On 21 April 2021 the Supreme Court heard oral argument in Minerva Surgical Inc v Hologic Inc (20-440), a case that could limit or eliminate the doctrine of assignor estoppel.
'Assignor estoppel' is a common law doctrine that prevents, in district court patent litigation, the assignor of a patent from challenging the validity of the assigned patent as a defence to infringement allegations. The Federal Circuit has previously held that while assignor estoppel may apply in district court litigation, it cannot bar an assignor from challenging patent validity in an inter partes review at the United States Patent and Trademark Office (USPTO).
Thus, as well as potentially reshaping the assignor estoppel doctrine, the outcome of Minerva may reduce the disparity between the ability of assignors to challenge the validity of patents in district courts and at the USPTO.
In the 1990s Csaba Truckai founded Novocept and assigned to it his interest in a medical device patent application. In 2004 Novocept was acquired by Cytyc, which in turn was acquired by Hologic in 2007. In 2008 Truckai left Novocept to form Minerva and develop the medical device in question.
In 2015 Hologic sued Minerva in the US District Court for the District of Delaware, accusing Minerva's device of infringing two patents (the '183 and '348 patents) which issued from the application that Truckai had assigned. Hologic moved for summary judgment, asserting that assignor estoppel barred Minerva from challenging the validity of both patents.
The district court granted Hologic's motion. The case proceeded to trial and the jury awarded Hologic damages for the infringement of both patents. However, the district court denied Hologic's motion for a permanent injunction and additional damages under the '183 patent because Minerva had successfully invalidated such patent in a parallel inter partes review. The parties cross-appealed.
On appeal, the Federal Circuit affirmed the district court's application of assignor estoppel to the '348 patent. Minerva petitioned for certiorari, arguing that the Federal Circuit should not have applied assignor estoppel to the '348 patent because, among other things, the claims of the '348 patent as issued in 2015 were broader than the claims that Truckai had assigned in the 1990s. On 8 January 2021 the Supreme Court granted 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".
In its Supreme Court brief, Minerva argued that assignor estoppel should be eliminated because:
- 35 US Code (USC) Section 282(b) of the Patent Act permitted accused infringers to raise an invalidity defence in any action without qualification;
- estoppel by deed, the real property doctrine from which the courts adapted assignor estoppel, provided a poor foundation for applying an analogous form of estoppel to patents; and
- assignor estoppel thwarted public policy which favoured challenges to patent validity.
Minerva also argued that if assignor estoppel was preserved, it should:
- not apply to claims that issue after assignment;
- not bar 35 USC Section 112 invalidity defences; and
- be limited to situations in which an assignor has made a representation that the claims are valid and on which an assignee has reasonably relied.
In response, Hologic argued that the assignor estoppel doctrine should be preserved. Among other things, Hologic argued, based largely on the Supreme Court's decision in Westinghouse Electric & Manufacturing Co v Formica Insulation Co (266 US 342 (1924)), that assignor estoppel:
- was settled law; and
- served important public policy justifications – for example, "promoting innovation, facilitating patent sales and keeping inventors honest".
The United States, in its amicus brief, asserted that assignor estoppel should be preserved but should not apply "where there is no logical inconsistency between an assignor's prior representations and its current challenge to a patent's validity". The United States further asserted that assignor estoppel should be limited to situations such as "when an assignor conveys issued claims, or when an assignor has prosecuted claims that are materially identical to those asserted in the infringement suit".
The justices' questions at oral argument suggested that the Supreme Court will not eliminate the doctrine of assignor estoppel but may limit its application to a narrower set of situations than those to which the doctrine has previously been applied. However, the justices observed that the limitations proposed by Minerva and the United States have not previously been applied by any court. Therefore, it is uncertain what limitations the Supreme Court may adopt.
Justices Breyer, Alito, Sotomayor, Kagan, Gorsuch and Kavanaugh all noted that a significant body of common law supports the doctrine of assignor estoppel. Alito, Sotomayor and Kavanaugh asked Minerva why the Supreme Court should overrule that precedent. Minerva's counsel, Robert Hochman, answered that the only relevant Supreme Court precedent is the 1924 Westinghouse decision and that subsequent Supreme Court decisions, including Scott Paper Co v Marcalus Manufacturing Co (326 US 249 (1945)), criticised and undermined the assignor estoppel doctrine. Hochman further explained that the doctrine has "persisted for so long only because the Federal Circuit has exclusive jurisdiction over patent law".
Justices Roberts, Breyer, Sotomayor, Kagan and Gorsuch asked what issues might arise if the Supreme Court were to adopt the United States' proposed limitations. Hochman responded that the United States' proposed materially identical standard would introduce ambiguities; by contrast, if the assigned claims and the asserted claims were textually identical, the doctrine could be consistently applied. In Minerva's favour, Gorsuch noted that assignor estoppel cases often involve the assignment of patents from small inventors to large corporations and that by not limiting assignor estoppel to situations in which an assignee has in fact relied on an assignor's representations as Minerva had proposed, the court would be "advantaging large purchasers to the disadvantage of individual inventors".
Justice Barrett asked if the facts would support equitable estoppel if assignor estoppel were not available. Hochman answered that the difference in the scope of the patent application as assigned and the '348 patent as issued precluded the application of any kind of estoppel.
United States' argument
The justices' questions to the United States explored its proposed limitations on the assignor estoppel doctrine. Alito, Sotomayor, Gorsuch and Barrett noted that those limitations had never been applied by any court. Morgan Ratner, assistant to the solicitor general, countered that the reflexive application of assignor estoppel to all invalidity disputes "would mean that estoppel applies even in the absence of logically inconsistent positions, and that's not consistent with historical estoppel doctrines".
Roberts, Kagan and Kavanaugh asked about the examples in the United States' amicus brief of situations in which assignor estoppel would not apply under the United States' proposed limitations. In accordance with the United States' brief, Ratner confirmed that under the United States' proposed limitations, assignor estoppel would not apply where:
- an employee assigns to their employer all rights to inventions developed during their employment;
- an inventor assigns rights to an invention before patent claims are issued and the USPTO later issues patent claims which are broader than or different from those assigned; and
- an inventor assigns patent claims prior to a clear change in the law that affected their validity.
Kagan asked Ratner to explain the United States' disagreement with Minerva's proposal that an assignee has to rely upon an assignor's representation for assignor estoppel to apply. Ratner explained that such reliance would require a "knowing affirmative misrepresentation" and "justifiable reliance", which would be "extremely difficult to show in most cases".
Roberts, Gorsuch and Barrett asked Hologic's counsel, Matthew Wolf, whether Scott Paper's criticisms of assignor estoppel weakened Hologic's stare decisis argument. Wolf responded that while the Supreme Court had criticised the doctrine, it had not overturned it. Barrett noted that the Supreme Court had clearly told lower courts that "even if our precedents have made it a virtual certainty that we would overrule it, that's our prerogative" and thus the fact that lower courts continued to apply the doctrine "wouldn't necessarily mean that, as we view it, that it wasn't a dead letter".
Breyer questioned whether current trends (eg, increasing employee mobility, the development of new technologies and the complexity of patent claims) warranted the imposition of limitations on the doctrine. Wolf noted that some limitations already exist: inter partes reviews enable assignors to challenge patent validity regardless of assignor estoppel and assignor estoppel in its current form does not apply in situations in which the accused infringer is not in privity with the assignor – for example, "if an employee goes from company A to company B and is not sufficiently directing the activities".
Sotomayor and Kagan questioned why an assignor should be estopped from challenging the validity of a patent claim that is broader than or different from that which is assigned. Wolf disputed that the '348 patent as issued claimed subject matter broader than that which the original application had disclosed and which Truckai had tried to claim during the prosecution of the application before the USPTO.
Kavanaugh asked Hologic to explain its disagreement with the United States' position. Wolf explained that limiting assignor estoppel to asserted patent claims that are materially identical to pre-assignment claims prosecuted before the USPTO, as the United States had proposed, is incongruent with the standards of 35 USC Section 112, which does not require material identity between patent claims as originally filed and subsequently prosecuted claims.