Federal Circuit Revisits Assignor Estoppel

August 18, 2022

On August 11, 2022, the Federal Circuit issued its opinion in the remand of Hologic, Inc. v Minerva Surgical, Inc. from the Supreme Court’s decision limiting the application of assignor estoppel to where the assignor is taking in litigation a position inconsistent with his prior representations in assigning the patent. In this case the issue was whether the issued claims are materially broader than the claims in the assigned application, Minerva Surgical, Inc. v. Hologic, Inc., 141 S. Ct. 2298, 2302, 2309 (2021). The Supreme Court in Minerva refused to discard the concept of assignor estoppel but instead held that the concept comes with limits and “reaches only as far as the equitable principle long understood to lie at its core.” The Supreme Court held that assignor estoppel “applies only when an inventor says one thing (explicitly or implicitly) in assigning a patent and the opposite in litigating against the patent’s owner.” Id. at 2304. Stated differently, where the assignor has not any explicit or implicit representations which conflict with an invalidity defense.

In this case Minerva asserted that the challenged claim in the assigned patent was materially broader than the ones assigned the original application and thus representations as to the claims existing at the time of the assignment were not relevant to the issued claim. The Supreme Court did not reach this issue because the Federal Circuit had held that it was irrelevant since assignor estoppel applied in either event whether the claim was broader or narrower claim than those assigned. The issue turned on whether claim 1 of the patent-in-suit, U.S.P. 9,095,348 (‘348) was materially broader in scope than the invention described in its parent application 09/103,072, which matured into U.S.P. 6,813,520 after the assignment from NovaCept, the original assignee of the ‘072 application, to Cytec. The ‘072 application claimed the invention of Mr. Truckai who assigned the application to NovaCept. Mr. Truckai was a founder of NovaCept. NovaCept was acquired by Cytec in 2004 for $325 million in 2004. In the agreement assigning the ‘072 application to Cytec, NovaCept warranted that it had “no present knowledge from which it could reasonably conclude” that the assigned intellectual property rights were invalid or unenforceable. The NovaCept-Cytec agreement assigning its rights to the ‘072 application included the rights to its patents and any continuation, continuation-in- part, or divisional patent applications (which included the ’072 application).

Mr. Truckai eventually left NovaCept and in 2008 founded Minerva which developed a product which Hologic, who had acquired Cytec, asserted Minerva infringed the ‘348 patent claim 1.

During the prosecution of the ‘072 application NovaCept presented claims both to a method of ablating tissue and claims to an apparatus for performing the process. The examiner found claim 31 to the apparatus to be allowable but later restricted it out of the application.  Mr. Truckai attempted to persuade the examiner to withdraw the restriction requirement since he had found the claim to be allowable but failed. Ultimately claim 31 was cancelled in 2002 without prejudice before the assignment to Cytec in 2004.  Minerva argued that since claim 31 was not in the application at the time of the assignment it could not be assigned. The argument was that since the claims at the time of the assignment were narrower than the asserted claim, Mr. Truckai could not have warranted the validity in making the assignment. The Federal Circuit rejected the argument based on the language in 35 U.S.C. § 121 permitting the filing of applications to non-elected inventions.

The issue was that Mr. Truckai was asserting that claim 1 was invalid as not being enabled by the patent specification while previously asserting to the USPTO that it should issue the claim it had previously allowed instead of restricting it out of the application. At the time of the assignment claim 31 was considered patentable by Mr. Truckai and the USPTO, it was only after Mr. Truckai set out to start a competitor and his company was sued for patent infringement that Mr. Truckai considered the claim to be unpatentable. Thus, Mr. Truckai’s and his assignee’s actions prior to the assignment was that the broad claim was valid which invoked equitable estoppel precluding his challenging validity.

In its decision the Federal Circuit explicitly excluded a situation where a claim had been rejected during the period prior to the assignment from its decision leaving that to a later date.  However, it is common practice for applicants to cancel rejected broad claims and take allowance of narrower claims and then file continuation applications to continue the prosecution of the broader claims. Most of the claim cancellations are made “without prejudice” to filing continuation applications to broader claims. Logic would dictate that claims in such a continuing application would also be protected by assignor estoppel from a validity attack by a previous owner. A key takeaway is for the assignment to assign all the rights to held by the assignor to assignee including those relating to the filing of reissue, continuation, continuation-in-part, and divisional applications.

It is important to note that the Federal Circuit left open the possibility that assignor could still have rights to challenge patent claims depending upon representations made prior to the assignment.  For example, a representation to the USPTO that certain subject matter was not the assignor’s invention or was excluded from the claims could leave the assignor later with the ability to challenge the validity of claims drawn to that subject matter.

The takeaway is that a purchaser of patent rights should use an assignment which gives it all the rights held by the assignor. Further, that the prosecution history does not contain any statements which could allow the assignor to challenge claims in the assigned patents or that would allow for the assignor to challenge any continuation applications drawn to unclaimed embodiments filed after the assignment.