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On June 29, 2021, the Supreme Court in a 5-4 decision1 retained the doctrine of assignor estoppel.2 However, the Court also held that “the Federal Circuit has applied the doctrine too expansively.”3 Accordingly, the Supreme Court clarified that assignor estoppel bars the assignor of a patent from challenging the validity of that patent only when “the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.”4 The Court provided three examples of situations in which the doctrine of assignor estoppel would not apply: (1) “when an assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims”, (2) “when a later legal development renders irrelevant the warranty given at the time of assignment”, and (3) when a “post-assignment development—a change in patent claims—can remove the rationale for applying assignor estoppel.”5 The Supreme Court remanded the case to the Federal Circuit for further proceedings because the Federal Circuit “failed to recognize [these] boundaries.”6
Hologic, Inc, and Cytyc Surgical Products, LLC (collectively, “Hologic”) sued Minerva for infringement of U.S. Patent Nos. 6,872,183 and 9,095,348, which cover an apparatus and methods for endometrial ablation.7 Both the ’183 and ’348 patents list Csaba Truckai as an inventor.8
In 1993, Truckai co-founded NovaCept, Inc.9 In the late 1990s, Truckai and his design team developed the NovaSure system, a medical device that treats menorrhagia.10 Truckai/NovaCept filed patent applications covering the NovaSure system, from which the’183 and ’348 patents would later claim priority.11 Truckai assigned his broad interest in the patent applications to NovaCept.12 In 2004, Cytyc Corporation acquired NovaCept for $325 million.13 NovaCept assigned all patent rights to Cytyc.14 Thereafter, Hologic acquired Cytyc in 2007.15 Hologic is the current assignee of the’183 and ’348 patents, which were issued in 2005 and 2015 respectively.16
Meanwhile in 2008, Truckai founded Minerva, where he developed the Endometrial Ablation System (“EAS”).17 In 2015, EAS received FDA approval for the same indication as Hologic’s NovaSure system.18 Shortly after, Minerva began commercially distributing EAS, which gave rise to the lawsuit.19
In November 2015, Hologic sued Minerva in Delaware District Court, alleging infringement of certain claims of the ’183 and ’348 patents.20 Minerva asserted that the claims were invalid for lack of adequate written description and lack of enablement.21 Both parties moved for summary judgment on the issue of validity.22 Hologic argued that assignor estoppel bars Minerva from challenging invalidity.23 Minerva contended that “all of the asserted claims are invalid for failure to meet the written description and enablement requirements” because the claims go beyond the scope of what is described in the patents and “undue experimentation would be required to practice the invention.”24 The district court granted Hologic’s motion on both patents and denied Minerva’s motion.25
“Considering the balance of equities and the relationship of Truckai to Minerva,” the district court found “privity between Truckai and Minerva” and that “assignor estoppel applies to Minerva’s defenses.”26 Specifically, the district court found that Truckai founded Minerva, developed the EAS, and “executed a broad assignment of his patent rights to NovaCept and later sold [it] to Hologic’s predecessor for $325 million.”27 The district court also found that “Minerva’s invalidity defenses [were] barred by assignor estoppel” and that “even if Minerva were not estopped from raising the defense,” its motion “lack[ed] merit.”28 Minerva appealed to the Federal Circuit, arguing that the doctrine of assignor estoppel should be abolished.29
The Federal Circuit upheld the application of assignor estoppel.30 It defined assignor estoppel as “an equitable doctrine that prevents one who has assigned the rights to a patent (or patent application) from later contending that what was assigned is a nullity.”31 Although the Supreme Court abolished licensee estoppel in Lear v. Adkins, 395 U.S. 653, 666 (1969), the Federal Circuit previously concluded that “nothing in Lear eliminated assignor estoppel” and that public policy favored the assignor estoppel doctrine.32 The Federal Circuit further acknowledged that its precedent is consistent with the Supreme Court’s guidance on the assignor estoppel doctrine.33
Finally, the Federal Circuit rejected Minerva’s assertion that “Hologic broadened the claims during prosecution and after Mr. Truckai’s assignment, and that it would be unfair to block Mr. Truckai (or Minerva) from challenging the breadth of those claims[,]” holding that the court had already considered it “irrelevant that, at the time of the assignment, the inventor’s patent applications were still pending and that [the assignee] may have later amended the claims in the application process (a very common occurrence in patent prosecutions), with or without [the inventor’s] assistance.”34
Judge Stoll noted that Federal Circuit precedent presents “an odd situation where an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office, but cannot do the same in district court.”35 She added that there is a need to “clarify this odd and seemingly illogical regime in which an assignor cannot present any invalidity defenses in the district court but can present a limited set of invalidity grounds in an IPR proceeding.[]”36
After granting certiorari to determine whether assignor estoppel is still a viable doctrine, the Supreme Court concluded that “[a]ssignor estoppel . . . is well grounded in centuries-old fairness principles, and the Federal Circuit was right to uphold it. But the [Federal Circuit] failed to recognize the doctrine’s proper limits. The equitable basis of assignor estoppel defines its scope: The doctrine applies only when an inventor says one thing (explicitly or implicitly) in assigning a patent and the opposite in litigating against the patent’s owner.”37
In the Court’s view, Minerva put forth three arguments in support of its main argument that “assignor estoppel should be eliminated”: (1) “Congress repudiated [the doctrine] in the Patent Act of 1952”, (2) the Supreme Court’s post-Westinghouse cases “leave no room for the doctrine to continue,” and (3) “assignor estoppel ‘imposes’ too high a ‘barrier to invalidity challenges’ and so keeps bad patents alive.”38
The Supreme Court rejected all three arguments.39 As to Minerva’s first argument, the Court did not agree that the Patent Act of 1952 abrogated assignor estoppel because “similar language, entitling a defendant to plead invalidity in any infringement action, was in the [Patent Act of 1897] when Westinghouse was decided.”40 The Supreme Court further stated that “Minerva’s view is untenable because it would foreclose applying in patent cases a whole host of common-law preclusion doctrines—not just assignor estoppel, but equitable estoppel, collateral estoppel, res judicata, and law of the case[,]” and “[t]hat broad result would conflict with this Court’s precedents.”41 The Court explained that “Congress legislates against a background of common-law adjudicatory principles, and it expects those principles to apply except when a statutory purpose to the contrary is evident.”42 Accordingly, “[a]ssignor estoppel was by 1952 just such a background principle of patent adjudication, and Congress gave no indication of wanting to terminate it or disturb its development. Nor has Congress done so since that time.”43
Rejecting Minerva’s second argument, the Supreme Court held that the post-Westinghouse cases, “Scott Paper and Lear in fact retained assignor estoppel.”44 In that, “Scott Paper did nothing more than decline to apply assignor estoppel in a novel and extreme circumstance[,]’ i.e., where “estoppel would have prevented the assignor from making a device on which the patent had expired—a device, in other words, that had already entered the public domain.”45 And Lear “considered and toppled a different patent estoppel doctrine[,]” licensee estoppel, where the Court “counseled careful attention to the equities at stake in discrete patent contexts—and expressly distinguished assignor from licensee estoppel.”46 The Supreme Court stated that these cases did nothing more than leave “Westinghouse right about where they found it—as a bounded doctrine designed to prevent an inventor from first selling a patent and then contending that the thing sold is worthless.”47 The Court added that Westinghouse, Scott Paper, and Lear “together thus show not the doctrinal evisceration . . ., but only the kind of doctrinal evolution typical of common-law rules.”48
The Supreme Court dismissed Minerva’s third argument, stating that “the core of assignor estoppel [is] justified on the fairness grounds” and “reflects a demand for consistency in dealing with others.”49 The Court reasoned that for the assignor to make a “representation at the time of assignment (to his advantage) and later to repudiate it (again to his advantage)” is “unfair dealing—enough to outweigh any loss to the public from leaving an invalidity defense to someone other than the assignor.”50
The Supreme Court, however, recognized that “assignor estoppel comes with limits” and “should apply only when its underlying principle of fair dealing comes into play.”51 The Court explained that, in the context of assignor estoppel, contradiction creates unfairness.52 Specifically, when “an assignor warrants that a patent is valid, his later denial of validity breaches norms of equitable dealing.”53 “But when the assignor has made neither explicit nor implicit representations in conflict with an invalidity defense, then there is no unfairness in its assertion[,]” thus, “no ground for applying assignor estoppel.54 The Court provided three examples of non-contradiction in which assignor estoppel would not apply:
1. “when an assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims[,]” e.g., “when an employee assigns to his employer patent rights in any future inventions he may develop during his employment”;
2. “when a later legal development renders irrelevant the warranty given at the time of assignment[,]” e.g., if the governing law changes after a patent assignment, possibly rendering the previously valid patent invalid, then the “inventor may claim that the patent is invalid in light of that change in law without contradicting his earlier representation”; and
3. when a “post-assignment development—a change in patent claims—can remove the rationale for applying assignor estoppel[,]” e.g., “the new claims are materially broadened” during patent prosecution after the assignment takes place.55
The Supreme Court criticized the Federal Circuit’s failure to recognize these boundaries and, particularly relevant to this case, the third limitation.56 The Court rejected the Federal Circuit’s holding that “whether Hologic expanded the assigned claims” was “irrelevant”, and even if so, “Minerva could not contest the new claim’s validity.”57 The Court clarified that “[i]f Hologic’s new claim is materially broader than the ones Truckai assigned, then Truckai could not have warranted its validity in making the assignment. And without such a prior inconsistent representation, there is no basis for estoppel.”58 Accordingly, the Supreme Court remanded the case to the Federal Circuit to address “whether Hologic’s new claim is materially broader than the ones Truckai assigned.”59
Going forward, practitioners should be aware of the extent of the rights assigned by or to their clients at the time of assignment, including the scope of the patent claims, written description, and drawings, and any other expressly or implicitly represented warranties of validity. Practitioners representing assignors should avoid assigning broad interests, especially when assigning patent applications. As for practitioners representing assignee-employers, it would be prudent to ask clients to follow up with inventor-employees regarding the warranties of validity at the time of invention, and perhaps request an invention-specific assignment, in addition to an earlier blanket assignment, or at least an acknowledgement of such warranties.
Additionally, in the context of inter partes review (“IPR”), the Supreme Court’s decision in Minerva may undermine the rationale for the Federal Circuit’s holding in Arista Networks, Inc. v. Cisco Systems, Inc., 908 F.3d 792 (Fed. Cir. 2018), that assignor estoppel has no applicability to IPR proceedings.60 Arista held that assignor estoppel can never bar a party from petitioning for IPR because 35 U.S.C. § 311(a) broadly permits any “person who is not the owner of a patent” to file an IPR petition.61 Because the language of § 311(a) does not exclude assignors, the Federal Circuit held that the doctrine of assignor estoppel cannot bar assignors from challenging patents by way of IPR.62 In Minerva, however, the Supreme Court rejected an analogous argument: that 35 U.S.C. § 282(b) abrogates the doctrine of assignor estoppel by providing that invalidity “shall be [a] defense[] in any action involving the validity or infringement of a patent.”63 In rejecting that argument, the Court explained that “Congress legislates against a backdrop of common-law adjudicatory principles,” and that assignor estoppel is one such principle.64 Based on this reasoning, there seems to be at least a plausible (if not strong) argument that § 311(a), like § 282(b), was enacted against the backdrop of the assignor-estoppel doctrine, and that assignor estoppel is therefore applicable to IPR proceedings to the same extent as district-court proceedings.