Reconsidering Estoppel: Patent Administration and the Failure of Festo

Abstract:     
Last Term, in Festo Corporation v. Shoketsu Kinzoku Kogyo Kabashuki Co., the United States Supreme Court missed perhaps the most important opportunity for patent law reform in two decades. At the core of the failure to grasp the implications of "prosecution history estoppel" - a judicially-crafted principle limiting the enforceable scope of patents based on acts occurring during their application process - is the heretofore universal (but ultimately unsupportable) view of the doctrine as an arbitrary ex post limitation on patent scope. This Article demonstrates the serious flaws in this traditionalist approach, and develops a new theory of prosecution history estoppel based on its ex ante effects. This shift of focus from the allocation of liability during infringement (ex post) to the way the rule generates incentives both during and before inventors apply for patents (ex ante) offers substantial insights into the central role that this venerable doctrine plays in the modern patent administrative system. In particular, the Article argues that prosecution history estoppel is best viewed as an information-forcing default penalty rule, where the possibility of lost patent scope induces patentees to produce socially-valuable information early in the life of the patent. Other benefits include the internalization of costs related to certain activities during patent prosecution, and increased enforcement of the institutional arrangements between the Patent Office and the Judiciary. Indeed, the considerable analytic advantages observed in this context strongly suggest that the Article's methodological approach of reconsidering the patent law in an explicitly ex ante framework has applications well beyond prosecution history estoppel.

Keywords: patents, law and economics, prosecution history estoppel, doctrine of equivalents, ex ante, ex post, default rules, PTO, federal circuit, patent prosecution, patent litigation, intellectual property, patent reform, patent administration, patent office

JEL Classifications: L51, K39, K00, K40, D23

Accepted Paper Series