Assignor Estoppel Does Not Prevent Assignor from Filing an IPR or Relying on a Prior Invalidity Decision

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Assignor estoppel is “an equitable doctrine that prevents one who has assigned the rights to a patent (or patent application) from later contending that what was assigned is a nullity.”  Makes sense, right? After all, an assignor (and those in privity with the assignor) should not be permitted to sell something only to later assert that what was sold is worthless, all to the detriment of the assignee. But there are limits to the doctrine. For example, while an estopped party cannot challenge the validity of the patent, the doctrine does not prevent the party from defending itself in other ways, including arguing that a) the patentee is itself collaterally estopped from asserting a patent found invalid in a prior proceeding, b) the claim construction should be narrowed, and/or b) the accused devices are within the prior art and thus cannot infringe. Again, seems reasonable. 

For anyone questioning whether validity challenges before the Patent Trial and Appeal Board (PTAB) would still be excepted from the application of assignor estoppel, the Federal Circuit delivered the answer last week in Hologic, Inc. v. Minerva Surgical, Inc. Briefly, the court noted that, while Minerva is estopped from challenging the validity of the patents in district court, it was not similarly constrained from lodging a validity challenge of either patent in an IPR proceeding. The court explained that its decision finds support in the plain language of the America Invents Act and its prior precedent.

The two patents-at-issue (U.S. Patent Nos. 6,872,183 and 9,095,348) were originally assigned to NovaCept by the inventor (and NovaCept co-founder) Truckai. In 2004, Cytyc Corporation acquired NovaCept (and, along with it, the ʼ183 and ʼ348 patents) for $325 million.  Several years later, Hologic acquired Cytyc (and the ʼ183 and ʼ348 patents). When Truckai’s new company Minerva began marketing a competitive system in 2015, Hologic sued Minerva in the District of Delaware for infringement of the ʼ183 and ʼ348 patents. Minerva answered in part by filing petitions for inter partes review (IPR) to challenge the validity of each of the asserted patents with the USPTO. The petition for IPR of the ʼ348 patent was denied. But, the ʼ183 IPR was instituted, and the PTAB rendered its final written decision of invalidity around the same time as the district court rendered its claim construction opinion. Since the PTAB’s invalidity decision of the ʼ183 IPR was on appeal and, thus, not yet final, the district court denied Minerva’s summary judgment motion to dismiss as moot the infringement claims related to the ʼ183 patent. At the same time, the district court agreed with Hologic that the doctrine of assignor estoppel barred Minerva from challenging the validity of both the ’183 and ’348 patent claims since Truckai was in privity with Minerva. In addition, the district court granted summary judgment to Hologic as to no invalidity and infringement of the asserted ’183 and ’348 patent claims. 

After the jury awarded Hologic nearly $5 million in damages for the infringement of both patents, Hologic moved for a permanent injunction, enhanced damages, and ongoing royalties for infringement of the ʼ183 patent. In the meantime, the PTAB’s decision of invalidity in the ʼ183 IPR was affirmed by the Federal Circuit. Accordingly, the district court denied as moot Hologic’s request to enjoin and further penalize Minerva based on infringement of the ʼ183 patent. 

Both parties appealed on various grounds and the Federal Circuit was left to answer, among other questions, whether the district court correctly applied the doctrine of assignor estoppel. The court answered in the affirmative for both patents. More specifically, the court explained that the plain language of 35 U.S.C. § 311(a), which provides that “a person who is not the owner of a patent” may file an IPR, unambiguously allows an assignor who is no longer the owner of the patent-at-issue to petition for IPR. In addition, the court cited its 2018 decision in Arista Networks, Inc. v. Cisco Sys., Inc. in which it made clear that “assignor estoppel has no place in IPR proceedings.” Thus, while the court seemed somewhat sympathetic to Hologic’s plight, it noted that its affirmance of the PTAB’s invalidity decision in the ʼ183 IPR meant that any pending litigation related to infringement of the now invalid ʼ183 patent claims was moot.  Indeed, as with prior Federal Circuit decisions involving concurrent appeals from both the district court and the PTAB, if the first appeal to be decided affirms the PTAB’s decision of invalidity of the claims, it has an immediate issue-preclusive effect on the still-pending litigation at the district court relating to those claims (see, e.g., XY, LLC v. Trans Ova Genetics, L.C., 890 F.3d 1282 (Fed. Cir. 2018). In other words, timing is everything. And, because assignor estoppel also does not preclude the assignor from relying on a prior invalidity decision, Minerva was entitled to rely on the invalidity decision from the ʼ183 IPR. As a result, Hologic lost any ability to seek ongoing monetary damages, enhanced damages, or injunctive relief based on infringement of the ʼ183 patent.

With a different set of facts for the ʼ348 patent — the IPR was not instituted and, thus, Minerva was only left with the district court as the venue for any defenses (including potentially challenging the validity) — the Federal Circuit found that the district court’s application of the equitable doctrine of assignor estoppel was not an abuse of discretion. In particular, the appellate court rejected Minerva’s argument that, in general, the continued use of assignor estoppel directly conflicted with the Supreme Court’s prior abolishment of licensee estoppel. The court explained that, unlike a licensee who might be forced to continue to pay for the right to practice a potentially invalid patent, an assignor has already fully been paid for the patent rights it assigned.  Moreover, while the court conceded that assignor estoppel should not be automatically applied, it found that the equities weighed in favor of its application in this case. Indeed, as discussed above, Truckai, who was in privity with Minerva, received a substantial payment for the patents.  And it did not matter that it was Hologic — not Truckai or NovaCept — that prosecuted the ʼ348 patent. While Minerva would have still been able to defend against Hologic’s infringement allegation by presenting evidence of prior art to reduce the scope of the asserted claim (and, thus, argue that the accused product was outside of the scope), the court found no error in the lower court’s decision to prevent Minerva from arguing invalidity of the claim based on any overbreadth.

This is a hard decision to reconcile especially since the doctrine of assignor estoppel is supposed to be an equitable doctrine. Indeed, why is there a perceived unfairness in allowing one who profited from the sale of the patent to attack it in district court, but not in a post-grant proceeding before the PTAB? Judge Stoll separately commented that this decision and Federal Circuit precedent “presents an odd situation where an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office, but cannot do the same in district court.” He strongly suggests that the court consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office. We will have to wait and see whether the full court takes on this issue. 

In the meantime, there are two main takeaways: 1) Assignor estoppel does not (currently) apply to post-grant proceedings, and 2) assignor estoppel does not preclude reliance by the assignor on a prior invalidity decision. So, if you are an alleged infringer of a patent that you previously assigned, file an IPR because that is your only way to challenge the validity of the patent. And, do so sooner rather than later since the timing of the final judgment is key to whether the underlying district court litigation becomes moot.