On June 29, the Supreme Court issued a 5-4 decision in Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440 (June 29, 2021) ( slip opinion). Minerva involves a challenge to the "assignor estoppel" doctrine, which is an equitable or "court-created" rule that prevents a party who assigned a patent from later challenging the validity of the assigned patent in district court. The Court first gave the doctrine its seal of approval in 1924, by ruling that principles of fair dealing should limit an inventor's ability to assign a patent to another for value and then later argue in litigation that the patent is invalid. [i]

Now, nearly a century later, the Court ruled that it is time to narrow the scope of assignor estoppel. In its decision authored by Justice Elena Kagan, the Court concluded that assignor estoppel applies "when, but only when, the assignor's claim of invalidity contradicts explicit or implicit representations he made in assigning the patent." [ii]

The Facts

In Minerva, an inventor created a medical device, founded a company (Novacept, Inc.) to sell the device, filed a patent application for the device, and assigned the company his interest in the patent application, as well as any future continuation applications. Novacept later sold its patent and patent application portfolio to another company, which in turn sold the patent rights for the medical device to Hologic, Inc. The inventor later founded Minerva Surgical, Inc. and developed another medical device that allegedly improved the version he patented and sold just a few years earlier. As a result, Hologic sued Minerva Surgical for patent infringement of one of its continuation patents. As a defense to infringement, Minerva Surgical argued that the continuation patent for the medical device is invalid. In turn, Hologic invoked the doctrine of assignor estoppel. Both the district court and the Federal Circuit found that assignor estoppel barred Minerva Surgical's invalidity defense. [iii] [iv]

The Court's Decision

To determine whether assignor estoppel should still exist, the Court examined "centuries-old fairness principles" from the doctrine's roots in 18th-century England to the United States today. The Court explained, "[a]ssignor estoppel, like many estoppel rules, reflects a demand for consistency in dealing with others. … 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." [v] According to the Court, "[b]y 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." [vi]

The Court concluded that assignor estoppel should only apply when those principles of fair dealing are in question — it should not apply when the assignor hasn't made any representations that conflict with his invalidity defense, such as when the assignor is an inventor assigning his rights before he can make any warranty of validity of the patent's claims. The Court envisioned such a scenario where the assignor is an inventor signing an employment contract with an agreement to assign all rights in future inventions to his employer, or where the assignor assigns a patent application to another party. In both examples, the patent claims (which define the scope of the invention) may change or be enlarged "beyond what 'the assignor intended' to claim as patentable" without the inventor's knowledge. [vii] In those cases, the Court found that assignor estoppel does not apply because the assignor never made any representations that the patent claims are valid, and estoppel only extends to the representations the assignor made in completing the assignment. Accordingly, the Court vacated the Federal Circuit's judgment that assignor estoppel barred Minerva Surgical's invalidity defense and remanded the case to consider the rejected invalidity defense.

Assignor estoppel is alive and well in cases where a party assigns a granted patent to another with the express or implied representation that the patent is valid. However, the doctrine may be subject to further fact finding in cases where a party assigns a pending patent application to another or the patent at issue is a continuation patent because the scope of the claims may no longer align with the inventor's intended invention.

[i] Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 349 (1924).

[ii] Minerva, slip op. at 1.

[iii] Hologic, Inc. v. Minerva Surgical, Inc., 325 F. Supp. 3d 507 (D. Del. 2018).

[iv] Hologic, Inc. v. Minerva Surgical, Inc., 957 F. 3d 1256, (Fed. Cir. 2020).

[v] Minerva, slip op. at 13.

[vi] Minerva, slip op. at 14.

[vii] Minerva, slip op. at 16.