ARTICLE - American University Law Review

ARTICLETHE COURT OF APPEALS FOR THEFEDERAL CIRCUIT: A FIFTHANNIVERSARY LOOK AT ITSIMPACT ON PATENT LAWAND LITIGATION*GERALD SOBEL**TABLE OF CONTENTSIntroduction ................................................ 1089I. Validity ................................................ 1092A. The Presumption of Validity ....................... 10921. The prior standard ............................. 10922. The federal circuit standard .................... 1093B. Obviousness ....................................... 10941. The prior standard ............................. 10942. The federal circuit standard .................... 1095a. Commercial success and other objectivecriteria ..................................... 1096b. Hypothetical person of ordinary skill in art . 1097c. Hindsight ................................... 1098d. Combining references ...................... 1098e. Public policy to eliminate invalid patents .... 1100C. The On-Sale Bar .................................. 11011. The prior standard ............................. 11012. The federal circuit standard .................... 1102D. Licensee Declaratory Judgment Actions ............ 11031. The prior standard ............................. 1103© 1988 Gerald Sobel** Member of the firm of Kaye, Scholer, Fierman, Hays & Handler, New York, NewYork. The writer gratefully acknowledges the assistance of Michael C. Stuart and David A.Einhorn.1087

1088 THE AMERICAN UNIVERSITY LAw REVIEW[Vol. 37:10872. The federal circuit standard .................... 1104II. Infringem ent .......................................... 1105A. Experimental Use ................................. 11051. The prior standard ............................. 11052. The federal circuit standard .................... 1106B. Infringement of Means Claims ..................... 11071. The prior standard ............................. 11072. The federal circuit standard .................... 1108C. The Doctrine of Equivalents ....................... 11091. The prior standard respecting file wrapperestoppel ....................................... 11092. The federal circuit standard .................... 11113. The prior standard respecting "Invention As AW hole" ...... ................................. 11134. The federal circuit standard .................... 1114III. R elief ................................................. 1117A. Preliminary Injunctions ............................ 11171. The prior standard ............................. 11172. The-federal circuit standard .................... 1119B. Permanent Injunctions ............................. 11201. The prior standard ............................. 11202. The federal circuit standard .................... 1121C. Willful Infringement-Increased Damages-Attorneys' Fees .................................... 11231. The prior standard ............................. 11232. The federal circuit standard .................... 1124D. Damages-Reasonable Royalties ................... 11271. The prior standard ............................. 11272. The federal circuit standard .................... 1128IV. Affirmative Defenses ................................... 1129A. Fraud During Prosecution ......................... 11291. The prior standard ............................. 11292. The federal circuit standard .................... 1130a. M ateriality .................................. 1131b. Intent ...................................... 1133c. Cure of fraud ............................... 1133B. Patent M isuse ..................................... 11341. The prior standard ............................. 11342. The federal circuit standard .................... 1135V . Privilege ............................................... 1137A. The Attorney-Client Privilege ...................... 11371. The prior standard ............................. 1137

1988] THE FEDERAL CIRCUIT: A FiFrH ANNIVERSARY LOOK 10892. The federal circuit standard .................... 1138Conclusion ................................................. 1139INTRODUCTIONThe United States Court of Appeals for the Federal Circuit hasbeen the sole appellate court for patent cases for approximately fiveyears.' The Federal Circuit inherited this role from the UnitedStates Court of Customs and Patent Appeals, and the federal appellatecourts. Enough time has elapsed to warrant a review of thecourt's impact on the patent jurisprudence.The federal circuit's interpretations of particular governing principlesof patent law reflect a series of significant shifts from and amplificationsof prior constructions by the courts of appeals in theother twelve circuits-and, indeed, from some prior rulings of theSupreme Court. Some of the salient changes include:First, a climate more favorable to upholding the validity, and particularlythe non-obviousness of patents has emerged. 2 For example,the court has strengthened the statutory presumption ofvalidity. 3 In addition, circumstantial evidence of non-obviousness(such as commercial success) has been elevated to possibly the mostprobative objective indicia of non-obviousness, in contrast to theSupreme Court's relegation of such evidence to a "secondary" categorywhich "may be relevant." 4Second, as a result of the court's strengthening of the presumptionof validity and elevation of secondary considerations, there hasbeen a corresponding increase in the likelihood of relief against infringement.5 Similarly, the threat of liability for willful infringementhas increased, and good faith reliance on the advice of counsel is acrucial factor in averting such liability. At the same time, the courthas modified the standard for preliminary injunctive relief to be a"likelihood of success" on the merits as in non-patent cases, and hasreduced the possibility that permanent injunctive relief might be deniedto a patentee who prevailed after trial.Third, the court has created additional defense opportunities foralleged infringers. For example, the court has broadened the in-1. See Federal Courts Improvement Act, Pub. L. No. 97-164, 96 Stat. 25 (1982) (creatingfederal appellate court with subject matter jurisdiction for patent, government contract,merit system protection, tax, trademark, and international trade cases).2. See supra notes 23-68 and accompanying text (citing Federal Circuit cases addressingstatutory presumption of validity and obviousness).3. See 35 U.S.C. § 282 (1982) (stating that patents are presumed valid).4. See Graham v. John Deere Co., 383 U.S. 1, 17-18, 148 U.S.P.Q. 459, 467 (1966)(describing secondary considerations in context of patentability standards).5. See 35 U.S.C. § 271 (1982) (establishing cause of action for patent infringement).

1090THE AMERICAN UNIVERSrTY LAW REvIEw[Vol. 37:1087quiry with respect to whether a device was on sale more than oneyear before the filing of the patent application for purposes of a barand has abandoned the reduction to practice requirement. Whileendorsing "the total of technological changes" from the patent inan accused apparatus as the basis for non-infringement by inequivalence,the court withdrew its prior endorsement of reliance on"the invention as a whole" for infringement by equivalence for an"improvement in a crowded art."Fourth, the court has exhibited sensitivity to prosecution lapses inupholding fraud defenses. The court has stressed mispresentationswhich a "reasonable" examiner would have found "important," balancedthe level of materiality against the level of intent, and suggesteda way to cure a previous misrepresentation duringprosecution.Fifth, the court has suggested a narrow reading of attorney-clientprivilege which might treat some lawyer's opinions as notprivileged.Sixth, the establishment of a single appellate court for patentcases has inevitably diminished the wasteful forum shopping and relatedmotions which characterized the prior practice. Because theFederal Circuit now has appellate jurisdiction for all patent cases,litigants are less likely to choose a district court based on its controllingappellate court's hostility to upholding patents. The prior practiceinvolved cross motions to stay and change venue between thepatentee who sued for infringement in the court which he believedfavored his case and the alleged infringer who sued for declaratoryjudgment of invalidity of the patent and non-infringement in hischosen court. Typically related discovery respecting contacts witheach jurisdiction was conducted and the whole process sometimesreached levels of expenditures of resources and money almost comparableto those attributable to the expenses for proceeding on themerits.The changes brought about by the Federal Circuit have profoundpractical effects not only in patent infringement litigation, but alsoin the design of new products and in licensing negotiations.Although the court has preserved defenses to infringement and enhancedsome of them, the overriding change has been on the validityissue. The increased likelihood of success on the critical issue ofvalidity has transformed the outlook in patent infringement litigationfor patentees. The likelihood of suits for infringement isgreater, and the likelihood and authority with which patentees willmake threats of suit is correspondingly greater.

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOx 1091Infringers, therefore, have been required to increase their assessmentsof the likelihood of litigation and of the risk of loss from ajudgment of infringement. Old decisions to proceed with productsthat were made when the courts were hostile to upholding patentsmay be vulnerable. New products now must receive careful assessmentfrom an infringement perspective. Prudence requires right touse studies to minimize jeopardy to large investments and to qualifyas defenses to increased damages for willful infringement if an infringementcase is lost. When a patentee is willing to license, he willoften be better able to force an agreement on an infringer. By thesame token, infringers will often see licensing as an option moreattractive than litigation.In the aggregate, the court has brought about a philosophicalchange which strengthens the patent system. The setting in whichthis has occurred is significant. As the nation's basic manufacturingindustries suffer from competition with foreign suppliers, our abilityto innovate new products and processes has become of utmost economicimportance. The relative value of intangible technical knowledgehas grown as basic manufacturing has moved to lower-costareas abroad.Innovation is a risky, costly, and lengthy endeavor. The searchfor technological advance requires originality, persistence, money,and manpower. As the process is pursued towards the developmentof prototypes and then commercialization of saleable products, theresources required mount sharply. The risk of failure is ever-present.Studies of American economic growth by economists haveidentified innovation as a major source of that growth; a much moresignificant factor than, for example, the intensification of the use ofcapital. 6 Indeed, recently, innovation has been identified as the distinctiveforce stimulating economic growth in the Western worldsince the Middle Ages. 7The patent system stimulates invention and commercialization byproviding a seventeen-year exclusive right to the invention. 8 Thisexclusive right can be exploited to provide financial rewards to patentowners and investors who are able to successfully commercialize6. See F.M. SCHERER, INDUSTRIAL MARKET, STRUCTURE AND ECONOMIC PERFORMANCE407-08 (2d ed. 1980) (citing survey which reveals that innovation is strong stimulant forgrowth in economy).7. See generally N. ROSENBERG & L.E. BIRDZELL, JR., How THE WEST GREW RICH: THEECONOMIC TRANSFORMATION OF THE INDUSTRIAL WORLD (1986).8. See 35 U.S.C. § 154 (1982) (stating that patent grant provides one with right to preventothers from making, using, or selling invention throughout United States).

1092 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087their inventions. The net effect of the Federal Circuit's work, therefore,has been to strengthen the incentive to innovate.This Article will address the principal changes from the prior lawmade by the Federal Circuit in its approximately first five years concerningvalidity, infringement, relief, affirmative defenses, andprivilege.1. The prior standardI. VALIDITYA. The Presumption of ValidityFor purposes of patent litigation the Patent Code presumes thevalidity of patents. 9 Various appellate courts required that the allegedinfringer overcome the statutory presumption of validity by apreponderance of the evidence, or by substantial evidence.' 0 TheSecond Circuit noted that the presumption of validity served only toshift the burden of proof to the party asserting invalidity and tocause resolution of any reasonable doubt on the issue of validity infavor of the patentee." The court further stated that the validitypresumption carried no independent evidentiary weight and had noeffect on the standard of evidence that determined the issue.' 2 Thisview was grounded in skepticism about the efficacy of the ex partepatent examination process.' 39. See 35 U.S.C. § 282 (1982). Section 282 provides that:A patent shall be presumed valid. Each claim of a patent (whether in independent,dependent, or multiple dependent form) shall be presumed valid independently ofthe validity of other claims; dependent or multiple dependent claims shall be presumedvalid even though dependent upon an invalid claim. The burden of establishinginvalidity of a patent or any claim thereof shall rest on the party asserting suchinvalidity.Id. According to the legislative history, § 282 was to enact the presumption of patent validityrecognized by courts but never expressed in a statute. S. REP. No. 1979, 82d Cong., 2d Sess.8249, reprinted in 1952 U.S. CODE CONG. & ADMIN. NEWS 2394, 2402-03.10. See, e.g., Clark Equip. Co. v. Keller, 570 F.2d 778, 795, 197 U.S.P.Q. 209, 218 (8thCir.) (requiring alleged infringer to provide substantial evidence of patent invalidity), cert.denied, 439 U.S. 825 (1978); Dickstein v. Seventy Corp., 522 F.2d 1294, 1297, 187 U.S.P.Q.138, 140 (6th Cir. 1975) (using preponderance of evidence standard to refute presumed validityof patent), cert. denied, 423 U.S. 1055 (1976); L & A Prods. Inc. v. Britt Tech Corp., 365F.2d 83, 86, 150 U.S.P.Q. 770, 773 (8th Cir. 1966) (noting that presumption of validity maybe overcome by substantial evidence); see also Woodstream Corp. v. Herter's Inc., 446 F.2d1143, 1149 n.4, 170 U.S.P.Q. 380, 384 n.4 (8th Cir. 1971) (referring to multitude ofvaryingbut high standards of evidence necessary to overcome presumption of patent validity).11. Carter-Wallace, Inc. v. Davis-Edwards Pharmacal Corp., 443 F.2d 867, 871 n.4, 169U.S.P.Q. 625, 627 n.4 (2d Cir. 1971), cert. denied, 412 U.S. 929 (1973); see also Lorenz v. F.W.Woolworth Co., 305 F.2d 102, 105, 134 U.S.P.Q. 152, 154 (2d Cir. 1962) (interpreting patentstatute as not requiring that presumption of validity receive same weight as actual evidence).12. Lorenz v. F.W. Woolworth Co., 305 F.2d 102, 105, 134 U.S.P.Q. 152, 154 (2d Cir.1962).13. See Carter-Wallace, Inc. v. Davis-Edwards Pharmacal Corp., 443 F.2d 867, 871-72,

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1093Other appellate courts, however, imposed a heavier burden ofproof upon alleged infringers to rebut the statutory presumption ofvalidity. 14 These courts required parties asserting invalidity to produceclear and convincing evidence to overcome the presumption ofvalidity. The courts qualified this standard by acknowledging that achallenger could weaken the presumption of validity by demonstratingthat the patent examiner did not review all of the relevant priorart references during prosecution of the application for patent.' 52. The federal circuit standardThe Federal Circuit has adopted a standard for burden of proofunder which the infringer challenging the validity of a patent has theburden to introduce clear and convincing evidence of invalidity. 16Moreover, the statutorily assigned burden of proof cannot beshifted. 1 7 Unlike certain of the earlier cases, 1 8 the introduction ofprior art not previously considered during prosecution does notweaken or otherwise affect the presumption of validity. 19 The burdenof proof necessary to overcome the presumption of validitydoes not shift downward to a "mere preponderance. ' 20 Neverthe-169 U.S.P.Q. 625, 627 (2d Cir. 1971) (commenting on discrepancy between courts and Patentand Trademark Office (PTO) standard of patentability).14. See, e.g., Houston v. Polymer Corp., 637 F.2d 617, 620, 209 U.S.P.Q. 31, 33 (9th Cir.1980); Tights, Inc. v. Acme-McCrary Corp., 541 F.2d 1047, 1054, 191 U.S.P.Q. 305, 308 (4thCir.), cert. denied, 429 U.S. 980 (1976); Gaddis v. Calgon Corp., 506 F.2d 880, 885, 184U.S.P.Q. 449, 452 (5th Cir. 1975); Laser Alignment, Inc. v. Woodruff& Sons, Inc., 491 F.2d866, 871, 180 U.S.P.Q. 609, 612 (7th Cir.), cert. denied, 419 U.S. 874 (1974); Moore v. Schultz,491 F.2d 294, 298, 180 U.S.P.Q. 548, 551 (10th Cir.), cert. denied, 419 U.S. 930 (1974).15. See, e.g., Sidewinder Marine, Inc. v. Starbuck Kustom Boats & Prods., 597 F.2d 201,206. 202 U.S.P.Q. 356, 361 (10th Cir. 1979); Reynolds Metals Co. v. Acorn Bldg. Components,Inc., 548 F.2d 155, 160, 192 U.S.P.Q. 737, 741 (6th Cir. 1977); Forbro Design Corp. v.Raytheon Co., 532 F.2d 758, 762, 190 U.S.P.Q. 49, 52 (1st Cir. 1976); Parker v. Motorola,Inc., 524 F.2d 518, 521 (5th Cir. 1975), cert. denied, 425 U.S. 975 (1976).16. Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 730 F.2d1452, 1459, 221 U.S.P.Q. 481, 486 (Fed. Cir. 1984) (citing RCA v. Radio Eng'g Labs, Inc.,293 U.S. 1 (1934)); see Raytheon Co. v. Roper Corp., 724 F.2d 951, 960, 220 U.S.P.Q. 592,599 (Fed. Cir. 1983), cert. denied, 469 U.S. 835 (1984).17. Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 730 F.2d1452, 1459, 221 U.S.P.Q. 481,486 (Fed. Cir. 1984); see ACS Hospital Supply, Inc. v. MontefioreHosp., 732 F.2d 1572, 1574-75, 221 U.S.P.Q. 929, 930-31 (Fed. Cir. 1984) (stating thatpresumption of validity not destroyed regardless of facts of record and burden always remainson party asserting invalidity); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1534, 218U.S.P.Q. 871, 875 (Fed. Cir. 1983) (stating that party asserting validity has no initial burdento prove validity).18. See supra note 15 (citing decisions wherein court weakened presumption of validityupon introduction of unconsidered prior art).19. Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1566, 220 U.S.P.Q. 97,100 (Fed. Cir. 1983).20. Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 730 F.2d1452, 1459, 221 U.S.P.Q. 481, 486 (Fed. Cir. 1984). The Federal Circuit's view on this issueis that "[a] patent is born valid. It remains valid until a challenger proves it was stillborn orhad birth defects, or it is no longer viable as an enforceable right." Roper Corp. v. Litton

1094 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087less, the clear and convincing standard may be easier for a challengerto meet when such new prior art is more pertinent than theprior art already of record. 2 1The Federal Circuit has thus taken the Patent Code's presumptionof validity literally and, by doing so, has given credibility to the decisionsreached in the ex parte examination procedure of which manyprior courts were basically skeptical. 221. The prior standardB. ObviousnessIt is fundamental that one cannot obtain a patent to a novel inventionif the differences between the subject matter sought to be patentedand the prior art are such that "the subject matter as a wholewould have been obvious at the time the invention was made to aperson having ordinary skill in the art to which said subject matterpertains." 23 This standard in section 103 of the Patent Code is implicitin the concept of invention and distinguishes an invention,which warrants an award of a property right, from the routine, whichdoes not.In 1966 the United States Supreme Court, in Graham v. JohnDeere, 24 definitively set forth the factors to be taken into account indetermining obviousness. Under the Court's broad standard, thefollowing factors must be considered: (1) the scope and content ofthe prior art; (2) the differences between the prior art and the claimsat issue; and (3) the level of ordinary skill in the pertinent art. 25 TheSystems, Inc., 757 F.2d 1266, 1270, 225 U.S.P.Q. 342, 347 (Fed. Cir. 1985); see also AmericanHoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359-60, 220 U.S.P.Q. 763, 770(Fed. Cir. 1984), cert. denied, 469 U.S. 821 (1984).21. See Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1566, 220 U.S.P.Q,97, 100 (Fed. Cir. 1983) (predicting that party challenging patent validity is more likely tomeet standard of proof if unconsidered prior art is more relevant than cited prior art).22. See Surface Technology, Inc. v. United States Int'l Trade Comm'n, 801 F.2d 1336,1339, 231 U.S.P.Q. 192, 195 (Fed. Cir. 1986) (noting that administrative law judge correctlyheld that party asserting invalidity of patent must prove invalidity by clear and convincingevidence). The view of the Federal Circuit, in contrast to certain views found in prior law, isthat the PTO is:a qualified government agency presumed to have properly done its job, which includesone or more examiners who are assumed to have some expertise in interpretingthe references and to be familiar from their work with the level of skill in the artand whose duty it is to issue only valid patents... . Deference is due the Patent andTrademark Office decision to issue the patent with respect to evidence bearing onvalidity which it considered ....American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359-60, 220 U.S.P.Q.763, 770-71 (Fed. Cir.), cert. denied, 469 U.S. 821 (1984).23. 35 U.S.C. § 103 (1982 & Supp. III 1985).24. 383 U.S. 1, 148 U.S.P.Q. 459 (1966).25. Graham v.John Deere, 383 U.S. 1, 17, 148 U.S.P.Q. 459, 467 (1966).

1988] THE FEDERAL CIRcurr: A FIFrH ANNIVERSARY LOOK 1095Court also noted that the obviousness determination could take intoaccount "secondary considerations" including (1) commercial success;(2) long felt but unsolved needs; and (3) the failure of others tosolve the specific problem. 26 As "indicia of obviousness or non-obviousness,"the Supreme Court stated, "these inquiries may haverelevancy." 27 Perhaps because the Court in Graham characterizedthese factors as "secondary" and not compulsory subjects in the obviousnessinquiry, the result often was that even strong circumstantialevidence of non-obviousness was rejected as insufficient to tipthe scales in favor of non-obviousness. 282. The federal circuit standardThe Federal Circuit has elevated the secondary considerationsdiscussed in Graham to "objective" considerations that comprise "afourth factual inquiry under Graham which must be resolved beforecoming to a conclusion concerning obviousness. ' 29 Once a nexusbetween the merits of the claimed invention and the evidence of anysecondary considerations is clear, 30 the secondary considerations26. It at 17-18, 148 U.S.P.Q. at 467.27. lId, 148 U.S.P.Q at 467. The Supreme Court also specifically rejected the test thatfound an invention new and not obvious if the device revealed a "flash of creative genius, notmerely the skill of the calling." I at 15, 148 U.S.P.Q. at 466.28. In fact, the Supreme Court itself held that an invention that filled a long felt needand had enjoyed commercial success was nonetheless obvious (and thus unpatentable) under§ 103, absent an invention. Anderson's-Black Rock, Inc. v. Pavement Savage Co., 396 U.S.57, 61, 163 U.S.P.Q. 673, 674 (1969); see also Exer-Genie, Inc. v. McDonald, 453 F.2d 132,136, 177 U.S.P.Q. 277, 280 (9th Cir. 1971) (stating that secondary considerations could notfill gap when patentable invention lacking), cert. denied, 405 U.S. 1075 (1972); Inject-O-MeterMfg. v. North Plains Fertilizer & Chem., Inc., 439 F.2d 1138, 1142 n.21, 169 U.S.P.Q. 70, 74n.21 (5th Cir.) (noting that evidence of need and commercial success is of secondary importanceonly, and cannot alone support patentability), cert. denied, 404 U.S. 824 (1971); ScottPaper Co. v. Fort Howard Paper Co., 432 F.2d 1198, 1204, 167 U.S.P.Q. 4, 9 (7th Cir. 1970)(ruling that trial court's failure to consider long felt need and commercial success did notrequire reversal), cert. denied, 401 U.S. 913 (1971).29. See Vandenberg v. Dairy Equipment Co., 740 F.2d 1560, 1567, 224 U.S.P.Q. 195,199 (Fed. Cir. 1984). In W.L Gore & Assocs., Inc. v. Garlock, Inc., the court stated that theobjective evidence could be the most relevant, probative, and revealing evidence available todetermine the obvious/non-obvious issue and should always be an integral part of the analysis.W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1555, 220 U.S.P.Q. 303, 315(Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984); see Raytheon Co. v. Roper Corp., 724 F.2d951, 961, 220 U.S.P.Q. 592, 600 (Fed. Cir. 1983) (referring to commercial success as onefactor, among others, constituting probative, objective criteria to form foundation for nonobviousness),cert. denied, 469 U.S. 835 (1984); Hughes Aircraft Co. v. United States, 717 F.2d1351, 1360, 219 U.S.P.Q. 473, 479-80 (Fed. Cir. 1983) (stating that, inter alia, long-felt needfilled by invention and commercial success provided evidence of non-obviousness). The ultimateconclusion under § 103 is one of law. Panduit Corp. v. Dennison Mfg., 810 F.2d 1561,1567, 1 U.S.P.Q.2d 1593, 1596 (Fed. Cir. 1987).30. See Cable Elec. Prod., Inc. v. Genmark, Inc., 770 F.2d 1015, 1027, 226 U.S.P.Q. 881,887 (Fed. Cir. 1985) (holding that nexus between invention claimed and secondary considerationsis necessary to give such considerations substantial weight in analysis).

1096 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087should always receive consideration in the obviousness analysis.3'Accordingly, the Federal Circuit has given secondary factors a major,sometimes dispositive, role in the section 103 analysis.a. Commercial success and other objective criteriaThe Federal Circuit's consideration of commercial success illustratesthe heightened status of the secondary factors. In W.L. Gore &Associates, Inc. v. Garlock, Inc.,32 the Federal Circuit reversed a lowercourt's finding of obviousness in view of a $60 million annual salesfigure and unchallenged testimony establishing that the patented artificialveins were the most significant synthetic material then existingin vascular surgery. 33 The court stated that the evidence ofcommercial value or success, and uniqueness of the invention madethe patented product the most important in its field. 3 4Similarly, the Federal Circuit relied upon commercial success aswell as other objective evidence in Panduit Corp. v. Dennison ManufacturingCo. 35 The patented cable tie device in controversy was an outstandingcommercial success with over $50 million in annual sales,the unquestioned leader in the market, and "the most successful inthe history of the industry." 36 In addition, the record showed thatthe alleged infringer was a large corporation with many engineerson its staff that had tried for years but failed to create a superiorcable tie, had not copied a prior art device, and had found it neces-31. See Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1380, 231U.S.P.Q. 81, 90 (Fed. Cir. 1986) (ruling that objective evidence must always receive considerationin § 103 analysis), cert. denied, 107 S. Ct. 1606 (1987); W.L. Gore & Assocs., Inc. v.Garlock, Inc., 721 F.2d 1540, 1555, 220 U.S.P.Q. 303, 314 (Fed. Cir. 1983) (criticizing lowercourt's finding of obviousness before considering objective evidence), cert. denied, 469 U.S.851 (1984); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1539, 218 U.S.P.Q. 871, 879(Fed. Cir. 1983) (stating that obviousness inquiry should include all evidence pertinent tonon-obviousness). The Federal Circuit has approved consideration of sales outside theUnited States on the issue of commercial success. See Lindemann Maschinenfabrik GmbH v.American Hoist & Derrick Co., 730 F.2d 1452, 1461, 221 U.S.P.Q. 481, 487 (Fed. Cir. 1984)(considering revenues from invention's worldwide sales).32. 721 F.2d 1540, 220 U.S.P.Q. 303, 315 (Fed. Cir. 1983), cert. denied, 469 U.S. 851(1984).33. W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1555-56, 220 U.S.P.Q.303, 315-16 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984); see Lindemann MaschinenfabrikGmbH v. American Hoist & Derrick Co., 730 F.2d 1452, 1461, 221 U.S.P.Q. 481, 487 (Fed.Cir. 1984) (considering inventor's worldwide revenues).34. W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d at 1555-56, 220 U.S.P.Q. 303,315 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).35. 774 F.2d 1082, 227 U.S.P.Q. 337 (Fed. Cir. 1985), vacated, 475 U.S. 809, 229U.S.P.Q. 478 (1986), aff'g in part and rev "g in part its prior opinion, 810 F.2d 1561, 1 U.S.P.Q.2d1593 (Fed. Cir.), cert. denied, 107 S. Ct. 2187 (1987).36. Panduit Corp. v. Dennison Mfg. Co., 774 F.2d 1082, 1085, 1095, 227 U.S.P.Q. 337,338, 345, vacated, 475 U.S. 809, 229 U.S.P.Q. 478 (1986), aff'g in part and rev'g in part its prioropinion, 810 F.2d 1561, 1 U.S.P.Q.2d 1593 (Fed. Cir.), cert. denied, 107 S. Ct. 2187 (1987).

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1097sary to copy the cable tie of the claims in suit.3 7 Under these circumstances,the Federal Circuit reversed a finding of obviousness bythe district court. 38Long-felt need, inability to solve the problem, and commercialsuccess were the factors which led the Federal Circuit in Alco StandardCorp. v. Tennessee Valley Authority 3 9 -in the clearest illustration ofits elevation of secondary evidence-to conclude that secondaryconsiderations established the non-obviousness of an inventioneven when the invention seemed obvious in view of the prior art. 40In addition, the Federal Circuit has underscored the adage thatcopying can be the sincerest form of flattery. The court held thatthe fact that an accused infringer had abandoned its use of the priorart machines in favor of the machine covered by the patent in issuewas evidence of the non-obviousness of the patented invention. 41b. Hypothetical person of ordinary skill in artThe obviousness analysis proceeds under section 103 with referenceto a hypothetical person of ordinary skill in the art, and not theinventor or a person with the inventor's particular skill. 42 It is acommon litigation problem for patentees to have the inventor, whofrequently takes the stand, testify about what would have been obviousto him and have that testimony used as the measure of "obviousness"for purposes of the case. 43 The Federal Circuit, therefore,has emphasized that the inventor has a higher level of skill thansomeone of "ordinary skill in the art" and what would have been37. Id. at 1095-96, 227 U.S.P.Q. at 345-46.38. Id. at 1096, 1100, 227 U.S.P.Q. 345, 348-49. See generally Marky, "Why Not the Stat-Utle?" J. PAT. OFF. Soc'y 331 (1983) (criticizing analysis under § 103 that discounts evidenceof, for example, commercial success, fulfillment of a long-felt need, failure of others, recognitionby competitors, and disbelief by experts).39. 808 F.2d 1490, 1501, 1 U.S.P.Q.2d 1337, 1345 (Fed. Cir. 1986).40. Alco Standard Corp. v. Tennessee Valley Auth., 808 F.2d 1490, 1501, 1 U.S.P.Q. 2d1337, 1345 (Fed. Cir. 1986).41. See Windsurfing Int'l, Inc. v. AMF, Inc., 782 F.2d 995, 1000, 228 U.S.P.O. 562, 565(Fed. Cir. 1986) (reaffirming principle that copying indicates non-obviousness); Panduit v.Dennison Mfg. Co., 774 F.2d 1082, 1099, 227 U.S.P.Q. 337, 348-49 (Fed. Cir. 1985) (statingthat copying is strong evidence of non-obviousness); Carl Schenck, A.G. v. Norton Corp., 713F.2d 782, 782, 218 U.S.P.Q. 698, 701 (Fed. Cir. 1983) (concluding that employment of patentedinvention by others indicates non-obviousness); cf Cable Elec. Prods., Inc. v. Genmark,Inc., 770 F.2d 1015, 1027-28, 226 U.S.P.Q. 881, 889 (Fed. Cir. 1985) (cautioning that forcopying to be indicative of non-obviousness, it must be adequately proven); Vandenburg v.Dairy Equip. Corp., 740 F.2d 1560, 1567, 224 U.S.P.Q. 195, 199 (Fed. Cir. 1984) (notingother factors that show copying not indicative of non-obviousness).42. See 35 U.S.C .§ 103 (1982 & Supp. III 1985) (stating that for invention to be patentable,it could not have been obvious to one of ordinary skill in art at time invention was made).43. See Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 874, 228 U.S.P.Q. 90, 99 (Fed. Cir.1985) (holding that subjective testimony of inventor should not compel finding ofobviousness).

1098 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087obvious to the highly skilled inventor would not necessarily havebeen obvious to one of ordinary skill. 44c. HindsightAll patent infringement cases are obviously decided after the inventionand, therefore, necessarily employ hindsight. 45 The FederalCircuit has stressed the need to avoid the unfairness of "insidious"hindsight to "imbue one of ordinary skill in the art with knowledgeof the invention in suit, when no prior art reference or references ofrecord convey or suggest that knowledge." 46d. Combining referencesThe Federal Circuit has criticized the ready combination of referencesto conclude obviousness without a predicate for the combination.47 Thus, a conclusion of obviousness reached by combining theteachings of different references in the prior art absent some teachingsupporting the combination is inappropriate. 48 This rule imposeson infringers the burden to justify the combination ofreferences.For example, in W.L. Gore & Associates, Inc. v. Garlock, Inc., 49 theFederal Circuit criticized the district court for piecing together a"mosaic" of separate references to support its finding of obviousness.50 The only references showing the claimed inventive featureof fast stretching of Teflon fiber related to other44. Id., 228 U.S.P.Q. at 99; see Bausch & Lomb, Inc. v. Barnes-Hind/Hydrocurve Inc.,796 F.2d 443, 447-50, 230 U.S.P.Q. 416, 419 (Fed. Cir. 1986) (concluding that obviousnessissue should focus on hypothetical person of ordinary skill in art), cert. denied, 108 S. Ct. 85(1987); Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 454, 227 U.S.P.Q. 293,298 (Fed. Cir. 1985) (deciding that obviousness analysis requires reference to hypotheticalperson of ordinary skill and what that person would have been able to do with knowledge ofprior art).45. Illustrative of pre-Federal Circuit treatment of hindsight are Northern Eng. & PlasticsCorp. v. Eddy, 652 F.2d 333, 337, 210 U.S.P.Q. 784, 787 (3d Cir. 1981) (invalidatingpatent on insufficiency of prior art while stating that court must avoid tendering every pureconcept "obvious" just because invention is fundamentally simple), cert. denied, 454 U.S. 1146(1982), and Reinke Mfg. Co., v. Sidney Mfg. Corp., 594 F.2d 644, 651, 201 U.S.P.Q. 344, 350(8th Cir. 1979) (holding patent claims invalid for reason of obviousness although court statedthat to deny patentability in every case would be sanctioning use of hindsight).46. W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540, 1553, 220 U.S.P.Q. 303,312-13 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).47. See Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 730 F.2d1452, 1462, 221 U.S.P.Q. 481, 488 (Fed. Cir. 1984).48. See ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1577, 221 U.S.P.Q.929, 933 (Fed. Cir. 1984); see also W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540,1553, 220 U.S.P.Q. 303, 312-13 (Fed. Cir. 1983) (criticizing use of hindsight analysis under§ 103), cert. denied, 469 U.S. 851 (1984).49. 721 F.2d 1540, 220 U.S.P.Q. 303 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).50. See id. at 1552, 220 U.S.P.Q. at 312 (stating that district court did not explain whymosaic would have been obvious to one skilled in art).

1988] THE FEDERAL CIRcurr: A FIFTH ANNIVERSARY LOOK 1099thermoplastics, and the conventional wisdom for Teflon taught theopposite. 51 There was nothing in the prior art that suggested thecombination. 52Similarly, in Hybritech Inc. v. Monoclonal Antibodies, Inc., 53 the FederalCircuit rejected a trial court's substitution of an element disclosedin one reference for an element in a combination disclosed ina second reference as impermissible "obvious to try" techniques.There, the court reversed the district court's holding that a sandwichassay using monoclonal antibodies for determining concentrationof an antigenic substance in a fluid was obvious. 54 Prior artreferences separately disclosed the use of polyclonal antibodies insandwich assays and the method of producing monoclonal antibodies.The Federal Circuit rejected references discussing use ofmonoclonal antibodies in immunoassays because they "do not suggesthow that end might be accomplished." 55 The Federal Circuitwent on to reject the district court's approach that certain referencesmade it "obvious to try monoclonal antibodies of the claimedaffinity in a sandwich immunoassay that detects the presence of orquantitates antigen." '56On the subject of substituting the claimed point of novelty for anelement in a prior art reference to show the obviousness of theclaimed invention, the court was critical and favored focusing "onthe invention as a whole." ' 57 The court also evinced a willingness toclosely examine many prior art references and to emphasize distinctionsof the claimed invention from each. 58On the other hand, "non-obviousness cannot be established byattacking references individually where the rejection is based upon a51. Id at 1551, 220 U.S.P.Q. at 312.52. Id., 220 U.S.P.Q. at 312.53. 802 F.2d 1367, 1379-80, 231 U.S.P.Q. 81, 90-91 (Fed. Cir. 1986), cert. denied, 107 S.Ct. 1606 (1987); see In re Merck & Co., 800 F.2d 1091, 1097, 231 U.S.P.Q. 375, 379 (Fed. Cir.1986) (rejecting obvious to try analysis).54. Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1381, 231 U.S.P.Q.81, 90-91 (Fed. Cir. 1986), cert. denied, 107 S. Ct. 1606 (1987).55. Id at 1380, 231 U.S.P.Q. at 91.56. Id., 231 U.S.P.Q. at 91. According to the court, the "obvious to try" analysis is inappropriatefor adjudicating issue of obviousness. Id., 231 U.S.P.Q. at 91.57. Id at 1383, 231 U.S.P.Q. at 93. The court stated that:Focusing on the obviousness of substitutions and differences instead of on the inventionas a whole, as the district court did in frequently describing the claimed inventionas the mere substitution of monoclonal for polyclonal antibodies in a sandwichassay, was a legally improper way to simplify the difficult determination ofobviousness.Id., 231 U.S.P.Q. at 93.58. Id., 231 U.S.P.Q. at 93. The court described the 20 references relied upon by thedistrict court in Hbntech to show obviousness by noting that the references "skirt all aroundbut do not as a whole suggest the claimed invention .... Id., 231 U.S.P.Q. at 93.

1100 THE AMERICAN UNIVERSITY LAw REvIEw[Vol. 37:1087combination of references. ' 59 In In re Merck & Co., Inc. 60 the courtupheld an obviousness determination by the Patent Office on an antidepressantdrug which was structurally similar to a prior art drugexcept for the replacement of a nitrogen atom for an unsaturatedcarbon atom. 61 The court, in this instance, accepted that structuralsimilarity could lead to an expectation that compounds similar instructure will have like properties. 62e. Public policy to eliminate invalid patentsA countervailing consideration in assessing obviousness is thepublic policy that "federal law requires that all ideas in general circulationbe dedicated to the common good unless they are protectedby a valid patent." 63 The Federal Circuit also has recognizedthis policy. 6 4The court was not stopped by the doctrine of resjudicata from rejectingthe validity of a patent based on subsequently discoveredfraud in the Patent Office in Thompson-Hayward Chemical Co. v. Rohmand Haas Co. 65 A damage award was overturned against an infringerbased on a finding in a later case of fraud in obtaining the patent insuit, even though the infringer had not contested the validity of thepatent and fraud had not been raised by him. 66 Although the infringer'sappeal based on invalidity would have been barred by "thegeneral proposition that conceded or unappealed issues are not reviewable,"the court allowed the public policy in favor of candor inthe Patent Office to override this rule. 6759. In re Merck & Co., Inc., 800 F.2d 1091, 1097, 231 U.S.P.Q. 375, 380 (Fed. Cir. 1986).60. Id.61. Id at 1098-99, 231 U.S.P.Q. at 380-81.62. Id. at 1096, 231 U.S.P.Q. at 379. The theory of "Bioisoterism" teaches that whenatoms or groups of atoms are replaced with other atoms or groups of atoms of similar size,shape, and electron density, the resulting molecule may have the same type of biological activity.Id, 231 U.S.P.Q. at 379. On the other hand, it must be recognized that bioisoterism isoften not a valid predictor of activity.63. Lear v. Adkins, 395 U.S. 653, 668, 162 U.S.P.Q 1, 5 (1969).64. See Nestier Corp. v. Menasha Corp., 739 F.2d 1576, 1581, 222 U.S.P.Q. 747, 751(Fed. Cir. 1984). The court stated that "[t]here is a stronger public interest in the eliminationof invalid patents than in the affirmation of a patent as valid, at least in part because patentsmaintain a presumption of validity."65. 745 F.2d 27, 32, 223 U.S.P.Q. 690, 695 (Fed. Cir. 1984).66. Thompson-Hayward Chem. Co. v. Rohm & Haas Co., 745 F.2d 27, 33,223 U.S.P.Q.690, 694 (Fed. Cir. 1984).67. See id. at 33, 223 U.S.P.Q. 694. The court stated that:The Court [in Lear] noted "the important public interest in permitting full and freecompetition in the use of ideas which are in reality a part of the public domain."[395 U.S. 653, 670, 80 S. Ct. at 1911, 162 U.S.P.Q. at 8 (1969).] In Lear, the public'sinterest in allowing challenges to invalid patents was determined to prevail over theprinciples of contract law. In Crystal, we recognized that "[slurely, a very importantpolicy consideration is to discourage all manner of dishonest conduct in dealing withthe PTO." [Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1571, 220

1988] THE FEDERAL CIRcurr: A FiF-H ANNIVERSARY LOOK 1101In another case, the court affirmed an International Trade Commission(ITC) holding of invalidity based upon the same prior artconsidered in the patent's prosecution. In Surface Technology v.United States International Trade Commission, 68 the patent had been allowedby the Patent Office after a "tortuous and laborious prosecution"during which the patent had been reissued, subsequentlyreexamined and allowed only after the submission of three affidavitssubmitted to overcome a rejection by the Patent Examiner based onthe prior art. 69 The Federal Circuit observed that subsequent testimonyof two of the affiants during the ITC proceeding indicatedthat statements in their affidavits were questionable and probablywere based upon a lack of understanding of the legal term"obvious." 70The aggregate of the Federal Circuit's treatment of the obviousnessissue of section 103 is probably the most important changeit has made. Its significance is heightened by the court's willingnessto alter Supreme Court doctrine less favorable to patent validity.Salient among the specific shifts are use of circumstantial evidenceas a powerful vehicle for sustaining patents and close scrutiny ofwhether a combination of references which add up to the inventioncan be combined at all. Both increase the likelihood of upholdingthe validity of patents.1. The prior standardC. The On-Sale BarFederal courts typically held that in order for one to invoke theon-sale bar under 35 U.S.C. § 102(b), the device offered for salemore than one year prior to the application filing date must havebeen reduced to practice. 71 A sale of such a device more than oneU.S.P.Q 289, 301 (1983).] Given the particular circumstances in this case, the publicinterest in enforcing adherence to the duty of candor in the PTO. .. [is] paramountover the proprieties of pleading practice.Id., 223 U.S.P.Q. 694.68. 801 F.2d 1336, 1339-41, 231 U.S.P.Q. 192, 195-96 (Fed. Cir. 1986).69. Surface Technology v. U.S.I.T.C., 801 F.2d 1336, 1339, 231 U.S.P.Q. 192, 195 (Fed.Cir. 1986).70. Id. at 1340, 231 U.S.P.Q. at 196.71. See In re Corcoran, 640 F.2d 1331, 1333, 3208 U.S.P.Q. 867, 870 (C.C.P.A. 1981)(invalidating patent application for material in manufacture of roller blinds because of priorsale and obviousness of practice); Timely Prods. Corp. v. Aaron, 523 F.2d 288, 302, 187U.S.P.Q. 257, 267 (2d Cir. 1975) (holding "reduction to practice" requirement expressedprinciple that invention cannot be offered for sale until completed); see also Barmag BarmerMaschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 837, 221 U.S.P.Q. 561, 565-66(Fed. Cir. 1984) (finding that offer to sell invention before physical completion of inventiondoes not start the running of one year time period). See generally J.A. LaPorte, Inc. v. NorfolkDredging Co., 787 F.2d 1577, 1583, 229 U.S.P.Q. 435, 439 (Fed. Cir.) (finding third party's

1102 THE AMERICAN UNIVERSITY LAW REvIEW[Vol. 37:1087year prior to the application for a patent could prevent the issuanceof (or invalidate) a patent if, in addition to the reduction to practicerequirement, the invention claimed was embodied in, or was obviousin view of, the device offered for sale; and the sale was primarilyfor profit rather than experimental purposes. 722. The federal circuit standardThe Federal Circuit in UMC Electronics v. United States, 73 however,held that actual reduction to practice is not an absolute requirementof the on-sale bar. 74 The Federal Circuit decided that activitiesbefore the critical date (one year prior to the application date) weresufficient to invoke the on-sale bar, even though the invention wasnot reduced to practice before the critical date. 75 After commentingthat prior precedent only appeared to require reduction to practice,the court held that although reduction to practice is "an importantanalytical tool in on-sale analysis," it should not constitute an absoluterequirement of the on-sale bar. 76 The court stated that theanalysis should consider all of the circumstances surrounding thesale or offer to sell, and that these circumstances must be consideredand weighed against the policies underlying section 102(b). 77promotion of device embodying claimed invention was a sale more than one year prior toapplication thus rendering patent invalid), cert. denied, 107 S. Ct. 274 (1986); Western MarineElec. Inc. v. Furuno Elec. Corp., 764 F.2d 840, 844, 226 U.S.P.Q. 334, 338 (Fed. Cir. 1985)(holding patents on fishing boat sonars invalid because on sale more than one year beforepatent application filed); King Instrument Corp. v. Otari Corp., 767 F.2d 853, 859-60, 226U.S.P.Q. 402, 407 (Fed. Cir. 1985) (holding patent for "shift lock" device used in loadingcassettes invalid as having been on sale more than one year prior to date of application forpatent), cert. denied, 475 U.S. 1016 (1986).72. See Timely Prods. Corp. v. Aaron, 523 F.2d 288, 302, 187 U.S.P.Q. 257, 267-68 (2dCir. 1975); Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831,837-38,221 U.S.P.Q. 561, 564-67 (Fed. Cir. 1984).73. 816 F.2d 647, 2 U.S.P.Q.2d 1465 (Fed. Cir. 1987).74. Ume Elecs. v. United States, 816 F.2d 647, 657, 2 U.S.P.Q.2d 1465, 1471 (Fed. Cir.1987).75. Id., 2 U.S.P.Q.2d at 1471. Prior to the critical date, plaintiff (the inventor's employer)responded to a Navy proposal by offering to supply its UMC-B accelerometer (at astated price) after building an engineering prototype which differed from the claimed invention.After the critical date, plaintiff submitted a technical proposal (which described themodel in detail and included test results and schematics) and gave a demonstration of itsdevice to the Navy. The court explained that because there was no physical embodimentcontaining all limitations of the claimed invention before the critical date (as the court belowfound and the parties did not dispute), there could not have been a reduction to practice. Id.,2 U.S.P.Q.2d at 1471.76. Id. at 656, 2 U.S.P.Q2d at 1471. The court found that:A holding that there has or has not been a reduction to practice of the claimed inventionbefore the critical date may well determine whether the claimed invention was infact the subject of the sale or offer to sell or whether a sale was primarily for anexperimental purpose. A holding that there is a reduction to practice of the claimedinvention may, of course, lighten the burden of the party asserting the bar.Id., 2 U.S.P.Q.2d at 1471.. 77. Id., 2 U.S.P.Q.2d at 1471-72.

1988] THE FEDERAL CIRCurr: A FIFiT ANNIVERSARY LOOK 1103Under the facts before it, the court in UMC Electronics ruled thatthe plaintiff's commercial activities, the degree to which the inventionwas developed, the substantial embodiment of the invention,the testing that satisfied the inventor that his invention would actuallywork, and the nature of the inventor's contribution to the particularart collectively triggered the on-sale bar. 78In a vigorous dissent, Judge Smith accused the majority of ignoringa long line of precedent that provided specific guidelines for inventorsto follow. 79 He opined that the majority's decision wouldlead to the filing of more patent applications "on sketchy concepts,before they have been reduced to practice and before the inventorknows whether or not the invention will work, or whether it is worthdeveloping," 80 which "disserve[s] both the inventing and the usingcommunities.""'In short, the Federal Circuit opted for breadth rather than certaintyin the application of the on-sale bar requirement by decidingto look to all the circumstances of the sale or offer to sell. Thecourt, however, did not indicate how the change in law bore on thepolicy underlying the on-sale bar. It is not, for example, clear thatan effort to sell when an invention has not yet been reduced to practicewarrants dedication to the public and precludes the issuance ofa patent.1. The prior standardD. Licensee Declaratoy Judment ActionsIn Lear v. Adkins 8 2 the Supreme Court held unenforceable a provisionin a patent license agreement that prohibited the licensee fromchallenging the validity of the licensed patent. 88 Thus, the Court'sdecision in Lear permits a licensee to file an action for a declaratoryjudgment that the licensed patent is invalid. In addition, a licensee78. Id. at 657, 2 U.S.P.Q.2d at 1472. The court pointed to certain critical considerationsand the respective burdens of proof:the challenger has the burden of proving that there was a definite sale or offer to sellmore than one year before the application for the subject patent, and that the subjectmatter of the offer to sell fully anticipated the claimed invention or would have renderedthe claimed invention obvious by its addition to the prior art. If these facts areestablished, the patent owner is called upon to come forward with an explanation ofthe circumstances .... [such as that he] had merely a conception ... [or that he] wasparticipating in experimental testing.Id. at 656-57, 2 U.S.P.Q.2d at 1472.79. Id. at 658-59, 2 U.S.P.Q.2d at 1473 (Smith, J., dissenting).80. Id at 664, 2 U.S.P.O.2d at 1478.81. Id at 665, 2 U.S.P..2d at 1478.82. 395 U.S. 653 (1969).83. Lear v. Adkins, 396 U.S. 653, 162 U.S.P.Q. 1 (1969).

1104THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087can defend an infringement suit arising out of the licensee's failureto make royalty payments to the licensor by claiming invalidity ofthe patent that forms the basis of the license agreement.Prior to the creation of the Federal Circuit, the courts of appealswere divided as to (1) whether a licensee could sue for a declarationof invalidity while continuing to benefit from the license and payingroyalties pursuant to the terms of the license agreement, or(2) whether the licensee had to cease paying royalties and breachthe license agreement before challenging the validity of the patentand thus, risk termination of the license and a suit for patent infringement.For example, in Thiokol Chemical Corp. v. Burlington Industries,Inc. ,84 the Third Circuit held that while a license agreementwas in effect the licensee did not have a reasonable apprehension ofan impending infringement suit, and therefore there was no case orcontroversy that could form the basis for federal jurisdiction. 85 TheSecond and Seventh Circuits, however, held that even though thelicensee continued to pay royalties under the license agreement,there was still a litigable controversy. 8 62. The federal circuit standardIn C.R. Bard, Inc. v. Schwartz, 8 7 the Federal Circuit relied on thepolicy underlying the decision in Lear to encourage challenges topatents and explicitly rejected the Third Circuit's approach in Thiokol.88 The court held that a patent licensee could bring a federaldeclaratory judgment action to declare invalid the patent subject tothe license without first terminating the license agreement. 89In Cordis Corp. v. Medtronic, Inc. 90 the Federal Circuit, however, didnot go so far as to permit the licensee to pay royalties into escrow in84. 448 F.2d 1328, 171 U.S.P.Q. 193 (3d Cir. 1971), cert. denied, 404 U.S. 1019 (1972).85. Thiokol Chem. Corp. v. Burlington Indus., Inc. 448 F.2d 1328, 171 U.S.P.Q. 193 (3dCir. 1971), cert. denied, 404 U.S. 1019 (1972).86. Precision Shooting Equip. Co. v. Allen, 646 F.2d 313, 210 U.S.P.Q. 184 (7th Cir.),cert. denied, 454 U.S. 964 (1981); Warner-Jenkinson Co. v. Allied Chem. Corp., 567 F.2d 184,193 U.S.P.Q. 753 (2d Cir. 1977).87. 716 F.2d 874, 219 U.S.P.Q. 197 (Fed. Cir. 1983).88. C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 880, 219 U.S.P.Q. 197, 202-03 (Fed. Cir.1983).89. Id., 219 U.S.P.Q. at 203. The court stated:We reject the blanket approach of Thiokol that there can never be an apprehension ofa federal infringement suit and thus no controversy when a license is still in effect.To always require the termination of a license agreement as a precondition to suitwould mean that a licensee must then bear the risk of liability of infringement. Thiswould discourage licensees from contesting patent validity and would be contrary tothe policies expressed in Lear. As stated in Lear, licensees are often the only oneswith sufficient interest in a patent to contest its validity.Id., 219 U.S.P.Q. at 203.90. 780 F.2d 991, 228 U.S.P.Q. 189 (Fed. Cir. 1985), cert. denied, 106 S. Ct. 1971 (1986).

1988] THE FEDERAL CIRCurr: A FIFH ANNIVERSARY LOOK 1105order to preserve the license while it challenged the licensed patent.The court vacated a district court's order allowing the licensee todeposit all future royalty payments due to the licensor in an escrowaccount and enjoining the licensor from terminating the licenseagreement because of the licensee's failure to make royalty payments.The court concluded:We believe that if the plaintiffs [licensees] wish to continue to invokethe protections of their licensing agreements, they should berequired to continue paying their royalties. Ultimately all royaltiespaid after the filing of the complaint may have to be returnedto the plaintiffs .... It would not be fair for the plaintiffs to beallowed simultaneously to reap all the benefits of the licensingagreement and to deprive the licensor of all his royalties. 91Thus, to encourage challenges to the validity of licensed patentsthe Federal Circuit has conferred the advantage of honoring a licenseagreement on licensees even though they can simultaneouslychallenge the validity of the patent forming the basis of the license.The court, however, declined to disadvantage the licensor further;accordingly, if the licensee stops payment of royalties to the licensor,the licensor may elect to terminate for breach of the licenseagreement.II. INFRINGEMENT1. The prior standardA. Experimental UseThe experimental use defense to liability for patent infringement,which permits unlicensed experimentation of a patented inventionwithout giving rise to liability for patent infringement, originated inan opinion by Supreme Court Justice Story while on circuit in Massachusetts.In Whittemore v. Cutter 92 Justice Story upheld a trialjudge's instruction to a jury that an infringer must have an intent touse a patented invention for profit. 93 Subsequent cases similarly didnot permit the experimental use defense if the use was commercial91. Id., 228 U.S.P.Q. at 192 (quoting Warner-Jenkinson Co. v. Allied Chem. Corp., 567F.2d 184, 188, 193 U.S.P.Q. 753, 757 (2d Cir. 1977)) (emphasis in original). In Cordis, thelicensee made no showing that the patentee was financially irresponsible or might be judgmentproof at the end of the litigation. lId at 996, 228 U.S.P.Q. at 192. By failing to commentupon this possibility, the Federal Circuit has not determined the availability of an escrowaccount in the case of an insolvent licensor.92. 29 F. Cas. 1120, 1121 (C.C.D. Mass. 1813) (No. 17,600).93. Id. Justice Story believed that holding experimental activity as giving rise to liabilityfor infringement would be contrary to the legislative intent behind creating liability for patentinfringement. Id

1106 THE AMERICAN UNIVERSITY LAw REVIEW[VOI. 37:1087in nature. 94These decisions reflect the public policy favoring free disseminationof information and scientific inquiry, unless commercial activityimpairs the patentee's reward. 952. The federal circuit standardIn Roche Products, Inc. v. Bolar Pharmaceutical Co. ,96 the Federal Circuitheld that the experimental use defense was appropriate only incases in which the experiments were not commercial in purpose. 97The defendant in Roche tested a patented drug, before the plaintiff'spatent expired, for purposes of submitting clinical data to the Foodand Drug Administration (FDA). 98 The defendant was attemptingto obtain FDA approval of its version of the drug prior to the expirationof the patent so it could market the drug as soon as the patentexpired. 99 The Federal Circuit determined that this type of use wasnot "experimental" but commercial in nature, and held that the usewas an infringing one. 1 00 Thus, the Federal Circuit has essentiallyadopted the commercial use test which existed prior to the court'screation.94. See Spray Refrigeration Co. v. Sea Spray Fishing, Inc., 322 F.2d 34, 36-37, 138U.S.P.Q. 470, 472 (9th Cir. 1963) (finding patent infringement when fishing vessel used patentedmethods experimentally but while engaged in commercial fishing expedition); see alsoPitcairn v. United States, 547 F.2d 1106, 1125-26, 192 U.S.P.Q. 612, 625 (Ct. Cl. 1976) (notingthat experimentation of patented invention consistent with legitimate business of infringernot entitled to experimental use defense), cert. denied, 434 U.S. 1051 (1978); Dugan v.Lear Avia., Inc., 55 F. Supp. 223, 229, 61 U.S.P.Q. 404, 410 (S.D.N.Y. 1944) (finding noinfringement when defendant built device only experimentally and had not manufactured orsold it), aft'd, 156 F.2d 29, 69 U.S.P.Q. 357 (2d Cir. 1946); Douglas v. United States, 181U.S.P.Q. 170, 177 (Ct. Cl. Tr. Div. 1974) (concluding that government's use of devices insystematic program over a long period of time to serve its own business falls outside scope ofpermissible use), aft'd, 510 F.2d 364, 184 U.S.P.Q. 613 (Ct. Cl.), cert. denied, 423 U.S. 825(1975); R.C.A. v. Andrea, 15 F. Supp. 685, 687, 30 U.S.P.Q. 194, 196-97 (E.D.N.Y. 1936)(holding that use was step towards manufacture and sale of product although proposed purposewas to determine operability of invention).95. See R.C.A. v. Andrea, 15 F. Supp. 685, 687, 30 U.S.P.Q. 194, 195 (E.D.N.Y. 1936)(stating that while guarding patentee's exclusive rights, court will ignore appropriation foramusement or scientific purposes).96. 733 F.2d 858, 862-63, 221 U.S.P.Q. 927, 939-41 (Fed. Cir.), cert. denied, 469 U.S. 856(1984).97. Roche Prods., Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, 863, 221 U.S.P.Q.937, 941 (Fed. Cir.), cerl. denied, 469 U.S. 856 (1984).98. Id. at 860, 221 U.S.P.Q. at 941.99. Id., 221 U.S.P.Q. at 941.100. Id. at 863, 221 U.S.P.Q. at 941. The court decided that the experimental use doctrinedid not warrant a construction so broad as to permit a violation of patent rights underguise of scientific curiosity when this curiosity has commercial purposes. Id, 221 U.S.P.Q. at941. Since Roche, Congress has amended the Patent Act to permit certain testing for FDAapproval without infringing and to define certain FDA filings as infringement. 35 U.S.C.§ 271 (1982).

1988] THE FEDERAL CIRCUIT: A FIFrH ANNIVERSARY LOOK 1107B. Infringement of Means Claims1. The prior standardUnder section 112 of the Patent Code a claim may describe elementsof the invention generally as "means" for accomplishing astated function, without recital of particular structure. 10 1 Accordingto the statute, such claims cover the structure described in the patentspecification and equivalents. Prior to the establishment of theFederal Circuit, courts had difficulty determining whether to givemeans claims their literal broad interpretation, 10 2 or whether tolimit their interpretation of the claims by reference to the embodimentsdescribed in the specification of the patent.For example, in Decca Ltd. v. United States, 10 3 the United StatesCourt of Claims held that it is necessary to consider the structuretaught in the specification to determine whether a patented inventionexpressed in means plus function claim language has been infringed.'0 4 The construction of the patent claim will encompass"the disclosed structure and equivalents of that structure." 10 5 Sixyears later, however, the Court of Claims appeared to reverse itsposition by holding that means claims, like all other patent claims,are not "in any way limited" by structural features in thespecification. 106Shortly after, in Lockheed Aircraft v. United States, 10 7 the Court ofClaims once again modified its position. Specifically, the court, indictum, stated that it is proper to refer to the specification even ifthis would result in a narrower interpretation of the claims than thebroad language of the claims would indicate. 108 Similarly, in HaleFire Pump v. Tokai Ltd. 1 09 the Court of Customs and Patent Appeals101. Section 112 of the Patent Code provides that:[aln element in a claim for a combination may be expressed as a means or step forperforming a specified function without the recital of structure, material, or acts insupport thereof, and such claims shall be construed to cover the correspondingstructure, material or acts described in the specifications and equivalents thereof.35 U.S.C. § 112 (1982).102. The doctrine of equivalents provides that even in the absence of "literal infringement,"a device infringes a claim of a patent if it performs substantially the same function insubstantially the same way to obtain substantially the same result. Graver Tank & Mfg. Co. v.Linde Air Prods. Co., 339 U.S. 605, 608 (1950).103. 420 F.2d 1010, 164 U.S.P.Q. 348 (Ct. Cl. 1970), cert. denied, 400 U.S. 865 (1971).104. Decca Ltd. v. United States, 420 U.S. 1010, 1014, 164 U.S.P.Q. 348, 351 (Ct. Cl.1970), cert. denied, 400 U.S. 865 (1971).105. Id, 164 U.S.P.Q. at 351.106. Decca Ltd. v. United States, 544 F.2d 1070, 1080, 191 U.S.P.Q. 439, 447 (Ct. Cl.1976), cert. denied, 454 U.S. 819 (1981).107. 553 F.2d 69, 193 U.S.P.Q. 449 (Ct. Cl. 1977).108. Lockheed Aircraft v. United States, 553 F.2d 69, 81, 193 U.S.P.Q. 449, 458 (Ct. Cl.1977).109. 614 F.2d 1278, 205 U.S.P.Q. 123 (C.C.P.A. 1980).

1108 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087stated that if the accused device is not the same as the best modedisclosed in the specification, principles of equivalency shouldapply. 1102. The federal circuit standardThe Federal Circuit articulated a broad "invention as a whole"standard for limiting the reach of infringement of means clauses inTexas Instruments, Inc. v. United States International Trade Commission."The patent in suit, which was owned by Texas Instruments, hadclaims to the miniature electronic calculator framed in a series ofmeans clauses.' 12 Subsequent to the filing of the original patent application,each recited means of the claimed combination had undergonesubstantial technological advancement. 113The Federal Circuit acknowledged that each individual means ofthe accused devices, considered separately, were probably"equivalent" under section 112.114 Noting that the determinationof claim scope includes equitable considerations, however, the courtheld that the technological changes in the accused devices distinguishedthem from the claimed invention when the claimed inventionwas considered "as a whole."' 1 5 The court concluded that thetotal of these technological changes exceeded equitable limits and,therefore, removed the accused devices from the literal scope of the110. Hale Fire Pump v. Tokai Ltd., 614 F.2d 1278, 1283, 205 U.S.P.Q. 123, 125 (C.C.P.A.1980); see 35 U.S.C. § 112 (1982) (requiring that patent specification set forth best mode ofusing invention contemplated by inventor).111. 805 F.2d 1558, 231 U.S.P.Q. 833 (Fed. Cir. 1986).112. Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 805 F.2d 1558, 1561,231 U.S.P.Q. 833, 834 (Fed. Cir. 1986). Claim one described the calculator in means plusfunction language as comprising the combination, with a battery, of an electronic means (anintegrated circuit array), an "input" means (a keyboard), and a "means for providing visualdisplay." Id., 231 U.S.P.Q. at 834.113. Id. at 1561-62, 231 U.S.P.Q. at 834. The patent specification, for example, disclosedbipolar transistor integrated circuits while the accused devices used metal oxide semiconductorchips. Id. at 1570, 231 U.S.P.Q. at 840.114. See id. at 1569-71, 231 U.S.P.Q. at 839-41 (concluding that separate consideration ofeach changed means separately may lead to determination of infringement).115. Id. at 1569-70, 231 U.S.P.Q. at 839. The Federal Circuit, however, did not discuss inwhat way, if at all, "the invention as a whole" test related to the reverse doctrine ofequivalents. As the Supreme Court explained in Graver Tank & Mfg. v. Linde Air Prods. Co., thereverse doctrine of equivalents applies when an accused device falls literally within the scopeof a patent claim, but is so different in principle that it produces the same result in an entirelydifferent way. 339 U.S. 605, 608-09 (1950). In SRI Int'l v. Matsushita Elec. Corp., for example,this issue was raised in an action to recover for alleged infringement of a patented color televisioncamera. 775 F.2d 1107, 227 U.S.P.Q. 577 (Fed. Cir. 1985). The court held that summaryjudgment would be inappropriate because the reverse doctrine of equivalents raised afactual issue of whether the allegedly infringing devices were so far changed in principle thatthey performed the same or similar function in a substantially different way. Id. at 1125, 227U.S.P.Q. at 587.

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1109claims. 11 6After its determination that the accused devices did not literallyinfringe the claims of the patent, the court next considered whetherthe doctrine of equivalents might nevertheless support infringement.1 17 The court stated that whether the issue is equivalency forpurposes of literal infringement, or equivalency for purposes of infringementunder the doctrine of equivalents, the test still must determineif the asserted "equivalent perform[s] substantially thesame function in substantially the same way to accomplish substantiallythe same result."' 18 The court, therefore, found that the extensivetechnological changes in the means of performing theclaimed functions supported the conclusion that the accused deviceswere not equivalent to, and thus did not infringe, the claimed inventionunder the doctrine of equivalents. 11 9Prior to Texas Instruments, Inc., the Federal Circuit had also utilizedan analysis that considered the embodiments specifically mentionedin the patent specification and other relevant history in construingmeans claims. In P.M. Palumbo v. Don-Joy Co., 120 the Federal Circuitstated that in construing a means claim, it is appropriate to considerthe claim language in addition to the patent specification, the prosecutionhistory, other claims in the patent, and expert testimony.21Once such factors are weighed, the scope of the means claim may bedetermined. 22 In DM, Inc. v. Deere & Co., 123 the Federal Circuitalso referred to the specification as defining the scope of a claimrespecting a single means clause in an accused device.1 24Thus, while we are left somewhat confused about the precise limitingrole of the embodiment described in the specification, an "inventionas a whole" doctrine limits the scope of means clauses.C. The Doctrine of Equivalents1. The prior standard respecting file wrapper estoppelIt is well established that a product that does not literally infringe116. Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 805 F.2d 1558, 1571,231 U.S.P.Q. 833, 841 (Fed. Cir. 1986).117. See id. at 1571-72, 231 U.S.P.Q. at 841.118. Id. at 1571, 231 U.S.P.Q. at 841.119. Id at 1572, 231 U.S.P.Q. at 841.120. 762 F.2d 969, 226 U.S.P.Q. 5 (Fed. Cir. 1985).121. P.M. Palumbo v. Don-Joy Co., 762 F.2d 969, 975, 226 U.S.P.Q. 5, 8 (Fed. Cir. 1985).122. Id, 226 U.S.P.Q. at 8.123. 755 F.2d 1570, 225 U.S.P.Q. 236 (Fed. Cir. 1985).124. See DMI, Inc. v. Deere & Co., 755 F.2d 1570, 1575, 225 U.S.P.Q. 236, 239 (Fed. Cir.1985) (stating that patentee's specification determines whether accused device employsequivalent means to perform specified function).

1110THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087a claim of a patent can nevertheless infringe the claim under thejudicially established doctrine of equivalents. This doctrineoriginated to protect a patentee from an infringer who essentiallyappropriates the invention but avoids the literal language of the patentclaims. The doctrine, therefore, allows a finding of infringementwhen the accused product and claimed invention performsubstantially the same function in substantially the same way to yieldsubstantially the same result. 1 25When applying the Doctrine of Equivalents to analyze potentialinfringement, however, the coverage of the claim generally cannotbe broadened to include aspects that have been surrendered duringthe prosecution of the patent. This qualification of the applicationof the doctrine of equivalents is known as the doctrine of file wrapperestoppel, or prosecution history estoppel. 126 As the Court ofClaims stated:The doctrine of equivalence is subservient to file wrapper estoppel.It may not include within its range anything that would vitiatelimitations expressed before the Patent Office. Thus a patent thathas been severely limited to avoid the prior art will only have asmall range between it and the point beyond which it violates filewrapper estoppel. 1 27Some courts of appeals had held that virtually any amendment ofa claim created a file wrapper estoppel effective to bar all resort tothe doctrine of equivalents and to confine the patentee strictly to theletter of the limited claim granted. 1 28 For example, in NationwideChemical Corp. v. Wright, 129 the claims were amended in response torejections based on prior art disclosing a dosage of a pesticide forcitrus groves of forty-eight ounces per acre, to recite a dosage of lessthan four ounces per acre. 130 The defendant's products called fordosages of greater than four ounces per acre.' 3 ' The Fifth Circuit125. Graver Tank & Mfg. Co. v. Linde Air Prod. Co., 339 U.S. 605, 608-09 (1950).126. The doctrine of file wrapper--or prosecution history estoppel-provides that a patentowner is precluded from obtaining a claim construction that would resurrect subject mattersurrendered during the prosecution of his patent application. The estoppel applies toclaim amendments to overcome rejections based on prior art and to arguments submitted todistinguish the claim of subject matter from the prior art. See Coleco Indus. v. United StatesInt'l Trade Comm'n, 573 F.2d 1247, 1257, 197 U.S.P.Q. 472, 480 (C.C.P.A. 1978); Dwyer v.United States, 357 F.2d 978, 984, 149 U.S.P.Q. 133, 138 (Ct. Cl. 1966).127. Autogiro Co. v. United States, 384 F.2d 391, 400-01, 155 U.S.P.Q. 697, 705 (Ct. Cl.1967).128. See Nationwide Chem. Corp. v. Wright, 585 F.2d 714, 718-19, 200 U.S.P.Q. 257, 261(5th Cir. 1978); Ekco Prod. Corp. v. Chicago Metallic Mfg. Co., 347 F.2d 453, 455, 146U.S.P.Q. 146, 147-48 (7th Cir. 1965).129.130.584 F.2d 714, 200 U.S.P.Q. 257 (5th Cir. 1978).Nationwide Chem. Corp. v. Wright, 584 F.2d 714, 716, 200 U.S.P.Q. 257, 258 (5thCir. 1978).131. Idl, 200 U.S.P.Q. at 258.

1988] THE FEDERAL CIRCUIT: A FIFrH ANNIVERSARY LOOK 1111found no infringement under the doctrine of equivalents and refusedto consider whether the examiner would have allowed the patenteeto claim any dosages in the "gap" between that of the priorart and that claimed in the issued patent. 3 22. The federal circuit standardIn Hughes Aircraft Co. v. United States, I33 the Federal Circuit statedthat it would not follow the "wooden application of estoppel" rulepreviously adopted by some circuits, and instead would adopt a rulemore lenient to patentees. 134 The Federal Circuit observed that:No reason or warrant exists for limiting application of the doctrineof equivalents to those comparatively few claims allowed exactlyas originally filed and never amended. Amendments may beof different types and may serve different functions. Dependingon the nature and purpose of an amendment, it may have a limitingeffect within a spectrum ranging from great to small to zero.The effect may or may not be fatal to application of a range ofequivalents broad enough to encompass a particular accused5product. It is not fatal to application of the doctrine itself. 'In Hughes the Federal Circuit examined in great detail the patentedsatellite, the allegedly infringing satellite, and the prior artsatellite cited as the basis for the estoppel, and determined thatthere was no estoppel because the infringing satellite was muchcloser to the claims than the prior art which had required theamendments.1 36In two later cases, Prodyne Enterprises v. Julie Powerantz 1 37 and132. Id. at 719, 200 U.S.P.Q. at 261. In Omark Indus., Inc. v. Textron, however, the doctrineof file wrapper estoppel did not prevent a finding of infringement under the doctrine ofequivalents. 688 F.2d 1242, 1251-52, 216 U.S.P.Q. 749, 757-58 (9th Cir. 1982). The courtdetermined that the claim limitation, added in a new application after a prior rejection, hadbeen unnecessary to distinguish the claim over the prior art cited during prosecution, and thatin eliminating this limitation in applying the doctrine of equivalents the patentee would not berecapturing something that it had given up to secure issuance of the patent. Id., 216 U.S.P.Q.at 757.133. 717 F.2d 1351, 219 U.S.P.Q. 473 (Fed. Cir. 1983).134. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1363, 219 U.S.P.Q. 473, 481(Fed. Cir. 1983). The Federal Circuit also later observed that infringement would be foundunder the doctrine of equivalents unless (1) arguments or amendments made by an applicantduring prosecution provide a basis to estop the patentee from asserting a range of equivalencebroad enough to encompass the accused product or process; or (2) the equivalent deviceis within the public domain, i.e., found in the prior art. Perkin-Elmer Corp. v.Computervision Corp., 732 F.2d 888, 900, 221 U.S.P.Q. 669, 678 (Fed. Cir.), cert. denied, 469U.S. 857 (1984).135. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1363, 219 U.S.P.Q. 473, 481(Fed. Cir. 1983).136. Id. at 1364, 219 U.S.P.Q. at 482.137. 743 F.2d 1581, 223 U.S.P.Q. 477 (Fed. Cir. 1984).

1112 THE AMERICAN UNIVERSITY LAw REVIEW[Vol. 37:1087Kinzenbaw v. Deere & Co.,138 the court seemed to withdraw from itsearlier lenient position. In both of these cases, the Federal Circuitheld that the patentees were estopped from assserting infringementunder the doctrine of equivalents because the claims had beenamended in response to prior art rejections. 8 9 The court statedthat it would not undertake "speculative inquiry" as to whether theparticular claim limitations at issue were actually necessary to overcomethe prior art rejections. 1 40 In Kinzenbaw there was even evidencethat the claim limitation at issue was irrevelant.' 4 'In Loctite Corp. v. Ultraseal Ltd., 1 4 2 however, the Federal Circuit emphasizedthat Prodyne and Kinzenbaw were decided on their specificfacts. 143 The court commented that when the issue of prosecutionhistory estoppel arises, a close examination is necessary as to whatwas surrendered and why certain claimed aspects were surrendered.144 The court also stated that the narrowing of a claim duringprosecution does not completely prevent any later recapture.' 45The Federal Circuit also has held that "where a patentee's amendmentswere not required in response to an examiner's rejection orcritical to the allowance of the claims" there is no estoppel.' 46 Furthermore,the court has indicated that estoppel does not necessarilyarise "by an amendment designed only to remove a section 112 indefinitenessrejection."'47Although inconsistent on the issue, the Federal Circuit appears tobe willing to give patentees some breadth in asserting a claim of138. 741 F.2d 383, 222 U.S.P.Q. 929 (Fed. Cir. 1984), cert. denied, 470 U.S. 1004 (1985).139. Prodyne Enter. v.Julie Pomerantz, Inc., 743 F.2d 1581, 1583, 223 U.S.P.Q. 477, 478(Fed. Cir. 1984); Kinzenbaw v. Deere & Co., 741 F.2d 383, 389, 222 U.S.P.O. 929, 933 (Fed.Cir. 1984), cert. denied, 470 U.S. 1004 (1985).140. Kinzenbaw v. Deere & Co., 741 F.2d 383, 389, 222 U.S.P.Q. 929, 933 (Fed. Cir.1984), cert. denied, 470 U.S. 1004 (1985); Prodyne Enter. v. Julie Pomerantz, Inc., 743 F.2d1581, 1583, 223 U.S.P.Q. 477, 478 (Fed. Cir. 1984).141. Kinzenbaw v. Deere & Co., 741 F.2d 383, 389, 222 U.S.P.Q. 929, 933 (Fed. Cir.1984), cert. denied, 470 U.S. 1004 (1985).142. 781 F.2d 861, 228 U.S.P.Q. 90 (Fed. Cir. 1985).143. Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 871 n.7, 228 U.S.P.Q. 90, 96 n.7 (Fed.Cir. 1985). The court stated that:the results reached [in Kinzenbawl only highlight that application of prosecution historyestoppel to limit the doctrine of equivalents should be performed as a legalmatter on a case-by-case basis, guided by equitable and public policy principles underlyingthe doctrines involved and by the facts of the particular case.Id., 228 U.S.P.Q. at 96 n.7.144. Id. at 871, 228 U.S.P.Q. at 96.145. Id., 228 U.S.P.Q. at 96; see Mannesmann Demag Corp. v. Engineered Metal Prod.,793 F.2d 1279, 1284-85, 230 U.S.P.Q. 45, 48 (Fed. Cir. 1986); Great Northern Corp. v. DavisCore & Pad Co., 782 F.2d 159, 166, 228 U.S.P.Q. 356, 359-60 (Fed. Cir. 1986).146. Mannesmann Demag Corp. v. Engineered Metal Prod., 793 F.2d 1279, 1285, 230U.S.P.Q. 45, 48 (Fed. Cir. 1986).147. Id., 230 U.S.P.Q. at 48; see Caterpillar Tractor Co. v. Berco, S.P.A., 714 F.2d 1110,1115, 219 U.S.P.Q. 185, 187-88 (Fed. Cir. 1983).

1988] THE FEDERAL CIRCUIT: A FIFrH ANNIVERSARY LOOK 1113infringement by not articulating a rule holding the patentee to theprecise limitations of a claim that has been amended duringprosecution.3. The prior standard respecting "invention as a whole"The Supreme Court's first decision involving the doctrine ofequivalents, Winans v. Denmead,1 48 discussed the "invention as awhole" concept. The patent claimed a circular railroad car whoseconical design achieved several benefits. 1 49 The accused device wasoctagonal but otherwise similar to a conical design, and achievedthe same benefits.' 50 Finding infringement, the Court stated:Where form and substance are inseparable, it is enough to look atthe form only. Where they are separable; where the whole substanceof the invention may be copied in a different form, it is the duty ofcourts and juries to look through the form for the substance of theinvention .... 151The last word by the Supreme Court on the doctrine ofequivalents, after a century of application, occurred in Graver Tank &Manufacturing Co. v. Linde Air Products Co. 1 52 The patent claims atissue involved an electrical welding composition employing a combinationof an alkaline earth metal silicate and any other silicate. 153The Court held that the use of manganese (a non-alkaline earthmetal) instead of magnesium (an alkaline earth metal) was a sufficientlyinsubstantial change which justified application of the doctrineof equivalents.54The Court formulated the now familiar rulethat:[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. 155Appellate courts also struggled with the proper application of thedoctrine of equivalents and the "invention as a whole" concept toachieve a just result. For example, in Keith v. Charles E. Hires Co.,148. 56 U.S. 330 (1853).149. Winans v. Denmead, 56 U.S. 330, 339 (1853).150. Id. at 340.151. Id. at 343 (emphasis supplied). In Burr v. Duryee the Supreme Court elaborated onthe concept, stating that an infringement "is a copy of the thing described in the specificationof the patentee, either without variation, or with such variations as are consistent with itsbeing in substance the same thing." 68 U.S. 531, 573 (1870) (emphasis supplied).152. 339 U.S. 605, 85 U.S.P.Q. 328, 331 (1950).153. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 610, 85 U.S.P.Q.328, 331 (1950).154. Id. at 612, 85 U.S.P.Q. at 332.155. Id. at 608,85 U.S.P.Q. at 330 (quoting Sanitary Refrigerator Co. v. Winters, 280 U.S.30, 42 (1929)).

1114THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087Inc.,156 the Second Circuit stated that often even the most sympatheticinterpretation of a claim cannot literally cover an infringementwhich essentially steals the very heart of the invention. 1 57 Thecourt commented that it is then that the doctrine of equivalents intervenesto protect the real invention.1 5 8 Courts of Appeals generallyhave held that the doctrine of equivalents covers the "essence"' 159and the "heart and substance"' 160 of the claimed invention.4. The federal circuit standardThe Federal Circuit has been unclear in its treatment of the "inventionas a whole" concept in a revealing depiction of a court'ssearch for a correct rule of law. In Hughes Aircraft Co. v. UnitedStates, 16 the Federal Circuit held that a lower court's failure to applythe doctrine of equivalents to the claimed invention as a whole constitutedlegal error. 162 In Hughes, the patent claimed a space satellitewith many limitations, including means plus function clauses whichrequired, inter alia, means for providing an indication of the spinangle and the position of the satellite to a location external to thesatellite, such as to a computer on the ground. 163 The lower courtheld that the allegedly infringing satellite, which contained an onboardcomputer to calculate the satellite's position on-board, was notan equivalent. 164 The Federal Circuit reversed, stating that:The failure to apply the doctrine of equivalents to the claimed inventionas a whole, and the accompanying demand for "obvious andexact" equivalents of two elements the presence of which have effec-156. 116 F.2d 46, 47 U.S.P.Q. 402 (2d Cir. 1940) (emphasis supplied).157. Keith v. Charles E. Hires Co., 116 F.2d 46, 48, 47 U.S.P.O. 402, 404 (2d Cir. 1940).158. Id., 47 U.S.P.Q. at 404 (emphasis supplied); see Cutter Labs, Inc. v. Lyophile-CryochemCorp., 179 F.2d 80, 89, 84 U.S.P.Q. 54, 62 (9th Cir. 1949).159. E.g., Georgia-Pacific Corp. v. United States Plywood Corp., 258 F.2d 124, 137, 118U.S.P.Q. 122, 132 (2d Cir.), cert. denied, 358 U.S. 884 (1958).160. E.g., Shields v. Halliburton, 667 F.2d 1232, 1238, 216 U.S.P.Q. 1066, 1071 (5th Cir.1982).161. 717 F.2d 1351, 219 U.S.P.Q. 473 (Fed. Cir. 1983).162. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1364, 219 U.S.P.Q. 473, 482(Fed. Cir. 1983). Later, in Perkin-Elmer Corp. v. Westinghouse Elec. Corp., the court explained itsview in Hughes:That statement dealt with an infringement inquiry implicating an entire claim as distinguishedfrom ... a 'means plus function' limitation of a claim. That statementalso was a recognition that, in applying the doctrine of equivalents, each limitationmust be viewed in the context of the entire claim. That statement should not beinterpreted as sanctioning the treatment of claim limitations as insignificant or immaterialin determining infringement.822 F.2d 1528, 3 U.S.P.O.2d 1321, 1324-25 (Fed. Cir. 1987).163. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1353, 219 U.S.P.Q. 473, 475(Fed. Cir. 1983).164. Hughes Aircraft Co. v. United States, 205 U.S.P.Q. 381, 386-88 (Cl. Ct. 1979), aff'din part and rev'd in part, 717 F.2d 1351, 219 U.S.P.Q. 473 (Fed. Cir. 1983).

1988] THE FEDERAL CIRCurr: A FIFTH ANNIVERSARY LOOK 1115tively produced literal infringement, was error. 165In Texas Instruments v. United States International Trade Commission, 166the Federal Circuit held that under the doctrine of equivalents, theaccused structure should be compared with the claimed invention asa whole. 167 The court acknowledged that Texas Instruments wascorrect in its argument that each individual means of the accuseddevices, considered separately, was probably "equivalent" undersection 112 to the means clauses of the claim.' 68 The court, however,held that there was neither literal infringement nor infringementunder the doctrine of equivalents, in view of the extensivetechnological advances in all of the claimed functions found in theaccused device. 169In later cases, however, the Federal Circuit reduced its reliance onthe invention as a whole concept in assessing equivalence. InPennwalt Corp. v. Durand-Wayland, Inc. 170 and Perkin-Elmer Corp. v.Westinghouse Electric Corp.,1 71 the Federal Circuit indicated that, for anon-pioneering improvement in a crowded art, the doctrine ofequivalents cannot erase the specific limitations of a claim by referenceto the gist of the invention. In Perkin-Elmer, the plaintiff soughtto minimize the fact that two of the clauses of the claim in issue werenot infringed by characterizing the entire claim as consisting of atwo element combination. 72 The Federal Circuit stated that it wasinappropriate for a court, under the guise of applying the doctrineof equivalents, to ignore meaningful structural and functional limitationsof the claim on which the public is entitled to rely in avoidinginfringement. 73 The confusion over consideration of the essenceof an invention in determining equivalence surfaced in a footnote inPerkin-Elmer:We are aware of dicta that state consideration of the essence, gist,165. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1364, 219 U.S.P.Q. 473, 482(Fed. Cir. 1983).166. 805 F.2d 1558, 231 U.S.P.Q. 833 (Fed. Cir. 1986).167. Texas Instruments v. United States Int'l Trade Comm'n, 805 F.2d 1558, 1571, 231U.S.P.Q. 833, 841 (Fed. Cir. 1986).168. Id., 231 U.S.P.Q. at 841.169. Id. at 1572, 231 U.S.P.Q. at 841.170. 833 F.2d 931, 4 U.S.P.Q.2d 1737 (Fed. Cir. 1987).171. 822 F.2d 1528, 3 U.S.P.Q.2d 1321 (Fed. Cir. 1987).172. Perkin-Elmer Corp. v. Westinghouse Elec. Corp., 822 F.2d 1528, 1532, 3 U.S.P.Q.2d1321, 1324 (Fed. Cir. 1987). The patent involved was directed to a resonant coupler for anelectrodeless discharge lamp used to provide a bright spectral line source of a selected metalfor use in chemical analysis, particularly atomic absorption spectroscopy. The plaintiff hadconceded the absence of literal infringement but alleged infringement under the doctrine ofequivalents. Id. at 1529, 3 U.S.P.Q.2d at 1322.173. Id. at 1532, 3 U.S.P.Q.2d at 1324. The court explained that the doctrine ofequivalents was founded in equity, but was not derived to permit total redrafting of a claim toprotect non-equivalent devices. Id., 3 U.S.P.Q.2d at 1324.

1116THE AMERICAN UNIVERSITY LAW REVIEW[VoI. 37:1087or heart of the invention may be helpful in determining infringementunder the doctrine of equivalents. That dicta may not beread as implying that specific claim limitations can be ignored asinsignificant or immaterial in determining infringement. It mustbe read as shorthand for the considerations set forth in GraverTank, i.e., that the infringer should not appropriate the inventionby making substitutions for those limitations, when the substitutionsdo not substantially change the function performed, or theway it is performed, by the invention.' 74Judge Newman dissented in Perkin-Elmer and opined that the majorityhad not followed the court's precedent and had departed fromthe requirement that the invention as a whole be considered. JudgeNewman concluded that the invention as a whole had beeninfringed.' 75In Pennwalt Corp. v. Durand-Wayland, Inc., 1 76 the Federal Circuit adheredto its ruling in Perkin-Elmer. The patent involved a high speedmeans for sorting such things as fruit by color, weight, or both. 177The patent specification disclosed a "hard-wired" embodiment. 178The device recited in the claim conveyed the items to be sortedalong a track and had, among other elements recited in means plusfunction form, a continuously operating position indicating means,which was used in the sorting process. 179The accused sorter employed computer software and omitted certainfunctions, notably the continuously operating position indicatingmeans. 1 80 The court reasoned that "the invention was not apioneer, but an improvement in a crowded art."'81The court determinedthat the continuous position indicating means, which was addedas a limitation during prosecution, had been "crucial topatentability." ' 8 2 The accused device did not sort by keeping trackof the physical location of an item in transit, continuously or other-174. Id. at 1533 n.8, 3 U.S.P.Q.2d at 1325 n.8 (citations omitted).175. Id. at 1535-36, 3 U.S.P.Q.2d at 1327 (Newman, J., dissenting). Commenting uponthe majority's footnote 8, Judge Newman stated:If indeed the majority wishes to redefine this court's precedent on the doctrine ofequivalents, as in the majority's footnote 8, this important issue should be confronteddirectly, as a matter of public policy. The patent-user community is entitledto rely on judicial decisions as they exist and until they are overruled as a matter oflaw, not as some might prefer to have written them.Id. at 1536, 1542, 3 U.S.P.Q.2d at 1327, 1332 (Newman, J., dissenting).176. 833 F.2d 931, 4 U.S.P.Q.2d 1737 (Fed. Cir. 1987).177. Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 933, 4 U.S.P.Q.2d 1737,1738 (Fed. Cir. 1987).178. Id., 4 U.S.P.Q.2d at 1738.179. Id. at 935-36, 4 U.S.P.Q2d at 1738-39.180. Id. at 935-37, 4 U.S.P.Q.2d at'1740-41.181. Id. at 937, 4 U.S.P.Q.2d at 1741.182. Id., 4 U.S.P.Q.2d at 1741.

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1117wise, as required in the claims. 183 The Federal Circuit, relying uponits opinion in Perkin-Elmer, held that the accused device did not infringethe claimed device literally or under the doctrine ofequivalents. 184The dissent in Pennwalt criticized the majority's analysis by statingthat it had "contrived an analytical frame work for the doctrine ofequivalents that is little more than a redundant literal infringementinquiry, which renders the doctrine of equivalents so unduly restrictiveand inflexible as to end its usefulness as a judicialdoctrine .... 185In sum, the Federal Circuit has embraced the "invention as awliole" standard of claim breadth for both, inequivalence 186 andequivalence, 8 7 but has also rejected it for improvements in crowdedarts.1. The prior standardIII.RELIEFA. Preliminary InjunctionsThe federal courts have statutory power to grant injunctions toprevent violations of patent rights. 188 Prior to the establishment ofthe Federal Circuit, the standard that patentees had to meet to obtainpreliminary injunctive relief had been more burdensome thanthe standard for a preliminary injunction in other types of cases. 18 9To establish a likelihood of success on the merits, some courts requiredthe patentee to prove that the validity and infringement ofthe patent was "beyond question."' 9 0 Only two types of patentsgenerally proved likely to satisfy this requirement: those previously183. Id., 4 U.S.P.Q.2d at 1741.184. Id. at 939, 4 U.S.P.Q.2d at 1741.185. Id. at 940, 4 U.S.P.Q.2d at 1743-44 (Bennett, J., dissenting in part).186. Supra notes 168-69 and accompanying text.187. Supra note 161 and accompanying text.188. 35 U.S.C. § 283 (1982). Section 283 provides that "the general courts having jurisdiction... may grant injunctions in accordance with the principles of equity to prevent theviolation of any right secured by a patent on such terms as the court deems reasonable." Id.189. See North Carolina State Ports Auth. v. Dart Containerline Co., 592 F.2d 749, 750(4th Cir. 1979) (noting weight of burden of patentees seeking preliminary injunction). Typicallycourts required the movant in nonpatent cases to demonstrate a reasonable probabilityof success on the merits, an irreparable injury if relief is denied, a lack of adverse effects onothers, and a requisite level of public interest. See Harris v. Wilters, 596 F.2d 678, 680 (5thCir. 1979) (per curiam); Kolz v. Board of Educ., 576 F.2d 747, 748-49 (7th Cir. 1978) (percuriam).190. See, e.g., Mayview Corp. v. Rodstein, 480 F.2d 714, 717, 178 U.S.P.Q. 449, 451 (9thCir. 1973); Eli Lilly & Co. v. Generix Drug Sales, 460 F.2d 1096, 1099, 174 U.S.P.Q. 65, 67(5th Cir. 1972); Frommelt Indus. v. W.B. McGuire Co., 504 F. Supp. 1180, 1184, 212U.S.P.Q. 449, 452 (N.D.N.Y. 1981).

1118 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087adjudicated valid and those whose validity industry had acquiesced.191 The "beyond question" rule, as defined by Judge LearnedHand, 192 had been followed in a majority of the circuits9sAs to other requirements for obtaining a preliminary injunction,some disagreement existed about whether the mere fact of infringementof a patent was sufficient to establish irreparable injury, orwhether something more, such as insolvency of the defendant, wasrequired to establish the inadequacy of a remedy at law.'94Verylittle precedent existed for patent cases on the issues of balancingthe equities and identifying the public interest. 195191. Mayview Corp. v. Rodstein, 480 F.2d 714, 717, 178 U.S.P.Q. 449, 451 (9th Cir.1973) (stating that showing of likelihood of success on merits in patent infringement suitrequires proof of patent's validity beyond question by prior adjudication or publicacquiescence).192. See Simson Bros. v. Blancard & Co., 22 F.2d 498, 499 (2d Cir. 1927). The courtreviewed prior art references and questioned whether the jewelry setting patent in issue distinguishedfrom the prior art and ultimately held that preliminary relief was unwarranted. Id.;see Rosenberg v. Groov-Pin Corp., 81 F.2d 46 (2d Cir. 1936). Of the two patents for metalpins allegedly infringed, one had previously been adjudicated valid. Id. The question of infringement,however, hinged on whether the disputed material had the same performancecapability as the patented material. Id. at 47. Because the court was unwilling to decide thisfactual issue relying on the affidavits alone, a trial was necessary and subsequently, preliminaryinjunctive relief denied. Id. at 48.193. See, e.g., Pacific Cage & Screen Co. v. Continental Cage Corp., 259 F.2d 87, 88 (9thCir. 1958); Hoeme v.Jeoffroy, 100 F.2d 225, 226 (5th Cir. 1938); Zenith Labs, Inc. v. Eli Lilly& Co., 460 F. Supp. 812, 820, 201 U.S.P.Q. 324, 330 (D.N.J. 1978), aff'd sub nom. Eli Lilly &Co. v. Premo Pharmaceutical Labs, Inc., 630 F.2d 120, 127 U.S.P.Q. 719 (3d Cir.), cert. denied,449 U.S. 1014 (1980). The United States Court of Appeals for the Eighth Circuit, in thecontext of preliminary injunctions, applied a "reasonably clear" standard to the issue of infringementas distinct from validity. See Diamond Power Specialty Corp. v. Bayer Co., 95 F.2d541, 542 (8th Cir. 1938). In one case, the Third Circuit declined to apply the "beyond question"standard, and instead applied a general "reasonable probability of success on the merits"test to a patent infringement case. Eli Lilly & Co. v. Premo Pharmaceutical Labs, Inc., 630F.2d 120, 136, 207 U.S.P.Q. 719, 734 (3d Cir.), cert. denied, 449 U.S. 1014 (1980). Federaldistrict courts in the Third Circuit, however, have applied the "beyond question" test. SeeRohm & Haas Co. v. Mobil Oil Corp., 525 F. Supp. 1298, 1302, 212 U.S.P.Q. 354, 359 (D.Del. 198 1);Jenn-Air Corp. v. Modem Maid Co., 499 F. Supp. 320, 322, 209 U.S.P.Q. 295, 298(D. Del. 1980), aff'd mer., 659 F.2d 1068 (3d Cir. 1981).194. Compare Zenith Labs, Inc. v. Eli Lilly & Co., 460 F. Supp. 812, 825-26, 201 U.S.P.Q.324, 334-35 (D.N.J. 1978) (holding that strong showing of other requirements for preliminaryinjunction justifies classifying on invasion of patent rights as requisite irreparable injury), aff'dsub nom. Eli Lilly & Co. v. Premo Pharmaceutical Labs, Inc., 630 F.2d 120, 207 U.S.P.Q. 719(3d Cir.), cert. denied, 449 U.S. 1014 (1980) and Teledyne Indus. v. Windmere Prods., 433 F.Supp. 710, 739-40, 195 U.S.P.Q. 354, 378 (S.D. Fla. 1977) (finding that invasion of validpatent right constituted irreparable injury) with Nuclear-Chicago Corp. v. Nuclear Data, Inc.,465 F.2d 428, 430, 174 U.S.P.Q. 381, 382 (7th Cir. 1972) (concluding that defendant's abilityto compensate plaintiff in money damages precludes finding of irreparable harm) and SignodeCorp. v. Weld-Loc Sys., 216 U.S.P.Q. 310, 312 (N.D. Ill. 1982) (holding that patentee mustmeet substantially heavier burden of proving irreparable injury), aff'd, 700 F.2d 1108, 218U.S.P.Q. 293 (7th Cir. 1983) and Frommelt Indus. v. W.B. McGuire Co., 504 F. Supp. 1180,1184-85, 212 U.S.P.Q. 449, 452 (N.D.N.Y. 1981) (stating that irreparable harm not shownwhere monetary damages are ascertainable and available) and Heyman Mfg. Co. v. ElectrixCorp., 200 F. Supp. 217, 218 (D.R.I. 1961) (ruling alleged invasion of patent rights is notirreparable harm if monetary damages are available).195. The court in Zenith Labs, Inc. v. Eli Lilly & Co. did address these issues and held thatthe equities and public interest favored a preliminary injunction because denial of relief would

1988] THE FEDERAL CIRcurr: A FiFrH ANNIVERSARY LOOK 11192. The federal circuit standardThe Federal Circuit has adopted a rule more favorable to patenteesin preliminary injunction cases by rejecting the traditional "beyondquestion" rule in favor of the lesser standard of a likelihood ofsuccess on the merits.96This standard is a logical outcome of thecourt's strengthening of the presumption of validity and elevation ofthe secondary considerations for finding non-obviousness.In one case, Smith International, Inc. v. Hughes Tool Co.,'9 7the FederalCircuit mentioned in dicta the traditional requirement of ashowing that the patent is "beyond question valid and infringed,"'98but the court subsequently noted that a preliminary injunctionshould issue on the standard factors applicable in other types ofcases:(1) whether the plaintiff will obtain an adequate remedy at law orwill suffer irreparable harm if the injunction does not issue;(2) whether the threatened injury to the plaintiff out-balancesthe harm the injunction could impose on the defendant;(3) whether the plaintiff has at least a reasonable likelihood ofsuccess on the merits; and(4) whether the issuance of a preliminary injunction will be contraryto the public interest. 1 99Under this analysis, the alleged infringer faces the burden ofproving that the plaintiff does not have a reasonable likelihood ofencourage others to infringe, drain the patent-holder's profits by increased litigation costs,and discourage further research and development. 460 F. Supp. 812, 826, 201 U.S.P.Q. 324,335 (D.N.J. 1978), aff'd sub nom. Eli Lilly & Co. v. Premo Pharmaceutical Labs, Inc., 630 F.2d120, 207 U.S.P.Q. 719 (3d Cir.), cert. denied, 449 U.S. 1014 (1980). The dispute in Zenithinvolved the validity and infringement of the patents on two antibiotic drugs. Id. at 814, 201U.S.P.Q. at 325. Eli Lilly established the patents' validity by presenting evidence of industryacquiescence. Id. at 822, 201 U.S.P.Q. at 332. The court viewed Zenith's admissions that ithad solicited orders and sold the disputed antibiotics as admissions of infringement. Id. at825, 201 U.S.P.Q. at 334. The court found that the invasion of Eli Lilly's patents constitutedirreparable harm. Id., 201 U.S.P.Q. at 335. In support of its decision to grant a preliminaryinjunction, the court in Zenith cited several public interest factors including the following: EliLilly's initial development and continued testing of the antibiotics; Eli Lilly's potential lostprofits if Zenith were allowed to continue its infringement; the common practice of drug companiesentering the market with similar products while the original patent is being challenged;and the costs of continued litigation, which would deplete Eli Lilly's resources, and therebyhinder research and development. Id. at 826, 201 U.S.P.Q. at 335.196. See supra notes 190-91 and accompanying text (discussing beyond question approach).The court also has approved the granting of a preliminary injunction where thepatent was previously adjudicated valid. See Atlas Powder v. Ireco Chemicals, 773 F.2d 1230,1234, 227 U.S.P.Q. 289, 291 (Fed. Cir. 1985).197. 718 F.2d 1573, 219 U.S.P.Q. 686 (Fed. Cir.), cert. denied, 464 U.S. 996 (1983).198. Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1578, 219 U.S.P.Q. 686, 690(Fed. Cir.), cert. denied, 464 U.S. 996 (1983).199. Roper Corp. v. Litton Sys., Inc., 757 F.2d 1266, 1269 n.1, 225 U.S.P.Q. 345, 346 n.l(Fed. Cir. 1985); see Cordis Corp. v. Medtronic, Inc., 780 F.2d 991, 994, 228 U.S.P.Q. 189,191 (Fed. Cir. 1985), cert. denied, 106 S. Ct. 1971 (1986).

1120 THE AMERICAN UNIVERSITY LAw REVIEW[Vol. 37:1087success on the issue of validity. 20 0 In turn, the patentee has the burdenon the infringement issue of showing a reasonable likelihood ofsuccess on the merits. 20 ' This standard imposes markedly less stringentrequirements on a patentee seeking a preliminary injunctionthan the beyond question rule.Upon a "strong showing" that the defendant is infringing a validpatent, 20 2 there is a presumption of irreparable injury. 203 The defendant,however, can rebut this presumption by offering evidencethat the patentee would not actually suffer the irreparable injury ifthe preliminary injunction did not issue. 204The court also held that even though infringement and relateddamages are fully compensable in money, this does not preclude anirreparable injury determination. 205 Irreparable injury can existeven without a showing of financial irresponsibility. 20 6 The irreparableharm derives from the invasion of the patentee's exclusiveright. 20 7 Similarly, denial of the opportunity for the patentee to obtaina toe-hold in the market with the patented product has sufficed.208 Again, the patentee's burden of proof is eased.1. The prior standardB. Permanent InjunctionsThe Patent Code provides that injunctive relief may be granted"in accordance with the principles of equity to prevent the violationof any right secured by patent, on such terms as the court deems200. Roper Corp. v. Litton Sys., Inc., 757 F.2d 1266, 1270, 225 U.S.P.Q. 345, 347 (Fed.Cir. 1985).201. Id., 225 U.S.P.Q. at 347.202. Id., 225 U.S.P.Q. at 347.203. Id., 225 U.S.P.Q. at 347.204. Id. at 1272, 225 U.S.P.Q. at 349.205. See Atlas Powder Co. v. Ireco Chem., 773 F.2d 1230, 1233, 227 U.S.P.Q. 289, 292(Fed. Cir. 1985). The court expressed concern over the preservation of the legal interests ofthe parties against future infringement that could have effects not compensable in money:The patent statute further provides injunctive relief to preserve the legal interests ofthe parties against future infringement which may have market effects never fullycompensable in money. If monetary relief were the sole relief afforded by the patentstatute, then injunctions would be unnecessary and infringers could become compulsorylicensees for as long as the litigation lasts.Id., 227 U.S.P.Q. at 292.206. See Smith Int'l Inc. v. Hughes Tool Co., 718 F.2d 1573, 1580-81, 219 U.S.P.Q. 686,692 (Fed. Cir.), cert. denied, 464 U.S. 996 (1983).207. H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384, 390 (Fed. Cir. 1987);Atlas Powder Co. v. Ireco Chem., 773 F.2d 1230, 1233 (Fed. Cir. 1985).208. Hybritech, Inc. v. Abbott Laboratories, 4 U.S.P.Q.2d 1001 (C.D. Cal. 1987) (statingthat fast moving technology may deny patentee opportunity to gain a foothold in market becausepatent value may be gone at time of litigation); Pittway v. Black & Decker, 667 F. Supp.585 (N.D. Il1. 1987) (finding infringer's tradename so well known that use of patented inventionwould give defendant irreversible command of market).

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1121reasonable. " 20 9 Prior to the establishment of the Federal Circuit,although permanent injunctions were often granted after a trial onthe merits, they were sometimes rejected based on factors irrelevantto liability. For example, the Second Circuit affirmed a districtcourt's denial of injunctive relief in Foster v. American Machine &Foundry Co. 210 In Foster, the patentee failed to arrange for manufactureof the patented product and the court therefore awarded it onlya compulsory royalty, even though this was "half a loaf." '2 11 In AlliedResearch Product Inc. v. Heatbath Corp., 2 12 the trial court ordered that alicense be granted to an infringer who had been refused one becauseof a personal dispute, stating that "[p]ublic policy requiresliberal use of a patent." 21 32. The federal circuit standardThe Federal Circuit has indicated that the equitable circumstanceswhich previously might have defeated an injunction will now rarelysuffice to deny an injunction to a successful patentee after trial. InSmith International, Inc. v. Hughes Tool Co.,214 the Federal 'Circuit describedthe rules which assert the patentee's ability to obtain injunctiverelief in view of the patent's exclusive grant. The FederalCircuit explained that "[o]nce the patentee's patents have been heldto be valid and infringed, he should be entitled to the full enjoymentand protection of his patent rights." 2 15 The Federal Circuit rejectedthe infringer's arguments that public policy was in its favor becauseit was a substantial competitor with a large inventory of the infringingproduct. 2 16209. 35 U.S.C. § 283 (1952).210. 492 F.2d 1317, 182 U.S.P.Q. 1 (2d Cir. 1974), cert. denied, 419 U.S. 833, reh'g denied,419 U.S. 1061 (1974).211. Id. at 1324, 182 U.S.P.Q. at 6.212. 300 F. Supp. 656, 161 U.S.P.Q. 527 (N.D. Ill. 1969).213. Allied Research Prod. Inc. v. Heatbath Corp., 300 F. Supp. 656, 657, 161 U.S.P.Q.527, 530 (N.D. IIl. 1969). Injunctive relief also had been denied where the patentee's assuranceto the defendant that the patentee would not sue for patent infringement amounted to amisrepresentation which supported an estoppel. Royal-McBee Corp. v. Smith-CoronaMarchant Inc., 295 F.2d 1, 130 U.S.P.Q. 377 (2d Cir. 1961); Hinde v. Hot Sulphur Springs,Colo., 482 F.2d 829, 837, 178 U.S.P.Q. 584, 589 (10th Cir. 1973).214. 718 F.2d 1573, 219 U.S.P.Q. 686 (Fed. Cir.), cert. denied, 464 U.S. 996 (1983).215. Smith Int'l, Inc., v. Hughes Tool Co., 718 F.2d 1573, 1581, 219 U.S.P.Q. 686, 692(Fed. Cir.), cert. denied, 464 U.S. 996 (1983). Moreover, the court stated in a footnote,"[tihough ... we have reviewed the case [as one involving a preliminary injunction], we intendno implication that a patentee is not entitled to a permanent injunction against the infringerin the case upon final judicial determination that the involved patent is valid and hasbeen infringed by that infringer." Id. at 1581 n.8, 219 U.S.P.Q. at 693 n.8.216. Id. at 1581, 219 U.S.P.O. at 693. The court determined that the defendant knew ofthe patents in issue when it designed its infringing product, took a calculated risk that it mightinfringe those patents, and then instituted the action in an attempt to invalidate those patents.Id. The court stated that public policy did not favor such activity but "[t]o the contrary, public

1122 THE AMERICAN UNIVERSrrY LAw REVIEW[VoI. 37:1087The assertion that an infringing product is the infringer's primaryproduct and that a permanent injunction might put him out of business,has also been insufficient to justify denial of an injunction. 2 1 7The influence of the Federal Circuit's decisions respecting permanentinjunctions is visible in Polaroid Corp. v. Eastman Kodak Co. 218 Apermanent injunction was granted by the district court in the Kodakcase even though it was argued that it would (1) render sixteen millioninstant cameras useless; (2) cause the possible loss of 800 fulltimeand 3700 part-time employees; and (3) cause the possible lossof a $200 million investment in plant and equipment. The infringer'sability to respond in money damages was rejected as a basisfor denying a permanent injunction. Because the infringing devicewould continue to infringe "and thus damage plaintiff in the future,'2 19monetary damages are generally considered to be inadequate.The district court in Kodak summarized the treatment of injunctiverelief by other courts since the Hughes case:[O]nce a patent is judged valid and infringed, its holder is entitledto injunctive relief. [Courts] have found money damages deficientagainst encroachments on rights of exclusivity, and they havejudged the public interest better served by a broad policy favoringpolicy favors protection of the rights secured by valid patents." Id.; cf. Kloster Speedsteel ABv. Crucible Inc., 793 F.2d 1565, 1581, 230 U.S.P.Q. 81, 92 (Fed. Cir. 1986) (lawsuit challengingpatent's validity based on bonafide belief of invalidity serves patent system).217. Windsurfing Int'l, Inc. v. AMF Inc., 782 F.2d 995, 1003 n.12, 228 U.S.P.Q. 562, 568n.12 (Fed. Cir.), cert. denied, 477 U.S. 905 (1986), on remand, 231 U.S.P.Q. 19 (S.D.N.Y. 1986),vacated, 828 F.2d 755, 4 U.S.P.Q.2d 1052 (Fed. Cir. 1987).In Roche Prod. v. Bolar Pharmaceutical Co., the Federal Circuit held that plaintiff's patenteddrug was infringed but that a permanent injunction could not be ordered because the patentin suit had expired just prior to oral argument. 733 F.2d 858, 865, 221 U.S.P.Q. 937, 942(Fed. Cir.), cert. denied, 469 U.S. 856 (1984). The plaintiff sought an order to confiscate anddestroy experimental data developed by defendant prior to the expiration of plaintiff's patent.Id., 221 U.S.P.Q. 937. The court, in a throwback to earlier views of irreparable injury, notedthat the district judge should determine if he can deal with the case by adequate money damagesbefore he invokes equitable relief of a harsh, or even a mild, character. Id. at 866, 221U.S.P.Q. at 943. According to the court, it is a mistaken belief that once infringement isestablished and adjudicated, an injunction must follow. Id. at 865, 221 U.S.P.Q. at 942. Thecourt noted that "[slection 283, by its terms, clearly makes the issuance of an injunction discretionary:the court 'may grant' relief 'in accordance with the principles of equity."' Id. at 865-66,221 U.S.P.Q. at 942 (emphasis in original).218. 641 F. Supp. 828, 228 U.S.P.Q. 305 (D. Mass. 1985), aft'd, 789 F.2d 1556, 229U.S.P.Q. 561 (Fed. Cir.), cert. denied, 107 S. Ct. 178 (1986).219. Polaroid Corp. v. Eastman Kodak Co., 641 F. Supp. 828, 228 U.S.P.Q. 305 (D. Mass1985), aft'd, 789 F.2d 1556, 229 U.S.P.Q. 561 ( Fed Cir.), cert. denied, 107 S. Ct. 178 (1986).Although a patent was due to expire in only three months, a district court granted a permanentinjunction against continued infringement, stating "once the patentee's rights have beenheld to be valid and infringed, the threat of continued infringement is alone sufficient towarrant injunctive relief." In re Cole Patent Litigation, 606 F. Supp. 45, 47, 225 U.S.P.Q. 556,557 (D. Del. 1984) (citing Smith International). The fact that the defendant may have sufferedadverse economic effects from an injunction was held to be an insufficient basis not to grantthe injunction. Id. at 48 n.3, 225 U.S.P.Q. at 557 n.3.

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1123creativity than by the narrow protection of specific consumers.220In several recent cases, 221 the Federal Circuit has implicitly followedthis reading and declined to stay the injunction pending its decisionon the appeal.Infringers today, therefore, are faced with a greater likelihoodthan in the past that a patentee successful after trial will obtain apermanent injunction.C. Willful Infringement-Increased Damages-Attorneys' FeesI. The prior standardThe Patent Code gives the courts discretion to increase damagesup to three times -the actual damages and, in exceptional cases, attorneys'fees may be awarded. 222 Prior to the creation of the FederalCircuit, courts had awarded increased damages based upon afinding that the infringer's conduct was willful, wanton, deliberate,intentional, or in reckless disregard of a patentee's rights. 223 Infringers,however, avoided a finding of willfulness by relying uponthe advice of competent patent counsel to establish that their actionwas based upon a good faith belief that a valid patent would not beinfringed by such action. 224220. Polaroid Corp. v. Eastman Kodak Co., 641 F. Supp. 828, 878, 228 U.S.P.Q. 305,344(D. Mass 1985), aff'd, 789 F.2d 1556, 229 U.S.P.Q. 561 (Fed Cir.), cert. denied, 107 S. Ct. 178(1986). In Shiley, Inc. v. Bentley Labs, Inc., removal of an infringing blood oxygenator from themarket was ordered, notwithstanding the argument that it would have an adverse effect oncandidates for open heart surgery due to short term supply problems from the sudden cut-offof the infringing oxygenator. 601 F. Supp. 964,225 U.S.P.Q. 1013 (C.D. Cal. 1985), aff'd, 794F.2d 1561, 230 U.S.P.Q. 112 (Fed. Cir. 1986), cert. denied, 107 S. Ct. 1291 (1987). The court,however, permitted a six-month transition period before the injunction went into effect "toallow an efficient and non-disruptive changeover" for those institutions who employed defendant'sinfringing oxygenator exclusively to alleviate the possibility of short term supplyproblems and the lag-time in training staff to use different equipment. Id. at 971.221. Shiley, Inc. v. Bentley Labs, Inc., 782 F.2d 992, 992-93, 228 U.S.P.Q. 543, 544 (Fed.Cir. 1986), af'd, 794 F.2d 1561, 230 U.S.P.Q. 112 (Fed. Cir. 1986), cert. denied, 107 S. Ct. 1291(1987); S.C. Johnson & Son, Inc. v. Carter Wallance, Inc., 225 U.S.P.Q. 968, 972 (S.D.N.Y.1985); Crucible, Inc. v. Stora Kopparbergs Bergslags AB, 226 U.S.P.Q. 842, 845-46 (W.D. Pa.1985). In Polaroid Corp. v. Eastman Kodak Co., the district court, the Federal Circuit, and theSupreme Court all denied a stay pending a decision on appeal. The appeal of the case in chiefwas fully briefed and argued in the Federal Circuit before the ruling regarding the stay wasmade. The Federal Circuit ultimately affirmed the district court's decision. 789 F.2d 1556,229 U.S.P.Q. 561 (Fed. Cir.), cert. denied, 107 S. Ct. 178 (1986).222. See 35 U.S.C. § 284 (1982) (providing courts with discretion to multiply damages forinfringement up to three times actual damage); 35 U.S.C. § 285 (1982) (permitting courts inexceptional cases to award attorney's fees).223. See Lam, Inc. v.Johns-Manville Corp., 206 U.S.P.Q. 452,467 (D. Colo. 1979) (statingthat § 284 permits tripling of damages when infringement is deliberate, intentional, or wanton),aff'd, 668 F.2d 462, 213 U.S.P.Q. 1061 (10th Cir.), cert. denied, 456 U.S. 1007 (1982).224. See H.K. Porter Co. v. Goodyear Tire & Rubber Co., 536 F.2d 1115, 1124, 191U.S.P.Q. 486, 492 (6th Cir. 1976) (stating that opinions from in-house counsel and outsidecounsel established that there was an "honest doubt" as to validity and infringement so as topreclude award of increased damages); Union Carbide Corp. v. Graver Tank & Mfg. Co., 282

1124THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:10872. The federal circuit standardThe Federal Circuit essentially has amplified the prior law in thisarea rather than instituted any changes. The issue of willful infringementis more likely to emerge now because of the changesdiscussed in the preceding sections which make the invalidity defensemore difficult. Thus, infringers must be more concernedabout liability for infringement, and particularly willful infringement,which can treble the damages.According to the Federal Circuit, a plaintiff must establish willfulinfringement by clear and convincing evidence. 225 An infringer isliable for willful infringement if the infringer acted in disregard ofthe patent: that is, the infringer had no reasonable basis for believingit had a right to engage in the alleged infringing acts. 226If a client acts upon the good faith belief of his patent counsel andis later found to have infringed, there is no willful infringement. 227Thus, in Machinery Corp. of America v. Gullfber 228 the Federal Circuitaffirmed a lower court's determination that the infringer's relianceon the opinion of counsel did not warrant a finding of willful infringement.229 The court emphasized, however, that it had notadopted aper se rule that reliance on an opinion from patent counselwill always prevent a finding of willful infringement. 230 The courtalso qualified its position by declaring that a failure to obtain anopinion from patent counsel will not always dictate a finding of willfulness.23 ' Instead, the analysis for willfulness must focus on thetotality of the circumstances, 23 2 including the substance of the opin-F.2d 653, 658-60, 127 U.S.P.Q. 3, 7-9 (7th Cir. 1960) (holding that procurement of opinionfrom competent counsel show defendant made good faith effort to avoid infringement); seealso General Elec. Co. v. Sciaky Bros., 415 F.2d 1068, 1073-74, 163 U.S.P.Q. 25, 30 (6th Cir.1969) (affirming lower court's finding of willfulness and stating that good faith opinion ofcounsel not conclusive on issue).225. Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 628, 225U.S.P.Q. 634, 644 (Fed. Cir.), cert. dismissed, 474 U.S. 976 (1985).226. Stickle v. Heublein Inc., 716 F.2d 1550, 1565, 219 U.S.P.Q. 377, 388 (Fed. Cir.1983).227. Radio Steel & Mfg. Co. v. MTD Prod., Inc., 788 F.2d 1554, 1559, 229 U.S.P.Q. 431,435 (Fed. Cir. 1986).228. 774 F.2d 467, 227 U.S.P.Q. 368 (Fed. Cir. 1985).229. Machinery Corp. of Am. v. Gullfiber, 774 F.2d 467,472, 227 U.S.P.Q. 368, 371 (Fed.Cir. 1985).230. Id. at 472, 227 U.S.P.Q. at 372; see Great Northern Corp. v. Davis Core & Pad Co.,782 F.2d 159, 167, 228 U.S.P.Q. 356, 360 (Fed. Cir. 1986) (stating that in absence of legalopinion it is within court's discretion to judge willfulness).231. Machinery Corp. of Am. v. Gullfiber, 774 F.2d 467,472, 227 U.S.P.Q 368,372 (Fed.Cir. 1985); see Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1109, 231 U.S.P.Q.185, 191 (Fed. Cir. 1985) (stating that absence of legal opinion from counsel does not requirefinding of willfull infringement).232. Radio Steel & Mfg. Co. v. MTD Prod., Inc., 788 F.2d 1554, 1559, 229 U.S.P.Q. 431,434 (Fed. Cir. 1986); see Shiley, Inc. v. Bentley Labs, Inc., 794 F.2d 1561, 1568, 230 U.S.P.Q.

1988] THE FEDERAL CIRCUIT: A FiFrH ANNIVERSARY LOOK 1125ions relied on, 233 and the adequacy of the counsel's investigation.234A potential infringer with actual notice of another's patent rights"has an affirmative duty to exercise due care to determine whetheror not he is infringing. ' 2 3 5 This affirmative duty generally includes,inter alia, the duty to seek and obtain competent legal advice fromcounsel before the initiation of any possible infringing activity. 2 36Actual knowledge of the patent in suit can be proved directly orcan be inferred by the conduct of the alleged infringer. Deliberatecopying of a patented invention may create an inference of actualknowledge. However, even if a corporate defendant is "technically"aware of a patent that it is infringing through routine monitoring byits patent staff of patent activity in all areas of the applicable technology,the corporate defendant may not face liability for willful infringementif its "key" people in the development of the infringingproduct were not aware of the patent that was being infringed untilthe litigation actually arose. 23 7Similarly, "exceptional case" determinations for attorneys' feesawards require examination for inequitable conduct in the procurementof a patent, willful infringement, misconduct during litigation,vindictive or unjustified litigation, or a frivolous suit. 23 8The Federal Circuit has ruled that good faith reliance on the adviceof counsel is insufficient to avoid an award of attorneys' feesand increased damages when the defendant failed to measure itsproducts against its lawyer's recommended range to avoid infringe-112, 115 (Fed. Cir. 1986) (noting that use of willfullness analysis must include look at totalityof circumstances).233. Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1576-77, 220 U.S.P.Q.490, 492-93 (Fed. Cir. 1983).234. Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1390, 219U.S.P.Q. 569, 577 (Fed. Cir. 1983).235. Id. at 1389-90, 219 U.S.P.Q. at 576. Section 287 of the patent statute provides thatin the event of a patent owner's failure to mark a patented item, he can recover no damagesagainst infringers "except on proof that the infringer was notified of the infringement andcontinued to infringe thereafter." 35 U.S.C. § 287 (1982).236. Underwater Devices, Inc., v. Morrison-Knudsen Co., 717 F.2d 1380, 1389-90, 219U.S.P.Q. 569, 576 (Fed. Cir. 1983); see Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d1101, 1109, 231 U.S.P.Q. 185, 191 (Fed. Cir. 1986) (holding that affirmative duty of due carenormally entails obtaining competent legal opinion before commencing infringing activity butin absence court will examine totality of circumstances); Rosemount v. Beekman Instruments,Inc., 727 F.2d 1540, 1547-48, 221 U.S.P.Q. 1, 8 (Fed. Cir. 1984) (stating that there is duty toobtain competent legal advice before initiating potential infringing activity); Central Soya Co.v. Geo. A. Hormel & Co., 723 F.2d 1573, 1577, 220 U.S.P.Q. 490, 493 (Fed. Cir. 1983) (statingthat defendant had affirmative duty to exercise due care to determine whether productwas infringing patent).237. Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 628-29, 225U.S.P.Q. 634, 644 (Fed. Cir. 1985), cert. dismissed, 474 U.S. 976 (1985).238. Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 455, 227 U.S.P.Q. 293,298 (Fed. Cir. 1985).

1126THE AMERICAN UNIVERSITY LAw REVIEW[VoI. 37:1087ment until two years after the infringement began. 239 In addition,the opinion of an in-house, nonpatent counsel, which was givenwithout a review of the complete ex parte prosecution history andbased essentially on statistics of patent invalidity, fell within therealm of non-competent legal advice regarding infringement. 240While obtaining advice solely from in-house counsel does not in itselfestablish a lack of good faith, it is a factor that warrants consideration.24 1 The court will discount an opinion that is merelyconclusory with little or no supporting analysis. 242On the other hand, attempting to avoid infringement by designingaround a patent under which another has taken a license may be"fundamentally unfair," but is not sufficient to warrant increaseddamages and/or attorneys' fees. 243 The court in Yarway Corp. v. Eur-Control USA, Inc. 244 commented that "the incentive to 'designaround' patents is a positive result of the patent system." 245A good faith belief in invalidity, even in a "close" case, will alsoavert increased damages and attorneys' fees:A party who has obtained advice of competent counsel, or otherwiseacquired a basis for a bonafide belief that a patent is invalid,239. Central Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1577, 220 U.S.P.Q. 490,493 (Fed. Cir. 1983).240. Id., 220 U.S.P.Q. at 493. An oral opinion from outside counsel, which was neverreduced to writing, based upon the patent and the accused device and not based upon even acursory study of the patent's prosecution history, was not, in itself, sufficient to establish a lackof good faith in Radio Steel & Mfg. Co. v. MTD Prod., Inc., 788 F.2d 1554, 1559, 229U.S.P.Q. 431, 435 (Fed. Cir. 1986). The court noted, however, that this was not a case inwhichan outside patent attorney initially was reluctant to give an oral opinion based on thefacts before him, but was pressured or coerced into doing so by his client, or [a case]in which the client previously had received a number of carefully prepared writtenopinions but in the particular case had acted on the basis of an oral, almost off-thecuffopinion. In those situations, the opinion ofcounsel might not suffice to establishnonwillfulness.Id. But see Radio Steel & Mfg. Co. v. MTD Prods., 788 F.2d 1554, 1559, 229 U.S.P.Q. 431,434(Fed. Cir. 1986) (upholding lower court determination of no willfull infringement eventhough opinion was oral and not based on even a cursory study of prosecution history ofpatent).241. Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1390, 219U.S.P.Q. 569, 576 (Fed. Cir. 1983).242. For example, the following statement made by a patent counsel, without any supportinganalysis, "I have every reason to believe that the validity of the aforesaid patent cannotbe maintained and that it will be declared null and void by the court handling thelitigation," has been held not to amount to an "authoritative opinion" upon which a goodfaith reliance on invalidity may be based. Kor. Corp. v. Wilco Marsh Buggies & Draglines,761 F.2d 649, 656, 225 U.S.P.Q. 985, 989 (Fed, Cir.), cert. denied, 474 U.S. 902 (1985).243. Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 277-78, 227 U.S.P.Q. 352,358-59 (Fed. Cir. 1985).244. Id. at 268, 227 U.S.P.Q. at 352.245. Id., 227 U.S.P.Q. at 358; see State Indus. v. A.O. Smith Corp., 751 F.2d 1226, 1236,224 U.S.P.Q. 418, 424 (Fed. Cir. 1985) (stating that one benefit of patent system is its "negativeincentive" to "design around" competitor's products).

1988] THE FEDERAL CIRCUIT: A FiFTH ANNIVERSARY LOOK 1127can be said to serve the patent system in challenging the patent ina lawsuit conducted fairly, honestly, and in good faith. Such aparty should not have increased damages or attorney fees imposedsolely because a court subsequently holds that belief unfounded,particularly when the issues may be fairly described as",close.", 246The risk of willful infringement and the critical role of advice ofcompetent counsel requires that prudent companies make a study ofexisting patents before making major investments in new products.Such studies should be done with the recognition that they may becomekey defense evidence in later proceedings. 2471. The prior standardD. Damages-Reasonable RoyaltiesA money damages recovery for patent infringement may not beless than a reasonable royalty. 248 Courts typically define a reasonableroyalty as one that would have resulted from a hypotheticalarm's length negotiation between a willing patent owner and a willingpotential user of the patented invention. 249 In Georgia-PacificCorp. v. United States Plywood Corp. ,250 a leading case prior to the establishmentof the Federal Circuit and a case with continuing instructivevalue, the District Court for the Southern District of NewYork explained the rationale for the hypothetical negotiation approachand the relevance of the many factors that affect such anegotiation. 25 1246. Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1581, 230 U.S.P.Q. 81, 92(Fed. Cir. 1986); Windsurfing Int'l, Inc. v. Fred Ostermann GmbH, 668 F. Supp. 812(S.D.N.Y. 1987) (oral and written informal opinions that issues are difficult and close, butpatent probably invalid, sufficient to preclude willful infringement).247. It also should be noted that the defense may require testimony by the lawyer involvedand invoke complex attorney-client privilege issues.248. 35 U.S.C. § 284 (1982).249. See, e.g., Foster v. American Mach. & Foundry Co., 492 F.2d 1317, 1321, 182U.S.P.Q. 1, 4 (2d Cir. 1979); Hughes Tool Co. v. G.W. Murphy Indus., 491 F.2d 923, 930,180 U.S.P.Q. 353, 358 (5th Cir. 1973); Egry Register Co. v. Standard Register Co., 23 F.2d438, 443 (6th Cir. 1928).250. 318 F. Supp. 116, 166 U.S.P.Q. 235 (S.D.N.Y. 1970), modified and aff'd, 446 F.2d 295,170 U.S.P.Q. 369 (2d Cir. 1971).251. Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 116, 121, 166U.S.P.Q. 235, 240 (S.D.N.Y. 1970), modied and aff'd, 446 F.2d 295, 170 U.S.P.Q. 369 (2d Cir.1971). The court stated:The [willing buyer-willing seller] rule is more a statement of approach than a tool ofanalysis .... Where a willing licensor and a willing licensee are negotiating for aroyalty, the hypothetical negotiations would not occur in a vacuum of pure logic.They would involve a market place confrontation of the parties, the outcome ofwhich would depend on such factors as their relative bargaining strength; the anticipatedamount of profits that the prospective licensor reasonably thinks he would loseas a result of licensing the patent as compared to the anticipated royalty income; theanticipated amount of net profits that the prospective licensee reasonably thinks he

1128 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087While the Second Circuit affirmed the district court's findingsconcerning the factors relevant in hypothetical negotiations, it heldthat the district court had committed "basic error" by failing to allowthe licensee "a reasonable profit after paying the suppositiousroyalty" despite its "professed intention to do so."252 The methodof calculating a royalty enunciated by the Second Circuit has becomeknown as the "analytical approach." 2 532. The federal circuit standardThe Federal Circuit continues to follow a flexible approach addressinga variety of factors similar to the approach used in Georgia-Pacific, including the Second Circuit's view that the reasonable royaltycalculation falls within the sound discretion of the districtcourt, 2 54 and has endorsed several approaches to the method ofmeasuring a reasonable royalty.The Federal Circuit used the reasonable royalty measure when itupheld an award of $300 per week, or a total of $33,600, based onroyalties in the range of $250-$300 per week paid by others in theindustry for use of a comparable process in the industry. 255 Thecourt also had taken into consideration cost savings when it affirmedan award calculated as one-third of the defendant's cost savings resultingfrom its use of the patented apparatus and method instead ofthe prior art method in Hanson v. Alpine Valley Ski Area, Inc. 256In TWM Manufacturing Co. v. Dura Corp. ,257 the Federal Circuit affirmeda district court's award of a thirty percent royalty calculatedwill make; the commercial past performance of the invention in terms of public acceptanceand profits; the market to be tapped; and any other economic factor thatnormally prudent businessmen would, under similar circumstances, take into considerationin negotiating the hypothetical license.Id., 166 U.S.P.Q. at 240.252. 446 F.2d 295, 299, 170 U.S.P.Q. 369, 373 (2d Cir. 1971). Nevertheless, the appealscourt then modified the royalty of $50 awarded by the district court to $35.65 because of its'failure to allow the licensee a "reasonable profit." Id., 170 U.S.P.Q. at 373.253. Supra note 252; see Tektronics, Inc. v. United States, 193 U.S.P.Q. 384 (Ct. Cl. 1977)(computing a 10% reasonable royalty by subtracting from the sales price of the patented itemthe cost of manufacture and the infringer's usual rate of profit).254. TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 898, 229 U.S.P.Q. 525, 526 (Fed. Cir.1986). The recent case of Hughes Tool Co. v. Dresser Indus. Inc., a case in which the FederalCircuit vacated an award of a 25% royalty based on a consideration of the infringer's projectedprofits on rock bits and the amount that the patent in question contributed to the valueof the bits, does not stand for the reverse proposition. 2 U.S.P.Q.2d 1396 (Fed. Cir. 1987).In that case, the court vacated a royalty award of $132,096,430 (including prejudgment interest),not because it disagreed with the district court's method of assessing a reasonable royalty,but because of the "clearly erroneous" factual finding by the district court concerningthe infringer's projected profits as a percentage of sales. Id. at 1401.255. American Original Corp. v. Jenkins Food Corp., 774 F.2d 459, 462, 227 U.S.P.Q.299, 301 (Fed. Cir. 1985).256. 718 F.2d 1075, 1077, 219 U.S.P.Q. 679, 681 (Fed. Cir. 1983).257. 789 F.2d 895, 229 U.S.P.Q. 525 (Fed. Cir. 1986).

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1129under the analytical approach articulated in Georgia-Pacific. The districtcourt had adopted the magistrate's calculation of royalties,which subtracted (1) the overhead expenses and (2) the infringer'susual or acceptable net profit from the infringer's admitted grossprofits. 258 The magistrate chose cost savings as an appropriate measureof damages after applying the pertinent factors for determininga reasonable royalty set forth by the district court in Georgia-Pacific.25 9 The one-third figure was derived from expert testimony asto what would have been deemed acceptable to both parties in anarm's-length negotiation in accordance with the Georgia-Pacific analyticalapproach. 260In Deere & Co. v. International Harvester Co.,261 the Federal Circuitaffirmed a fifteen percent royalty rate calculated under a willing licensor/willinglicensee test which used several of the factors setforth in Georgia-Pacific. 262 The Federal Circuit held that in determininga reasonable royalty it is not improper to consider the impact ofa patented product on the sale of nonpatented products becausethis is evidence of the relative bargaining position of the twoparties. 263In the $134 million royalty computation of Smith International, Inc.v. Hughes Tools Co., the patentee was awarded a ten percent rate orthree times the cost savings the infringer enjoyed by using the patenteddevice instead of the unviable alternative. 264The Court's treatment of reasonable royalties reflects the soundjudgment that the marketplace uses many different mechanisms forvaluing inventions and that all of them are proper. It also indicatesthe possibility of substantial damages awards by the reasonable royaltyroute.IV.1. The prior standardAFFIRMATIVE DEFENSESA. Fraud During ProsecutionThe notion that patent applicants have a duty of candor in theirconduct during ex parte prosecution in the Patent Office was well es-258. TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 899, 229 U.S.P.Q. 525, 529 (Fed. Cir.1986).259. Id. at 899-900, 229 U.S.P.Q. at 527-29.260. Id, 229 U.S.P.Q. at 527-29.261. 710 F.2d 1551, 218 U.S.P.Q. 481 (Fed. Cir. 1983).262. Deere & Co. v. International Harvester Co., 710 F.2d 1551, 1558-59, 218 U.S.P.Q.481, 487 (Fed. Cir. 1983).263. Id at 1559, 218 U.S.P.Q. at 487.264. 229 U.S.P.Q. 81, 99 (C.D. Cal. 1986).

1130THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087tablished prior to the Federal Circuit. 265 For a defense of "fraud onthe Patent Office"-failure to follow the duty of candor-to succeed,the party had to show that an intentional misrepresentation ofa fact material to the Patent Office examination process had occurred.266 Three different tests to determine "materiality" evolved,including an objective "but for" test, a subjective "but for" test, anda "might have been" test. 267 In Plastic Container Corp. v. ContinentalPlastics, 268 the Tenth Circuit concluded that the subjective "but for"test was the appropriate standard to use and that the subjective"might have been" test was "too speculative." 269 The objective"but for" test was applied, for example, in Coming Glass Works v.Anchor Hocking Glass Corp. 270 In explaining why the defendants' antitrustcounterclaims had failed, the court in Corning Glass noted thatbecause the application was patentable over the prior art, any misrepresentationaimed at overcoming the prior art would not be material.27 ' The defense of fraud on the Patent Office generallyrequired a higher burden of proof than a mere preponderance ofthe evidence. Thus, courts held that the appropriate standardshould be the "clear and convincing" evidence standard or theproof to a "reasonable degree of certainty" standard. 2 722. The federal circuit standardThe Federal Circuit has expounded upon the fraud doctrinenowtermed inequitable conduct-by a series of important decisionsconcerning the obligations of disclosure during patent prosecution.In Rohm & Haas Co. v. Crystal Chemical Co. 273 the court stressed thatan important policy consideration in such cases is the discouragementof dishonest conduct before the Patent Office. 274 Proof of an265. See Precision Instrument Mfg. v. Automotive Maintenance Mach. Co., 324 U.S. 806,818, 65 U.S.P.Q. 133, 144, reh'g denied, 325 U.S. 893 (1945).266. Plastic Container Corp. v. Continental Plastics, 607 F.2d 885, 899 (10th Cir. 1979).267. Id.268. 607 F.2d 885 (10th Cir. 1979).269. Id at 900.270. 253 F. Supp. 461 (D. Del. 1966), af'd in reL part, 374 F.2d 473 (3d Cir. 1967).271. Coming Glass Works v. Anchor Hocking Glass Corp., 253 F. Supp. 461, 469-70 (D.Del. 1966), aff'd in reL part, 374 F.2d 473 (3d Cir. 1967).272. Scott Paper Co. v. Fort Howard, 432 F.2d 1198, 1204, 167 U.S.P.Q. 4, 9 (7th Cir.1970) (stating that fraud must be established by clear and convincing evidence), cert. denied,401 U.S. 913 (1971); Ransburg Electro-Coating Corp. v. Nordsun Corp., 293 F. Supp. 448,483, 158 U.S.P.Q. 385, 421 (N.D. Ill. 1968) (adopting clear and convincing evidence standard);Reeves Bros. v. United States Laminating Corp., 282 F. Supp. 118, 128, 157 U.S.P.Q.235, 244 (E.D.N.Y. 1968) (noting that proof of fraud must be to a reasonable degree of certainty),aff'd, 417 F.2d 869 (2d Cir. 1969).273. 722 F.2d 1556, 222 U.S.P.Q. 289 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).274. Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1571, 222 U.S.P.Q. 289,301 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1131intentional, material misrepresentation to, or inequitable conductregarding, the Patent Office qualifies as an affirmative defense to aninfringement claim. 2 75 A party must prove inequitable conduct byclear and convincing evidence. 2 76a. MaterialityThe Federal Court has approved the threshold tests for materialitydeveloped prior to its creation: the objective "but for" test; thesubjective "but for" test; the "but it may have been" test; and alsothe Patent Office standard of whether there is a substantial likelihoodthat a reasonable examiner would have considered the omittedor false information important. 2 77 The Patent Office ruledefines information as "material where there is a substantial likelihoodthat a reasonable examiner would consider it important in decidingwhether to allow the application to issue as a patent." 278 TheFederal Circuit has commented that the Patent Office rule is an appropriatestarting point for any analysis of materiality because it appearsto be the broadest. 2 79 Nevertheless, the court has stated thatmateriality alone does not govern the inquiry into inequitable conduct.280 A determination of inequitable conduct, therefore, requiresa careful balancing of intent in light of materiality. 28 'As stated in the Patent Office rules of procedure, an obligation todisclose information to the Patent Office extends to prior art or anyother information which a reasonable examiner would have consideredimportant in deciding whether to allow the application to issue275. Argus Chem. Corp. v. Fibre Glass-Evercoat Co., 759 F.2d 10, 14, 225 U.S.P.Q. 1100,1103 (Fed. Cir.), cert. denied, 474 U.S. 903 (1985).276. See Kimberly-Clark Corp. v.Johnson &Johnson, 745 F.2d 1437, 1454, 223 U.S.P.Q.603, 614 (Fed. Cir. 1984); KansasJack, Inc. v. Kuhn, 719 F.2d 1144, 1151, 219 U.S.P.Q. 857,861 (Fed. Cir. 1983).277. J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1559, 223 U.S.P.Q. 1089, 1092(Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985); American Hoist & Derrick Co. v. Sowa &Sons, Inc., 725 F.2d 1350, 1363, 220 U.S.P.Q. 763, 773 (Fed. Cir.), cert. denied, 469 U.S. 821(1984).278. 37 C.F.R. § 1.56(a) (1987).279. American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1363, 220U.S.P.Q. 763, 773 (Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985).280. Id., 220 U.S.P.Q. at 773. The court stated that:[q]uestions of "materiality" and "culpability" are often interrelated and intertwined,so that a lesser showing of the materiality of the withheld information may sufficewhen an intentional scheme to defraud is established, whereas a greater showing ofthe materiality of withheld information would necessarily create an inference that itsnon-disclosure was "wrongful."Id., 220 U.S.P.Q. at 773 (quoting Digital Equip. Corp. v. Diamond, 653 F.2d 701, 716, 210U.S.P.Q. 521, 538 (Ist Cir. 1981)).281. Id. at 1364, 220 U.S.P.Q. at 774; accord, J.P. Stevens Co. v. Lex Tex Ltd., 747 F.2d1553, 1560, 223 U.S.P.Q. 1089, 1092 (Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985).

1132 THE AMERICAN UNIVERSITY LAw REVIEW[Vol. 37:1087as a patent. 28 2 The court has held that this obligation is neither limitedto references which fully anticipate a patent, thereby destroyingnovelty under section 102, nor to the disclosure of references whichwould have rendered the subject matter unpatentable as obviousunder section 103.283In one case, the court held that there was no obligation to discloseto the Patent Office prior art designs that were used as a startingpoint in the development of the patented design if there are significant,non-obvious differences between the prior art design and thepatented design. 28 4 Also, the court has found no duty to disclose tothe Patent Office all uses which occur prior to the application date,but only "material" uses such as commercial sales of the same or asimilar product that occurred more than one year prior to the filingdate of the application. 285 The fact that the Patent Office rejected areissue application based upon a previously uncited. prior art referenceconstituted strong probative evidence that a reference hasbeen found material. 28 6The Federal Circuit has held that the failure of a patentee to disclosematerial information to a court in an adversary proceeding onthe issue of validity did not rise to the level of a breach of the duty ofdisclosure and thus, did not render a patent unenforceable. 28 7 Consequently,the standard applicable to an ex parte prosecution doesnot apply in a court proceeding. 288282. 37 C.F.R. § 1.56(a) (1984).283. Argus Chem. Corp. v. Fibre Glass-Evercoat Co., 759 F.2d 10, 13, 225 U.S.P.Q. 1100,1102 (Fed. Cir.), cert. denied, 474 U.S. 903 (1985).284. See Pacific Furniture Mfg. Co. v. Preview Furniture Corp., 800 F.2d 1111, 1114, 231U.S.P.Q. 67, 69 (Fed. Cir. 1986) (holding that patent owner's failure to disclose reliance onformer designs not sufficiently material because examiner would not have considered themimportant in deciding whether to issue patent).285. Reactive Metals &Alloys Corp. v. ESM, Inc., 769 F.2d 1578,1583,226 U.S.P.Q. 821,824-25 (Fed. Cir. 1985). In another case, the Federal Circuit stated that resolution of the"subjective but for" test is factual, requiring the testimony of the patent examiner regardingthe effect of the omitted or misrepresented information. See American Hoist & Derrick Co. v.Sowa & Sons, Inc., 725 F.2d 1350, 1363 n.4, 220 U.S.P.Q. 763, 773 n.4 (Fed. Cir.), cert. denied,469 U.S. 821 (1984). Thus, in Hycor Corp. v. Schlueter Co., where the prosecution history of thepatent in suit showed that the patent examiner knew of devices such as those shown in arelevant non-disclosed prior art catalog, and the examiner was neither called to testify at trialnor deposed, the Federal Circuit reversed the trial court's finding of materiality based on theundisclosed information. 740 F.2d 1529, 1539-40, 222 U.S.P.Q. 553, 561 (Fed. Cir. 1984).286. In rejarabek, 789 F.2d 886, 890, 229 U.S.P.Q. 530, 533 (Fed. Cir. 1986).287. Atlas Powder Co. v. Ireco Chem., 773 F.2d 1230, 1234, 227 U.S.P.Q. 289, 292-93(Fed. Cir. 1985).288. Id. at 1234, 227 U.S.P.Q. at 293. The district court, in granting a motion for a preliminaryinjunction, had relied on the outcome of prior litigation in determining the likelihoodof success on the merits. Id. at 1232, 227 U.S.P.Q. at 291. The prior litigation had beenbefore a different district court, but had been appealed to the Federal Circuit. The case involveda different defendant, but dealt with the same patent for a chemical used as a blastingagent compound. Id. at 1231-32, 227 U.S.P.Q. at 290-91. In the second litigation, the defendantargued that in the prior litigation the plaintiff had failed to disclose that the com-

1988] THE FEDERAL CIRCurr: A FiFTH ANNIVERSARY LOOK 1133b. IntentIn addition to a requirement of materiality of the false or nondisclosedinformation, a threshold intention to mislead the PatentOffice must be proven. The requisite intent for an inequitable conductdefense is established "where an actor in applicant's positionwould have reasonably known that the reference was material, e.g.,that the reference would have been important to a reasonable examinerin deciding whether to allow the claims." 2 89Similarly, subjective good faith of counsel does not always negateintent if the attorney knew or should have known that the withheldinformation was material. 290 In In re Jarabek, 29 1 for example, theFederal Circuit affirmed a lower court's finding of gross negligencewhich led to an inference of an intent to mislead the Patent Office.292 In this case, applicant's counsel had known of a material referencefrom prosecution of another patent application, but failed toinform the examiner of the reference in a pending patent application.293 Simple negligence, oversight, or an erroneous judgment,however, does not establish the requisite level of intent for inequitableconduct. 294c. Cure offraudThe Federal Circuit has suggested a way to cure inequitable conductduring prosecution. The applicant can show that its conductpound disclosed in the primary prior art reference contained air. Id. at 1234, 227 U.S.P.Q. at292-93.289. J.P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1564, 223 U.S.P.Q. 1089, 1096(Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985); see Argus Chem. Corp. v. Fibre Glass-Evercoat Co., 759 F.2d 10, 14, 225 U.S.P.Q. 1100, 1103 (Fed. Cir.), cert. denied, 474 U.S. 903(1985).290. Argus Chem. Corp. v. Fibre Glass-Evercoat Co., 759 F.2d 10, 14-15, 225 U.S.P.Q.1100, 1103 (Fed. Cir.), cert. denied, 474 U.S. 903 (1985); see Rolls-Royce Ltd. v. GTE ValeronCorp., 800 F.2d 1 101, 1107, 231 U.S.P.Q. 185, 191-92 (Fed. Cir. 1986) (asserting that subjectivegood faith alone would not suffice if an actor in applicant's position should have knownthat the undisclosed information was material); Laitram Corp. v. Cambridge Wire Cloth Co.,785 F.2d 292, 294, 228 U.S.P.Q. 935, 936 (Fed. Cir. 1986) (explaining Argus Chemical Corp.and asserting that case did not hold that subjective good faith is never a defense in inequitableconduct claim).291. 789 F.2d 886, 229 U.S.P.Q 530 (Fed. Cir. 1986).292. In reJarabek, 789 F.2d 886, 891, 229 U.S.P.Q. 530, 533 (Fed. Cir. 1986).293. Id., 229 U.S.P.Q. at 533; see A.B. Dick Co. v. Burroughs Corp., 798 F.2d 1392, 1397-98 (Fed. Cir. 1986) (patentee's failure to cite to examiner reference which patentee describedas "similar" in intervening interference, although claims were allowed after examiner foundreference on his own, held inequitable). While a hypothetical person of ordinary skill in theart is presumed to have knowledge of all material prior art when the issue of obviousness isdetermined, the inventor himself is not presumed to have such knowledge. Kimberly-ClarkCorp. v.Johnson &Johnson, 745 F.2d 1437, 1454, 223 U.S.P.Q. 603, 614 (Fed. Cir. 1984).294. Reactive Metals & Alloys Corp. v. ESM, Inc., 769 F.2d 1578, 1584, 226 U.S.P.Q. 821,825 (Fed. Cir. 1985) (quoting J.P. Stevens Co. v. Lex Tex Ltd., 747 F.2d 1553, 1560, 223U.S.P.Q. 1089, 1092 (Fed. Cir.), cert. denied, 469 U.S. 821 (1984)).

1134THE AMERICAN UNIVERSITY LAW REVIEW[VOI. 37:1087was cured by (1) expressly informing the Patent Office of the misrepresentation"stating specifically wherein it resides"; (2) informingthe Patent Office of the particular facts so as to make it clear thatfurther examination is necessary if any Patent Office action waslinked to the misrepresentation; and (3) establishing patentabilityon the basis of the new and accurate record. 295 A complete curemust be established by "dear, unequivocal, and convincing evidence."29 6 The court, however, has qualified the cure concept byholding that it does not occur through submission to the examinerof an abundance of largely irrelevant data from which it is arguedthat the examiner should have to discover the important data. 297Candor in the exparte patent prosecution is a necessary ingredientof a successful examination system and contributes to the issuanceof stronger patents. Nonetheless, the extension of the defense tomisrepresentations that would not affect issuance of the patent butwould merely be "important" to a "reasonable" examiner leaves afoggy standard for imposing a complete defense that sometimes carrieswith it an unfortunate opprobrium.1. The prior standardB. Patent MisuseThe Supreme Court historically regarded the patent right as a"special privilege" 298 to be construed narrowly 299 in a generalscheme of competition. Accordingly, the patent misuse doctrinewas created to deny relief against patent infringement to a patentee"if he has attempted illegally to extend the scope of his patent monopoly."3 00 The question is not whether the patentee has violatedthe Clayton Act, but rather whether a court of equity is willing toprotect the patent monopoly. 30 ' Thus, the showing of anticompetitiveeffect required for affirmative relief under the Rule of Reason ofSection 1 of the Sherman Act 30 2 has not been identified as a traditionalelement of the misuse defense. 303 A misuse defense could beasserted even when actual damages did not result from the misuse295. Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1572, 220 U.S.P.Q. 289,301-02 (Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984).296. Id., 220 U.S.P.Q. at 301-02.297. Id., 220 U.S.P.Q. at 302.298. Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 492 (1942).299. See Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 666 (1944).300. Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 180 (1980).301. Morton Salt v. G.S. Suppiger Co., 314 U.S. 488, 490 (1942).302. National Soc. of Professional Eng'rs. v. United States, 435 U.S. 679, 691-92 (1978).303. See Laitram Corp. v. King Crab, Inc., 244 F. Supp. 9, 17 (D. Alaska 1965); Peelers Co.v. Wendt, 260 F. Supp. 193 (W.D. Wash. 1966). In these cases there was proof of an anticompetitiveeffect as the predicate to a holding of patent misuse based on royalty discrimination.

1988] THE FEDERAL CIRcurr: A FirH ANNIVERSARY LOOK 1135and even in the absence of a showing of impact upon the party assertingthe defense.3 °4In Morton Salt v. G.S. Suppiger Co.,305 for example, the SupremeCourt found patent misuse in a tying arrangement where the holderof a patent on a machine for depositing salt tablets leased and licensedits machines to third parties only upon condition that thelicensee purchase unpatented salt tablets from the patentee's subsidiary.306 The patentee had asserted his patent against an allegedinfringer who had not been victimized by the tie-in and had notshown damages from the tie-in. 30 7Equitable limitations have been applied to the doctrine of patentmisuse. A relationship between the patent in suit and the patentee'simproper conduct had to be established in order for the misuse doctrineto come into play. 30 8 Also, if the patent owner has purgedhimself of the conduct which comprises the misuse, he may againenforce his patent. 30 9 For the patentee to satisfy his burden of demonstratinga purge, the improper practices must have been abandonedand their consequences dissipated. 3102. The federal circuit standardThe Federal Circuit's major substantive decision on the patentmisuse defense is the recent case of Windsurfing International Inc. v.AMF, Inc. 31 1 The Federal Circuit suggested the added requirementthat misuse be shown to be anticompetitive in actual effect. 3 12In AMF, Inc. an allegation of patent misuse was based on a paragraphincluded in the patentee's license agreements in which thelicensees acknowledged that the licensor's federally registeredtrademarks 313 were valid trademarks and that the licensees wouldnot use the trademarks in any way. The district court determined,however, that the trademarks had become generic and that, becauseplaintiff had earned a substantial portion (fifteen percent) of its rev-304. Morton Salt v. G.S. Suppiger Co., 314 U.S. 488, 493-94 (1942); see Berlenbach v.Anderson & Thompson Ski Co., 329 F.2d 732, 784 (9th Cir.), cert. denied, 379 U.S. 830 (1964);Baldwin-Lima-Hamilton Corp. v. Tatnall Meas. Sys. Co., 169 F. Supp. 1, 31 (E.D. Pa. 1958),aff'd, 268 F.2d 395 (3d Cir.) (per curiam), cert. denied, 361 U.S. 894 (1959).305. 314 U.S. 488 (1942).306. Id at 490.307. Id.308. See Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933).309. See United States Gypsum Co. v. National Gypsum Co., 352 U.S. 457 (1957); MortonSalt v. G.S. Suppiger Co., 314 U.S. 488 (1942).310. See Preformed Line Prods. Co. v. Fanner Mfg. Co., 328 F.2d 265, 279 (6th Cir.), cert.denied, 379 U.S. 846 (1964).311. 782 F.2d 995, 228 U.S.P.Q. 562 (Fed. Cir.), cert. denied, 106 S. Ct. 3275 (1986).312. Id. at 1001, 228 U.S.P.Q. at 568.313. "WINDSURFER," "WINDSURFING," "WIND SURF" and a logo.

1136THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087enues from its sales of articles displaying the marks, the licenseagreement had an "intrinsic[ally] inhibiting effect on competitionbeyond the scope of the patent and that the provisions wereunenforceable." 3 14The Federal Circuit reversed on appeal, holding that the districtcourt had been improperly persuaded to rest its holding of misuseentirely on an after-the-fact determination that the marks had becomegeneric. 3 15 The court went on to describe the patent misusedoctrine in traditional terms, adding that it requires the alleged infringerto show that the patentee had broadened the scope of thepatent so as to have an anticompetitive effect. 3 1 6 According to thecourt, in order to find patent misuse, the overall effect of the licensemust unlawfully restrain competition. 317 The Seventh Circuit's decisionin USM Corp. v. SPS Technologies, Inc. 3 1 8 was cited for the propositionthat a licensing practice cannot be per se anticompetitive.That court ruled that the provision in issue did not restrain competitionunlawfully in an appropriately defined market. 31 9While the meaning of the Federal Circuit's reading of patent misuseis not perfectly clear, it reflects the court's view that an actualanticompetitive effect ought to be a requirement for patent misuse.In a subsequent decision, Senza-Gel Corp. v. Seiffhart, 3 20 the court endorseda conventional definition of a tie-in. However, the court suggestedthat the determination of whether there are two products forpatent misuse tying purposes in licensing need look only to the natureof the claimed invention, rather than consumer demand as314. Windsurfing Int'l Inc. v. Ostermann GmbH, 613 F. Supp. 933, 953, 227 U.S.P.Q.927, 942 (S.D.N.Y. 1985) (citing Robintech, Inc. v. Chemidus Wavin Ltd., 197 U.S.P.Q. 657,661 (D.D.C. 1978) and Lear v. Adkins, 395 U.S. 653 (1969)).315. Windsurfing Int'l Inc. v. AMF, Inc., 782 F.2d 995, 1002, 228 U.S.P.Q. 562,567 (Fed.Cir.), cert. denied, 106 S. Ct. 3275 (1986).316. 782 F.2d at 1001, 228 U.S.P.Q. at 566-67 (citing Bio-Rad Labs., Inc. v. Nicolet InstrumentCorp., 739 F.2d 604, 617, 222 U.S.P.Q. 654, 664 (Fed. Cir.), cert. denied, 469 U.S.1038 (1984) and Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, 343(1971)); Senza-Gel Corp. v. Seiffhart, 1986-2 Trade Cas. (CCH) 67,307 at p. 61, 573 n.5(1986).317. Windsurfing Int'l Inc. v. AMF, Inc., 782 F.2d 995, 1002, 228 U.S.P.Q. 562,567 (Fed.Cir.), cert. denied, 106 S. Ct. 3275 (1986).318. 694 F.2d 505, 510-14, 216 U.S.P.Q. 959, 963-66 (7th Cir. 1982), cert. denied, 462 U.S.107 (1983).319. USM Corp. v. SPS Technologies, Inc., 694 F.2d 505, 510-14, 216 U.S.P.Q. 959, 963-66 (7th Cir. 1982), cert. denied, 462 U.S. 107 (1983); Windsurfing Int'l Inc. v. AMF, Inc., 782F.2d 995, 1002, 228 U.S.P.Q. 562, 567 (Fed. Cir.), cert. denied, 106 S. Ct. 3275 (1986). In USM!Corp. v. SPS Technologies, Inc., the Seventh Circuit held that a royalty schedule providing fordifferent rates to different licensees did notperse constitute patent misuse. 694 F.2d 505, 510-14, 216 U.S.P.Q. 959, 963-66 (7th Cir. 1982), cert. denied, 462 U.S. 107 (1983). The courtstated that misuse claims "must be evaluated under antitrust principles" and because plaintiff"made no effort to present evidence of actual or probable anticompetitive effect in a relevantmarket," no misuse was found. Id. at 512-13, 216 U.S.P.Q. at 963-66.320. 803 F.2d 661 (Fed. Cir. 1986).

1988] THE FEDERAL CIRCUIT: A FiFTH ANNIVERSARY LOOK 1137traditional antitrust non-patent analysis does. 321 In what may be avague reference to the court's discussion of anticompetitive effect inAMF, the court observed that "we are bound, however, to adhere toexisting Supreme Court guidance in the area until directed by Congressor by the Supreme Court." 322In sum, the Federal Circuit favors the requirement that there be ashowing of anticompetitive effect for the misuse defense, but hasbeen unclear about implementing it.1. The prior standardV. PRIVILEGEA. The Attorney-Client PrivilegeA number of early cases had held that certain letters and otherdocuments written by attorneys concerning their clients' patentswere not within the scope of protection of the attorney-client privilege.For example, in American Cyanamid Co. v. Hercules Powder Co. ,323the court held that certain documents written by attorneys concerninganalyses of patents and the products manufactured under themwere not privileged because "[t]he Court takes this to be public informationon file in the patent office." '3 24 Similarly, in Sperti Products,Inc. v. Coca-Cola Co. ,325 documents authored by attorneys concerningpatents were held not to be privileged because the documents were"based upon public documents such as patents or statutes." 3 26321. Senza-Gel Corp. v. Seiflhart, 803 F.2d 661, 670-71, n.14 (Fed. Cir. 1986).322. Id. at 664-65.323. 211 F. Supp. 85, 135 U.S.P.Q. 235 (D. Del. 1962).324. See American Cyanamid Co. v. Hercules Powder Co., 211 F. Supp. 85, 90, 135U.S.P.Q. 235, 239 (D. Del. 1962).325. 262 F. Supp. 148, 152 U.S.P.Q. 790 (D. Del. 1966).326. See Sperti Prods., Inc. v. Coca-Cola Co., 262 F. Supp. 148, 151, 152 U.S.P.Q. 790,793 (D. Del. 1966); see also United States v. United Shoe Mach. Corp., 89 F. Supp 357, 359, 85U.S.P.Q. 5, 7 (D. Mass. 1950) (associating public documents with other sources of unprivilegedoutside information such as witnesses and judicial opinions). Both the Cyanamidand Sperti decisions were influenced by Zenith Radio Corp. v. RCA, which held that corporatepatent attorneys did not act as lawyers and that their patent related work was therefore, notprivileged. 121 F. Supp. 792, 795 (D. Del. 1954). Since that time, the view expressed in Zenithhas been discredited by the Third Circuit in In re Natta, 4 10 F.2d 187, 192, 161 U.S.P.Q 389,392 (3d Cir.) (acknowledging that recognition of attorney-client privilege and work productdoctrine does not compromise public interest in patent problems), cert. denied, 396 U.S. 836(1969). Other courts also have declined to follow the Zenith line of cases. For example, inCollins & Aikman Corp. v. J.P. Stevens & Co., the court expressly rejected Zenith, reasoning asfollows:Work product and attorney-client privileges exist in the field of patent law and mustbe respected by the court in regulating discovery. It would appear to this court thatthe necessity for frank and full exchange of information between patent attorneysand their clients requires, as it does in other areas, that these communications beprotected by the attorney-client privilege. The policy which dictated the creation ofthe privilege applies with equal force to the area of patent law.

1138 THE AMERICAN UNIVERSITY LAW REVIEW[Vol. 37:1087These views, however, generally have been since discredited. 3 27More recent cases have uniformly held that an attorney's legal adviceregarding public patents is protected by the attorney-clientprivilege. Thus, for example, courts have upheld as privileged alawyer's opinion letter concerning the scope and validity of patents,328 documents relating to the possible infringements of others'patents, 329 correspondence from house patent counsel to generalhouse counsel concerning house counsel's understanding of a firmpatent, 3 30 and other advice concerning patents. 33 12. The federal circuit standardIn American Standard, Inc. v. Pfizer Inc. ,332 the Federal Circuit mayhave disagreed with the prevailing view that an opinion letter on apatent's validity prepared by an attorney for his client is privi-51 F.R.D. 219, 220-21, 169 U.S.P.Q. 296, 297 (D.S.C. 1971).327. See, e.g., Ledex, Inc. v. United States, 172 U.S.P.Q. 538, 539 (Ct. Cl. 1972) (commentingthat Zenith and its progeny do "not represent the best current thinking on the efficacy ofthe attorney-client privilege to communications dealing with patent solicitation"); Garrison v.General Motors Corp., 213 F. Supp. 515, 520-21, 136 U.S.P.Q. 343, 347 (S.D. Cal. 1963)(noting that it did not view communications from outside counsel as opinions on facts gleanedfrom public documents).328. See Knogo Corp. v. United States, 213 U.S.P.Q. 936, 942 (Ct. Cl. 1980) (reasoningthat privilege should apply to communications of technical information); Sylgab Steel & WireCorp. v. Imoco-Gateway Corp., 62 F.R.D. 454,456-57, 182 U.S.P.Q. 187, 188 (N.D. Ill. 1974),aff'd, 534 F.2d 330 (7th Cir. 1976) (stating that documents prepared by defendants' attorneyconcerning disputed patent within scope of attorney-client privilege).329. See Sylgab & Steel Wire Corp. v. Imoco-Gateway Corp., 62 F.R.D. 454, 456-57, 182U.S.P.Q. 187, 188 (N.D. Il1. 1974), aff'd, 534 F.2d 330 (7th Cir. 1976); see also Amerace Corp.v. USM Corp., 183 U.S.P.Q. 506, 507 (T.T.A.B. 1974) (stating that all communications betweenattorney and client as to adoption of trademark, prosecution of application for registrationof a trademark, or the infringement of trademark are within scope of privilegeprotection).330. American Optical Corp. v. Medtronic, Inc., 179 U.S.P.Q. 553, 554 (E.D. Wisc. 1973).The court also held that letters passing between house patent counsel setting forth "conclusionsregarding testing concerning prior art devices, [and] the validity of the [company's]patent" were privileged. Id.331. See, e.g., Illinois Tool Works, Inc. v. KL Spring & Stamping Corp., 207 U.S.P.Q. 806,807 (N.D. Ill. 1980) (holding that invention disclosure forms are protected by attorney-clientprivilege where attorney uses documents to assist him in rendering opinions with regard topatentability and value of invention); EZ Loader Boat Trailers, Inc. v. Shoreline Trailer Sales,Inc., 207 U.S.P.Q. 1002, 1003 (N.D. Tex. 1979) (stating that the opinion of a patent attorneybased on a search of trademark registrations and patents is not different from legal advicesought in any other confidential relationship between an attorney and his client); Fisons Ltd.v. Capability Brown Ltd., 209 U.S.P.Q. 167, 170 (T.T.A.B. 1980) (reasoning that any opinionprepared from search report could be privileged); Miles Laboratories, Inc. v. InstrumentationLaboratory, Inc., 185 U.S.P.Q. 432, 434 (T.T.A.B. 1975) (declaring that comments or opinionsby attorney regarding search reports are privileged); Eutectic Corp. v. Metco, Inc., 61F.R.D. 35, 42 (E.D.N.Y. 1973) (holding that privilege applies to documents dealing with "suggestionsto assist counsel in preparation of a continuation patent application[,] ... possibletechnical strategies which might be adopted in the continuation patent application [and] ...possible strategies in the content and timing of the patent application").332. 828 F.2d 734, 3 U.S.P.Q.2d 1817 (Fed. Cir. 1987).

1988] THE FEDERAL CIRCUIT: A FIFTH ANNIVERSARY LOOK 1139leged. 333 This case arose in an unusual posture in which the clientthat received the legal advice asserted that the letter was not privileged.33 4 The letter had been produced during discovery and theparty was seeking to avoid a waiver of the attorney-client privilege asto the whole subject. 3 3 5The Federal Circuit held that the opinion letter was not privileged,that there was therefore no attorney-client privilege to bewaived, and that another party could not obtain discovery on thatbasis. 33 6 The court stated that the letter "did not reveal, directly orindirectly, the substance of any confidential communication .... ,,337The court, however, acknowledged that patent validity opinions aresubject to the same treatment as counsel's opinions dealing withother areas of the law. 3 38In a strong dissenting opinion, Judge Newman stated that she was"greatly concerned with the majority's treatment of the attorney-clientprivilege," which was "blatantly contrary" to precedent andwarned that the "ruling negates decades of hard won precedent,and is a giant step backward into uncertainty, confusion, andprejudice." 3 39CONCLUSIONThe Court of Appeals for the Federal Circuit has profoundly affectedpatent jurisprudence. The strengthened patent comes at atime when intellectual property is of special value in this countryrelative to other forms of industrial wealth. While the court in a fewareas has been inconsistent and even surprising, this is characteristicof the common law, case-by-case approach. The court is meeting itschallenge of hammering out a coherent, comprehensive, rationalandyes, improved-jurisprudence.333. The cases and policy arguments on both sides of this issue are discussed in Sobel, 4CARDOzo L. REv. 649 (1983).334. American Standard, Inc. v. Pfizer, 828 F.2d 734, 737-38, 3 U.S.P.O.2d 1817, 1818(Fed. Cir. 1987).335. Id. at 738, 3 U.S.P.Q.2d at 1820.336. Id. at 739, 3 U.S.P.Q.2d at 1825.337. Id. at 745-56, 3 U.S.P.Q.2d at 1824-25.338. Id. at 745, 3 U.S.P.O-2d at 1825.339. Id. at 747-49, 3 U.S.P.Q.2d at 1826-27 (Newman, J. dissenting).