Case Preview

Court to decide whether an inventor may challenge the validity of the patent on the inventor’s own invention

This Wednesday, the Supreme Court will hear oral argument in Minerva Surgical Inc. v. Hologic Inc. about whether to abolish the doctrine of patent assignor estoppel. This doctrine, which has fallen under criticism, prohibits an inventor from challenging the validity of the patent on the inventor’s own invention.

Background

Why would the inventor challenge the validity of the patent on his own invention? Because he is being sued for patent infringement after he assigned the patent rights to someone else.

Here is the generic setup for assignor estoppel. An inventor files a patent application on an invention and then assigns the patent rights to an assignee. After a patent issues, the assignee contends that the inventor is infringing the patent and sues the inventor for patent infringement. As a defense, the inventor wants to argue that the patent is invalid. The doctrine of assignor estoppel precludes the inventor from challenging the validity of the patent, on the theory that the inventor made implicit representations about the patent’s validity at the time of assignment and may not later contradict those principles.

The doctrine stems from the common-law principle that one who sells property to another generally should not be able to undermine the value of the property by later challenging the rights the seller conveyed in the first place.

Federal courts have applied this doctrine since 1880, and the Supreme Court implicitly approved of the doctrine in 1924 in Westinghouse Electric. Manufacturing Co. v. Formica Insulation Co. But the doctrine has faced recent criticism, most notably in Mark Lemley’s 2016 article, “Rethinking Assignor Estoppel.”

This case concerns a system for endometrial ablation (in which the lining of the uterus is destroyed to treat an underlying condition) invented by Csaba Truckai. Truckai filed patent applications on his new system and then sold his company, including the rights to patents that might eventually issue from the applications. Those patent rights ultimately ended up with Hologic, Inc. After the assignment, a patent issued based on Truckai’s patent applications.

Meanwhile, Truckai founded a new company, Minerva Surgical, Inc., which competed against Hologic. When Hologic sued Minerva for patent infringement, Minerva tried to contend that the patent was invalid. Applying the doctrine of assignor estoppel, however, both the district court and the U.S. Court of Appeals for the Federal Circuit precluded Minerva from challenging validity.

Arguments of the parties

In the Supreme Court, Minerva seeks to abolish the assignor-estoppel doctrine altogether, or at least to narrow its scope.

Minerva’s principal argument comes from statutory text. Under the Patent Act, invalidity “shall be” a “defense[] in any action involving the validity or infringement of a patent.” Minerva contends that it has a statutory right to challenge invalidity; the statute does not have any textual exceptions for patent assignors. Hologic responds that Congress incorporated assignor estoppel into the Patent Act by reenacting the relevant statute in 1952 without material changes, after the Supreme Court acknowledged the doctrine in Westinghouse in 1924.

Minerva’s second argument comes from precedent. In the 1969 case Lear, Inc. v. Adkins, the Supreme Court abolished the related doctrine of patent licensee estoppel, which prohibited a patent licensee from challenging the validity of the licensed patent. Lear arguably undermined the premises supporting applying estoppel in patent-validity disputes. Hologic responds that Lear itself has been criticized because it relies on public policy arguments instead of statutory text. Hologic adds that licensees (who buy patent rights) do not make the same types of implicit representations as assignors (who sell patent rights), so Lear does not justify abolishing assignor estoppel.

Third, Minerva questions whether contesting validity always contradicts the assignor’s implicit representations. Minerva contends that Hologic broadened its patent claims after assignment. Truckai made no implicit representations about the validity of the broader patent scope, and therefore should be free to challenge validity. Hologic disputes this account on the facts. Hologic also responds that it is common to seek broader claims after assignment, so Truckai should have known that the assignee would do so.

In addition to all of the above, Hologic argues that the court should maintain the doctrine because of stare decisis.

A possible middle ground

So far we have covered the two binary choices: abolish assignor estoppel altogether or maintain it in full. But a middle ground exists. The court could maintain the doctrine but limit its scope. Minerva offers this middle ground as a second-choice alternative.

The federal government filed an amicus brief urging the court to take the middle ground. The government contends that the court “should not jettison” the doctrine, but instead should “clarify its contours.”

No clear consensus has emerged on what the middle ground would look like. Minerva offers three limiting principles, contending that the doctrine should not apply (1) to patents issued after assignment, (2) to certain types of defenses that do not turn on facts uniquely in the inventor’s possession, and (3) when the inventor made no express representation about validity at assignment.

The federal government’s brief does not adopt Minerva’s limiting principles. Instead, it urges the court to limit the doctrine to its “equitable core.” The government argues that the doctrine should apply only when the assignor sells patent rights for valuable consideration in an arm’s-length transaction. Under this limitation, for example, an employee who broadly assigns to his employer all patent rights to any inventions made during the course of employment may remain free to challenge the validity of later-issued patents if the employee moves to another company. The government also proposes that the doctrine should apply only if the assignor either (1) contests the validity of a claim “materially identical to” a claim that existed upon assignment, or (2) contravenes a pre-assignment representation about patentability. If the assignee later asserts a broader claim, as Minerva alleges Hologic did in this case, the assignor would remain free to contest validity.

Other amici propose various other ways to limit the doctrine, such as by treating it as a rebuttable presumption instead of a bar.

Assessment

When the justices convene, they will have an opportunity to determine whether the doctrine of assignor estoppel remains valid, whether as a matter of statutory interpretation, stare decisis or otherwise. They could either reaffirm the doctrine as-is or jettison it completely. Or they could retain the core of the doctrine but limit it to minimize the problems raised by Minerva and the amicus briefs.