IP Law Daily Supreme Court agrees to weigh in on assignor estoppel doctrine in patent cases
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Monday, January 11, 2021

Supreme Court agrees to weigh in on assignor estoppel doctrine in patent cases

By Cheryl Beise, J.D.

Doctrine of assignor estoppel precludes an inventor or prior owner of a patent from contesting validity in later litigation.

The U.S. Supreme Court on January 8 agreed to hear a medical device manufacturer Minerva Surgical’s petition for certiorari asking the High Court to eliminate or constrain the equitable doctrine of assignor estoppel, which bars patent validity challenges by inventors and prior owners of a patent who are later sued for infringement. The Federal Circuit has applied the doctrine of assignor estoppel to preclude accused infringers from asserting invalidity defenses in district court litigation, but the court also has ruled that assignor estoppel does not bar an assignor from challenging the validity of a patent in an inter partesreview proceeding. Challenges to both types of assignor estoppel were raised in this case.

In 2015, Hologic, Inc. and Cytyc Surgical Products, LLC (collectively, "Hologic") filed suit against Minerva Surgical, Inc.in the federal district court in Wilmington, Delaware, asserting infringement of certain claims of U.S. Patent Nos. 6,872,183 (the ’183 patent) and 9,095,348 (the ’348 patent), which relate to procedures and devices for endometrial ablation. In turn, Minerva filed petitions for inter partes review, challenging the patentability of the asserted claims of both patents. The Patent Trial and Appeal Board denied review of the ’348 patent, but instituted review of the ’183 patent and found all challenged claims were invalid as obvious. In April 2019, the Federal Circuit affirmed ("Hologic I") the Board’s decision finding that the challenged claims of the ’183 patent were invalid as obvious.

Prior to the Federal Circuit’s decision in Hologic I, the district court granted summary judgment of infringement to Hologic, finding that Minerva’s accused product infringed the asserted claims of both patents. The court additionally ruled on summary judgment that the doctrine of assignor estoppel barred Minerva from challenging the validity of the ’183 and ’348 patent claims. The court found that privity existed between Minerva and an individual who was an inventor of the patents asserted by Hologic. Following trial, a jury found Hologic was entitled to damages for lost profits of roughly $4.2 million and for royalties not included in lost profits in the amount of $587,000. In May 2019, the district court largely denied the parties’ post-trial motions. Both sides appealed. The Federal Circuit affirmed the district court rulings and damages award, but remanded the case for recalculation of pre- and post-judgment interest on the supplemental damages award.

Assignor estoppel. On the issue of assignor estoppel, the Federal Circuit noted that the patents-in-suit each presented a different assignor estoppel issue. For the first patent, the question was whether the district court erred in holding that assignor estoppel barred Minerva from relying on the Federal Circuit’s affirmance of the PTAB’s final decision invalidating the asserted patent claims in an inter partes review proceeding. For the second patent, the issue was whether the district court erred in finding on summary judgment that assignor estoppel barred Minerva from asserting invalidity. The Federal Circuit concluded that the district court did not err in either respect.

The Federal Circuit held that while Minerva was estopped from challenging the validity of the asserted patent claims before the district court, it was not barred from challenging the claims’ validity in an IPR proceeding. In Arista Networks, Inc. v. Cisco Sys., Inc., 908 F.3d 792, 803–04 (Fed. Cir. 2018), the Federal Circuit held that the doctrine of assignor estoppel does not bar an assignor from filing a petition for IPR. The court found that 35 U.S.C. § 311(a)—which provides that "a person who is not the owner of a patent" may file an IPR—meant that Congress intended that assignor estoppel does not apply in an IPR proceeding. The court affirmed that Hologic was collaterally estopped from asserting infringement of these claims.

The Federal Circuit then held that the district court did not abuse its discretion in concluding that assignor estoppel precluded Minerva from challenging the validity of claim 1 of the ’348 patent. Minerva argued that the Federal Circuit should abandon application of assignor estoppel as inconsistent with the Supreme Court’s decision in Lear, Inc. v. Adkins, 395 U.S. 653, 666 (1969), which abolished application of the doctrine of licensee estoppel. The Federal Circuit disagreed, finding that the equities in this case weighed in favor of application of the doctrine. The inventor of the applications that matured into the patents-in-suit had executed a broad assignment of his rights to a company he founded and later sold to Hologic for $325 million. The inventor then founded Minerva to produce the accused products in direct competition with Hologic. The Federal Circuit affirmed the district court’s grant of summary judgment of no invalidity as to claim 1 of the ’348 patent.

Circuit Judge Kara Stoll wrote separately to address the "odd situation" presented in this case and caused by Federal Circuit precedent, 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. "[I]t’s 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," Judge Stoll said. "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."

Petitions for review. Both Minerva and Hologic filed petitions asking the High Court to review the assignor estoppel doctrine. Hologic’s petition sought to restrict application of assignor estoppel in inter partes review proceedings, while Minerva’s petition challenged application of the doctrine in court litigation. On January 8, the High Court denied review to Hologic, but agreed to review Minerva’s petition.

Hologic’s petition had asked, "Whether an assignor of a patent may circumvent the doctrine of assignor estoppel by challenging the validity of the assigned patent in administrative proceedings before the Patent Office, and then using the Patent Office’s finding of invalidity to collaterally estop the assignee from relying on the patent in infringement litigation in district court."

Minerva’s petition asks, "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." Minerva’s petition notes that the Patent Act makes invalidity a defense in "any action" for patent infringement. 35 U.S.C. § 282(b). According to Minerva, the judge-made doctrine of "assignor estoppel," is contrary to the Patent Act’s clear text and undermines patent law values. "Assignor estoppel singles out a class of individuals—inventors, who are likely well positioned to expose a patent’s flaws or highlight the way an assignee has asserted a patent beyond its legitimate scope—and bars them from challenging validity. The result is that bad patents stand and frustrate legitimate competition," the petition states.

Minerva urges the Supreme court to eliminate assignor estoppel entirely, or in the alternative, to limit its contours. In this case, Minerva’s invalidity defense was based solely on Section 112’s written description and enablement requirements. Minerva asserted that Hologic in this case had broadened the scope of the patent beyond anything the inventor had claimed. "When, as here, the assignee seeks to bar a challenge based on written description and enablement to an assignee’s expansion of a patent after assignment, assignor estoppel should not apply," the petition says.

In an amicus brief on behalf of law professors, Stanford Law Professor Mark Lemley agrees that the Court should eliminate or narrow the assignor estoppel doctrine because the Federal Circuit has unduly expanded the scope of the doctrine beyond the Supreme Court precedent and patent policy. limits. According to Professor Lemley, the current doctrine "broadly precludes inventors and their privies from challenging the validity of patents, even though invalidating bad patents is widely recognized as an important public good and even though inventors and their privies are at times in the best position to challenge bad patents." Professor Lemley also points out that the doctrine "restricts employee mobility in ways that harm innovation and economic growth, and it is particularly taxing on startups and the most innovative inventors."

The case is Dkt. No. 20-440.

Attorneys: Robert N. Hochman (Sidley Austin LLP) for Minerva Surgical, Inc. Matthew M. Wolf (Arnold & Porter LLP) for Hologic, Inc., et al.

Companies: Minerva Surgical, Inc.; Hologic, Inc.

MainStory: TopStory Patent GCNNews

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