Assignor Estoppel: Soil of the Common Law or a Strange State of Affairs?

On April 21, 2021, the Supreme Court of the United States heard oral arguments in Minerva Surgical, Inc., v. Hologic, Inc., et al., Case No. 20-440, concerning whether to limit, abolish, or uphold the doctrine of assignor estoppel.

The doctrine of assignor estoppel, generally stated, prevents an inventor who assigns his patent from later challenging its validity.

The parties to the case, as well as the Solicitor General for the United States, argued that the Court should either abolish, limit, or affirm the doctrine of assignor estoppel. Specifically,

• Minerva argued that the Court should either abolish the doctrine or limit it to apply only to issued patent claims (as opposed to claims still in prosecution at the time of assignment)[1];
• Hologic argued that the Court should neither limit nor abolish the doctrine[2]; and
• the Solicitor General argued that the Court should limit the doctrine.[3]

Arguments on Abolishing Assignor Estoppel

Minerva argued the Court should abolish assignor estoppel primarily because the text of the Patent Act made clear that “invalidity ‘shall be’ available as a defense in ‘any’ action asserting patent infringement.”[4] Hologic responded by arguing that the Court had affirmed the doctrine of assignor estoppel in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1924), and that Congress had then incorporated the Court’s adoption of the doctrine in the Patent Act of 1952.[5]

Minerva replied to Hologic’s use of Westinghouse by noting that subsequent Supreme Court decisions—particularly Scott Paper Co. v. Marcalus Manufacturing Co., 326 U.S. 249 (1945), and Lear, Inc. v. Adkins, 395 U.S. 653 (1969)—demonstrated that the Westinghouse decision had not settled the doctrine of assignor estoppel into law. Specifically, Minerva pointed to a section of the Scott Paper decision in which the “Court wondered out loud the ‘extent’ to which assignor estoppel ‘may be deemed to have survived the [Westinghouse] decision or to be restricted by it.’”[6] Minerva argued that the uncertainty created by Scott Paper meant that when Congress adopted the Patent Act of 1952, assignor estoppel did not form part of the common-law backdrop against which Congress legislated.[7]

When considering the argument to abolish the doctrine, the justices focused on whether Westinghouse had, indeed, applied assignor estoppel or had merely recognized it and what, if any, effect Scott Paper and Lear had on Westinghouse’s continuing relevance.

For example, during an exchange with the Solicitor General’s counsel, Justice Sotomayor indicated that the changes in patent litigation since 1924 have undermined Westinghouse’s precedential value. After the Solicitor General’s counsel admitted, “It’s true that claim construction has changed to some degree over time,” Justice Sotomayor said, “[T]hat, in my mind, gives credence to Petitioner’s counsel that maybe the doctrine has lost its utility . . .. [Y]ou’ve just admitted that . . . how you read patents has fundamentally . . . changed.”[8]

Justice Barrett noted “uncertainty in the cases, especially ours.”

During an exchange with Hologic’s counsel, Justice Gorsuch explained his view of the precedent in a way favorable to Minerva:

On the stare decisis front, . . as I come at it . . . Westinghouse didn’t actually apply the doctrine. It acknowledged its existence and allowed challenges over the scope of the . . . patent.

Scott Paper called it a “logical embarrassment.” Lear said that Scott had undermined the basis for patent estoppel, even more than Westinghouse had, so it read Westinghouse as undermining the basis for patent estoppel.

The world has changed greatly since then, as Justice Breyer pointed out . . .. And now we have the Patent Office itself, refusing to apply patent estoppel in . . . IPR proceedings. So the only place left that the doctrine seems to apply is in court.

Isn’t that a strange state of affairs . . . to rest on stare decisis?[9]

While difficult to predict how they will decide, the justices seemed generally skeptical of Hologic’s reliance on Westinghouse as establishing assignor estoppel in the common law against which Congress legislated when creating the Patent Act of 1952.

Arguments on Limiting Assignor Estoppel

Minerva argued that if the Court decides not to abolish assignor estoppel, it should limit it to apply only to claims issued at the time of assignment.[10] Minerva noted that “[a]n assignor makes no representations about not-issued claims[.]”[11]

The Solicitor General recognized that “[t]his Court has never actually applied assignor estoppel in a case before it[.]”[12] The Solicitor General argued that the Court should limit the doctrine of assignor estoppel to cases in which

the assignor sells patent rights for valuable consideration in an arm’s-length transaction, then either contests the validity of a claim materially identical to a claim issued or pending at the time of the assignment, or otherwise contradicts preassignment representations about the patent’s validity.[13]

Several justices seemed to take a dim view of the Solicitor General’s position. Justice Breyer seemed particularly skeptical of any effort to limit the doctrine, noting at one point, “I can understand abolishing it. I can understand keeping it. But limiting it, I’m finding trouble in finding the right way to do that.”[14] Justice Barrett expressed concern that the government’s position would lead to inefficiency as courts would need to determine “what’s materially identical,” potentially leading to “a battle of the experts.”[15]

Conclusion

The justices seemed generally skeptical of the argument that Westinghouse had established the doctrine of assignor estoppel sufficiently to form part of the common law that existed when Congress enacted the Patent Act of 1952. This would seem to indicate that at least some of the justices lean in favor of Minerva’s textual argument and abolishing assignor estoppel.

Regardless of whether the Court decides to abolish assignor estoppel, it will not likely lead to a rash of inventor-assignors challenging patents that they had previously assigned. As Minerva’s counsel pointed out, “other state law doctrines such as ‘equitable estoppel’” would remain to “protect[] against . . . unscrupulous patentees[.]”[16] If, however, the Court adopts one of the proposed limitations to the doctrine, it could add additional layers of complexity to both patent-assignment transactions and any subsequent infringement litigation between an assignor and assignee.

If you have any questions, please contact the authors of this article or your Dinsmore attorney.