Public Policy Role of PTAB Clashes with Assignor Estoppel Equities

The doctrine of assignor estoppel prevents prior owners/inventors of a patent from later challenging the patent’s validity.  Assignor estoppel’s premise is that the assignor “should not be permitted to sell something and later assert that what was sold is worthless, all to the detriment of the assignee.” Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988).

While exceptions to assignor estoppel have existed since its inception, the Federal Circuit has found that the AIA can be leveraged to circumvent the doctrine—that is, while a prior owner of a patent may not challenge the patent’s validity at district court, it may challenge the validity at the PTAB.

In Arista Networks, Inc. v. Cisco Sys., Inc.,908 F.3d 792, 804 (Fed. Cir. 2018), the Federal Circuit found that § 311(a), “by allowing ‘a person who is not the owner of a patent’ to file an IPR, unambiguously dictates that assignor estoppel has no place in IPR proceedings.”  This leads to a curious result—while an assignor may not challenge the validity of an assigned patent it is accused of infringing at the district court, under Arista, it may challenge the same patent at the PTAB.

However, Arista only addressed whether an assignor may challenge an assigned patent at the PTAB—the case did not address the effect of a PTAB invalidation on a parallel district court proceeding.  In Hologic, Inc. v. Minerva Surgical, Inc., the Federal Circuit was asked to consider whether a district court erred in holding that assignor estoppel does not bar the assignor from relying on a Federal Circuit affirmance of a PTAB decision invalidating asserted claims.

In this case, an inventor assigned his rights to two patent applications to his employer, plaintiff Hologic, Inc.’s predecessor-in-interest.  The inventor later left the company and founded the accused infringer, Minerva Surgical, Inc.

Hologic sued Minerva in the District of Delaware for infringing patents that granted from the assigned applications.  Minerva filed IPR petitions against the asserted patents, and the Board instituted review against one of them.  The Board found the patent’s claims unpatentable as obvious, and Hologic appealed the Board’s decision to the Federal Circuit.  While the Board’s determination was on appeal, the district court granted several of Hologic’s motions for summary judgment: (1) the doctrine of assignor estoppel bars Minerva (who the court found to be in privity with the patents’ inventor) from challenging the validity of the patents in district court; (2) both patents are not invalid; and (3) Minerva infringed both patents.

The case proceeded to a jury trial on the remaining issues.  After trial, the Federal Circuit affirmed the Board’s invalidity decision.  Thereafter, the district court denied Hologic’s post-trial motions relating to the invalidated patent, finding Hologic collaterally estopped from pursuing claims based upon the invalidated patent.

Hologic appealed the district court’s decision that it was collaterally estopped from asserting the patent invalidated by the PTAB, arguing that assignor estoppel still precluded Minerva from relying upon the Federal Circuit’s affirmance of the PTAB’s invalidation.  The Federal Circuit rejected Hologic’s argument and affirmed the district court, begrudgingly citing Arista (here):

Although Minerva would have been estopped from challenging the validity of the ’183 patent claims in district court, it was able to challenge their validity in an IPR proceeding and, hence, circumvent the assignor estoppel doctrine.  Minerva had the right to do so under the AIA and this court’s precedent.  This court has held that the doctrine of assignor estoppel does not bar an assignor from filing a petition for IPR. Arista Networks, Inc. v. Cisco Sys., Inc., 908 F.3d 792, 804 (Fed. Cir. 2018).

Since Minerva was not estopped from challenging the patent’s claims at the PTAB, and since a patentee is estopped from asserting a patent found invalid in a prior proceeding, the court found that Hologic was collaterally estopped from asserting infringement of the invalidated claims in its post-trial motions.

Judge Stoll authored the opinion, but she also wrote “separately to highlight and question the peculiar circumstances created in this case by this court’s precedent.”  She questioned the logic of barring an assignor from asserting invalidity at the district court but allowing it at the PTAB, and suggested “that it is time for this court to consider en banc the doctrine of assignor estoppel as it applies both in district court and the Patent Office.”

Stay tuned.