the Presumption • Subject matter surrendered unless Patentee shows: • Equivalent unforeseeable at time of amendment/application; • Reason for amendment bears no more than a tangential relation to the equivalent; or • Any other reason patentee could not have reasonably been expected to describe the insubstantial substitute in question ACI's Eighth National Advanced Forum On Litigating Patent Disputes

6. How Have the District Courts Been Applying the Presumption? • Procedural Issues • How to Measure Foreseeability • Objective evidence from skilled artisan? • Subjective evidence from inventor and/or patent attorney? • What is tangential? ACI's Eighth National Advanced Forum On Litigating Patent Disputes

7. When Does the Festo Presumption Apply? • Not when determining literal scope of claims • Court should determine ordinary meaning of claim language as understood by skilled artisans. • Burden on party seeking to alter plain meaning. • Middleton, Inc. v. 3M Co., 311 F.3d 1384 (Fed. Cir. 2002) • Only to DOE analyses • Burden on patentee as tries to extend protection beyond literal scope of claims. • Gentile v. Franklin Sports, Inc., 211 F. Supp. 2nd 334 (D. Mass 2002) ACI's Eighth National Advanced Forum On Litigating Patent Disputes

8. Case Law Applying Festo II Rebuttable Presumption • Tangential Argument Succeeded • Vardon -- First reported case (N.D. Ill.) • Foreseeability Arguments Failed • Glaxo Wellbutrin SR® Drug Cases • EDVA, SDNY, ND Cal. • Bosch Cordless Drill (C.D. Cal.) • Soundtube Dome Loudspeakers (D. Mass.) ACI's Eighth National Advanced Forum On Litigating Patent Disputes

9. Vardon Golf Co. v. Karsten Mfg. Corp.2002 U.S. Dist. LEXIS 11802 (N.D. Ill. 2002) • Vardon’s ‘021 patent directed to golf clubs with enlarged faces and reinforced cavity • Vardon: Karsten’s PING ISI golf clubs, with “ring and dot” in cavity, infringe under DOE ACI's Eighth National Advanced Forum On Litigating Patent Disputes

10. Vardon • Claim 7, relating to structural reinforcements, was amended to avoid prior art: • “...said head having a face wall, and means to reinforce the face wall and enlarge the effective hitting area of the golf club including an integral perimeter wall extending rearwardly from and surrounding the face wall defining a cavity in the rear of the head, and a progressive face wall reinforcing [weighting] element in the cavity extending from the approximate center of the rear of the face wall outwardly in the cavity to the perimeter wall, said element being integral with both the face wall and perimeter wall, said reinforcing element incrementally increasing [in weight] in height [at least one direction] from the approximate center of the rear of the face wall to the perimeter wall...” ACI's Eighth National Advanced Forum On Litigating Patent Disputes

11. Vardon • Prior art reference disclosed iron with dot in center • Defendant Karsten: • By distinguishing ‘021 invention from prior art with a “dot in rear cavity” Vardon surrendered subject matter • PING ISI irons – with ring and dot in center of cavity – are part of surrendered territory Prior Art ACI's Eighth National Advanced Forum On Litigating Patent Disputes

12. Vardon • Vardon: • Could not reasonably be expected to draft claim literally encompassing clubs with ring and dot. • Ring and dot only tangentially related to reinforcing function of the ribs in accused ISI clubs. • Court: Vardon rebutted Festo presumption • Amendments focused on structural -- not cosmetic --distinctions. Ring and dot are primarily aesthetic. • No mention of ring and dot in Vardon’s amendment. • PTO considered “dot” insubstantial distinction as it granted patent despite presence in prior art. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

13. GlaxoSmithKline (“GSK”) HPMC Cases • GSK basic patent on active ingredient for antidepressant drug Wellbutrin SR® expired in ‘91. • GSK obtained another patent for a sustained release version of the drug. • Claims originally recited functional features of sustained release and shelf life of over a year. • Claims were rejected under 35 U.S.C. § 112 for lack of enablement • Hydroxypropylmethylcelluslose (“HPMC”) is “considered critical for controlled and/or sustained release and should be incorporated into the independent claims.” • Claims were amended, adding HPMC as sustained release agent and dropping the shelf life feature. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

14. GSK HPMC Cases • Four generic drug companies filed ANDA’s/¶ IV certs. • Andrx used HPMC but not as sustained release agent. • Excel used polyvinyl alcohol (PVA). • Eon and Impax used hydroxypropyl cellulose (HPC). • GSK filed 4 patent infringement suits • SDFla, EDVA, SDNY, and NDCal. • Andrx obtained SJ of non-infringement pre-Festo II. • In August 2002, courts ruled on other defendant’s motions for summary judgment of non-infringement, based on the foreseeability test outlined Festo II. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

15. SmithKline Beecham v. Excel214 F. Supp.2d 581 (E.D.V.A. 2002) • GSK argued claim Festo did not apply • Alleged claim not narrowed because substituted HPMC for unrelated shelf life feature. • Court ruled claims narrowed from generic, controlled release concept to single species, HPMC. • GSK had “burden to demonstrate that the amendment did not surrender the alleged equivalent…PVA.” • GSK submitted affidavit from expert that PVA was unforeseeable and skilled artisan could not have drafted claim to literally cover. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

16. SmithKline Beecham v. Excel214 F. Supp.2d 581 (E.D.V.A. 2002) • Court, assuming truth of non-movant’s affidavit, still granted SJ of non-infringement to Excel. • GSK, preparing for usual pre-Festo DOE case, had to admit numerous mechanisms like HPMC were known. • Court found that scientific knowledge of this “category of polymers” existed at the time the claims were amended. • Therefore, even if PVA unforeseeable, equivalents from that family of polymers were foreseeable. • Court concedes patentee could not have successfully redrafted the claims in PTO, but issue is whether patentee had “scientific ability” to draft literal claims. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

17. Glaxo Wellcome v. Eon Labs220 F. Supp.2d 1089 (S.D.N.Y. 2002), 2003 U.S. Dist LEXIS 2074 (2003) • On SJ, GSK only had to “come forward with evidence to establish a triable issue of fact as the foreseeability of HPC as a sustained release agent.” • Glaxo argued • No teaching in prior art of sustained release version. • Inventors tested and only knew of HPMC. • Expert affidavit shows HPC could not have been foreseen. • Eon submitted a listing from prior art catalogue disclosing that HPC was a “well-known” sustained release agent. • Court held Glaxo created a triable issue of fact • Per Eon court, foreseeability is subjective/question of fact. • 2.13 Motion for Reconsideration/Claim Preclusion denied. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

18. Glaxo Wellcome v. Impax Labs2002 U.S. Dist. LEXIS 15966 (N.D. Cal. 2002) • Court grants SJ of Non-Infringement to Impax • Addressed earlier decisions, but did not finding the same ambiguity as Eon court. • Court held, PHE, including foreseeability of equivalents, is question of law for court. • Two-part test for Festo II PHE: (1) if the amendment narrowed the claim for reasons related to patentability; and (2) skilled artisan could have foreseen a less restrictive alternative. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

19. Glaxo Wellcome v. Impax Labs2002 U.S. Dist. LEXIS 15966 (N.D. Cal. 2002) • Court found “anyone skilled in the art would have known that HPC and HPMC were substantially equivalent” • HPC listed in Handbook of Pharmaceutical Excipients as popular stabilizing and suspending agent in drugs • Earlier GSK patents disclose both as release agents • GSK argued HPC not foreseeable because it was not tested with Wellbutrin SR® • Court responded by noting GSK had known for years HPC and HPMC similar, and its failure to perform analysis or expand claims was “unreasonable.” ACI's Eighth National Advanced Forum On Litigating Patent Disputes

20. Soundtube Entertainment v. Brown Innovations233 F.Supp.2d 188 (D. Mass. 2002) • Brown ‘438 patent: • “Spherical” dome loudspeakers • Speaker with “substantially spherical” interior rejected as indefinite under § 112 • Amendment: “substantially spherical” • Prior art disclosed speaker with elliptical cross section • Amendment: a spherical interior having “a constant radius” ACI's Eighth National Advanced Forum On Litigating Patent Disputes

21. Soundtube Entertainment v. Brown Innovations233 F.Supp.2d 188 (D. Mass. 2002) • Accused infringer Soundtube used 30-inch dome speaker that was almost spherical: • Upper portion of dome varied from best fit sphere by 0.16 inches, lower portion varied by over 0.11 • Brown argued that Soundtube speaker fell within “allowable tolerances for spheres” • Soundtube’s slight variance not foreseeable • ‘438 amendments only “tangentially related” to infringing aspects of Soundtube speaker ACI's Eighth National Advanced Forum On Litigating Patent Disputes

22. Soundtube Entertainment v. Brown Innovations233 F.Supp.2d 188 (D. Mass. 2002) • Court: Brown did not rebut Festo presumption • Substantially-spherical speakers (like Soundtube’s) were foreseeable • Patentee originally claimed them • Tangential argument rejected • Patentee made arguments about the benefits of a constant radius to avoid prior art • Brown estopped from asserting DOE ACI's Eighth National Advanced Forum On Litigating Patent Disputes

23. Federal Circuit Insights • Amendment v. Argument-based Estoppel Post-Festo II • Riles v. Shell Exploration & Production Co., 298 F.3d 1302 (Fed. Cir. 2002) • Eagle Comtronics, Inc. v. Arrow Comm. Labs., Inc., 64 U.S.P.Q.2d 1481 (Fed. Cir. 2002) • Arguments give more leeway to patentees • Festo II on Remand in the Federal Circuit • En banc Rehearing Held on Feb. 6, 2003 ACI's Eighth National Advanced Forum On Litigating Patent Disputes

24. Eagle Comtronics v. Arrow Comm. Labs64 USPQ2d 1481 (Fed. Cir. 2002) • Eagle ‘494 patent: Electrical signal filters to unscramble protected TV signals • Improved cable filter with sealed collet assembly to prevent moisture and other contamination ACI's Eighth National Advanced Forum On Litigating Patent Disputes

25. Eagle Comtronics v. Arrow Comm. Labs64 USPQ2d 1481 (Fed. Cir. 2002) • Examiner rejected claims for collet assembly as being obvious in view of prior art • Eagle:Argued that prior art did not teach use of O-ring seal between front cap and rear insert body • Prior art used sealant at rear of collet assembly ACI's Eighth National Advanced Forum On Litigating Patent Disputes

26. Eagle Comtronics v. Arrow Comm. Labs64 USPQ2d 1481 (Fed. Cir. 2002) • Accused device also has collet assembly to prevent moisture and contamination in filter • One-piece block – no front cap and rear insert body • Eagle alleged DOE infringement • Defendant asserted argument-based estoppel as to location of O-ring seal Accused Device ACI's Eighth National Advanced Forum On Litigating Patent Disputes

27. Eagle Comtronics v. Arrow Comm. Labs64 USPQ2d 1481 (Fed. Cir. 2002) • Federal Circuit • While claim amended, amended-based estoppel not alleged • A filter structure comprising: • . . . • a rear insert body including a rear end portion, • . . . • and a region of the housing that surrounds the rear end portion is not covered by sealant material • Court analyzed for argument-based estoppel • Requires “clear and unmistakable surrender of subject matter” ACI's Eighth National Advanced Forum On Litigating Patent Disputes

28. Eagle Comtronics v. Arrow Comm. Labs64 USPQ2d 1481 (Fed. Cir. 2002) • Traditional PHE analysis applied to argument • What was given up and why • No Festo presumption of surrender • Eagle’s arguments not based on whether claimed collet was made of separable pieces or integral • Argued prior art did not suggest use of seal at interface between collet assembly and filter housing • Did not surrender location of seal elsewhere along interface • Patentee has more leeway with arguments ACI's Eighth National Advanced Forum On Litigating Patent Disputes

29. Festo II on Remand in CAFC • Supreme Court left rebuttal issues unresolved • On remand, CAFC asked parties in Festo II: • Whether rebuttal of presumption of surrender is a question of law for judge or a question of fact for jury • Festo brief, amicus brief by research organizations, argue that rebuttal is factual matter for jury • Defendant SMC, majority of amici, relied on Markman in arguing that rebuttal is legal matter for judge • What factors are encompassed by Supreme Court’s criteria? ACI's Eighth National Advanced Forum On Litigating Patent Disputes

30. Feb. 6, 2003 En Banc Rehearing • 13 Judge panel presided over packed courtroom • Transcript available from BADC • Predictions from exchange of Judges • Rebuttal is mixed Q of fact of law for judge • Analogous to other equitable doctrines like inequitable conduct as • DOE is equitable • PHE is legal limitation on DOE • Mixed standard of review • Deferential “clear error” for underlying facts • De novo for legal issues and interpretations ACI's Eighth National Advanced Forum On Litigating Patent Disputes

31. En Banc Rehearing Predictions • Minimal discussion on rebuttal factors • Festo argued for “subjective” foreseeability test • Knowledge and intent of inventors and attorneys relevant • SMC argued for “objective” standard • No remand is necessary as language to literally claim was available • Original claims encompassed accused SMC device • Festo will probably get remand to develop factual record and make arguments before trial court • CAFC Likely to give some guidance short of treatise ACI's Eighth National Advanced Forum On Litigating Patent Disputes

32. Significant Issues Remain Re Festo Rebuttal Factors • Is foreseeability objective or subjective test? • Knowledge of inventors and attorneys relevant as in Eon Labs.? • What is foreseeability measured against? • Scientifically available data like Excel Pharm. Case? • Result is narrow exception akin to absolute bar • Actual disclosure in patent specification? • Argued by BIO in its amicus brief • What is or should have been disclosed in specification? • Eli Lily argued in its amicus brief that Festo II creates duty to draft a reasonably complete and enabling specification ACI's Eighth National Advanced Forum On Litigating Patent Disputes

33. Significant Issues Remain Re Festo Rebuttal Factors • When is foreseeability measured? • At time of application? • Would capture after-arising technology as equivalents, consistent with current DOE law. • At time of amendment? • More equivalents likely foreseeable, so less DOE. • Is unforeseeability limited to new technology? • Unexpected uses of known technology? • Should standard be different based on technology? • Combination of strict §112, 1st ¶ law and a scientifically based foreseeability test eviscerates DOE in bio/chem. fields. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

34. Tips/Takeaways Strategies For Patentees • Pre-litigation • Premium on high quality patent prosecution • Festo policy requires literally claiming • Argue/Traverse/Appeal -- Don’t amend • Spend more $/time on prosecution to avoid DOE • Festo DOE analysis during investigation phase • Identify amended claim elements subject to Festo • Is narrowing amendment unexplained or for patentability? • Was accused product known before filing of application/amendment? • Then, DOE protection harder to obtain. ACI's Eighth National Advanced Forum On Litigating Patent Disputes

35. Tips/TakeawaysStrategies For Patentees • Litigation • Defer DOE until literal resolved to obviate Festo • Force Defendant to link amendments to accused product distinctions • In Vardon, claim amended exhaustively, but not related to distinctions with accused product • Break claims into small components, limitation by limitation • Be creative • Even if foreseeability turns out to be strict, objective test • “Tangential” and “Other” factors wide open ACI's Eighth National Advanced Forum On Litigating Patent Disputes

36. Tips/TakeawaysLitigation Strategies For Defendants • ID limitations not literally present to position case for early resolution based upon Festo • Can combine Festo into Markman • Avoid improper burden shift • Burden on party seeking to alter plain meaning on literal construction of claims • Burden on patentee under Festo to show narrowing amendment did not surrender equivalent • Consider waiving reliance on presumption • If have strong PHE/DOE case, may avoid need for factual evidence on foreseeability ACI's Eighth National Advanced Forum On Litigating Patent Disputes

37. ACI’s Eighth National Advanced Forum on Litigating Patent Disputes Festo In Litigation What Festo and Its Progeny Mean for Litigation Today . . . and Tomorrow Richard S. Meyer Morgan, Lewis & Bockius LLP 202.739.5751 rmeyer@morganlewis.com Mary T. Huser Bingham McCutcheon 650.849.4914 mary.huser@bingham.com