Supreme Court Provides Additional Guidance on Assignor Estoppel in Patent Litigation

Assignor estoppel is an equity-based doctrine that can be invoked during the course of patent litigation to prevent an assignor, after assigning their interests to a patent to another, from later asserting that the patent is actually invalid. Invocation of assignor estoppel commonly arises in instances where the assignor engages in some post-assignment activity that prompts the assignee to sue the assignor for patent infringement, and, in response, the assignor asserts the affirmative defense of invalidity to combat the infringement claim. In assigning ownership of a patent to another, there is presumed to be at least an implicit warranty that the patent is valid. Accordingly, when the assignor asserts the defense of invalidity, they, in turn, effectively disavow any warranty of validity express or inherent at the time of assignment. Left unchecked by assignor estoppel, the assignor could potentially benefit from both the consideration paid by the assignee to acquire the patent as well as continued use of the patented invention, while the assignee is effectively left with a worthless asset. In this regard, the doctrine of assignor estoppel thus serves to guard against unfair dealing by the assignor and provide the assignee with some degree of confidence that they are receiving the benefit of what was bargained for.

The assignment of patent interests, however, does not always center around an issued patent where the claims defining the metes and bounds of the inventive subject matter are static at the time of assignment. Rather, the interest being conveyed often relates to rights to present or future patent applications. In such cases, it is not definite as to what the ultimate scope of protection, and thus value, the assignee will be afforded at the time of assignment as the claimed subject matter of a patent application can be amended significantly during the course of prosecution and/or expanded upon through additional, related filings. In such situations, the pertinent question for the assignee thus becomes, to what extent will an earlier assignment guard against subsequent claims of invalidity by the assignor to a later-issued patent?

Enter the Supreme Court: Minerva Surgical, Inc. v. Hologic, Inc.

The Supreme Court provided guidance to the above-posed question toward the end of its 2020-2021 session in Minerva Surgical, Inc. v. Hologic, Inc. The facts giving rise to this case are as follows:

• Inventor develops device for uterine bleeding, files a patent application for the same, and later assigns the application and any subsequent applications to his company, Novacept, Inc.
• The filed patent application matures into an issued patent.
• Novacept, Inc. and its entire patent portfolio are subsequently acquired by Hologic, Inc.
• Following the acquisition, the inventor starts Minerva Surgical, Inc., where he develops a new, improved device to treat abnormal uterine bleeding.
• Minerva files a patent application for the improved device that matures into an issued patent and receives FDA approval for commercial sale of the improved device.
• Hologic files a continuation application including a claim specifically drafted to encompass Minerva’s improved device, and the application subsequently matures into an issued patent.
• Hologic sues Minerva for infringing the patent arising from the continuation application, Minerva claims the asserted patent is invalid under 35 U.S.C. § 112(a) for lack of written description, and Hologoic invokes the doctrine of assignor estoppel.
• District Court rules assignor estoppel bars Minerva from asserting invalidity and Federal Circuit affirms such ruling.
• Mineverva seeks review and urges Supreme Court to eliminate the doctrine of assignor estoppel or, in the alternative, to limit its effects.

Guidance on Limits of Assignor Estoppel

While the Court declined to abandon the doctrine of assignor estoppel, it did affirm that the doctrine is not applicable in every case where an assignment has been made. Rather, the Court held that the scope of assignor estoppel is limited to instances where an assignor’s later claim of invalidity actually contradicts explicit or implicit representations of the patent’s validity made at the time of assignment and provided three examples of when such contradiction does not occur.

1. The Invention Does Not Yet Exist

The first example provided by the Court as to when the requisite contradiction for assignor estoppel does not exist relates to instances when assignment occurs before it is even possible for the assignor to make a warranty with respect to validity of any specific patent claims—such as when an employee assigns her rights to any future inventions to her employer as a part of her employment agreement. The rationale here is: if an invention has not yet come into existence, there necessarily cannot be any representation as to the validity of patent claims to such invention.

2. The Law Changes After Assignment

The Court also indicated that no contradiction exists when a post-assignment change in law renders a patent invalid. In this situation, any warranty given at the time of assignment effectively becomes irrelevant as there is a new basis for asserting validity that was not contemplated at the time of assignment.

3. The Claims are Materially Broadened After Assignment

Finally, and most relevant to the facts of Minerva and instances where the interest assigned is a patent application, the Court indicated that a post-assignment change in the scope of a patent’s claims can undercut a claim of assignor estoppel. To this point, the Court reasoned that if the claims of an issued patent are materially broader than that contained within the patent application at the time of assignment, then the assignor did not warrant such claims validity, and therefore there is no contradiction that prevents the assignor from asserting the issued patent is invalid.

With the last example in mind, the Court vacated the Federal Circuit’s judgment and remanded the case back to the Federal Circuit to consider whether the Hologic’s patent born from the continuation application including the new claim drafted to encompass Minerva’s improved device is materially broader than the ones initially assigned by the inventor.

Takeaways

In light of this new guidance, moving forward, assignees of pending patent applications should take care to try and obtain explicit representations from the assignor at the time of assignment which serve to better ensure assignor estoppel will apply in the event the claims within the application or related filings are subsequently broadened. It may also prove beneficial for the assignee to secure the assignor’s future cooperation to provide affirmation of validity at the time of patent issuance. For prosecutors assisting an employer in the preparation of an initial patent application relating to an invention acquired via employment agreement, drafting the application to include one or more independent claims directed to the broadest possible aspects of the invention and securing the employee’s assignment of such application may help to guard against future arguments that the claims were materially broadened post assignment.

Stites & Harbison, PLLC’s full-service Intellectual Property & Technology Group regularly assists clients in the acquisition, management, licensing, and litigation of patents, copyrights, trademarks, and trade secrets. For questions, comments, or assistance with any intellectual property-related matters, please contact the author or any of the other attorneys in our group.