United States: The Federal Circuit Revisits Minerva Surgical

Assignor estoppel is an equitable doctrine that can amount to an implied warranty of validity to prevent an assignor from assigning the rights to a patent — such as to an employer or an acquiring company — for value, and then later assert invalidity of the patent as a defense in a subsequent patent infringement suit. If the assignor were permitted to later assert that an assigned patent or patent application is invalid and unenforceable, the assignment would be ineffective as the assignor would have knowingly transferred little of value. The doctrine is rooted in “an idea of fair dealing” between the parties. Minerva Surgical Inc. v. Hologic, Inc.  141 S.Ct. 2298, 2302 (2021). 

In Minerva Surgical, Inc., the Supreme Court affirmed the ongoing application of the doctrine, but limited its use to “when an invalidity defense in an infringement suit conflicts with an explicit or implicit representation made in assigning patent rights.” 141 S.Ct at 2311. In so doing, the Supreme Court did not appear to disturb existing precedent related to other proceedings, such as Federal Circuit precedent permitting an assignor to challenge a patent via inter partes review. Hologic, Inc. v. Minerva Surgical, Inc., 957 F.3d 1256, 1266 (Fed. Cir. 2020) (Hologic I). Similarly, an assignor can be permitted to “argue for a narrow claim construction, or that the accused devices are within the prior art and therefore cannot infringe.” Mentor Graphics Corp. v. Quickturn Design Systems, Inc., 150 F.3d 1374, 1380 (Fed. Cir. 1998).

To add clarity to when the doctrine does and does not apply, the Court discussed scenarios meant to facilitate understanding of the boundaries of the doctrine. A common theme among these scenarios is that the assignor would not have been able to make representations about the validity of the patent claims that later became the subject of a dispute. For example, assignor estoppel may not apply where the assignment occurred before the invention existed or the inventor sees the patent document, such as a blanket statement in an employment agreement. Minerva Surgical Inc., 141 S.Ct at 2310. Assignor estoppel also may not apply where a change in law after the assignment renders the patent invalid or the warranty ineffective. Id. Finally, assignor estoppel may not apply where the scope of the patent claims “go beyond ‘what the assignor intended' to claim as patentable” such as when the scope is “materially broadened” after the assignment by the new owner. Id.  (quoting Westinghouse Electric & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 353 (1924). The Court stopped short, however, of providing clear guidance of when, for example, claim terms are “materially” broadened during prosecution.

“Materially Broadened”

On remand, the Federal Circuit has provided further guidance to this question. In Hologic, Inc. v. Minerva Surgical, Inc., 44 F.4th 1358 (Fed. Cir. 2022) (Hologic II), the Federal Circuit found that the claims at issue are not “materially broader” than what was intended to be claimed at time of issuance. To reach this conclusion, the Federal Circuit “construe[d] the assigned and issued claims and compare[d] the properly construed claims, focusing on the material aspects of those claims.” Id.  at 1365. This process involved analysis of the intrinsic record and the prosecution history to justify a finding of the understanding of the assignee at the time of assignment.

The assignment in question involved a patent application in the priority chain for the patent-in-dispute. Some of the claims as originally filed included a “fluid permeable elastic member” for moisture removal, but one claim did not. Id.  at 1360. A divisional application including that claim would later issue as the patent-in-dispute. Id. Prior to the assignment, and after several rounds of prosecution, the one claim without the “fluid permeable elastic member” was subjected to a restriction requirement and canceled by the then-applicant. Id.  at 1364. After the assignment, the new owner obtained a patent for the invention without the “fluid permeable elastic member,” reinstating the restricted material.

The Federal Circuit found that in at least this situation, the cancelled claim is part of the invention that the assignor “intended” to claim because cancelling a claim in response to a restriction requirement “says nothing, implicitly or explicitly, about the patentability” of the canceled claim. Id.  The Federal Circuit reasoned that an “objective assignee” would understand that the canceled claim could later be prosecuted in a divisional application without prejudice. Id.  at 1364–65. Because the assignment covered the rights to the pending application and any continuation, continuation-in-part, or divisional application, it would have been expected that the canceled claim was available to be filed as a divisional application. Id. Thus, the act of cancelling a claim did not, in itself, indicate what the assignor believed to be the proper scope of the patent application that would later be assigned. The Federal Circuit noted, however, that it was expressly not addressing “whether a claim canceled for reasons other than to comply with a restriction requirement” would be part of an assignment of a pending application, and therefore subject to the doctrine of assignor estoppel. Id.  at 1365 (n. 3). Even so, the holding may signal that the question of the scope of the claims for what an assignor “intended to assign” may not be limited to reviewing only the pending claims in any named application, but can also require reviewing the originally-filed claims as well as the reasoning for any claim amendments during prosecution.

Practical Measures to Avoid Reliance on Assignor Estoppel

Assignor estoppel — as an implied warranty — can act as a backstop when the explicit terms of agreement between the parties has not been clearly set to writing. To avoid reliance on the doctrine, the assignee should consider several practices to avoid uncertainty. This is particularly so in cases where there is an active relationship between the assignor and assignee, such as in the employment context. First, assignments can be drafted to include an express warranty of the validity of the assigned patents and patent applications. This moves the agreement between the assignor and the assignee from the realm of implied warranties (and assignor estoppel) into express warranties. As an example, the assignment can state that the assignors, to the best of their knowledge:

Second, additional contact provisions, such as no-challenge clauses, can be added to assignments as an effort to dissuade an assignor from asserting the invalidity of patents and patent applications subject to the assignment. As an example, the assignment can state that the assignors:

Similar language could be considered for addition to employment agreements relating to patents and applications assigned during an employee's tenure.

A third strategy to safeguard against an assignor later challenging the validity of a patent issued from an assigned application is to secure confirmatory assignments. As discussed, an assignor can assign inchoate rights, such as the case where a patent application is pending. The scope of pending claims can be broadened, narrowed, or shifted and continuing applications can be filed to do the same — the patents which may eventually be covered by the assignment fundamentally unknown at the time. To avoid reliance on a favorable determination of whether claims are “materially broader” than those intended to be claimed, when a patent application subject to an assignment matures into an issued patent, available assignors can be made to execute a confirmatory assignment, extending the explicit warranties of validity — and attaching no-challenge provisions — to the newly issued patents. This strategy may be beneficial when an inventor-assignor is an employee of the assignee and there is potential risk of the inventor-assignor departing to a rival firm. Alternatively, employee exit procedures can involve a review of assigned inventions and confirmatory assignments of at least the pending claim scope.

These and other strategies can be developed to secure certainty while the dust continues to settle on this nearly century-old doctrine. Language in form assignments can and should be reviewed carefully to minimize downstream risks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.