Assignor And Licensee Estoppel

  • (As Of June 29, 2021) Assignor Estoppel Bars Inventor (Or Privity) Contradicting Explicit Or Implicit Representations Made In Assigning Patent Rights: “Assignor estoppel should apply only when its underlying principle of fair dealing comes into play. That principle … demands consistency in representations about a patent’s validity: What creates the unfairness is contradiction.” Minerva Surgical (U.S. 06/29/2021) (5-4) (refusing to eliminate assignor estoppel but cabining it; vacating application of assignor estoppel against written description defense against a continuation application’s arguably broadened claim (omitting an element emphasized in the application the inventor had assigned)), vacating, Hologic I (Fed. Cir. 04/22/20) (aff’g application of assignor estoppel). It ”applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.” Id. “Assignor estoppel rests on the idea that the assignor has made an explicit or implicit representation about the patent’s validity, and received some kind of payment in return.” Id. More specifically, “an inventor presenting an application to the PTO thus states his good-faith belief that his claims are patentable—that they will result in a valid patent. When the inventor then assigns those claims to another, he effectively incorporates that assurance.” Id. (citing inventor’s oath, duty of candor, and duty to disclose). There is no contradiction (or estoppel) when (1) the “assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims” (as in assignment of future inventions in an employment agreement), or (2) intervening law renders the claims invalid, or (3) later claims in a patent are “materially broader” than the claims at the time of the assignment. Id. (reversing Hologic I (Fed. Cir. 04/22/20)). See Hologic II (Fed. Cir. 08/11/22) (on remand from S. Ct.; only asserted issued claim not “materially broader” than broadest claim that was assigned by inventor’s company when it was acquired, i.e., claim that was cancelled two years earlier “without prejudice” in response to a restriction requirement and thus “traveled with” the application and its assignment to Hologic, and thus assignor estoppel bars his later employer (and alleged infringer) with which he is in privity, from challenging validity of issued claim).
    • (Pre Minerva Surgical) Assignor Estoppel Bars Patent’s Assignor Or Privity From Challenging Patent Validity: Equitable remedy barring assignor of patent, or one in privity with assignor, from challenging validity of patent if sued for infringement. Mag Aerospace (Fed. Cir. 03/23/16) (aff’g J. that defendant estopped because it hired a named inventor on asserted patent to help develop the accused system, despite that employee’s negligible financial interest in the defendant); Mentor Graphics (Fed. Cir. 03/16/17) (aff’g application of assignor estoppel; Fed. Cir. already rejected argument that Lear (U.S. 06/16/1969) abolished assignor estoppel), rehearing denied (Fed. Cir. 09/01/17) (Moore, J., concurring op. (2 judges) (Lear does not overrule Westinghouse; “The question of privity and the extent to which assignor estoppel ought to prohibit a future employer of the inventor/assignor from challenging the validity of the patent is an interesting one not raised by the parties on appeal in this case”)), CVSG (U.S. 04/23/2018); see generally Shamrock Tech. (Fed. Cir. 05/04/90) (discussing equitable factors for privity determination, and applying assignor estoppel to inequitable conduct where inventor became “VP of operations” of defendant); Diamond Scientific (Fed. Cir. 06/03/88) (applying assignor estoppel, akin to “estoppel by deed,” to company founded by inventor; “despite the public policy encouraging people to challenge potentially invalid patents, there are still circumstances in which the equities of the contractual relationships between the parties should deprive one party (as well as others in privity with it) of the right to bring that challenge).
  • Assignor Estoppel Does Not Apply To PTAB Proceedings: Arista (Fed. Cir. 11/09/18) (assignor estoppel does not apply to IPR proceedings: “§ 311(a) unambiguously leaves no room for assignor estoppel in the IPR context, given that the statute allows any person “who is not the owner of a patent” to file an IPR,” and the statute does not provide that all equitable defenses apply (unlike ITC proceedings)).
  • Assignor Estoppel Does Not Bar Assertion Of Issue Preclusion Against Patent Owner Who Lost Invalidity Or Patentability Challenge In Another Proceeding (E.g., In PTAB): Hologic I (Fed. Cir. 04/22/20) (aff’g that although assignor estoppel barred invalidity defense against continuation patents (whose applications were assigned by inventor/defendant’s principal) despite claims being held unpatentable by PTAB and Fed. Cir., it did not bar assertion of issue preclusion that claims were void ab initio, thus avoiding an injunction and monetary relief), cert. granted (U.S. 01/08/2021) (Question Presented: “whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits”).
  • Licensee Estoppel: Licensee May Challenge Patent’s Validity, And Not Be Required To Pay Royalties On Issued Patent During Pendency Of Challenge, But May Suffer Contractual Consequences: Federal patent policy requires that a patent licensee be permitted to challenge the validity of the patent and not be required by the license contract to pay royalties during the pending of that invalidity challenge. Lear (U.S. 06/16/1969) (license entered while patent application was pending; licensee stopped paying royalties before patent issued, asserting no valid patent could issue; upon patent issuance patent owner sued for breach of contract). But see Cordis (Fed. Cir. 12/17/85) (licensor may terminate license agreement when licensee challenging patent validity stops making royalty payments (e.g., pays them into an escrow account)).
  • Licensee Estoppel Does Not Extend To Settlement Agreements Or Consent Judgments: Hemstreet (Fed. Cir. 07/07/88) (enforcing settlement agreement requiring continued payments even after patents declared unenforceable); Flex-Foot (enforcing settlement agreement barring challenge to patent’s validity where action was dismissed with prejudice).

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