U.S. Supreme Court, Minerva Surgical, Inc. v. Hologic, Inc., Docket No. 20–440

 

Patent

Assignor Estoppel

Equity

Fair Dealing

Estoppel by Deed

Continuation Application

 

 

 

In Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U. S. 342, 349 (1924), this Court approved the “well settled” patent-law doctrine of “assignor estoppel.” That doctrine, rooted in an idea of fair dealing, limits an inventor’s ability to assign a patent to another for value and later contend in litigation that the patent is invalid. 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. 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.

 

 

(…) A continuation application enables an inventor to add to or modify
the claims set out in his original application. See 35 U. S. C. §120; Manual of Patent Examining Procedure §201.07 (9th ed., June 2020). But the continuation application may not materially change the written description of the invention. See Manual of Patent Examining Procedure
§211.05. So the new or altered claims must align with the original description. Ibid.; see 35 U. S. C. §112.

 

 

Assignor estoppel got its start in late 18th-century England and crossed the Atlantic about a hundred years later. In the first recorded case, Lord Kenyon found that a patent assignor “was by his own oath and deed estopped” in an infringement suit from “attempting to deny his having had any title to convey.” Oldham v. Langmead (1789), as described in J. Davies, Collection of the Most Important Cases Respecting Patents of Invention and the Rights of Patentees 442 (1816); see Hayne v. Maltby, 3 T. R. 439, 441, 100 Eng. Rep. 665, 666 (K. B. 1789) (recognizing the Oldham holding). That rule took inspiration from an earlier doctrine—estoppel by deed—applied in real property law to prevent a conveyor of land from later asserting that he had lacked good title at the time of sale. See 2 E. Coke, The First Part of the Institutes of Laws of England 352a (Hargrave & Butler eds., 19th ed. 1832) (1628). Lord Kenyon’s new patent formulation of the doctrine grew in favor throughout the 1800s as an aspect of fair dealing: When “the Defendant sold and assigned the patent to the Plaintiffs as a valid one,” it “does not lie in his mouth to say that the patent is not good.” Chambers v. Crichley, 33 Beav. 374, 376, 55 Eng. Rep. 412 (1864); see Walton v. Lavater, 8 C. B. N. S. 162, 187, 141 Eng. Rep. 1127, 1137 (C. P. 1860) (“The defendant, who has received a large sum for the sale of this patent, ought not to be allowed to raise any question as to its validity”). The earliest American decision applying the doctrine dates from 1880. See Faulks v. Kamp, 3 F. 898 (CC SDNY). Within a decade or two, the doctrine was “so well
established and generally accepted that citation of authority is useless.” Griffith v. Shaw, 89 F. 313, 315 (CC SD Iowa 1893); see 2 W. Robinson, Law of Patents for Useful Inventions §787 (1890) (collecting cases).
This Court first considered—and unanimously approved—assignor estoppel in 1924, in Westinghouse v. Formica.

 

 

(…) “Of course,” the Court said, the assignor cannot use prior art in an infringement suit “to destroy the patent,” because he “is estopped to do this.” Id., at 351. But he can use prior art to support a narrow claim construction—to “construe and narrow the claims of the patent, conceding their validity.” Id., at 350–351. “Otherwise,” the Court explained, a judge “would be denied” the “most satisfactory means” of “reaching a just conclusion” about the patent’s scope—a conclusion needed to resolve the infringement charge. Id., at 350–351. “The distinction” thus established, the Court thought, “may be a nice one, but
seems to be workable.” Id., at 351.

 

 

Still, our endorsement of assignor estoppel comes with limits—true to the doctrine’s reason for being. Just as we guarded the doctrine’s boundaries in the past, see supra, at 7–8, 11–13, so too we do so today. Assignor estoppel should apply only when its underlying principle of fair dealing comes into play. That principle, as explained above, demands consistency in representations about a patent’s validity: What creates the unfairness is contradiction. When an assignor warrants that a patent is valid, his later denial of validity breaches norms of equitable dealing. And the original warranty need not be express; as we have explained, the assignment of specific patent claims carries with it an implied assurance. See supra, at 13. 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.
One example of non-contradiction is when the assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims. Consider a common employment arrangement. An employee assigns to his employer patent rights in any future inventions he develops during his employment; the employer then decides which, if any, of those inventions to patent. In that scenario, the assignment contains no representation that a patent is valid. How could it? The invention itself has not come into being. See Lemley, Rethinking Assignor Estoppel, 54 Houston L. Rev. 513, 525–527 (2016). And so the employee’s transfer of rights cannot estop him from alleging a patent’s invalidity in later litigation.
A second example is when a later legal development renders irrelevant the warranty given at the time of assignment. Suppose an inventor conveys a patent for value, with the warranty of validity that act implies. But the governing law then changes, so that previously valid patents become invalid. The inventor may claim that the patent is invalid in light of that change in law without contradicting his earlier representation. What was valid before is invalid today, and no principle of consistency prevents the assignor from saying so.

 

 

Most relevant here, another post-assignment development—a change in patent claims—can remove the rationale for applying assignor estoppel. Westinghouse itself anticipated this point, which arises most often when an inventor assigns a patent application, rather than an issued patent. As Westinghouse noted, “the scope of the right conveyed in such an assignment” is “inchoate”—“less certainly defined than that of a granted patent.” 266 U. S., at 352–353; see supra, at 9. That is because the assignee, once he is the owner of the application, may return to the PTO to “enlarge” the patent’s claims. 266 U. S., at 353; see 35 U. S. C. §120; 37 CFR §1.53(b). And the new claims resulting from that process may go beyond what “the assignor intended” to claim as patentable. 266 U. S., at 353. Westinghouse did not need to resolve the effects of such a change, but its liberally dropped hints—and the equitable basis for assignor estoppel—point all in one direction. Assuming that the new claims are materially broader than the old claims, the assignor did not warrant to the new claims’ validity. And if he made no such representation, then he can challenge the new claims in litigation: Because there is no inconsistency in his positions, there is no estoppel. The limits of the assignor’s estoppel go only so far as, and not beyond, what he represented in assigning the patent application.

 

 

The Federal Circuit, in both its opinion below and prior decisions, has failed to recognize those boundaries. Minerva (recall, Truckai’s alter-ego) argued to the court that estoppel should not apply because it was challenging a claim that was materially broader than the ones Truckai had assigned. But the court declined to consider that alleged disparity. Citing circuit precedent, the court held it “irrelevant” whether Hologic had expanded the assigned claims: Even if so, Minerva could not contest the new claim’s validity. 957 F. 3d, at 1268 (quoting Diamond Scientific, 848 F. 2d, at 1226); see supra, at 4. For the reasons given above, that conclusion is wrong. If Hologic’s new claim is materially broader than the ones Truckai assigned, then Truckai could not have warranted its validity in making the assignment. And without such a prior inconsistent representation, there is no basis for estoppel.

 

We remand this case to the Federal Circuit to now address what it thought irrelevant: whether Hologic’s new claim is materially broader than the ones Truckai assigned.

 

 

This Court recognized assignor estoppel a century ago, and we reaffirm that judgment today. But as the Court recognized from the beginning, the doctrine is not limitless. 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.

 

For these reasons, we vacate the judgment of the Federal Circuit and remand the case for further proceedings consistent with this opinion.

 

 

 

Secondary sources:  H. Herman, The Law of Estoppel §3 (1871) (“An estoppel is an obstruction or bar to one’s alleging or denying a fact contrary to his own previous action, allegation or denial”); Lemley, Rethinking Assignor Estoppel, 54 Houston L. Rev. 513, 525–527 (2016) ; Manual of Patent Examining Procedure (9th ed., June 2020)

 

 

 

 

(U.S. Supreme Court, June 29, 2021, Minerva Surgical, Inc. v. Hologic, Inc., Docket No. 20–440, J. Kagan, Roberts, C. J., and Breyer, Sotomayor, and Kavanaugh, JJ., joined)