No Foul in Fair Play: Supreme Court Clarifies the Boundaries of Assignor Estoppel
On June 29, 2021, the Supreme Court clarified the “boundaries” of the patent-law doctrine of assignor estoppel in Minerva Surgical, Inc. v. Hologic, Inc., 594 U.S. (2021). The Court, in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 349 (1924), grounded the doctrine in a principle of fairness: an inventor may not assign a patent to another for value and later contend in litigation that the patent is invalid. However, in vacating and remanding the Federal Circuit’s decision below that the doctrine precluded the Minerva defendant’s invalidity defense, the Court stated that “in both its opinion below and prior decisions, [the Federal Circuit] has failed to recognize” the boundaries of the doctrine.
In the late 1990s, Csaba Truckai invented a device to treat abnormal uterine bleeding. Truckai filed a patent application and later assigned the application, along with any future continuation applications, to his company, Novacept, Inc. (“Novacept”). Eventually, the patent issued for the device, Novacept, and its portfolio of other patents and patent applications, were acquired by Hologic, Inc. (“Hologic”). In 2008, Truckai founded Minerva Surgical, Inc. (“Minerva”), where he developed an improved device. Meanwhile, Hologic filed a continuation application with the United States Patent and Trademark Office, adding claims broader than those in the application originally assigned by Truckai. After the continuation application issued, Hologic sued Minerva for patent infringement. Minerva contested the validity of Hologic’s asserted patent claims, rejoining that the claims did not match the written description. Hologic invoked the doctrine of assignor estoppel. The district court agreed and barred Minerva’s invalidity defense. The Federal Circuit affirmed that particular holding. Minerva asked the Supreme Court to abandon or narrow assignor estoppel.
The Court first declined to discard the assignor estoppel doctrine, rejecting three arguments from Minerva:
- Congress abrogated the doctrine in the Patent Act of 1952, claiming that statutory language that “[in]validity” of the patent “shall be [a] defense in any action involving [infringement]” means that the defense of invalidity should always be available;
- Two prior decisions from the Court abrogated the doctrine; and
- The contemporary patent policy of needing to weed out bad patents supports abandoning the doctrine.
The Court retorted that (1) the idea of abrogation by the Patent Act of 1952 undermines congressional design to legislate in the background of common law principles such as those used in Westinghouse, (2) the two prior decisions only suggested that the doctrine needs to stay attached to its equitable moorings, not that it should be abandoned, and (3) the invalidity defense is still available to third parties that are not the assignor.
The Court then clarified the boundaries of the doctrine: assignor estoppel applies only when “the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.” For example, when an assignor warrants that a patent claim is valid, his later denial of validity breaches norms of fair dealing. In contrast, when an assignment occurs before an inventor can make a warranty of invalidity as to specific patent claims — such as when an employee assigns to his employer patent rights in any future inventions — there is no unfairness in an assertion of invalidity and thus no ground for applying assignor estoppel.
Particularly relevant to Minerva is the situation where a post-assignment change in patent claims — such as the broadening of claims in a previously assigned patent application — is challenged as invalid by the assignor. Minerva argued that in this situation assignor estoppel should not apply because what is being challenged is a claim that is materially broader than the ones Truckai had assigned. The Court agreed, holding that Truckai could not have warranted the validity of the new claims in making the assignment, and without such a prior inconsistent representation, there was no basis for the application of assignor estoppel.
What This Means for You
The Court’s decision in Minerva expressly confirms that the doctrine of assignor estoppel is here to stay but adds limits for when it applies. It will apply only “when its underlying principle of fair delaying comes into play.” Therefore, broad and generic assignments of patent rights, including future patent rights, may not be enough to invoke that doctrine. Instead, patent prosecutors for assignee companies should consider requiring inventors to sign (1) an assignment specific to the particular patent application (not just the parent) and/or (2) a confirmatory assignment at the time of patent issuance. In particular, assignee’s should consider expressly stating that the assignment precludes any assertion of invalidity of any claims that issue from that particular patent application or at least that the inventor agrees that the substance of the particular patent application, including the specification and claims, is eligible for patent protection. These methods are not guaranteed to permit invocation of the doctrine of assignor estoppel but may be enough for the court to find it “unfair” for the assignee to later claim that the patent subject to the assignment is invalid.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.