Assignor Estoppel Does Not Apply to AIA Challenges

By on May 7, 2020

The US Court of Appeals for the Federal Circuit reiterated that while assignor estoppel prevents a party that assigned a patent to another party from later challenging the validity of the assigned patent in district court, it does not preclude the party from challenging the validity of the assigned patent in an America Invents Act inter partes review (IPR) proceeding. Hologic, Inc. v. Minerva Surgical, Inc., Case Nos. 19-2054; -2081 (Fed. Cir. Apr. 22, 2020) (Stoll, J.) (Stoll, J., additional views).

Csaba Truckai co-founded NovaCept and developed the NovaSure system. Hologic subsequently acquired NovaCept along with two patents it owned relating to endometrial ablation. Truckai later founded Minerva and developed a system to compete directly with Hologic’s NovaSure system, which led to Hologic suing Minerva for infringement of the two patents. Minerva challenged the patents, both in district court and by filing IPR petitions. The district court found that assignor estoppel barred Minerva from challenging the validity of the patents in district court. The Patent Trial and Appeal Board (PTAB) instituted review of one of the patents (instituted asserted patent) but denied review of the other patent (non-instituted asserted patent). Ultimately, the PTAB found the claims of the instituted asserted patent unpatentable as obvious. The Federal Circuit later affirmed that finding.

In the interim, the district court granted summary judgment of infringement of both the instituted asserted patent and the non-instituted asserted patent, and a jury awarded more than $4.7 million in damages. During post-trial proceedings, the district court found that the Federal Circuit’s affirmance of the invalidity of the instituted asserted patent had no impact on the damages award, because an invalidity finding as to the method claims of the instituted asserted patent did not affect the infringement finding as to the apparatus claim of the non-instituted asserted patent, and the total damages award was adequately supported by the infringement finding of the non-instituted asserted patent. The district also found that the Federal Circuit’s invalidity finding of the instituted asserted patent did not affect the district court’s findings that assignor estoppel applied to claims of the non-instituted patent. Hologic and Minerva appealed.

While being “mindful of the seeming unfairness to Hologic,” the Federal Circuit found that assignor estoppel does not bar an assignor from relying on a PTAB final decision invalidating the asserted patent claims in an IPR proceeding. The Court explained that public policy encourages challenging potentially invalid patents, but assignor estoppel still serves important purposes, such as preventing unfairness and injustice, and preventing a party from “benefitting from his own wrong.” In this vein, it would be unfair to permit an assignor to assign a patent representing that it has value and then later repudiate its value, both to the assignor’s advantage.

The Federal Circuit noted that the doctrine was not without limits, however. Hologic argued that the IPR outcome was irrelevant to the district court proceeding due to assignor estoppel, as Minerva would be estopped from challenging the validity of the instituted asserted patent in district court. While the Court appreciated Hologic’s “predicament,” it explained that Minerva had a right to challenge the validity of the instituted asserted patent in an IPR proceeding, and collateral estoppel therefore barred Hologic from asserting infringement of that patent.

The Federal Circuit also confirmed that assignor estoppel bars an assignor from asserting invalidity of an assigned patent in district court and “declined Minerva’s invitation to ‘abandon the doctrine’ of assignor estoppel entirely.” The Court concluded that the “equities weigh[ed] in favor” of applying the doctrine of assignor estoppel to the non-instituted asserted patent since Truckai executed a broad assignment of his patent rights when Hologic’s predecessor acquired NovaCept for $325 million, and then founded Minerva to develop a product that directly competed with Hologic.

Judge Stoll also wrote separately to present additional views. She stated that the current application of the doctrine allows an assignor to “circumvent the doctrine of assignor estoppel” in district court by attacking the patent’s validity at the PTAB. Judge Stoll encouraged en banc hearing to clarify the “odd and seemingly illogical regime” of selectively applying assignor estoppel and the subsequent fairness issues in the district court and the PTAB.

Cecilia Choy, Ph.D.
Cecilia Choy, Ph.D., focuses her practice on intellectual property matters and is a certified patent agent. Read Cecilia Choy's full bio.