SCOTUS maintains but narrows the doctrine of assignor estoppel.

On June 29, 2021, the U.S. Supreme Court decided Minerva Surgical, Inc. v. Hologic, Inc., 594 U.S. ___, (2021) maintaining but narrowing the doctrine of assignor estoppel. In view of the Minerva decision, it is advisable to implement several changes to certain patent-related practices followed by many companies and institutions as set forth below. 

           The dispute arose because Hologic purchased a business based on a patented technology started by the inventor of that technology. The relevant patent was assigned to Hologic as part of the purchase. After selling that business, the inventor started Minerva and developed a competing product. Hologic filed suit against Minerva alleging that Minerva’s competing product infringed a continuation patent based on the originally assigned patent. As is typical, the assignment also applied to the continuation patent. Importantly, the continuation patent issued with broader claims than the original patent. Minerva attempted to defend itself by alleging the continuation patent was invalid. In response, Hologic asserted that the inventor and Minerva (essentially, the inventor’s alter ego) could not attack the validity of the patent based on the doctrine of assignor estoppel. Assignor estoppel is based on the principle that an assignor warrants, explicitly or implicitly, that the patent has worth and fairness prevents the assignor from later alleging the patent is worthless. 

The trial court applied the doctrine and prevented the inventor/Minerva from raising an invalidity defense. On appeal, the Federal Circuit upheld the trial court. As indicated above, the Supreme Court (in a majority opinion authored by Justice Kagan and joined by Justices Roberts, Breyer, Sotomayor, and Kavanaugh) upheld the doctrine but vacated the Federal Circuit’s judgment because it “failed recognize the doctrine’s proper limits.” For example, the majority opinion determined that the Court’s earlier decision in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co. holding that an assignor can use prior art to support a narrow claim construction without attacking validity made clear that the doctrine of assignor estoppel has limits.  Although there are limits to assignor estoppel, the Westinghouse decision left several questions unanswered. For example, the Westinghouse decision did not answer whether assignor estoppel applies when an assignor received only a nominal amount of money for assigning the patent, or whether an assignment of a patent application estopped a challenge of the resulting granted patent. As will be shown below, the Court’s majority effectively negated the aforementioned consideration question and answered the patent application-granted patent question. 

Specifically, the majority determined, “The equitable basis of assignor estoppel defines its scope: The doctrine applies only when an inventor says one thing (explicitly or implicitly) in assigning a patent and the opposite in litigating against the patent’s owner.”  Stated another way, the principle underlying assignor estoppel is consistency in representations about a patent’s validity. Although the Court initially stated the doctrine only applies to inventors, the majority opinion went on to broaden the applicability to non-inventor assignors by stating, “Assignor estoppel should apply only when its underlying principle of fair dealing comes into play.” Additionally, the Court provided the following examples of situations in which assignor estoppel does not apply because the assignor would not be contradicting the representation about a patent’s validity, and these examples were not limited to inventors.   

• When the assignment occurs before an inventor can possible make a warranty of validity [express or implied] as to specific patent claims. Thus, an employee who assigns to his/her employer patent rights in any future inventions developed during the employment could not have represented a patent on a future invention is valid. So, the employee’s assignment of rights cannot estop his/her allegation of invalidity in a later litigation.
• A later legal development rendering irrelevant the warranty given at the time of assignment. If a change in law renders a patent invalid, the principle of consistency does not prevent the assignor from challenging the validity.
• A post-assignment development such as a change in patent claims can remove the rationale for applying assignor estoppel.  For example, when an assignee like Hologic obtains claims that are materially broader than those originally sought by the assignor, in which case the assignor did not warrant the broader claims. 

           In a footnote, the Court observed the following: “Assignors are especially likely infringers because of their knowledge of the relevant technology.” So, what should or can an assignee do to protect the purchased patents by increasing the likelihood of assignor estoppel being applied? Below are suggestions for assignees to implement.

Assignments

• Continue the typical practice of including in assignments a requirement for an inventor/assignor to assist in the procurement of patents subject of the assignment by, among other things, executing relevant USPTO documents such as the required oath/declaration attesting to being an original inventor of the claimed invention.
• Instead of recording the same first-executed assignment for each application in a patent family with the USPTO, obtain and record a new assignment for each subsequent application.
• Obtain a confirmatory assignment from the inventor/assignor after the USPTO issues a Notice of Allowability. Specifically, after receiving the Notice, provide the inventor/assignor with a copy of the current application, including the allowable claims, and have the inventor/assignor execute an assignment confirming that the application as allowed was assigned to the assignee pursuant to the earlier signed assignment(s). The confirmatory assignment can, but need not, be recorded with the USPTO.

Oath/declarations

• Instead of using an oath/declaration filed with a first non-provisional application in subsequent continuation-type applications, obtain and file a new oath/declaration from each inventor for each subsequent application.
• Obtain such an oath/declaration at the filing of the application so that it is available if the inventor later becomes unavailable or uncooperative. Don’t, however, immediately file that oath/declaration with the USPTO. Instead, when the assignee receives a Notice of Allowability from the USPTO, provide the inventor with a copy of the current application, including the allowable claims, and have the inventor sign a new oath/declaration that is to be filed with the USPTO. This post-allowance oath/declaration is an averment that the inventor believes the allowable claims are patentable notwithstanding that they may be materially broader or different than the claims as originally presented in the application or in an earlier filed application. 

It is believed that these actions will improve the likelihood of assignor estoppel applying by negating the “assignment occurred before an inventor knew the claims” and the “post-assignment development” rationales.