In Minerva Surgical, Inc. v. Hologic, Inc.,1 the Supreme Court held, in a 5–4 opinion, that the doctrine of assignor estoppel continues to apply, but only for an assignor’s invalidity assertion that contradicts explicit or implicit representations the assignor made when assigning the patent. The Court explained that the doctrine of assignor estoppel prevents the assignor from guaranteeing validity and later rescinding that guarantee.
Chief Justice John Roberts Jr. and Justices Stephen Breyer, Sonia Sotomayor and Brett Kavanaugh joined Justice Elena Kagan for the majority opinion. Justice Amy Coney Barrett, joined by Justices Clarence Thomas and Neil Gorsuch, dissented on the ground that the Patent Act of 1952 did not include the doctrine of assignor estoppel or any exception to any invalidity defenses when the inventor is the defendant. Barrett would have overturned prior precedent and rescinded the doctrine. Justice Samuel Alito dissented because the Court declined to decide whether to overrule the prior precedent that established the doctrine.
Specifically, the majority opinion upheld prior precedent on the doctrine of assignor estoppel:
Assignor estoppel, we now hold, is well grounded in centuries-old fairness principles, and the Federal Circuit was right to uphold it. But the court failed to recognize the doctrine’s proper limits. The equitable basis of assignor estoppel defines its scope: The doctrine applies only when an inventor says one thing (explicitly or implicitly) in assigning a patent and the opposite in litigating against the patent’s owner.2
The majority reasoned that the basis for the doctrine relates to unfair dealing:
When a person sells his patent rights, he makes an (at least) implicit representation to the buyer that the patent at issue is valid—that it will actually give the buyer his sought-for monopoly. In later raising an invalidity defense, the assignor disavows that implied warranty. And he does so in service of regaining access to the invention he has just sold … . 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 strikes us, as it has struck courts for many a year, as unfair dealing—enough to outweigh any loss to the public from leaving an invalidity defense to someone other than the assignor.3
The Court also explained when the doctrine does not apply, i.e., when the assignor makes no explicit or implicit representation of validity:
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.4
The Court provided examples where no warranty would be implied:
- Assignment of a future invention, such as in an employment agreement
- A post-assignment change in the law that renders the patent invalid
- A post-assignment amendment to existing claims, or addition of new claims, where the amended or new claims are materially broader than the pre-assignment claims5
The Court summarized the holding as follows:
This Court recognized assignor estoppel a century ago, and we reaffirm that judgment today. But as the Court recognized from the beginning, the doctrine is not limitless. Its boundaries reflect its equitable basis: to prevent an assignor from warranting one thing and later alleging another. 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.6
The Court remanded the case to the Federal Circuit to consider whether any of the invalidity defenses were in conflict with any explicit or implicit representation.
Practical Considerations
This decision limits the degree to which an assignor-patent owner who sells his or her patent to a third-party assignee can assert the doctrine of assignor estoppel. For example, the assignor can now claim the doctrine does not apply where any post-assignment claims are materially broader in scope than the assigned invention and/or the assignor made statements regarding the assigned patent that are inconsistent with any invalidity defenses being asserted by the assignee.
Thus, when assigning patent rights, an inventor (assignor) will want to consider whether the scope of the invention being assigned should be described in the agreement with the assignee. This approach can backfire when the assignee expands the scope of the invention being assigned even beyond the current scope of claims of any patent application that may be pending or patent that has been issued, and/or contractually prohibits the assignor from challenging any patents that have been issued or will be issued in the future.
Furthermore, the Court’s decision puts a purchaser (assignee) on notice that failure to evaluate the scope of a patented or patent-pending invention, including in U.S. Patent and Trademark Office prosecution history, may result in an unfavorable outcome in a future dispute with the seller (assignor). Such an evaluation may also include an independent prior art search that might add clarity concerning the appropriate scope of the invention.
Irah Donner is a partner in Manatt’s intellectual property practice and is the author of Patent Prosecution: Law, Practice, and Procedure, Eleventh Edition, and Constructing and Deconstructing Patents, Second Edition, both published by Bloomberg Law.
1 Minerva Surgical, Inc. v. Hologic, Inc., 141 S.Ct. 2298, 2021 USPQ2d 701, 2021 WL 2653265 (2021).
2 Id., 141 S.Ct. at 2303.
3 Id., 141 S.Ct. at 2309.
4 Id., 141 S.Ct. at 2310.
5 Id.
6 Id., 141 S.Ct. at 2311.