Is an assignor of patent rights barred from later challenging the validity of the patents, and if so, what are the boundaries of this bar? On June 29, 2021, the Supreme Court (the “Court”) issued an opinion upholding the doctrine of assignor estoppel which prevents an assignor of patent rights from challenging the validity of the patents. However, the Court further defined the boundaries of assignor estoppel and emphasized the equitable basis, in particular the fair dealing concerns, of assignor estoppel.
In the case, Csaba Truckai was a listed inventor on a patent application, the rights to which were subsequently acquired by Hologic, Inc. Mr. Truckai then founded Minerva Surgical, Inc. and developed an endometrial ablation system. Hologic sued Minerva for patent infringement of one of the assigned patents related to endometrial ablation.
In response to the claims of patent infringement, Minerva argued that the patent was invalid. In response, Hologic argued that Minerva could not challenge the patent’s validity due to assignor estoppel, because Mr. Truckai had assigned his rights in the patent and was a founder of Minerva.
In deciding the case, the Court recognized the fairness principle of assignor estoppel. However, the Court also recognized that assignor estoppel had been applied too expansively by the lower court. In response, the Court clarified the scope of assignor estoppel. Specifically, the Court found that the doctrine applies only when an inventor makes contradictory statements (explicitly or implicitly) in assigning a patent and in challenging the validity of the patent. The Court reasoned that an assignment carries an implied assurance of a patent’s validity, but where the assignor has not made explicit or implicit representations that contradict an invalidity defense, there is no ground for assignor estoppel.
To illustrate the boundaries of assignor estoppel, the Court provided three non-exhaustive examples of when assignor estoppel does not apply: first, when assignment occurs before an inventor can make a warranty of validity (e.g., “when an employee assigns to his employer patent rights in any future inventions he may develop during his employment”); second, when a later legal development renders the warranty of validity irrelevant; and third, when a change in patent claims occurs for an assigned application (e.g., “the new claims are materially broadened” during patent prosecution after the assignment takes place).
While the Court provided various examples of when assignor estoppel does not apply, each assignor’s and each company’s situation is unique, and the application of assignor estoppel depends on the particular situation. You should seek the guidance of professional legal counsel when making any determination regarding whether assignor estoppel applies.