Supreme Court to Review Assignor Estoppel Doctrine

Author: Lara Garner

Assignor estoppel bars the seller of a patent from later attacking the patent’s validity in patent infringement litigation. The doctrine seems commonsensical. One shouldn’t be able to sell a patent and then later turn around and claim that that patent is worthless. It would seem reasonable, then, that the assignor should also be barred from challenging the validity of the assigned patent at the USPTO in an inter partes review. Not so according to the Federal Circuit.

Last April, the Federal Circuit “grapple[d] with the doctrine of assignor estoppel” in Hologic, Inc. v. Minerva Surgical, Inc. and affirmed, seemingly reluctantly, the decision of U.S. District Court for the District of Delaware. The district court had held that the assignor of a patent was not barred by assignor estoppel from relying on a Patent Trial and Appeal Board (PTAB) decision, affirmed by the Federal Circuit, invalidating patent claims in a inter partes review. Also affirmed was the district court’s holding regarding a second patent that the assignor was barred from asserting invalidity of that patent’s claims in the district court.

The Patents and the Parties

Hologic sued Minerva for infringement of certain claims of its U.S. Patent Nos. 6,872,183 and 9,095,348. Hologic had acquired the patents indirectly from the founder of Minerva.

In the late 1990s, Csaba Truckai, a founder of the company NovaCept, with his design team at developed a medical device called the NovaSure system and patented the technology. Both the ’183 and ’348 patents list Mr. Truckai as an inventor and Mr. Truckai assigned his interest in the patents to NovaCept.

In 2004, Cytyc Corporation acquired NovaCept for $325 million and in 2007 Hologic acquired Cytyc. Mr. Truckai left NovaCept and, in 2008, founded a competing company, the accused infringer, Minerva.

In the District Court and the Patent Office

Hologic brought its infringement suit against Minerva in 2015. Minerva asserted invalidity defenses in district court and also filed petitions for IPR in the Patent Office challenging the validity of both patents. Review of the ’348 patent was denied but the Board instituted review of the ’183 patent and eventually held the ’183 patent claims unpatentable as obvious. Hologic appealed.

The district court denied Minerva’s request to dismiss Hologic’s claim for infringement of the ’183 patent as the Board’s finding was “on appeal and does not have preclusive effect as to this action unless and until the appeal is resolved.” But Hologic’s motion for summary judgment was granted, for both patents, that the doctrine of assignor estoppel barred Minerva from challenging their validity in district court. The case then proceeded to trial and the jury found for Hologic.

Subsequent to trial, the Federal Circuit affirmed the Board’s decision that the ’183 patent claims are invalid as obvious. In the interim, the ’3348 patent expired.

In deciding post-trial motions, the district court determined that the Federal Circuit’s decision did not affect the jury verdict because invalidity of the ’183 patent did not affect the finding of infringement as to the ’348 patent, and the jury’s damages determination was adequately supported by the finding of infringement of the ’348 patent. The district court further held that invalidation of the ’183 patent did not affect its findings of assignor estoppel on the ’348 patent.” But the court denied Hologic’s request for supplemental and enhanced damages, and ongoing royalties for infringement of the asserted ’183 patent claims as moot.

At the Federal Circuit

On Appeal Hologic argued that assignor estoppel precluded Minerva from relying on the Federal Circuit’s Hologic decision to escape liability for infringement. It contended that “the final outcome of the IPR is irrelevant to the district court proceeding” and that “[t]o hold otherwise would be to hold that the America Invents Act (‘AIA’) abrogated the assignor estoppel doctrine in a district court infringement action.”

The Federal Circuit examined its precedent and disagreed.

The Federal Circuit had first examined and affirmed the vitality of the doctrine of assignor estoppel in 1988, defining it as “an equitable doctrine that prevents one who has assigned the rights to a patent…from later contending that what was assigned is a nullity.” Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988). The Federal Circuit noted that, while early Supreme Court cases had carved out exceptions to the general assignor estoppel doctrine, the Court did not abolish the doctrine. And, while some courts had questioned the vitality of the doctrine following a Supreme Court’s decision abolishing licensee estoppel, the Federal Court noted an important distinction between assignors and licensees: Whereas a licensee might be forced to continue to pay for a potentially invalid patent, the assignor has already been fully paid for the patent rights.

Assignor estoppel, serves important purposes including: “(1) to prevent unfairness and injustice; (2) to prevent one [from] benefiting from his own wrong; (3) by analogy to estoppel by deed in real estate; and (4) by analogy to a landlord-tenant relationship.”

The doctrine has since continued to be applied in various circumstance, often with the primary stated purpose of the prevention of unfairness and injustice. That said, the Hologic court reasoned that there are limits to the doctrine, including that it does not preclude an estopped party from arguing that the patentee is itself collaterally estopped from asserting a patent found invalid in a prior proceeding.

Based on those limitations, and expressly notwithstanding the seeming unfairness, the Federal Circuit concluded that assignor estoppel did not preclude Minerva from relying on the IPR affirmance to argue that the ’183 patent claims are void ab initio.

But it wasn’t all good news for Minerva. The Federal Circuit rejected its assertion that its invalidity challenge should not have been precluded in the district court, including declining Minerva’s invitation to abandon the doctrine of assignor estoppel entirely.

The incongruity of the result was not lost on the Court. Judge Scholl, who authored the opinion, wrote separately in the decision to highlight this “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.” Judge Scholl concluded:

I suggest that it is time for this court to consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office. We should seek to clarify this odd and seemingly illogical regime in which an assignor cannot present any invalidity defenses in district court but can present a limited set of invalidity grounds in an IPR proceeding.

Notwithstanding her suggestion, the Court denied en banc rehearing, the parties petitioned the Supreme Court, and last month the Supreme Court granted Minerva’s petition for certiorari on the question of: “Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.”

About the author: Lara Garner is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on Intellectual Property litigation and counseling for patents, copyrights, trademarks, and trade secrets, and in a broad range of matters, including contract, technology, and privacy issues. Ms. Garner’s biography can be found here.