Reconstructing the Complete Patent Bargain: The Doctrine of Equivalents

This article provides a theoretical justification for the doctrine of equivalents in UK patent law that is based on the contractarian view of the patent grant. In Actavis v Eli Lilly, the Supreme Court introduced the concept of infringement by equivalents in UK patent law. Lord Neuberger justified his decision by arguing that "adopting a normal approach to [the] interpretation [of patent claims] would risk depriving patentees of a proper measure of protection …". At a theoretical level, the doctrine of equivalents could be justified as a corollary of the patent bargain theory. Inventors are invited to incur the kinds of investment in research and development that are eventually rewarded by the patent system. Hence, the inventors’ investments are relationship-specific. After outlining some practical problems associated with the determination of patent scope, this article will highlight the nature of the patent bargain as a relational contract. Someone engaging in relationship-specific investments is exposed to the risk of opportunistic behaviour at an ex post stage because such investments lose their value outside the context of the existing relationship. When third parties find a way to design around the patent claims in order to utilise the incentive concept encapsulated therein, the patent loses its market value since the patentee has no outside option to exploit his inventive efforts. Opportunism is examined as a lay, legal and economic term with a view to specifying the type of conduct that qualifies as opportunistic for the purposes of patent law. British patent law has long adhered to the purposive approach, which aligns claim construction with the interpretation of contracts. Compared with the textualist interpretative method, contextualism features the advantage of being more suitable for considering the interest position of the party that has incurred relationship-specific investments. Courts have been particularly effective in combating some very specific forms of blatant opportunism when administering the "pith and marrow" doctrine or assessing patent infringement through the lens of the more advanced concept of purposive claim construction, which marked the evolutionary pinnacle of the traditional British approach to the determination of patent scope. The main drawback of those infringement theories has been that they readily assumed a virtually perfect ability of applicants to design optimally inclusive claims. In practice, however, this is often impossible or comes at a very high cost of drafting, thereby leaving room for opportunism to emerge, as third parties have a chance to exploit a patented inventive concept by skilfully evading the contextual meaning of the claims’ wording. This not only reduces the incentives of inventors to innovate but, equally crucial, it decelerates the process of technical disclosure. Optimal drafting might be time-consuming or require the applicant to try out some things first. Such a situation is comparable to a state of contractual incompleteness attributable to high transaction costs which is bound to give rise to a hold-up problem. In a fashion that is quite similar to that of default rules in contract law, the doctrine of equivalents essentially reconstructs the complete patent bargain to rectify the impossibility or the potential inefficiencies associated with an attempt to draft optimally inclusive patent claims, the article argues. To illustrate all of these points, this article reviews some of the most important cases on the interpretation of patent claims in the UK.