Module 03 Patent Law

Unit 06:

1. Doctrine of Equivalents
2. Public Dedication Rule
3. Patent Exhaustion
4. Patent Misuse
5. Enforceability of Patent Rights

1. Doctrine of Equivalents

Definition

A means by which a patentee may raise a claim of infringement even though each
and every element of the patented invention is not identically present in the allegedly
infringing product. The purpose of the doctrine is to prevent an infringer from stealing
the benefit of a patented invention by changing only minor or insubstantial details of the
claimed invention while retaining the same functionality. The essential inquiry in
determining equivalency is whether the accused product or process contains elements
identical or equivalent to each claimed element of the patented invention.

The patentee’s exclusive rights are founded upon the text of claims. In practice,
the courts have refused to confine the infringement inquiry to the precise choice of words
of claims. Instead, the scope of the protection may be extended beyond the literal
wording of the claims under the doctrine of equivalents. Under the doctrine, an accused
infringement that presents insubstantial differences from the claimed invention may be
judged an equivalent and therefore an infringement.

The doctrine of equivalents arose to stop competitors who would introduce

insignificant modifications into the claimed invention to avoid literal infringement. So,
every patent infringement case potentially involves the doctrine of equivalents. The
doctrine of equivalents is applied not to the invention as a whole, but to the individual
elements recited in the claims to determine whether insubstantial differential differences
exist between the claimed invention and accused technology.
 However, a patentee may not obtain, through the doctrine of equivalents, claim
coverage that he could not lawfully have obtained from the patent office The prior art
also limits the scope of permissible equivalents of a claim.

In recent cases, the courts are willing to do an additional restraint on the doctrine
of equivalents through stressing that if an accused infringement was foreseeable by a
claim drafter, it is a duty of the drafter to obtain literal protection from the patent office.
The unclaimed subject matter that is disclosed in a patent is considered to have been
disclaimed and dedicated to the public.

The doctrine of equivalents arises in the context of an infringement action. If an

accused product or process does not literally infringe a patented invention, the accused
product or process may be found to infringe under the doctrine of equivalents. The
essential objective inquiry is: “Does the accused product or process contain elements
identical or equivalent to each claimed element of the patented invention?” Warner-
Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997). In determining
equivalence, “[a]n analysis of the role played by each element in the context of the
specific patent claim will thus inform the inquiry as to whether a substitute element
matches the function, way, and result of the claimed element, or whether the substitute
plays a role substantially different from the claimed element.”

In Graver Tank & Mfg. Co. v. Linde Air Prods., Inc., the U.S. Supreme Court
held that a patentee may invoke this doctrine to proceed against the producer of a device
if it performs substantially the same function in substantially the same way to obtain the
same result. See Graver Tank, 339 U.S. 605 (1950). This is often referred to as the
Graver Tank "triple identity" test for equivalence.

The Supreme Court enunciated the "all elements" test for equivalence in Warner-
Jenkinson v. Hilton Davis Chemical Co., 520 U.S. 17 (1997). Under the "all elements"
rule, the doctrine of equivalents must be applied to each individual element of a claim,
not to the invention as a whole. It is necessary to show that every element of the patented
invention, or its substantial equivalent, is present in the accused product or process.

To determine whether a substitute element is the substantial equivalent of an

element in the patented invention, it is necessary to analyze the role played by each
element in the context of the specific patent claim. To ba a substantial equivalent, the
substitute element must match the function, way, and result of the claimed element. A
missing claim element is considered equivalently present if only insubstantial differences
distinguish that element from the corresponding aspects present in the accused device or
process. See Id.

The proper time for evaluating whether an accused element is equivalent to a

claimed element is at the time of infringement, not at the time the patent was issued.
Subsequent changes in the state of the art, such as technologies developed after the date
of invention, will often challenge the definition of a previously essential element or
limitation present in the original invention. See Sage Products, Inc. v. Devon Industries,
Inc., 126 F.3d 1420 (Fed. Cir. 1997).

2. Public Dedication Rule

The patent system promotes the progress of science by rewarding in ventors with a
limited monopoly in exchange for public disclosure of their inventions. Public disclosure
stimulates further innovation and enables others to practice an invention once the patent
expires. A controversial doctrine in patent law called the "dedication rule" deems that
subject matter disclosed in the specification but falling outside the literal scope of the
claims is dedicated to the public.3 Although this doctrine imposes a sometimes harsh
burden on patent drafters to claim all disclosed subject matter, the dedication rule ensures
that the claims of a patent provide clear and explicit notice of the full scope of the
patented invention.

In the recent decision of Johnson & Johnston Associates, Inc. v. R.E. Service
Co.,4 an en banc panel of the Federal Circuit overruled its own precedent, concluding
that the dedication rule should be strictly applied. This Note analyzes the impact of this
decision on the practice of patent law, and concludes that the benefits of a strict
application of the dedication rule outweigh the costs. While the Johnson court did not
specifically define criteria for determining what "disclosed" subject matter may be.
Disclosure-Dedication Rule

Subject matter disclosed in written description but not claimed in patent is dedicated to public,
and cannot be recaptured under doctrine of equivalents. The disclosure-dedication rule requires
an inventor who discloses specific matter to claim it, and to submit the broader claim for
examination. Otherwise, that matter is dedicated to the public and may not be recaptured under
the doctrine of equivalents. The court held that the disclosure-dedication rule is designed to
motivate patentees to draw the broadest claims that they consider to be patentable, and to submit
these broad claims to the PTO for examination. The disclosure-dedication rule, should thereby
serve the important public notice function of patents-the mechanism whereby the public learns
which innovations are the subjects of the claimed invention, and which are in the public domain.
The patentee noted in the specification that “other prior art devices use molded plastic…” The
written description stated that “the elongated strap is made of resilient metal such as stainless
steel although other resilient materials may be suitable for the strap.” These passages
demonstrate that, at the time the inventor applied for ‘239 patent, he knew that other materials,
including plastic, could be used to make “parts” of his invention, and that the inventor asserted
the metal design of the ‘239 patent as an improvement over the prior art. The ‘239 patent,
however, does not claim plastic parts, but instead includes an explicit “metal” limitation. (PSC
Computer Products Inc. v. Foxconn International Inc., 69 USPQ2d 1460, CA FA, 1/20/04).

3. Patent Exhaustion

Patent exhaustion refers to termination of a patent owner’s rights to control the

use of patented product or a process used for making that product. Patent exhaustion
occurs when a patented product is for sale without any conditions. The owner of a patent
has no further rights in the particular product that is sold. The new owner can sell,
destroy, or dispose of that product as s/he would use any other property that s/he owned.
Patent exhaustion is a defense for claims such as a patent infringement claim, prohibiting
a party from suing for patent infringement to protect his/her proprietary rights since the
party is deemed to have already received full compensation for ownership in such rights.

THE DOCTRINE OF PATENT EXHAUSTION

Exhaustion Extinguishes Patent Exclusionary Power Globally

A patent right, a right enforced by an individual country under the laws of that
country, is an exclusionary intellectual property right (IPR) bestowed upon an inventor or
joint inventors for inventing new and non-obvious invention that is useful for the public,
granted by the government of that country, usually represented by an administrative
agency or a branch of the government called “the patent office,” and provides a right to
exclude other from making, using, offering for sale, or selling the invention throughout
the country in which the patent is granted. That IPR is accepted by a majority of the
countries in this world today along with the United States.

The right to use, sell, or import an item exists independently of the Patent Law.
What a patent grants exclusively to the patentee is a limited right to prevent others from
engaging in those practices. Whoever engages in one of these excluded acts, without
authority from the patentee, may face liability for patent infringement. However, when a
patentee sells an item of the product protected by the patent exclusionary right, the
patentee can no longer control that item through the patent laws, i.e., its patent rights
have been “exhausted,” in other words the so-called “doctrine of patent exhaustion”
applies to extinguish the patent exclusionary right to that particular item sold. For over
160 years, this doctrine has imposed a limit on the patent right and extinguished the
exclusionary right, even when a patentee sells an item under an express, otherwise lawful
restriction, the patentee does not retain patent rights in that product. The law is well
settled that an authorized sale of a patented product places that product beyond the reach
of the patent.

The exhaustion rule marks the point where patent rights yield to the common law
principle against restraints on alienation. The Patent Act promotes innovation by allowing
inventors to secure the financial rewards for their inventions. Once a patentee sells an
item, it has secured that reward, and the patent laws provide no basis for restraining the
use and enjoyment of the product. Allowing further restrictions would run afoul of the
“common law’s refusal to permit restraints on the alienation of chattels.” Patent
exhaustion reflects the principle that, when an item passes into commerce, it should not
be shaded by a legal cloud on title as it moves through the marketplace.

Exhaustion is a distinct limit on the patent grant, which is triggered by the

patentee’s decision to give a patented item up for whatever fee it decides is appropriate.
The patentee may not be able to command the same amount for its products abroad as it
does in the United States. But the Patent Act does not guarantee a particular price.
Instead, the Patent Act just ensures that the patentee receives one reward—of whatever it
deems to be satisfactory compensation—for every item that passes outside the scope of
its patent monopoly.

The exhaustion doctrine is not a presumption about the authority that comes along
with a sale. It is a limit on the scope of the patentee’s rights. The Patent Act gives
patentees a limited exclusionary power, and the exhaustion doctrine extinguishes that
power. A purchaser has the right to use, sell, or import an item because those are the
rights that come along with ownership, not because it purchased authority to engage in
those practices from the patentee.

Nevertheless, if the patentee negotiates a contract restricting the purchaser’s right

to use or resell the item, it may be able to enforce that restriction under the contract law.
Many manufacturers or distributors place restrictions on the resale of their goods.
Generally, these restrictions will be found legal if there is a "reasonable business
objective" and there is no "adverse effect on competition.” Some examples of restrictions
that are usually upheld are: A requirement that the distributor sell or not sell to certain
customers; A requirement that the distributor conduct business only in certain areas; A
requirement that the distributor sell only at certain specific locations. These restrictions
will usually be a part of the distributorship agreement and will be enforced by cutting off
supplies of the manufacturers goods or terminating the distributorship contract.

Since many distributorship contracts may include covenants not to compete which
may limit the ability of the distributor to work for a competitor, this can be a significant
punishment. Sale for resale includes the sale of goods which will be resold in their
original form, in an altered form, or as a part or ingredient of another article. A sale of
goods which the seller knows, or has reasonable cause to believe, will be resold after
processing or manufacture is a sale for resale. The most common restriction that is not
enforceable is a restriction on resale price maintenance. This restriction is a requirement
that the distributor sell the product at a minimum set price level. This requirement
prevents resellers from competing too fiercely and driving down profits and reduces the
ability of buyers to choose from sellers with independent prices; it is a violation of
competition and antitrust laws.

Thus, the patentee’s decision to make a sale is all that matters for the doctrine of
patent exhaustion to apply to extinguish the patent right to exclude. Contractual
restrictions and locations have been irrelevant to this doctrine for the past 160 years.

4. Patent Misuse

“Patent misuse” is perhaps one of the most “misused” phrases in patent law.
When faced with a patent lawsuit or even just a cease-and-desist letter, accused infringers
who disagree with the patent holder’s actions often ask whether they can counter the
infringement accusation with a claim of patent misuse.

Which leads to the question: what exactly is “patent misuse” in U.S. patent law?

Patent misuse can occur when a patent holder improperly tries to expand the scope of the
patent in a way that has an anti-competitive effect. (See B. Braun Med., Inc. v. Abbott
Labs, 124 F.3d 1419, 1426 (Fed. Cir. 1997).) Patent misuse requires more than just
aggressive litigation tactics or disagreement as to whether or not an accused product
actually infringes: “the defense of patent misuse is not available to a presumptive
infringer simply because a patentee engages in some kind of wrongful commercial
conduct.” Princo Corp. v. International Trade Commission and U.S. Philips Corp.616
F.3d 1318, 1329 (Fed. Cir. 2010) (en banc). Because patent misuse typically requires an
anti-competitive effect, courts give the doctrine a “narrow scope.” Id. Even a finding of
anti-competitive effect may not be sufficient to find that patent misuse occurred.
One situation that courts have considered to be patent misuse is that in which a patent
holder forced customers to buy un-patented products in exchange for a patent license
(also known as “patent tying”). Another example is where a patent holder forced
customers to pay royalties even though the patent was expired, although this example
may be short-lived based on the Supreme Court’s recent decision to hear an appeal that
challenges this long-standing example of patent misuse.

The Patent Act does not define patent misuse. Instead, it’s a judicially-created,
equitable doctrine that finds roots in a Supreme Court decision from 1917. However,
Section 271(d) of the Patent Act does list a number of activities that are not patent
misuse. These include:

1. seeking to enforce patent rights against infringement or contributory

infringement;
2. refusing to license or use any rights to the patent; or
3. conditioning a license or sale on the acquisition of a license to rights in
another patent or purchase of a separate product (unless, in view of the
circumstances, the patent owner has market power in the relevant market for
the patent or patented product on which the license or sale is conditioned).

A question remains as to whether patent misuse can be raised as a claim in an

independent action, or whether it is merely a defense to infringement. A recent court
decision from Northern District of Illinois highlighted how even U.S. courts don’t always
answer this question in a consistent manner. In Continental Automotive GmbH et al v.
iBiquity Digital Corporation, the plaintiff held a license from the patent holder. The
plaintiff stopped paying royalties under the license agreement and filed the suit to seek a
declaratory judgement of non-infringement. The suit also raised several other claims,
including patent misuse and sought damages associated with the claim.

The court dismissed the claim of patent misuse. However, the court
acknowledged that the law governing patent misuse is not entirely settled: “courts
disagree on whether patent misuse can constitute a claim, not just a defense. . . . Some
courts view [the B. Braun opinion] as allowing an affirmative claim of patent misuse so
long as the plaintiff does not seek damages. . . . Others read B. Braun as rejecting patent
misuse as an affirmative claim regardless of whether it seeks a declaratory, injunctive, or
compensatory relief.” In this case, however, the court dismissed the claims and stated
that “there is no disagreement among the courts that patent misuse doctrine cannot be
asserted for monetary relief.”

5. Enforceability of Patent Rights

Enforcement of Patent Rights

In most systems, a patent is the right enforceable in a court, usually to prevent the
manufacture, sale and use of a patented invention. It is not, as many people think,
permission to practice the patented invention, which may be subject to restrictions for
other reasons such as security or public health. Application is made to the court to stop
the unauthorized manufacture, sale or use of the invention, so that the court may grant the
appropriate order and stop the infringement. In practice, however, the process is less
straightforward than it sounds.

Assessing the Scope of Patent Rights

When thinking about patent enforcement, a patentee must first assess what he has
patented. It is now a feature of just about all patent systems that a patent must include
either a specification containing claims or a description, claims or any required drawings
(depending on the terminology of the particular law). In most systems, the claims are
decisive, as they define the scope of protection sought and eventually granted through the
patent. The specification or the description and drawings may be used to interpret the
claims, which must be fully supported by them.

Most inventors use the services of a patent attorney to write the specification for
them. An inventor may not fully understand the specification, and particularly may have
difficulties in understanding the claims. Even where the patentee has some idea of the
exclusive right granted to him in his own country, it is very rare for him to know with any
precision what rights he may have in corresponding patents in other jurisdictions. The
patentee’s first real understanding of the extent of his patent rights often only comes to
him when he is considering enforcement.
 Thus the basis for enforcement of patent rights is established at the start of the
patenting process when the patent specification is written by the inventor or the
inventor’s patent attorney. The examination process in the Patent Office can modify the
original wording. The inventor will normally try to avoid any modification which will
result in a limitation of the scope of protection, for any reduction in the scope of
protection makes it easier for a competitor to avoid infringement. If a competitor can
easily supply the market with something that is equivalent to the invention, but does not
infringe the patent, then the patent may be of limited commercial value. Patent Office
examiners should try to remember this when an applicant for a patent steadfastly resists
amending his claims in order to overcome an objection, but instead tries to deal with the
objection by argument. While acceding to an amendment might lead to the early grant of
a patent on the application, it may also lead to a patent right of doubtful commercial
utility.

Evaluating Validity and Infringement of a Patent

Having assessed the scope of the patent right, the next task is for the patentee to
decide if there is infringement. Before committing himself to the financial risk of a patent
case — which can be among the most time-consuming and expensive of all forms of
litigation — a patentee, unless he is very wealthy and relaxed about money, must make
some attempt to forecast whether he can be successful.

The issue of infringement is very rarely considered on its own. Patents, like other
forms of intellectual property, do not only affect the parties to a dispute; they have an
effect on the public at large. This being the case, it is normally considered that a patent
which can be shown to be invalid cannot be enforceable. In spite of the examination of
patent applications during prosecution, no patent system guarantees the validity of a
granted patent. In a patent enforcement action, therefore, a defendant will usually add to
any defense of non-infringement a further defense, often in the form of a counterclaim,
that the patent is invalid and hence not enforceable even if infringed. In some
jurisdictions, the issues of infringement and validity are heard together. In others, the
question of validity is heard separately by a different court or it may be referred to the
Patent Office.
 Because of the principle that no invalid patent should be enforceable, the
defendant in a patent action is usually allowed to bring in evidence of invalidity at any
stage of the proceedings, and in some jurisdictions even during the trial itself. As a result,
the position of the patentee during patent enforcement proceedings tends to deteriorate as
a defendant makes searches and often finds evidence which is relevant to validity.

As already stated, the task of the court in the determination of infringement is the
assessment of the scope of protection defined by the patent and whether the alleged
infringement falls within that assessed scope. In the determination of validity, the court
(or whatever tribunal is considering validity) should take the same scope of protection as
has been defined for the purposes of infringement, and consider whether the evidence
produced by the defendant renders the patent invalid with respect to, and to the extent of,
the scope of protection claimed by the patentee. Different issues will almost always arise
in these two assessments. The starting point for both, however, is almost always the
wording of the claims.

Frequently, there will be a problem as to whether the actual wording of the

claims, if necessary interpreted in light of the specification (or the description and any
drawings), defines an invention which includes the allegedly infringing subject matter.
For example, the claim may include as a feature “a spring.” If the allegedly infringing
device does not include a spring, but instead has a solid rubber tube which in some
respects acts like a spring, can that be infringement? Different jurisdictions may handle
this kind of question differently, depending on the way in which their law has developed
the procedure for the definition of an invention. In addition, many courts require or
expect the assistance of an expert to give guidance as to the technical merit of an
argument, such as, based on the example above, that a rubber tube can be considered to
fall within the term, “spring.”

The technical content in many patent cases can be very complex indeed, and the
resolution of the technical points of dispute may not only involve one or more expert witnesses,
but may need experimental evidence as well. For instance, in a case concerning the alleged
infringement of a patent granted for an invention consisting of an air plasma cutting torch, the
claim included a feature which defined what was happening within the torch when it was
operated. To prove infringement, an experiment was necessary to define the temperature gradient
of the plasmagenic air within the torch itself. A probe inserted into the torch has the effect of
modifying the air flow through the torch, which in turn will affect the temperature gradient. A
better means of evaluation is thermal imaging, but it is expensive to set up. No sooner has one
side carried out experiments, than the other side may feel obliged to carry out experiments
themselves to check the worth of the first set of experiments or with the aim of disproving the
first experiments.

Assisted by arguments, which in turn are supported by expert evidence and experimental
evidence, the court will reach a conclusion about whether or not an infringement has occurred.
But most patents contain more than one claim. The inclusion of a number of claims is to give the
patentee extra chances of preventing an infringement. If one claim is held invalid, the patentee
may still succeed in restraining infringement if it is held that another claim is valid and an
infringement has occurred with respect thereto. Where the patent in suit has a number of claims
with respect to which the patentee alleges an infringement, the court will have to consider each
claim separately to see if it is infringed.

Similar expert evidence and experiments may be needed in order to deal with validity.
Using the “spring” example given above, it may be that the defendant can show that it was
known before the date of the patent to use a member having elastic properties in some respects
similar to a spring. As with the determination of infringement, the court will need to decide
whether the known information is sufficient to invalidate the claims; and that exercise needs to
be carried out for all the claims.

The Cost of Patent Litigation

Whether the submission and evidence concerning infringement and validity are made in
writing or given orally at a hearing, or a combination of both, the parties to a patent dispute will
find themselves involved in lengthy consideration of the issues and preparation of material for
the court. It is mainly the borderline cases that go to trial. This has the effect of extending the
arguments by which each side hopes to secure a decision in its favor. Where the patent dispute
occurs in a field of high commercial value, and most disputes are because of their high cost, the
parties may be inclined to drag any point into the dispute, however peripheral, if it appears to
help their case. The costs arising from all of this can become outrageous.
 This is really the key point about patent enforcement. However carefully one makes an
estimate of the costs at the start of the litigation, they almost invariably have to be revised
upwards as new issues come to light during the development of the case. Patent enforcement, or
defense against enforcement, occurs because someone wishes to receive a commercial
advantage, in other words, to make money. That advantage must constantly be reviewed against
the cost of the litigation.