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Heads up! - SCOTUS upholds, but limits, “assignor estoppel”

Year End 2021 IP Newsletter

It seems like a simple matter of fairness that an inventor who assigns its patent rights can’t later challenge the validity of the underlying patent. But, as the U.S. Supreme Court recently explained in Minerva Surgical, Inc. v. Hologic, Inc., assignors can do just that in certain limited circumstances.

The issue comes to a head

An inventor came up with a device to treat uterine bleeding that uses a moisture-permeable applicator head. He filed a patent application and subsequently assigned the application to a company he founded. The U.S. Patent and Trademark Office (PTO) granted the company a patent, which eventually was acquired by Hologic when it bought the company.

The inventor went on to start another company, Minerva Surgical. There, he developed another device to treat uterine bleeding — this one with a moisture-impermeable head. The PTO issued a patent, and the device was approved for commercial sale.

Meanwhile, Hologic filed a continuation application on its patent to add claims. One of those claims included applicator heads generally, regardless of permeability. The PTO issued another patent in 2015, and Hologic proceeded to sue Minerva for infringement.

Minerva countered that Hologic’s patent was invalid because the newly added claim didn’t match the patent’s written description, which refers only to water-permeable applicator heads. Hologic invoked the doctrine of assignor estoppel, arguing that Minerva and the inventor couldn’t contest the validity of a patent the inventor had assigned to it.

The district court and the U.S. Court of Appeals for the Federal Circuit agreed. Minerva turned to the Supreme Court for relief.

It’s alive!

On review, the Court noted the lengthy history of assignor estoppel. Essentially, the doctrine provides that one who lawfully conveys a patented right should be prevented by fair dealing from later derogating the right. (An assignor, however, can still raise arguments about the correct interpretation of the patent’s language.)

Courts have long applied the doctrine to deal with inconsistent representations about a patent’s validity. The doctrine, the Court said, is grounded in a principle of fairness.

With this in mind, the Court rejected Minerva’s contention that assignor estoppel should be abandoned altogether. Among other reasons, it said that doing so would block the application of multiple “preclusion doctrines” — the doctrines of equitable estoppel, collateral estoppel and res judicata in addition to assignor estoppel — in patent cases. The Court said this result would conflict with earlier rulings.

However, the Supreme Court made clear that the doctrine comes with limits. Specifically, it applies only when the assignor’s claim of invalidity contradicts explicit or implicit representations the assignor made in assigning the patent. The Court laid out three examples of circumstances with no grounds for applying the doctrine:

  1. When an assignment occurs before an inventor can possibly make a warranty of the validity for specific patent claims (such as when an employee assigns an employer patent rights in any future inventions developed during employment),
  2. When a later legal development renders irrelevant the warranty given at the time of assignment, and
  3. A post-assignment change in patent claims.

The latter situation most often occurs when, as here, an inventor assigns a patent application rather than an issued patent. If the assignee asks the PTO to expand the patent’s claims, the assignor didn’t warrant the new claims’ validity. In such a case, the Court said, the assignor can challenge the validity of those claims.

Heading back to the Federal Circuit

Ultimately, the Supreme Court found that the Federal Circuit improperly failed to apply the limits to the doctrine. It therefore vacated the decision and sent the case back so the Federal Circuit can determine whether the new claim was indeed broader than those assigned and vulnerable to invalidity arguments.

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