Divided Supreme Court Narrows Doctrine of Patent Assignor Estoppel

In Minerva Surgical Inc. v. Hologic Inc., the U.S. Supreme Court declined to abolish the doctrine of patent assignor estoppel…

In Minerva Surgical Inc. v. Hologic Inc, the U.S. Supreme Court declined to abolish the doctrine of patent assignor estoppel, which prohibits inventors who sell their patent rights from challenging the patent’s validity in district court. However, the Court did impose new restrictions on its use, holding that assignor estoppel applies only when the assignor’s claim of invalidity contradicts explicit or implicit representations the assignor made in assigning the patent.

Facts of the Case

In the late 1990s, Csaba Truckai invented a device to treat abnormal uterine bleeding. The device, known as the NovaSure System, uses a moisture-permeable applicator head to destroy targeted cells in the uterine lining. Truckai filed a patent application and later assigned the application, along with any future continuation applications, to his company, Novacept, Inc. The U.S. Patent and Trademark Office (USPTO) issued a patent for the device.

Novacept, along with its portfolio of patents and patent applications, was eventually acquired by respondent Hologic, Inc. In 2008, Truckai founded petitioner Minerva Surgical, Inc. There, he developed a supposedly improved device to treat abnormal uterine bleeding. Called the Minerva Endometrial Ablation System, the new device uses a moisture-impermeable applicator head to remove cells in the uterine lining. The USPTO issued a patent, and the U.S. Food and Drug Administration (FDA) approved the device for commercial sale. Meanwhile, Hologic filed a continuation application with the USPTO, seeking to add claims to its patent for the NovaSure System. Hologic drafted one of its claims to encompass applicator heads generally, without regard to whether they are moisture permeable. The USPTO issued the altered patent in 2015.

Hologic subsequently sued Minerva for patent infringement. As relevant to the Supreme Court’s decision, Minerva rejoined that Hologic’s patent was invalid because the newly added claim did not match the invention’s written description, which addresses applicator heads that are water permeable. In response, Hologic invoked the doctrine of assignor estoppel. Because Truckai had assigned the original patent application, Hologic argued, he and Minerva could not impeach the patent’s validity. The District Court agreed that assignor estoppel barred Minerva’s invalidity defense. The U.S. Court of Appeals for the Federal Circuit affirmed. 

Supreme Court’s Decision

By a vote of 5-4, the Supreme Court held that assignor estoppel is well-grounded in centuries-old fairness principles, and the Federal Circuit was right to uphold it. However, it further held that assignor estoppel applies only when the assignor’s claim of invalidity contradicts explicit or implicit representations the assignor made in assigning the patent.

“The question presented here is whether to discard this century-old form of estoppel. Continuing to see value in the doctrine, we decline to do so,” Justice Elena Kagan wrote on behalf of the majority. “But in upholding assignor estoppel, we clarify that it reaches only so far as the equitable principle long understood to lie at its core. The doctrine applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.”

In reaching its decision, the majority rejected Minerva’s contention that assignor estoppel should be abandoned. Justice Kagan emphasized that the doctrine is rooted in principles of fairness, noting that courts have long applied the doctrine of assignor estoppel to deal with inconsistent representations about a patent’s validity. The majority also dismissed Minerva’s specific arguments that Congress repudiated assignor estoppel in the Patent Act of 1952 and that the Supreme Court’s post-Westinghouse cases “leave no room for the doctrine to continue.” According to Justice Kagan, the Supreme Court’s decisions “left Westinghouse right about where they found it—as a bounded doctrine designed to prevent an inventor from first selling a patent and then contending that the thing sold is worthless.”

The majority also disagreed with Minerva’s argument that contemporary patent policy—specifically, the need to weed out bad patents—supports overthrowing assignor estoppel. In so ruling, the Court again emphasized the need for fairness. Justice Kagan wrote:

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. As the Federal Circuit put the point, the assignor wants to make a “representation at the time of assignment (to his advantage) and later to repudiate it (again to his advantage).” 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.

The majority went on to hold that its endorsement of assignor estoppel comes with limits. “Its boundaries reflect its equitable basis: to prevent an assignor from warranting one thing and later alleging another,” Justice Kagan explained.  “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.”

Justice Kagan provided three examples where the doctrine of assignor estoppel does not apply: when an employee gives an employer a blanket assignment in “any future inventions”; when the governing law on patent validity changes; and when an inventor assigns a patent application (rather than an issued patent), and the issued patent is broader than the assigned application. 

Because the Federal Circuit “failed to recognize those boundaries,” the Supreme Court remanded the case to the Federal Circuit to address whether Hologic’s new claim is materially broader than the ones Truckai assigned. As Justice Kagan noted, the parties strongly disagree on the issue, with Truckai maintaining that the new claim expanded on the old by covering non-moisture-permeable applicator heads and Hologic arguing that the claim matched a prior one that Truckai had assigned.

While the Court refused to abolish assignor estoppel, it did impose limits.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Libby Varghese, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.