In two separate decisions involving the same parties, the US Court of Appeals for the Federal Circuit and the Patent Trial and Appeal Board (PTAB or Board) reached different conclusions on whether assignor estoppel applies to a party challenging validity of a patent. In the first decision, the Federal Circuit affirmed a district court’s ruling that barred a defendant from arguing that the patents-in-suit are invalid under the doctrine of assignor estoppel. MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc., Case Nos. 2015-1370, 2015-1426 (Fed. Cir., Mar. 23, 2016) (Prost, J). In the second decision, the Board held that assignor estoppel could not be used to prevent a petitioner from challenging the validity of a patent. B/E Aerospace, Inc. v. MAG Aerospace Industries, Inc., IPR2014-01510, Paper 106 (PTAB, Mar. 18, 2016) (Kauffman, APJ).
MAG owns US patents directed to the quick repair of vacuum toilets, such as those used on commercial aircrafts, and filed a complaint in district court accusing B/E of infringing these patents. B/E counterclaimed on the basis of non-infringement and invalidity. In response to B/E’s invalidity counterclaim, MAG moved for summary judgment on an affirmative defense of assignor estoppel. Under the doctrine of assignor estoppel, when a patent owner or inventor assigns a patent to another party, the previous owner cannot challenge the validity of the patent. Here, one of the inventors of the patents-in-suit now works for B/E. The inventor previously assigned the patents-in-suit to his former employer, which then assigned them to MAG. MAG argued that the inventor was in privity with B/E and thus assignor estoppel bars B/E from attacking the validity of the patents.
The district court granted MAG’s motion for summary judgment, finding that the inventor was in privity with B/E for the following reasons:
- B/E used the inventor’s knowledge to conduct the allegedly infringing activities.
- The inventor was hired specifically to develop the toilets that were accused of infringement.
- The inventor was the director of engineering for B/E and later became the vice president and general manager of B/E.
On appeal, the Federal Circuit held that the district court did not abuse its discretion in concluding that assignor estoppel applies, and that B/E was correctly barred from arguing that the patents-in-suit were invalid.
As it was defending itself in district court, B/E concurrently challenged the validity of the patents-in-suit in inter partes review (IPR) proceedings before the Board. During the IPR proceedings, MAG argued that the doctrine of assignor estoppel prevented B/E from seeking IPR of these patents because the inventor was in privity with B/E. The Board rejected MAG’s argument and held that assignor estoppel is not applicable to IPR. The Board concluded that assignor estoppel is an equitable doctrine and does not “provide an exception to the statutory mandate that any person who is not the owner of a patent may file a petition for inter partes review.” As a result, while B/E was unable to challenge the validity of the patents-in-suit in district court, it was able to challenge the validity of those patents in an IPR proceeding.