"Assignor Estoppel" - in Patent and its Limitation - As adjudicated by the US Supreme Court on 29 June 2021 - Minerva Surgical, Inc. v. Hologic, Inc

In a decision of the U.S. Supreme Court on June 29, 2021 in the matter of Minerva Surgical, Inc. v. Hologic, Inc, held that, when fairness requires, a patent inventor can contest a patent's validity after assigning it to a third party. Prior to this decision, the doctrine of "assignor estoppel" prohibited inventors from doing so under US Federal Circuit law.

"Assignor Estoppel" is well-grounded in centuries-old fairness principles. But assignor estoppel applies only when the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.

Courts have long applied the doctrine of assignor estoppel to deal with inconsistent representations about a patent’s validity. 

The US Supreme Court first considered and approved the doctrine in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342. The Court grounded the doctrine in a principle of fairness: “If one lawfully conveys to another a patented right, fair dealing should prevent him from derogating from the title he has assigned.”. The Court made clear, however, that the doctrine has limits. 

The Doctrine of Assignor Estoppel in Patent

The Doctrine is in a principle of fairness. “If one lawfully conveys to another a patented right,” the US Supreme Court in Westinghouse reasoned, “fair dealing should prevent him from derogating from the title he has assigned.” After all, the “grantor purports to convey the right to exclude others”; how can he later say, given that representation, that the grantee in fact possesses no such right? The Court supported that view of equity by referring to estoppel by deed. Under that doctrine, the Court explained, “a grantor of a deed of land” cannot “impeach the effect of his solemn act” by later claiming that the grantee’s title is no good. There was “no reason why the principles of estoppel by deed should not apply to [the] assignment of a patent right.” In the latter context too, the Court held, the assignor could not fairly “attack” the validity of a right he had formerly sold. 

 Endorsing assignor estoppel, the US Supreme Court made clear that the doctrine has limits in the Westinghouse. Although the assignor cannot assert in an infringement suit that the patent is invalid, the Court held that he can argue about how to construe the patent’s claims. Here, the Court addressed the role in patent suits of prior art—the set of earlier inventions (and other information) used to decide whether the specified invention is novel and non-obvious enough to merit a patent.

In a patent application, the inventor “swore to” a particular “specification.” But the exact rights at issue were at that point “inchoate”—not “certainly defined.” And afterward, the Court (presciently) observed, the claims might be “enlarged” at “the instance of the assignee” beyond what the inventor had put forward. That might weaken the case for estoppel.

Limitation of the Doctrine

"Assignor Estoppel" comes with limits: it applies only when its underlying principle of fair dealing comes into play. That principle demands consistency in representations about a patent’s validity. When an assignor warrants that a patent claim is valid, his later denial of validity breaches norms of equitable dealing. 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. 

Example:

1. One example of non-contradiction is when an assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims. That situation arises in certain employment arrangements, when an employee assigns to his employer patent rights in any future inventions he may develop during his employment. 

2. A second example is when a later legal development renders irrelevant the warranty given at the time of assignment. 

3.Third, and most relevant here, a post-assignment change in patent claims can remove the rationale for applying assignor estoppel. 

Held

The Court recognized the doctrine of assignor estoppel but not without the limitations. 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.