SCOTUS Maintains but Limits Assignor Estoppel in Patent Cases
Updated: Jun 30, 2021
MINERVA SURGICAL, INC. v. HOLOGIC, INC. decided by SCOTUS on June 29, 2021.
Court's syllabus below:
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 destroy 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 PTO issued a patent for the device. Novacept, along with its portfolio of patents and patent applications, was eventually acquired by respondent Hologic, Inc. In 2008, Truckai founded petitioner Minerva Surgical, Inc. There, he developed a supposedly improved device to treat abnormal uterine bleeding. Called the Minerva Endometrial Ablation System, the new device uses a moisture-impermeable applicator head to remove cells in the uterine lining. The PTO issued a patent, and the FDA approved the device for commercial sale. Meanwhile, Hologic filed a continuation application with the PTO, seeking to add claims to its patent for the NovaSure System. Hologic drafted one of its claims to encompass applicator heads generally, without regard to whether they are moisture permeable. The PTO issued the altered patent in 2015. Hologic then sued Minerva for patent infringement. As relevant here, Minerva rejoined that Hologic’s patent was invalid because the newly added claim did not match the invention’s written description, which addresses applicator heads that are water permeable. In response, Hologic invoked the doctrine of assignor estoppel. Because Truckai had assigned the original patent application, Hologic argued, he and Minerva could not impeach the patent’s validity. The District Court agreed that assignor estoppel barred Minerva’s invalidity defense. The Court of Appeals for the Federal Circuit affirmed in relevant part. Minerva now asks this Court to abandon or narrow assignor estoppel.
Held: Assignor estoppel is well grounded in centuries-old fairness principles, and the Federal Circuit was right to uphold it. But assignor estoppel applies only when the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent. Pp. 5–17.
(a) Courts have long applied the doctrine of assignor estoppel to deal with inconsistent representations about a patent’s validity. The doctrine got its start in late 18th-century England and crossed the Atlantic about a hundred years later. This Court first considered and approved the doctrine in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342. The Court grounded the doctrine in a principle of fairness: “If one lawfully conveys to another a patented right,” Westinghouse reasoned, “fair dealing should prevent him from derogating from the title he has assigned.” Id., at 350. The Court made clear, however, that the doctrine has limits. Although the assignor cannot assert invalidity in an infringement suit, he can argue about how to construe the patent’s claims. Id., at 350–351. The Court left for another day other questions about the doctrine’s scope, including how it would apply to the assignment of patent applications. Id., at 352–353. Pp. 5–9.
(b) The Court rejects Minerva’s contention that assignor estoppel should be abandoned. Minerva’s first argument on that score—that Congress abrogated the doctrine in the Patent Act of 1952—is unpersuasive. Minerva relies on statutory language providing that “[i]nvalidity” of the patent “shall be [a] defense in any action involving” infringement. 35 U. S. C. §282(b). According to Minerva, that language “instructs that invalidity must be available as a defense in every action,” thus leaving no room for assignor estoppel. Brief for Petitioner 17–18. But similar language appeared in the patent statute when the Court decided Westinghouse. Anyway, Minerva’s view is untenable because it would foreclose applying in patent cases a whole host of common-law preclusion doctrines—a broad result that would conflict with this Court’s precedents. See, e.g., SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 580 U. S. ___, ___. And it would subvert congressional design, for Congress in 1952 “legislate[d] against a background of common-law adjudicatory principles,” including assignor estoppel. Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104, 108.
The Court also rejects Minerva’s view that two post-Westinghouse decisions have already interred assignor estoppel. In Scott Paper Co. v. Marcalus Mfg. Co., 326 U. S. 249, the Court did nothing more than decline to apply assignor estoppel in a novel and extreme circumstance. The Court did not question—indeed, it restated—the “basic pinciple” of fairness on which the doctrine rests. Id., at 251. In Lear, Inc. v. Adkins, 395 U. S. 653, the Court considered and toppled a different patent estoppel doctrine—licensee estoppel—but did not purport to decide the fate of assignor estoppel. To the contrary, the Court stated that the patent holder’s “equities” in the assignment context “were far more compelling than those presented in the typical licensing arrangement.” Id., at 664. Together, Scott Paper and Lear maintained assignor estoppel, but suggested that the doctrine needed to stay attached to its equitable moorings.
Finally, the Court rejects Minerva’s claim that contemporary patent policy—specifically, the need to weed out bad patents—supports overthrowing assignor estoppel. Assignor estoppel reflects a demand for consistency in dealing with others. When a person sells his patent rights, he makes an (at least) implicit representation to the buyer that the patent at issue is valid. In later raising an invalidity defense, the assignor disavows that implied warranty. By saying one thing and then saying another, the assignor wants to profit doubly—by gaining both the price of assigning the patent and the continued right to use the invention it covers. That course of conduct by the assignor is unfair dealing. And the need to prevent such unfairness outweighs any loss to the public from leaving an invalidity defense to someone other than the assignor. Pp. 9–14.
(c) Assignor estoppel comes with limits: it applies only when its underlying principle of fair dealing comes into play. That principle demands consistency in representations about a patent’s validity. When an assignor warrants that a patent claim is valid, his later denial of validity breaches norms of equitable dealing. 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. One example of non-contradiction is when an assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims. That situation arises in certain employment arrangements, when an employee assigns to his employer patent rights in any future inventions he may develop during his employment. A second example is when a later legal development renders irrelevant the warranty given at the time of assignment. Third, and most relevant here, a post-assignment change in patent claims can remove the rationale for applying assignor estoppel. The last situation arises most often when an inventor assigns a patent application, rather than an issued patent. There, the assignee may return to the PTO to enlarge the patent’s claims. Assuming that the new claims are materially broader than the old ones, 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 Federal Circuit failed to recognize these boundaries. Minerva argued that estoppel should not apply because it was challenging a claim that was materially broader than the ones Truckai had assigned. The Federal Circuit declined to consider the alleged disparity, deeming “irrelevant” the question whether Hologic had expanded the assigned claims. But if Hologic’s new claim is materially broader than the ones Truckai assigned, then Truckai could not have warranted its validity in making the assignment. And without such a prior inconsistent representation, there is no basis for estoppel. The judgment of the Federal Circuit is therefore vacated, and the case is remanded for the Court of Appeals to address whether Hologic’s new claim is materially broader than the ones Truckai assigned. Pp. 14–17.