An assignor of a patent is generally precluded from challenging the validity of the patent in infringement litigation.1 Parties found to be in privity with an assignor are also estopped.2 The Patent Trial and Appeal Board (“PTAB”), however, has so far held that assignor estoppel is not a defense to patent validity inter partes review (“IPR”) challenges.3 Thus, parties precluded from challenging the validity of a patent in litigation under the doctrine of assignor estoppel may nonetheless be able to contest the validity of the same patent in IPR proceedings.
The Doctrine of Assignor Estoppel
is an equitable doctrine that prevents one who has assigned the rights to a patent (or patent application) from later contending that what was assigned is a nullity. ... The estoppel historically has applied to invalidity challenges based on "novelty, utility, patentable invention, anticipatory matter, and the state of the art."4
The Federal Circuit has stated that “the implicit representation of validity contained in an assignment of a patent for value raises the presumption that an estoppel will apply.”5 Assignor estoppel also precludes parties in privity with an assignor, “such as a corporation founded by the assignor,” from challenging patent validity.6 A recent opinion of the Federal Circuit on the doctrine,Semiconductor Energy Laboratory Co., Ltd. v. Nagata (“SEL”), summarizes the concept of assignor estoppel as a “defense to certain claims of patent infringement” that prohibits “an assignor of a patent … from attacking the validity of that patent when he is sued for infringement by the assignee.”7
Exceptions to Assignor Estoppel
The Supreme Court has articulated narrow exceptions to assignor estoppel which permit estopped assignors and privies to establish non-infringement by reference to the prior art. In the Supreme Court’s initial endorsement of assignor estoppel, the Court stated that “the state of the art can not be used [by an assignor] to destroy the patent [but] may be used to construe and narrow the claims of the patent, conceding their validity.”8 The Court subsequently held assignors have “a complete defense to an action for infringement where the alleged infringing device is that of [i.e., disclosed in] an expired patent.”9
PTAB Decisions on Assignor Estoppel in Inter Partes Review
Patent owners in at least five IPR proceedings have argued that the petitioner’s challenge was precluded by assignor estoppel.10 The initial PTAB opinions addressing the issue denied the applicability of assignor estoppel to the facts at trial but reserved judgment on the general availability of assignor estoppel in IPR.11 Ultimately, however, every PTAB panel to consider the issue has concluded that assignor estoppel is not available as a defense to IPR.12
Significantly, the PTAB’s decisions concerning assignor estoppel in IPR have emphasized the PTAB’s interpretation of the statute governing IPR.13 The PTAB’s rulings have been based primarily on a conclusion that 35 U.S.C. § 311(a), which provides that “a person who is not the owner of a patent may file with the office a petition to institute inter partes review of the patent,” allows for petitions filed by assignors (i.e., former owners) of the patent.14 These decisions contend that 35 U.S.C. § 311(a) is “a clear expression of Congress’s broad grant of the ability to challenge the patentability of patents through inter partes review.”15
The panel decisions on the issue in Redline Detection, IPR2013-00106, andAthena Automation, IPR2013-00290, also cite the statements of the Federal Circuit in SEL to the effect that assignor estoppel is a defense in infringement litigation, arguing that the defense does not extend to the IPR context.16Additionally, in response to the argument that the doctrine is recognized by the International Trade Commission (“ITC”), the Redline Detection and Athena Automation panels distinguished the ITC’s province over patent infringement actions, as well as the ITC’s enacting statute, which permits “all legal and equitable defenses” to be presented in “all cases.”17 In Palo Alto Networks, IPR2013-00369, the panel found that 37 C.F.R. § 42.101(c), which precludes filing of a petition for IPR where “the petitioner is estopped from challenging the claims,” refers to the estoppel arising from Final Written Decisions as provided in 37 C.F.R. § 42.73(d), and thus does not relate to the concept of assignor estoppel.18
Conclusion and Practice Notes
The Federal Circuit has yet to consider the PTAB’s determination that assignor estoppel is not a basis for denying post-grant review of a patent, and the issue has not been raised on appeal.19 It may therefore be some time before the issue is considered by the Federal Circuit. At least for the time being, the PTAB provides a venue to challenge claim validity to parties estopped from contesting patent validity in court.
Going forward, patent owners and assignees may wish to consider modifying their assignment forms and employment contracts to disincentivize post-assignment repudiation of validity (to the extent permitted by law). From the prospective assignor’s perspective, it should be noted that assignor estoppel can be expressly disclaimed,20 and assignors should seek such disclaimer where no estoppel is intended. To the extent an IPR petition is filed by an inventor (or privy) of the challenged patent, patent owners may wish to consider a strategy of impeachment based on the inventor’s oath to the PTO attesting to the inventor’s belief that they are the original inventor.21 Finally, both patent owners and challengers should be cognizant of the standards of appellate review for agency determinations when drafting arguments for and against the availability of assignor estoppel in IPR.