November 15, 2018

Federal Circuit Holds That Assignor Estoppel Is Not Available in IPRs

3 min

In a November 9, 2018 decision, the Federal Circuit in Arista Networks, Inc. v. Cisco Systems, Inc., Nos. 2017-1525, 2017-1577, held that the assignor estoppel is not available in inter partes review (IPR) proceedings.

Assignor estoppel is a common-law doctrine that prevents a party who assigns a patent to another from later challenging the validity of the assigned patent. In this case, Dr. David Cheriton, the named inventor of the patent at issue, U.S. Patent No. 7,340,597, was employed by Cisco at the time of invention, and assigned the '597 patent to Cisco. Dr. Cheriton subsequently left Cisco to found Arista, where he worked for several years before resigning in 2014.

In 2015, Arista challenged the validity of the '597 patent in an IPR proceeding. In 2016, the Patent Trial and Appeal Board in that IPR issued a final written decision upholding the validity of certain '597 patent claims, but invalidating other '597 patent claims as anticipated or obvious. In so doing, the Board rejected Cisco's argument that the doctrine of assignor estoppel barred Arista from challenging the '597 patent's validity. Arista appealed the Board's claim construction and validity determinations; Cisco cross-appealed the Board's refusal to apply the doctrine of assignor estoppel to Arista.

In a decision by Chief Judge Prost (joined by Judges Schall and Chen), the Federal Circuit held that the assignor estoppel is not available in IPRs.

As a threshold matter, the Federal Circuit first determined that the Board's decision not to apply assignor estoppel to Arista was reviewable on appeal, pursuant to its prior precedent in Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364 (Fed. Cir. 2018). In the Wi-Fi decision, the en banc Federal Circuit indicated that questions not "closely related" to the merits of the Board's decision to initiate IPR proceedings under 35 U.S.C. § 314(a) could be subject to appellate review. Because the assignor estoppel question was controlled by a different statute—35 U.S.C. § 311(a)—the Federal Circuit held that the assignor estoppel question was reviewable on appeal.

Turning to the substance of the question, the Federal Circuit noted that § 311(a) states in relevant part: "[s]ubject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent." According to the Federal Circuit, the plain language of § 311(a) "demonstrates that an assignor, who is no longer the owner of a patent, may file an IPR petition as to that patent."

In reaching that conclusion, the Federal Circuit rejected Cisco's arguments on cross-appeal that assignor estoppel should apply to IPRs. As to Cisco's primary argument that assignor estoppel is a "well-established common law doctrine that should be presumed to apply absent a statutory indication to the contrary," the Federal Circuit concluded that such contrary indication was "evident" from the plain and unambiguous language of § 311(a). The Federal Circuit also rejected Cisco's argument that § 311(a) "does not directly speak to the question of assignor estoppel in IPRs." According to the Federal Circuit, § 311(a) "delineates who may file an IPR petition." Last, the Federal Circuit rejected Cisco's argument that denying assignor estoppel in IPRs, while allowing it at the ITC and in district court, would invite forum shopping. According to the Federal Circuit, "such a discrepancy between forums—one that follows from the language of the respective statutes—is consistent with the overarching goals of the IPR process that extend beyond the particular parties in a given patent dispute."

As to the issues that Arista raised on appeal, the Federal Circuit held that the Board had erred in its construction of the claim term "broadcast," and remanded to the Board to reconsider the validity of the '597 patent claims in view of the Federal Circuit's claim construction.