As many readers know, the Supreme Court just granted a petition for certiorari in Minerva Surgical, Inc. v. Hologic, Inc. The case asks the Supreme Court to abolish the doctrine of assignor estoppel. But the Supreme Court also passed on a cross-petition in the case. So we thought it worth spending a minute discussing what it all means.
Assignor estoppel is a longstanding equitable rule that prevents inventors (or their privies) from assigning a patent to someone else and later challenging the patent's validity in court. In Minerva, for example, a medical device inventor sold the company he created for commercializing his invention, along with rights to multiple patents, and started a competitor company. The buyer sued the inventor's new company on two assigned patents, and the district court and Federal Circuit held that assignor estoppel applied and prevented the inventor's new company from asserting invalidity defenses. The Supreme Court granted certiorari to decide whether the assignor estoppel rule should remain the law, particularly given a 1969 Supreme Court decision called Lear, Inc. v. Adkins that abolished the similar licensee estoppel rule. The question presented in Minerva is thus:
Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.
But Minerva involved another assignor estoppel issue. In parallel with the district court proceeding, the inventor's new company filed petitions for inter partes review seeking to challenge the asserted patents at the Patent Office. The Patent Office granted review on only one of the district-court-asserted patents and held the challenged claims unpatentable, and the Federal Circuit affirmed. That Patent Office challenge was permitted because the Federal Circuit has held assignor estoppel inapplicable in inter partes review proceedings. And based on the Patent Office's order to cancel claims in the IPR, the district court held that the inventor's new company could not be liable for infringement of those claims in the district court action. That was so even though assignor estoppel prevented the new company from directly challenging the claims' validity in district court.
The cross-petition in Minerva asked the Supreme Court also to consider that issue, “whether an assignor of a patent may circumvent the doctrine of assignor estoppel by challenging the validity of the assigned patent in administrative proceedings before the Patent Office, and then using the Patent Office's finding of invalidity to collaterally estop the assignee from relying on the patent in infringement litigation in district court.” But the Supreme Court denied review on that issue.
That denial means, regardless of the outcome in Minerva, that the availability of inter partes reviews for assignors is unlikely to change for the time being. Current Federal Circuit precedent allows such Patent Office challenges and, because of the cross-petition denial, that issue is not currently before the Supreme Court. If the Supreme Court upholds the assignor estoppel rule for district court proceedings in Minerva, assignors will thus still have an option for challenging claim validity.
It may be tempting to read the cross-petition denial as also hinting at how the Justices may rule on the merits—i.e., that they denied the cross-petition because they intend to do away with assignor estoppel altogether, which would moot the cross-petitioner's complaints about circumvention. But as always there can be many reasons for a cert. denial unrelated to the merits of an issue. It's possible the Supreme Court simply wants to consider assignor estoppel in district court versus at the Patent Office one at a time. Or the Court may have thought there was some vehicle problem with the cross-petition that didn't affect the main petition. Because as usual the Court gave no reason for its denial, there's no way to know what, if anything, the denial signals about the Justices' views of the merits.
The Supreme Court should hear oral argument in Minerva this spring and issue a decision by the end of June.
Originally Published by MoFo, January 2021
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