By Eric M. Fraser
on April 20, 2021
at 10:24 am
This Wednesday, the Supreme Court will hear orally in the Minerva Surgical Inc. v Hologic Inc. case over whether to abolish the patent applicant’s estoppel doctrine. This criticized doctrine prohibits an inventor from questioning the validity of the patent for the inventor’s own invention.
Why should the inventor question the validity of the patent for his own invention? Because he’s being sued for patent infringement after assigning the patent rights to another person.
Here is the generic setup for Assignor Estoppel. An inventor files a patent application for an invention and then transfers the patent rights to an assignee. After a patent is granted, the assignee asserts that the inventor is infringing the patent and sues the inventor for patent infringement. In defense, the inventor would like to argue that the patent is invalid. The doctrine of the assignee estoppel prevents the inventor from questioning the validity of the patent because the inventor made implicit statements about the validity of the patent at the time of assignment and may not later contradict these principles.
The doctrine stems from the common law principle that someone selling property to another should generally not be able to undermine the value of the property by later challenging the rights that the seller has transferred in the first place.
Federal courts have applied this doctrine since 1880, and the Supreme Court implicitly endorsed the doctrine at Westinghouse Electric in 1924. Manufacturing Co. v Formica Insulation Co. However, the doctrine has been criticized in recent times, particularly in Mark Lemley’s 2016 article “Rethinking Assignor Estoppel”.
This case concerns an endometrial ablation system (which destroys the lining of the uterus to treat an underlying disease) invented by Csaba Truckai. Truckai filed patent applications for his new system and then sold his company, including the rights to patents that may emerge from the applications. Those patent rights eventually ended with Hologic, Inc. Upon assignment, a patent was granted based on Truckai’s patent applications.
Meanwhile, Truckai formed a new company, Minerva Surgical, Inc., which competed against Hologic. When Hologic sued Minerva for patent infringement, Minerva attempted to claim the patent was invalid. However, the application of Assignor Estoppel’s doctrine prevented both the District Court and the U.S. Appeals Court for the Minerva Federal Circuit from questioning its validity.
Arguments of the parties
In the Supreme Court, Minerva tries to abolish the Assignor Estoppel doctrine altogether, or at least to limit its scope.
Minerva’s main argument comes from the text of the law. Under patent law, invalidity is a defense in all actions that affect the validity or infringement of a patent. “Minerva contends that it has a legal right to challenge disability. The law does not contain any textual exceptions for patent applicants. Hologic responds that Congress incorporated the successor in title estoppel into the patent law by re-enacting the relevant law without substantial changes in 1952 after the Supreme Court recognized the Westinghouse doctrine in 1924.
Minerva’s second argument comes from a precedent. In the 1969 Lear, Inc. v. Adkins case, the Supreme Court overturned the related doctrine of the patent licensee estoppel that prohibited a patent licensee from questioning the validity of the licensed patent. Lear arguably undermined the premises that support the use of estoppel in patent validity disputes. Hologic replies that Lear himself has been criticized for relying on public policy arguments rather than legal texts. Hologic adds that licensees (who buy patent rights) do not make the same implicit representations as assignees (who sell patent rights), so Lear does not justify abolishing assignments from applicants.
Thirdly, Minerva asks whether the challenge of validity always contradicts the client’s implicit representations. Minerva claims that Hologic expanded its claims after the assignment. Truckai made no implicit representations about the validity of the broader scope of the patent and should therefore be free to question the validity. Hologic denies this factual account. Hologic also responds that it is customary to make broader claims after the assignment so Truckai should have known the assignee would do so.
On top of all of this, Hologic argues that the court should uphold the doctrine because of the rigid decision.
A possible middle ground
So far we have dealt with the two binary options: Abolish the referring person estoppel altogether or keep it completely. But there is a middle ground. The court could maintain the doctrine but limit its scope. Minerva offers this middle ground as a second choice alternative.
The federal government submitted an amicus letter asking the court to strike the middle ground. The government contends that the court should “not throw away” the doctrine but “clarify its contours”.
There has been no clear consensus on what the middle ground would look like. Minerva offers three limiting principles that the doctrine should not apply (1) to patents granted after the assignment, (2) to certain types of defense that do not concern facts clearly in the inventor’s possession, and (3) if the inventor made it No express assurance of validity in the event of assignment
The letter from the federal government does not adopt Minerva’s restrictive principles. Instead, it asks the court to restrict the doctrine to its “just core”. The government argues that the doctrine should apply only if the successor in title sells patent rights for valuable consideration in an arm-to-market transaction. Under this restriction, for example, an employee who transfers largely to his employer all patent rights to inventions made in the course of the employment relationship may question the validity of subsequently granted patents if the employee moves to another company. The government also suggests that the doctrine should only be applied if the assignee either (1) contests the validity of a claim that is “substantially identical to” a claim that existed on the assignment or (2) against an advance notice of assignment infringes on patentability. If the assignee later makes a broader claim, as Minerva Hologic claims in this case, the assignee may still contest the validity.
Other amici suggest various other ways to narrow the doctrine, such as treating it as a rebuttable presumption instead of a bar.
When the judges meet, they have the opportunity to determine whether the assignee’s doctrine continues to apply, whether it is a statutory interpretation, whether it is a decision or not. You could either affirm the doctrine as it is or discard it entirely. Or they could keep the core of the teaching but narrow it down to minimize the problems raised by Minerva and the Amicus Briefs.