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“Assignor estoppel” is a century old doctrine that prevents an inventor, who has assigned a patent to another for value, from later contending in litigation that the patent is invalid.  This week, in Minerva Surgical, Inc. v. Hologic, Inc., the U.S. Supreme Court, by the narrowest of margins, retained the doctrine while explaining its limits. 

In the late 1990s, Csaba Truckai invented a device to treat abnormal uterine bleeding. The device, known as the NovaSure System, uses a moisture-permeable applicator head to ablate targeted cells in the uterine lining. Truckai filed a patent application and later assigned the application, along with any future continuation applications, to his company, Novacept, Inc. The U.S. Patent and Trademark Office (“PTO”) issued a patent for the device.  Novacept, along with its portfolio of patents and patent applications, was eventually acquired by Hologic, Inc.

Not through with inventing, in 2008 Truckai founded Minerva Surgical, Inc. There, he developed a supposedly improved device to treat abnormal uterine bleeding. Called the Minerva Endometrial Ablation System.  This new device incorporates a “moisture impermeable” applicator head to avoid unwanted ablation.

In 2013, Hologic filed a continuation application requesting a second patent adding claims to the original patent for the NovaSure System.  To specifically cover Truckai’s new moisture impermeable applicator, Hologic drafted one of those claims to encompass applicator heads generally, without regard to whether they are moisture permeable. The PTO issued the continuation patent in 2015.

Hologic then sued Minerva for patent infringement.  Minerva defended, asserting that this newly added claim of Hologic’s continuation patent was invalid.  More specifically, Minerva argued that the claim was invalid because it did not match the invention’s original written description.  That description only described applicator heads that are water permeable.

In response, Hologic invoked the doctrine of assignor estoppel.  Hologic argued that “Because Truckai assigned the original patent application, … he and Minerva (essentially, his alter-ego) could not impeach the patent’s validity.”

Hologic’s assertion of assignor estoppel was well received by the court that tried the case and the U.S. Court of Appeals for the Federal Circuit.  Both courts found the doctrine of assignor estoppel barred Minerva from asserting invalidity of Hologic’s new patent claim.  On appeal, Minerva argued that the doctrine should be abolished, and four of the five Supreme Court justices agreed with Minerva.  But the other five justices voted to retain the doctrine.  While Minerva lost the argument, it still won the day, because the Supreme Court sent the case back to the Federal Circuit for further proceedings consistent with the Supreme Court’s holdings.

Justice Kagan, writing for the majority explained:

"The question presented here is whether to discard this century-old form of estoppel. Continuing to see value in the doctrine, we decline to do so. But in upholding assignor estoppel, we clarify that it reaches only so far as the equitable principle long understood to lie at its core. The doctrine applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent."

Later, Justice Kagan wrote:

"Assignor estoppel should apply only when its underlying principle of fair dealing comes into play. That principle, as explained above, demands consistency in representations about a patent’s validity: What creates the unfairness is contradiction. When an assignor warrants that a patent is valid, his later denial of validity breaches norms of equitable dealing. And the original warranty need not be express; as we have explained, the assignment of specific patent claims carries with it an implied assurance. …. But when the assignor has made neither explicit nor implicit representations in conflict with an invalidity defense, then there is no unfairness in its assertion. And so there is no ground for applying assignor estoppel."

Justice Kagan then gave several examples of when the doctrine does not apply.

1. When the assignment occurs before the inventor can possibly make a warranty of validity as to the specific patent claims.
   
   A common employment agreement requires the employee to assign to the employer patent rights in any future inventions the employee develops during the term of employment.  Thereafter, the employer decides which, if any, of those inventions to patent. According to Justice Kagan, “In that scenario, the assignment contains no representation that a patent is valid. How could it? The invention itself has not come into being.
   
   
2. When a later legal development renders irrelevant the warranty given at the time of assignment.
   
   As Justice Kagan explained,
   
   Suppose an inventor conveys a patent for value, with the warranty of validity that act implies. But the governing law then changes, so that previously valid patents become invalid. The inventor may claim that the patent is invalid in light of that change in law without contradicting his earlier representation. What was valid before is invalid today, and no principle of consistency prevents the assignor from saying so.
   
   
3. When there is a post-assignment change in the patent claims.
   
   As Justice Kagan again explained,
   
   Assuming that the new claims are materially broader than the old claims, the assignor did not warrant to the new claims’ validity. And if he made no such representation, then he can challenge the new claims in litigation: Because there is no inconsistency in his positions, there is no estoppel. The limits of the assignor’s estoppel go only so far as, and not beyond, what he represented in assigning the patent application.

This list is not exhaustive.  The majority of the Supreme Court provided this list to illustrate the guiding principle, i.e., “The doctrine applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.”

A skilled patent litigator will, of course, consider other issues related to the application of assignee estoppel.  One of these is whether the assignor is so closely affiliated with the party seeking to challenge validity that the challenger should be estopped.  Another is the amount paid for the patent.  What if the amount paid was nominal or even non-existent?  Also, what is the scope of the estoppel when applied to the assignment of a patent application rather than a granted patent?  As should be clear from the foregoing, this may very well depend in a particular case on the scope of the claims in the assigned application versus the scope of the claims in the later issued patent.  If the claims were enlarged before the patent was granted beyond what the inventor put forward, there may be a basis for challenging the claims.  However, if the claims are limited to what is expressly taught in the patent application assigned, estoppel may apply.

The attorneys of Dewitt’s intellectual property group are well-equipped to analyze all such issues in the context of employment agreements, agreements with independent contractors, agreements related to the sale and purchase of patent rights, and in infringement litigation. We would be happy to discuss such issues with you.