“Because the focus remains on ensuring fairness and consistency, when patent ownership is derived from an assignment from the inventor, inventors and companies alike should not consider patent assignments to be routine documents without possible negative implications.”
On June 29, 2021, the Supreme Court issued its long-awaited decision in Minerva Surgical, Inc. v. Hologic, Inc. in which it clarified the proper limits of the centuries-old doctrine of assignor estoppel, which operates to prevent an inventor who assigns a patent to another for value from later claiming that the patent assigned is invalid during litigation, holding that the doctrine only applies when “the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.” The decision underscores the need to keep in mind a number of factors when preparing and executing patent assignments.
What SCOTUS Said
As a refresher, the case centered around two patents invented by Csaba Truckai related to procedures and devices to treat abnormal uterine bleeding. In 2004, Truckai assigned his interest in a patent application which claimed a moisture permeable applicator head to destroy cells in the uterine lining and any future continuation applications to his company, Novacept. Novacept sold its portfolio of patents and patent applications to another company, which was eventually acquired by respondent Hologic, Inc. in 2007. After assigning his rights to Novacept, Truckai founded petitioner Minerva Surgical, Inc. in 2008 and developed a competing device which used a moisture impermeable applicator head to treat abnormal uterine bleeding and was also the subject of an issued patent. In 2013, Hologic filed a continuation application adding claims for an applicator head without regard to whether the applicator head is moisture permeable or impermeable. The U.S. Patent and Trademark Office (USPTO) later issued the patent.
Hologic sued Minerva for patent infringement in 2015. Minerva challenged the validity of the asserted patent, arguing that it was invalid because it lacked written description support for a moisture impermeable head. Hologic invoked the doctrine of assignor estoppel to argue that Minerva (and Truckai) were estopped from challenging the validity of the patent. The district court agreed, and the jury found that Minerva infringed. The Federal Circuit upheld the district court’s decision, finding that assignor estoppel applied.
In a 5-4 decision, the Supreme Court rejected each of the three arguments raised by Minerva challenging the applicability of the doctrine of assignor estoppel. First, the Court rejected Minerva’s argument that the doctrine of assignor estoppel was eliminated by the Patent Act of 1952. The Court held that accepting this argument would eliminate a host of other common law preclusion doctrines in patent disputes, a position the Court found to be “untenable.” Second, the Court rejected Minerva’s argument that the doctrine of assignor estoppel was eliminated by earlier case law from the Court. To the contrary, the Court noted that its earlier rulings cited by Minerva merely enforced boundaries and limitations on the doctrine of assignor estoppel without eliminating the doctrine itself. Third, the Court rejected Minerva’s argument outright that the doctrine should be eliminated for policy reasons to weed out “bad patents.”
Despite reinforcing the doctrine’s existence, the Court did recognize the need to (again) clarify its bounds, which are defined by the principles of fairness and consistency in which the centuries-old doctrine is rooted. The Court pointed out that the primary purpose of the doctrine is to prevent an inventor from making inconsistent representations about a patent’s validity—in the first instance warranting (either explicitly or implicitly) that the patent is valid when assigning his or her rights but then later claiming that the patent he or she assigned is invalid and should never have issued. Conversely, the doctrine of assignor estoppel may not apply in situations where later challenges to patent validity would pose little risk of unfairness or inconsistencies—such as when an inventor assigns a patent application before it is possible to make any warranties of validity for specific patent claims.
The Court helpfully provided representative examples of situations where the doctrine of assignor estoppel would not be an available defense to an inventor’s challenge to patent validity, and these generally arise when the facts indicate that the inventor was not originally in a position to “warrant” the validity of the patented invention, and a later challenge to the validity would not be inconsistent or unfair. One example is situations when an employee assigns rights in any future inventions developed during the course of employment. Such non-specific assignments thus may not be deemed to explicitly or implicitly warrant validity of future inventions not yet conceived at the time of assignment. A further example is situations when an assignee returns to the patent office after the assignment by the inventor and files a broadening amendment or continuation that results in new claims which are “materially broader than the old claims.” In this instance, because the assignor did not warrant the validity of the new and broader claims, estoppel does not apply, and the assignor can challenge the new claims in litigation. Similarly, the Court pointed out that no contradiction arises, and the doctrine should not apply, when a patent that was assigned later becomes invalid due to a change in the governing law.
In line with the above reasoning, the Court vacated the Federal Circuit’s ruling and remanded for consideration of whether Hologic’s new claim was “materially broader” than the claims in Truckai’s patent application at the time of assignment. The four dissenting Justices, however, were persuaded by the arguments presented by Minerva. Justice Alito dissented on the basis that the Court could not properly decide the issues in this case without first deciding whether to overrule the Supreme Court’s decision in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1924). Justices Amy Coney Barrett, Clarence Thomas, and Neil Gorsuch dissented on the basis that the doctrine of assignor estoppel was in fact abrogated by the Patent Act of 1952 because the doctrine was neither well-settled common law at that time nor did Congress ratify Westinghouse when it enacted the law.
The doctrine of assignor estoppel continues to be an available defense in patent infringement suits to challenge the validity of an asserted patent. Application of assignor estoppel, however, remains a fact-intensive inquiry that requires careful examination of the assignment record and prosecution history to determine what the assignor may or may not have represented at the time of the assignment and whether the claims have been materially broadened since the assignment was executed. Because the focus remains on ensuring fairness and consistency, when patent ownership is derived from an assignment from the inventor, inventors and companies alike should not consider patent assignments to be routine documents without possible negative implications. The following considerations thus should be taken into account in preparing and executing patent assignments.
- Companies seeking to avoid assignor estoppel may wish to include express provisions in employment agreements preventing an inventor from later challenging the validity of the assigned patent or patent application. Care should be taken, however, in the preparation of such provisions as there may be enforceability issues with blanket or overly broad anti-challenge provisions.
- Avoid blanket assignment agreements in the employment context. These are commonly found in employment agreements, but reliance on such blanket requirements as the sole basis for assignment would not be expected to withstand the “fairness and consistency” scrutiny. Assignment agreements should be narrowly tailored in the context of specific patent(s) or patent application(s) and should include representations from the inventor(s) as to the validity of each assigned claim. Keep in mind, however, that inventors may seek to minimize any representations they make regarding the validity of certain claims to avoid the risk that estoppel will apply after their departure.
- It is a common practice for patent assignments to include “catch-all” provisions whereby the inventor assigns rights in all later continuations, divisionals, continuations-in-part, etc. It should not be presumed, however, that catch-all provisions will exclude an inventor’s option to later challenge patent validity, particularly for broadened claims. One option may be to ensure that catch-all phrases are worded to encompass all aspects of the subject matter described in the application without limitation to the actually claimed embodiments. In addition to an initial assignment agreement, assignees may also consider having inventor(s) sign a declaration each time a continuation is filed or amendment is made affirmatively attesting to the validity of the new claims. Since inventor declarations in the US must only be filed before issuance, there may be benefit in delaying execution of the declaration until after allowance, and the execution of the declaration at that time may be evidence that the inventor is accepting validity of the claims as allowed. This poses the risk, however, that the inventor/assignor may be unavailable for signing declaration after allowance, which may be the case if the inventor/assignor has departed the assignee company. An alternative may be to file a declaration at the time of filing the application and also filing a confirmatory declaration after allowance.
- In many situations, companies provide nominal payments to employees upon issuance of patents for which they are inventors. Such payments may be accompanied by documentation indicating that acceptance is evidence that the inventor believes that the claims, as granted, are valid. It is difficult, of course, to predict which employees or inventors may depart a company after assigning his or her rights. This eventuality may be mitigated by providing payments for inventions instead of payments for granted patents. Acceptance of payment for the invention may be later evidence that the inventor believed all aspects of the initially filed application to be valid and thus may dissuade them from challenging the validity of the assigned patent portfolio after the initial assignment has been executed.
- It is important to recognize that the Patent Trial and Appeal Board does not apply the doctrine of assignor estoppel to inter partes review proceedings. Thus, even in situations with assignor estoppel may be an effective defense in court proceedings, IPR proceedings may remain as a viable alternative to challenge the validity of a patent asserted in district court.
- Applicability of assignor estoppel should also be a consideration when acquiring existing patent portfolios. Proper diligence thus may include making determinations of what changes (specifically broadening changes) have been made to the patents to determine whether estoppel may apply and secure attestations from the assignor regarding the validity of those claims.
Still to Be Seen
Several open questions remain after the Supreme Court’s decision, including what evidence is needed to demonstrate that claims have been made “materially broader” post-assignment. It is also unclear whether all inventors must make representations regarding the validity of the claims-at-issue to apply assignor estoppel or representations of only one inventor would be sufficient. Similarly, it is unclear whether estoppel would have applied if Truckai was only a mere employee of Minerva and not its founder and principal inventor. Despite these remaining questions, assignor estoppel remains as an effective defense for patent owners and can be solidified through effective planning and execution of assignment documents.
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