Yesterday, the United States Supreme Court issued its decision in Minerva Surgical, Inc. v Hologic, Inc., concerning the fate of the doctrine of patent law of the assignor’s estoppel, that is to say the estoppel against a patent holder who assigns his rights to another. In general, the assignor’s estoppel – at least as recently applied by the Federal Circuit – prohibits the assignor of a patent or a patent application from subsequently contesting the validity of the patent (s). arising from the request. The question presented in Neck brace was whether the Supreme Court should uphold the doctrine of assignor estoppel, narrow its scope, or dismiss the doctrine altogether. Minerva pleaded to overturn doctrine; Hologic argued that the doctrine should be retained in its current form; and the United States, appearing as amicus, argued for a common ground under which the doctrine would be maintained but restricted.
In a 5-4 decision, the Court largely followed the course suggested by the government, affirming the continuing vitality of the doctrine but limiting its scope. The majority, in an opinion prepared by Justice Kagan and joined by Chief Justice Roberts and Justices Breyer, Sotomayor and Kavanaugh, concluded that the assignor estoppel “applies when, but only when, the claim for invalidity of the assignor contradicts any express or implied statements made by him in the assignment of the patent.
The majority began their analysis by retracing the history of the assignor’s estoppel and by emphasizing the concern for fairness which motivated its adoption: the assignor of a patent thus provides an implicit representation that the patent is valid and should not. therefore not be allowed to subsequently perform a “face” and argue that the thing he assigned is in fact worthless. A myriad of lower courts applied the doctrine in the late 1800s and early 1900s , explained the majority, and the Supreme Court itself, in a 1924 case entitled Westinghouse, approved the estoppel of the transferor while “my[king] clear that doctrine has limits. Westinghouse drew an analogy between the real estate ownership doctrine and doctrine of estoppel by deed, which prevents a seller of land from subsequently claiming that the title he has passed on is not good.
The majority then turned to the “three main arguments” that Minerva put forward to eliminate the estoppel of the transferor. Minerva’s first argument was that the Patents Act of 1952 repealed the assignor’s estoppel by providing that invalidity âshall beâ a defense in âany actionâ involving infringement. The majority rejected this argument, explaining that similar language appeared in the Patent Act when Westinghouse was decided and that in any event the assignor’s estoppel – like collateral estoppel, equitable estoppel and other âcommon law exclusionary doctrinesâ – was a âbasic principle of ‘patent auction’ that Congress was supposed to legislate against.
Minerva’s second argument was that two post-Westinghouse Supreme Court casesâScott paper and Lear v. Adkins-estoppel of the repudiated assignor. The majority also rejected this argument. Scott paper, concluded the majority, simply refused to apply the assignor’s estoppel “in a new and extreme circumstance”, and LÃ©ar abolished only dismissed estoppel, which the majority argued was based on a different – and less compelling – fair justification.
Minerva’s third argument was that assignor estoppel is bad policy because it prevents the invalidation of wrongly granted patents. The majority disagreed with Minerva’s policy argument, stating that “the core of the cedant’s estoppel [is] justified by the reasons of fairness which the courts applying the doctrine have always granted. Transferor estoppel, like many estoppel rules, reflects a requirement for consistency in relationships with others.
Finally, the majority set limits on the transferor’s estoppel, arguing that it “should only apply when its underlying principle of fair use comes into play”, that is to say only when ‘a dispute in nullity conflicts with an explicit or implicit representation made previously by the assignor. The majority gave three examples of cases in which the transferor estoppel do not apply:
- Assignor estoppel would not prevent an employee who accepts as a condition of employment to automatically assign all patent rights in future inventions from later challenging the validity of one of those patents, because the employee cannot do so. statement about an invention that does not yet exist.
- Transferor estoppel would not preclude a disability challenge based on a change in law, because â[w]hat was valid before [may be] invalid today, and no principle of consistency prevents the assignor from saying so.
- Assignor estoppel would not prevent the assignor of a patent application from challenging the validity of a subsequent claim that is “substantially broader than the old claims”.
Because the analysis of the Federal Circuit “did not recognize th[e] limits âof the assignor’s estoppel, the court overturned the lower court’s decision and remanded for further proceedings.
Four judges were dissenting. In a first dissenting opinion, Judge Barrett, joined by Judge Thomas and Judge Gorsuch, would have completely repudiated the assignor’s estoppel. In the opinion of these judges, Congress has not “ratified” Westinghouse when it enacted the Patents Act of 1952 because (i) the assignor’s estoppel was not a well-established doctrine in 1952 and (ii) the 1952 Act specified that patents “have the attributes of personal property â, which undermined the Westinghouse The Court’s analogy to estoppel by deed (a doctrine of immovable property). This dissent also concluded that assignor estoppel was not a substantive common law principle against which the Court could presume Congress had legislated. Contrary to collateral estoppel and res judicata, this dissent argued that the assignor’s estoppel is a relatively “recent” legal development and stood on “shak[y]âDoctrinal ground in 1952.
Justice Alito wrote a separate dissent arguing that the Court should have dismissed the case as granted out of recklessness. Judge Alito argued that the question asked required “to decide[ing] whether Westinghouse should be quashed â, and concluded thatâ because the majority and the main dissent refuse[d] in order to decide âthis question, the Court should not have taken up the case. While he didn’t say so explicitly, Judge Alito’s opinion suggests he might have been in favor of annulment. Westinghouse because it had no basis in the text of the Patent Act.
The main thing to remember is that the estoppel of the transferor lives, but in a significantly reduced form. The limits the Court has placed on the doctrine mean that its future application may be relatively rare. It will apply if a assignor attempts to challenge the validity of either (i) the very claims it has assigned, or (ii) new similar claims – or at least not âsubstantially broaderâ – the assigned claims. (The precise meaning of the Court’s “substantially broader” standard is an open question that the Federal Circuit will likely need to address in future decisions.) And assignor estoppel will apply if a assignor’s invalidity arguments contradict an express declaration made by the assignor of the assignment. Beyond these scenarios, however, there may be little or no doctrinal work to be done.