Center for Advanced Study & Research on Innovation Policy


CASRIP Newsletter - Winter/Spring 1999, Volume 5, Issue 4

The Best Approach for Patentees to Prevent Competitors' Trivial Modifications

Richo Corp. v. Nashua Corp.1

Although being an unpublished opinion, Richo suggests the best strategy, without resorting to the doctrine of equivalents, to prevent competitors from circumventing patent infringement through trivial replacements and modifications. The facts in Richo represent a typical situation between a patentee and its licensee. The defendant, Nashua, was a former licensee of Richo's patent on a new toner cartridge, but decided to terminate the agreement. Nashua tried to avoid infringement by redesigning its cartridges, particularly by eliminating the removable gear ring and the internal spiral guide rib. Both the ring and the guide rib are required by the claims in the patent-in-suit. After learning of the defendant's attempt, Richo filed a continuation application, including claims eliminating the limitations of the ring and the guide rib. After the application matured into an issued patent, Richo notified the defendant about the new patent, but the defendant refused to review the patent and terminated the agreement.

In an infringement suit filed by Richo, the defendant raised four defenses, including arguments based on intervening rights and the doctrine of equitable estoppel. The district court rejected all defenses and found Richo's patent to be valid, enforceable, and infringed. On appeal, the Federal Circuit affirmed the district court's judgment. First, the court rejected defendant's argument that it is entitled to intervening rights for the products it developed during the pendency of the continuation application. Defendant argued that the continuation application impermissibly circumvented the statutory mandates of a reissue proceeding, because it broadened the claims of the early patent over two years after the issuance of the earlier patent. The court reviewed the patent statute governing continuation and reissue proceedings, Sections 120 and 252, and found no basis to support defendant's argument. The court recognized that a double-patenting objection could be raised against the practice of filing continuation applications containing claims broader than their parent applications in order to cover a competitor's product. However, the court found that such an objection would not be sufficient to give rise to intervening rights.

The Federal Circuit also rejected defendant's argument that equitable estoppel bars Richo from enforcing the patent against the defendant. The court reviewed, under the abuse-of-discretion standard, the district court's application of the Aukerman three-part test,2 which asks: (1) Was the defendant misled by the patentee to believe patentee had no intent to enforce the patent?; (2) Did defendant rely on patentee's representation?; and (3) Was defendant prejudiced by enforcement of the patent? The Federal Circuit found no error in the district court's finding that defendant failed to satisfy the second part of the test, reliance. The district court properly found that defendant failed to show a nexus between Richo's delay and the defendant's decision to go forward with production of the redesigned cartridge. As to the first part of the test, the court found that Richo's silence after learning of defendant's redesigning attempt should not be understood as showing its intent not to enforce its patent, because Richo had not yet obtained a patent on the continuation application covering the redesigned cartridge. The Federal Circuit noted that a party can be misled by inaction but found no misleading inaction by Richo. The court was not convinced by defendant's citation of cases in which patentees failed to object to allegedly infringing products, distinguishing those cases as involving an issued patent, not a pending application.

In short, considering recent case law of the Federal Circuit, which has restrictively applied the doctrine of equivalents and which has confused the issue of prosecution history estoppel, the best approach under current case law to avoid activities described as fraud by the Supreme Court in Graver Tank3 is to maintain continuation applications at the PTO even after receiving an issued patent on a particular disclosure, and broadening claims to cover a competitor's redesigned products. This continuation practice enables patentees to monitor and adjust claims by circumventing the two-year limitation associated with the reissue proceeding.4 The Richo court appeared to follow the liberal view of double patenting in Vogel,5 which allowed Richo to enjoy protection afforded to the broader claim (although the protection could be subjected to the terminal disclaimer).

Toshiko Takenaka

  1. 1999 U.S. App. Lexis 2672 (Fed. Cir. 1999).
  2. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 22 U.S.P.Q.2d 1321 (Fed. Cir. 1992) (en banc).
  3. Graver Tank v. Linde Air Products Co., 339 U.S. 605, 85 U.S.P.Q. 328 (1950).
  4. Adelman et al., Cases and Materials on Patent Law, 771 (1998).
  5. In re Vogel, 411 F.2d 438, 164 U.S.P.Q. 619 (Fed. Cir. 1970).

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