On April 21, 2021, the Supreme Court heard oral argument in Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, a case that could potentially limit or eliminate the doctrine of assignor estoppel. Assignor estoppel is a common-law doctrine that prevents, in district court patent litigation, an assignor of a patent from challenging the validity of the assigned patent as a defense to allegations of infringement. The Federal Circuit previously has held that, while assignor estoppel may apply in district court litigation, it cannot bar an assignor from challenging patent validity in an inter partes review (IPR) at the United States Patent and Trademark Office (USPTO). Thus, in addition to potentially reshaping the assignor estoppel doctrine, the outcome of Minerva may reduce the disparity in the ability of assignors to challenge the validity of patents in district courts and at the USPTO.
Background
In the 1990s, Csaba Truckai founded the company Novocept and assigned to it his interest in a medical device patent application. In 2004, Novocept was acquired by Cytyc, which in turn was acquired by Hologic in 2007. In 2008, Truckai left Novocept to form Minerva and develop the accused medical device. In 2015, Hologic sued Minerva in the United States District Court for the District of Delaware, accusing Minerva's device of infringing two patents, the '183 and '348 patents, which issued from the application that Truckai had assigned. Hologic moved for summary judgment, asserting that assignor estoppel barred Minerva from challenging the validity of both patents. The district court granted Hologic's motion. The case proceeded to trial, and the jury awarded Hologic damages for the infringement of both patents. However, the district court denied Hologic's motion for a permanent injunction and additional damages under the '183 patent, because Minerva had successfully invalidated the '183 patent in a parallel IPR. The parties cross-appealed.
On appeal, the Federal Circuit affirmed the district court's application of assignor estoppel to the '348 patent. Minerva petitioned for certiorari, arguing that the Federal Circuit should not have applied assignor estoppel to the '348 patent because, among other things, the claims of the '348 patent, as issued in 2015, were broader than the claims that Truckai had assigned in the 1990s. On January 8, 2021, the Supreme Court granted certiorari on the question of "whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits."
In its Supreme Court brief, Minerva argues that assignor estoppel should be eliminated because 35 U.S.C. § 282(b) of the Patent Act permits an accused infringer to raise an invalidity defense in "any" action without qualification; because estoppel by deed, the real property doctrine from which courts adapted assignor estoppel, provides a poor foundation for applying an analogous form of estoppel to patents; and because assignor estoppel thwarts public policy favoring challenges to patent validity. Minerva alternately argues that, if assignor estoppel is preserved, it should not apply to claims that issue after assignment; it should not bar 35 U.S.C. § 112 invalidity defenses; and it should be limited to situations where an assignor made a representation that the claims were valid, and upon which an assignee reasonably relied.
Hologic in response argues that the assignor estoppel doctrine should be preserved. Among other things, Hologic argues, based largely on the Supreme Court's decision in Westinghouse Electric & Manufacturing Co. v. Formica Insulation Co., 266 U.S. 342 (1924), that assignor estoppel is settled law, and that assignor estoppel serves important public policy justifications, such as "promoting innovation, facilitating patent sales and keeping inventors honest."
The United States, in its amicus brief, asserts that assignor estoppel should be preserved, but should not apply "where there is no logical inconsistency between an assignor's prior representations and its current challenge to a patent's validity." The United States further asserts that assignor estoppel should be limited to situations such as "when an assignor conveys issued claims, or when an assignor has prosecuted claims that are materially identical to those asserted in the infringement suit."
Oral Argument Analysis
The justices' questions at oral argument suggest the Supreme Court will not eliminate the doctrine of assignor estoppel, but may limit its application to a narrower set of situations than those to which the doctrine has previously been applied. The justices, however, observed that the limitations proposed by Minerva and the United States had not previously been applied by any court. It is therefore uncertain what limitations the Supreme Court may adopt.
Minerva's Argument
Justices Breyer, Alito, Sotomayor, Kagan, Gorsuch, and Kavanaugh all noted that a significant body of common law supports the doctrine of assignor estoppel. Justices Alito, Sotomayor, and Kavanaugh asked Minerva why the Supreme Court should overrule that precedent. Minerva's counsel, Robert Hochman, answered that the only relevant Supreme Court precedent was the 1924 Westinghouse decision, and that subsequent Supreme Court decisions, including Scott Paper Co. v. Marcalus Manufacturing Co., 326 U.S. 249 (1945), had criticized and undermined the assignor estoppel doctrine. Mr. Hochman further explained that the doctrine has "persisted for so long only because the Federal Circuit has exclusive jurisdiction over patent law."
Justices Roberts, Breyer, Sotomayor, Kagan, and Gorsuch asked what issues might arise if the Supreme Court were to adopt the United States' proposed limitations. Mr. Hochman responded that the United States' proposed "materially identical" standard would introduce ambiguities; by contrast, if the assigned claims and the asserted claims were "textually identical," then the doctrine could be consistently applied. In Minerva's favor, Justice Gorsuch noted that assignor estoppel cases often involve the assignment of patents from small inventors to large corporations and that, by not limiting assignor estoppel to situations in which an assignee in fact had relied on an assignor's representations, as Minerva proposed, the Court would be "advantaging large purchasers to the disadvantage of individual inventors."
Justice Barrett asked if the facts would support equitable estoppel if assignor estoppel were not available. Mr. Hochman answered that the difference in the scope of the patent application as assigned and the '348 patent as issued precluded the application of any kind of estoppel.
The United States' Argument
The justices' questions to the United States explored the United States' proposed limitations on the assignor estoppel doctrine. Justices Alito, Sotomayor, Gorsuch, and Barrett noted that those limitations had never been applied by any court. Morgan Ratner, assistant to the solicitor general, countered that the "reflexive" application of assignor estoppel to all invalidity disputes "would mean that estoppel applies even in the absence of logically inconsistent positions, and that's not consistent with historical estoppel doctrines."
Justices Roberts, Kagan, and Kavanaugh asked about the examples in the United States' amicus brief of situations in which assignor estoppel would not apply under the United States' proposed limitations. In accordance with the United States' brief, Ms. Ratner confirmed that, under the United States' proposed limitations, assignor estoppel would not apply where an employee assigns to his employer all rights to inventions developed in the course of his employment; where an inventor assigns rights to an invention before patent claims are issued, and the USPTO later issues patent claims broader than or different from those assigned; and where an inventor assigns patent claims prior to a clear change in the law that affects their validity.
Justice Kagan asked Ms. Ratner to explain the United States' disagreement with Minerva's proposal that an assignee rely upon an assignor's representation for assignor estoppel to apply. Mr. Ratner explained that such reliance would require a "knowing affirmative misrepresentation" and "justifiable reliance," which would "be extremely difficult to show in most cases."
Hologic's Argument
Justices Roberts, Gorsuch, and Barrett asked Hologic's counsel, Matthew Wolf, whether Scott Paper's criticisms of assignor estoppel weakened Hologic's stare decisis argument. Mr. Wolf responded that, while the Supreme Court had criticized the doctrine, it had never overturned it. Justice Barrett noted that the Supreme Court has been clear in telling lower courts that, "even if our precedents have made it a virtual certainty that we would overrule it, that's our prerogative," and thus the fact that lower courts continue to apply the doctrine "wouldn't necessarily mean that, as we view it, that it wasn't a dead letter."
Justice Breyer questioned whether current trends such as increasing employee mobility, the development of new technologies, and the complexity of patent claims warranted imposing limitations upon the doctrine. Mr. Wolf noted that some limitations already exist: IPRs allow assignors to challenge patent validity regardless of assignor estoppel, and assignor estoppel in its current form would not apply in situations where the accused infringer is not in privity with the assignor, for example, "if an employee goes from company A to company B and is not sufficiently directing the activities."
Justices Sotomayor and Kagan questioned why an assignor should be estopped from challenging the validity of a patent claim that was broader than or different from the one that was assigned. Mr. Wolf disputed that the '348 patent, as issued, claimed subject matter broader than what the original application had disclosed, and what Mr. Truckai had tried to claim during the prosecution of the application before the USPTO.
Justice Kavanaugh asked Hologic to explain its disagreement with the United States' position. Mr. Wolf explained that limiting assignor estoppel to asserted patent claims that are "materially identical" to pre-assignment claims prosecuted before the USPTO, as the United States proposes, is incongruent with the standards of 35 U.S.C. § 112, which does not require material identity between patent claims as originally filed and subsequently prosecuted claims.