Supreme Court Limits Patent Assignor Estoppel

02 August 2021 PharmaPatents Blog
Authors: Courtenay C. Brinckerhoff

In Minerva Surgical, Inc. V. Hologic, Inc., the Supreme Court limited the equitable doctrine of assignor estoppel that prevents an assignor from subsequently challenging the validity of the patent he or she assigned. The Court outlined three scenarios where assignor estoppel might not apply, and has employers wondering if and how they can better shield their patents from subsequent inventor challenges. 

The Backstory

For inventor-assignor estoppel to come into play, an inventor has to assign his or her rights in a patent application or patent and then be in a situation where he or she wants to challenge the validity of the assigned patent. Minerva illustrates one scenario where that may occur: an inventor (Mr. Truckai), having assigned patent rights to his employer, subsequently leaves that position and starts a competing company (Minerva) that eventually is charged with infringement of his assigned patents (U.S. Patent Nos. 6,872,183 and 9,095,348).

Critical to the Court’s decision in Minerva, the patents at issue were granted after the inventor had assigned his rights. It is also interesting that one of the patents stems from a continuation application that was filed and granted after he had left and started the competing company.

  • In August 1998, Truckai and his co-inventors assigned the invention described in U.S. Patent Application No. 09/103,072, the application, and all continuation applications thereof (etc.).
  • After a series of divisional and continuation applications, the application that was granted as U.S. Patent No. 9,095,348 was filed in 2013, and the patent granted in 2015.
  • In February 2001, Truckai and his co-inventors assigned the invention described in U.S. Patent Application No. 09/710,102, the application, and all continuation applications thereof (etc.).
  • After a series of continuation applications, the application that was granted as U.S. Patent No. 6,872,183 was filed in 2004, and the patent granted in 2005.

Assignor Estoppel

The Supreme Court explains that the doctrine of assignor estoppel was developed “to deal with inconsistent representations about a patent’s validity.”:

The classic case (different in certain respects from the one here) begins with an inventor who both applies for and obtains a patent, then assigns it to a company for value. Later, the inventor/assignor joins a competitor business, where he develops a similar—and possibly infringing—product. When the assignee company sues for infringement, the assignor tries to argue—contrary to the (explicit or implicit) assurance given in assigning the patent—that the invention was never patentable, so the patent was never valid. That kind of about-face is what assignor estoppel operates to prevent—or, in legalese, estop.

The Supreme Court’s New Limitations on Assignor Estoppel

The Supreme Court declined Minerva’s invitation to eliminate the doctrine of assignor estoppel altogether, but agreed “Assignor estoppel should apply only when its underlying principle of fair dealing comes into play.” Thus, the Court delineated three scenarios where assignor estoppel might not apply:

  1. Employment agreement-type assignments. The Court explained:

    One example of non-contradiction is when the assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims. Consider a common employment arrangement. An employee assigns to his employer patent rights in any future inventions he develops during his employment; the employer then decides which, if any, of those inventions to patent. In that scenario, the assignment contains no representation that a patent is valid. How could it? The invention itself has not come into being. …. And so the employee’s transfer of rights cannot estop him from alleging a patent’s invalidity in later litigation.

  2. A change in the law. The Court explained:

    A second example is when a later legal development renders irrelevant the warranty given at the time of assignment. Suppose an inventor conveys a patent for value, with the warranty of validity that act implies. But the governing law then changes, so that previously valid patents become invalid. The inventor may claim that the patent is invalid in light of that change in law without contradicting his earlier representation. What was valid before is invalid today, and no principle of consistency prevents the assignor from saying so.

  3. When the claims at issue are materially broader than the claims assigned. The Court explained:

    Most relevant here, another post-assignment development—a change in patent claims—can remove the rationale for applying assignor estoppel. …. [T]he assignee, once he is the owner of the application, may return to the PTO to “enlarge[]” the patent’s claims. …. And the new claims resulting from that process may go beyond what “the assignor intended” to claim as patentable. …. Assuming that the new claims are materially broader than the old claims, the assignor did not warrant to the new claims’ validity. And if he made no such representation, then he can challenge the new claims in litigation: Because there is no inconsistency in his positions, there is no estoppel.

Question: Does this reasoning cast doubt on the USPTO’s practice of accepting a copy of an inventor’s oath or declaration from a parent application to satisfy the statutory requirement for an inventor’s oath or declaration in a continuation application?

Each of these “exceptions” rests on the same principle: “The limits of the assignor’s estoppel go only so far as, and not beyond, what he represented in assigning the patent application.” In other words, assignor estoppel only bars invalidity challenges that are inconsistent with representations inherent in making the assignment.

Having outlined these exceptions, the Supreme Court remanded to the Federal Circuit to assess whether the claims at issue were indeed “materially broader than the ones Truckai assigned.”

This phrasing bothers me, because there was no dispute that the inventor had effectively assigned the patents at issue. I believe the question on remand is whether the claims at issue are “materially broader” than the ones in existence when the assignments were executed.

The Dissenting Opinions

Justice Alito wrote a dissenting opinion explaining his views that the Court should address whether “Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342 (1924), which recognized assignor estoppel, should be overruled.” He criticizes both the majority and the principal dissent for “evading stare decisis.”

Justice Barrett wrote a dissenting opinion explaining her views that the 1952 Patent Act abrogated the doctrine of assignor estoppel altogether. Justices Thomas and Gorsuch joined her dissent.

Practical Limits of Assignor Estoppel

While employers may find it disconcerting that an inventor may be permitted to challenge his or her own patent, the Federal Circuit already decided that assignor estoppel does not apply to Inter Partes Review proceedings (or presumably Post Grant Review proceedings), because the governing statutes permit challenge by “a person who is not the owner of a patent.” Indeed, Minerva already had successfully invalidated some claims of the asserted patents in an IPR. Moreover, inventor-assignor estoppel will not necessarily prevent an inventor’s subsequent employer from challenging the assigned patent(s). Here, Minerva was found to be “in privity” with the inventor because he was the founder, President, and CEO. (This issue is discussed more in the underlying Federal Circuit decision.)

Maneuvering Around Minerva

Companies who want to prevent their employee-inventors from being able to subsequently challenge their patents may be considering several maneuvers around Minerva’s holding. In view of the Court’s statement that assignor estoppel does not apply at all to employment agreement-type assignments which assign rights in future inventions not tied to any specific patent applications, it may be risky to rely on a “no challenge” clause in an employment agreement. Because the Court did not question the effectiveness of the original assignments, it may not be helpful to obtain second or “quitclaim”-type assignments for each patent granted in a given family. The most promising maneuvers could include giving monetary “patent awards” to inventors when a patent is granted, but that approach could be difficult to implement when the inventor(s) have left the company, and still would rely on equitable principles at least three Supreme Court justices are skeptical of, or contractual terms that may be viewed as contrary to public policy.

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