The Supreme Court Upholds the Doctrine of Assignor Estoppel While Clarifying Its Scope

On June 29, 2021, the Supreme Court, in Minerva Surgical, Inc. v. Hologic Inc., et al., upheld the doctrine of assignor estoppel, vacated the judgment of the Federal Circuit and remanded for further proceedings consistent with its opinion. The Court’s majority opinion, authored by Justice Kagan, issued from Minerva’s appeal of the Federal Circuit’s application of assignor estoppel. Assignor estoppel is a common law doctrine intended to prevent an “about-face” when an inventor obtains a patent, assigns it to a company for value, joins a competitor business and then, when later sued for infringement, tries to argue the patent is invalid and should never have issued. Id. at *5-6 (citing Chambers v. Crichley, 33 Beav. 374, 376 (1864) (When “the Defendant sold and assigned th[e] patent to the Plaintiffs as a valid one,” it “does not lie in his mouth to say that the patent is not good.”)).

On April 22, 2020, the Federal Circuit held that assignor estoppel precluded an inventor, Truckai, from later alleging his patent was invalid. Truckai had filed a patent application, and assigned it along with future continuation applications, to his company Novacept, which was eventually acquired by Hologic. Truckai later founded Minerva, where he developed an improved medical device. Hologic filed a continuation application with new claims that issued into a patent. Hologic then sued Minerva for infringement of the continuation patent. In the district court litigation, Hologic invoked the doctrine of assignor estoppel, arguing that Minerva was estopped from asserting the patent was invalid because it was assigned to Hologic. Both the district court and the Federal Circuit agreed with Hologic, applying the doctrine of assignor estoppel. Minerva subsequently appealed to the Supreme Court and sought to abrogate the doctrine.

In its June 29 opinion, the Supreme Court held that the Patent Act of 1952 did not abrogate the doctrine of assignor estoppel, finding there is still “value” in the doctrine and it is “well grounded in centuries-old fairness principles.” Id. at *1, 4-5. Although Section 282(b) of the Patent Act states that invalidity of the patent shall be a defense in any action involving infringement, the Court held that this language does not do away with assignor estoppel as similar language existed in the patent statute at the time when the doctrine was approved by the Court in Westinghouse v. Formica, 266 U.S. 349 (1924). Id. at *10. To hold otherwise would do away with other established common-law doctrines such as equitable estoppel, collateral estoppel, res judicata and law of the case. Id. The Court held that its subsequent decisions in Scott Paper (1945) and Lear (1969) did not disturb the doctrine, but instead, “left Westinghouse right about where they found it—as a bounded doctrine designed to prevent an inventor from first selling a patent and then contending that the thing sold is worthless.” Id. at *7, 12. Those cases, however, left “for another day several other questions about the contours of assignor estoppel,” including the question of whether the doctrine applied if the assignment was of a patent application, not a granted patent. Id. at *8-9.

The Court, while endorsing the doctrine of assignor estoppel, recognized that “the Federal Circuit has applied the doctrine too expansively” and that “the doctrine is not limitless.” Id. at *9, 17. It clarified that: “Assignor estoppel applies when an invalidity defense in an infringement suit conflicts with an explicit or implicit representation made in assigning patent rights. But absent that kind of inconsistency, an invalidity defense raises no concern of fair dealing—so assignor estoppel has no place.” Id. at *17. It also held that the “original warranty need not be express; as we have explained, the assignment of specific patent claims carries with it an implied assurance,” and provided three specific examples of circumstances in which assignor estoppel may not apply: (i) where there is an assignment of future inventions and an inventor cannot possibly vouch for the validity as to specific patent claims because the inventions do not yet exist; (ii) when the governing law changes so that previously valid patents become invalid under the new law; and (iii) where there is a change in patent claims (as in the present case). Id. at *14-15. It remanded for the Federal Circuit to address “whether Hologic’s new claim is materially broader than the ones Truckai assigned,” as resolution of that issue would “determine whether Truckai’s representations in making the assignment conflict with his later invalidity defense.” Id. at *16-17.

Justice Alito, in a dissenting opinion, maintained that the Court failed to address the question of whether Westinghouse should be overruled when no patent statute expressly addresses assignor estoppel. Justice Barrett, joined by Justices Thomas and Gorsuch, in a separate dissenting opinion, declared that the Patent Act of 1952 did not incorporate the doctrine, and there was no developed federal common law doctrine. Justice Barrett stated that Scott Paper and subsequent cases left assignor estoppel “on life support” and “in a confused state,” and Congress cannot be presumed to have known of or endorsed the doctrine at the time of the Patent Act of 1952. Id. (Barrett, J., dissenting) at *5-6, 12. Justice Barrett also remarked that the Patent Act of 1952 treated patents as “personal property” rather than deeds of land as was the case in Westinghouse, such that the Patent Act “unraveled” the very premise of assignor estoppel. Id. at *9.