Lewis Roca Blog

In a 5-4 decision written by Justice Kagan (joined by Chief Justice Roberts and Justices Breyer, Sotomayor and Kavanaugh) in Minerva Surgical, Inc. v. Hologic, Inc. (June 29, 2021), the Supreme Court reined in the doctrine of assignor estoppel. The doctrine of assignor estoppel is based on fairness/equitable principles that prevent an assignor from selling something and later asserting that what was sold is worthless, to the detriment of the assignee. The Supreme Court held that “[a]ssignor estoppel applies only when an invalidity defense in an infringement suit conflicts with an explicit or implicit representation made in assigning patent rights.”

In this case, Csaba Truckai invented and filed a patent application for a device known as the NovaSure System. Truckai later assigned the patent application, along with any future continuation applications to his company, Novacept, Inc. After the patent issued, Novacept, along with its patent portfolio, was acquired by Hologic, Inc. Later Truckai founded Minerva Surgical, Inc. and developed an improved device for which he received a patent. Hologic filed a continuation application and received a patent for the NovaSure System which included a claim broad enough to cover Truckai’s improved device. Hologic filed suit against Minerva Surgical for patent infringement based on the broader claim. Minerva Surgical asserted that the patent is invalid. In response, Hologic invoked the doctrine of assignor estoppel. The District Court agreed and the Federal Circuit mainly upheld the judgment.

In rendering her decision, Justice Kagan pointed that the doctrine has limits. “Assignor estoppel should apply only when its underlying principle of fair dealing comes into play. … But when the assignor has made neither explicit nor implicit representations in conflict with an invalidity defense, then there is no unfairness to its assertion. And so there is no ground for applying assignor estoppel.”

An example, according to Justice Kagan, under which assignor estoppel is limited is “when the assignment occurs before the inventor can possibly make a warranty of validity as to specific patent claims.” Such situations typically arise in employment arrangements, where the employee assigns to his employer the patent rights in any future inventions he may develop while employed. In such cases, “the assignment contains no representation that a patent is valid.”

Another example “is when later legal developments render irrelevant the warranty given at the time of assignment.” This can occur when the governing law “changes, so that previously valid patents become invalid. The inventor may claim that the patent is invalid in light of that change in the law without contradicting his earlier representation.”

A further example is a post-assignment change to the patent claims which often occurs when an inventor assigns a patent application. In such case, the assignee may return to the patent office and enlarge the scope of the claims. “Assuming that the new claims are materially broader than the old claims, the assignor did not warrant to the new claims’ validity.” This scenario was deemed to apply to the present case. As a result, the case was remanded back to the Federal Circuit to determine if the new claim in the continuation filed by Hologic is significantly broader than the ones Truckai assigned, thus barring the application of assignor estoppel.

Justice Alito dissented arguing he could not see how the question, of whether the doctrine of assignor estoppel bars petitioner from challenging the validity of a patent indirectly assigned to respondents, can be answered “without deciding whether Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1942), which recognized assignor estoppel should be overruled.” He further stated that “[n]ot one word in the patent statutes supports assignor estoppel and the majority does not claim otherwise.”

Justice Barrett, also dissented, joined by Justices Thomas and Gorsuch, arguing that the assignor estoppel doctrine should not be viable because “The Patent Act of 1952 set forth a comprehensive scheme for the creating and protection of patent rights. But it nowhere mentions the equitable doctrine of assignor estoppel, which precludes inventors who file patent applications from later saying that the patent is invalid. To the contrary, where the Act does address invalidity defenses, it states that invalidity ‘shall’ be a defense ‘in any action involving the validity or infringement of a patent.’ … The text includes no exception for actions in which the inventor is the defendant.”

This decision confirms that when representing an assignee, it is best to have an agreement in writing that the assignor will not challenge the validity of the assigned patent, as well as the validity of any continuations or divisions of the assigned patent, so as to limit reliance on the doctrine of assignor estoppel.