The Supreme Court’s decision in Minerva Surgical, Inc. v. Hologic, Inc. has far-reaching implications for patent law, particularly concerning the doctrine of assignor estoppel. This case, decided in June 2021, centered around the question of whether the doctrine of assignor estoppel should be retained, modified, or eliminated altogether. This blog post provides an overview of the case, its history, the key issues, the Court’s holding, and the relevant laws.

Case History

The case originated from a dispute between Minerva Surgical and Hologic over a patent related to endometrial ablation procedures. The inventor, Csaba Truckai, assigned his interest in a patent application, as well as all continuation applications, to Novacept, a company he co-founded, for a device to treat abnormal uterine bleeding. Later Novacept sold its assets, including its portfolio of patents and patent applications to another company, which was subsequently acquired by Hologic.  Mr. Truckai, in the meantime, left Novacept and founded Minerva Surgical, which sells a version of the device Hologic accused of infringing a patent later granted as a continuation of Mr. Truckai’s initial patent application. Based on assignor estoppel, Hologic sought to preclude Minerva from challenging the validity of the asserted patent in the district court. Minerva, however, argued that because Hologic broadened the claims during prosecution after Mr. Truckai’s assignment, it would be unfair to prohibit Minerva from challenging the breadth of those claims.  The district court disagreed and ruled for Hologic.

Key Issues

The main issue before the Supreme Court was whether the doctrine of assignor estoppel should be applied to prevent Smith, as the assignor of the patent, from challenging its validity in court. The doctrine of assignor estoppel is a common law doctrine that prevents an inventor who assigns a patent from later challenging the validity of the patent in court.

Supreme Court’s Holding

In a unanimous decision, the Supreme Court held that the doctrine of assignor estoppel should be retained, but with certain limitations. The Court clarified that assignor estoppel applies only when the assignor’s claim of invalidity is based on the same grounds as those raised in the assignment. The Court reasoned that allowing assignor estoppel to apply in such circumstances balances the equity of fair dealing and integrity of patent rights. 

To illustrate the boundaries of the doctrine, the Court discussed three scenarios where assignor estoppel will not apply: (1) claims are broadened after assignment (as exampled in the case of Minerva); (2) the assignment occurred before the invention existed such as in the context of employment agreement where employee assigns future invention to the employer; and (3) a change in law renders irrelevant the warranty given at the time of assignment.  Under each of the scenarios, the assignor could not have made representations about the validity of the patent claims that later became the subject of dispute.

Implications and Practice Tips

The Court’s decision in Minerva Surgical, Inc. v. Hologic, Inc. is significant because it clarifies the scope of the doctrine of assignor estoppel in patent law.  The decision highlights the importance of ensuring that assignor estoppel is applied in a manner that is consistent with the foundation of the doctrine.  The decision reaffirms the principle that patents are a form of property rights that should be protected from challenges by those who have assigned their rights.

Regarding the scenarios as noted above that may be outside the purview of assignor estoppel, as defined by the Court, it is possible to use contract provisions such as no-challenge clauses incorporated into an assignment agreement to explicitly prohibit an assignor from challenging the validity of patent claims that eventually result from the patent rights assigned. See Transocean Offshore Deepwater Drilling Inc. v. Noble Corp. Plc, 4:17-CV-123, 2020 WL 1666119 (S.D. Tex. Apr. 2, 2020) (finding the no-challenge clause enforceable in a settlement license agreement despite of the stricken licensee estoppel doctrine).  Additionally, an assignee may also incorporate first-party indemnification and fee-shifting clauses to discourage the assignor from challenging the validity of the patent. See generally, Maxwell Terhar, American v. British Rule: The Impact of James G. Davis Construction Corp. v. HRGM Corp. on Fee-Shifting Provisions in the Maryland and D.C. Area, 8 Am. U. Bus. L. Rev. 67 (2019).

In addition, a prospective assignee may, to the extent possible, want to include in the subject patent application the broadest claims supportable by the specification to stay within the applicable boundaries of the doctrine of assignor estoppel. This is particularly relevant in an employee-employer patent rights assignment scenario, where the employer typically is in charge of the patent prosecution.  

One note worth mentioning from the Minerva decision relates to a prospective assignment of any future inventions from an employee to an employer.  As typically embedded in an employment agreement, such assignment of the future invention falls outside the boundaries of assignor estoppel under Minerva, should the employee assignor decide to challenge the validity of the assigned patents in later litigation. However, an employer can remedy the situation by requesting that the employee execute an assignment after the patent applications are filed and/or the patents are granted, thus returning such assignment within the boundary of assignor estoppel.

Resources:

Minerva Surgical, Inc. v. Hologic, Inc. https://www.supremecourt.gov/opinions/20pdf/20-440_9ol1.pdf