by Dennis Crouch
Minerva Surgical Inc. v. Hologic Inc. (Supreme Court 2021)
In my property law course, I spend a good bit of time walking through post-conveyance rights and obligations. What warranties are are promised to the buyer? Do these need to be express or may they be implied? Can you disclaim the warranties by selling via quitclaim deed or “as is”? Are warranties different in for sale than for a gift? And What about caveat emptor? My class focuses on land and, to a lesser extent, personal property. Minerva asks the same questions, but for patents. The court upheld the assignor doctrine, but with some big caveats.
- Majority: Justice Kagan. Joined by Chief Justice Roberts and Justices Breyer, Sotomayor, and Kavanaugh.
- Dissent: Justice Alito.
- Dissent: Justice Barrett. Joined by Justices Thomas and Gorsuch.
The dissenting opinions would have overturned the prior precedent, although Justice Alito’s approach would have been more strident especially with regard to the reenactment canon (did the 1952 Act reenact the prior law except where expressly disturbed?).
These ideas of stare decisis and silent reenactment are part of a major ongoing debate within the Court over its role in changing its own prior precedent.
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Practice Note: The holding in the case suggests that attorneys may want to begin to require inventors to sign a confirmatory assignment at the time of patent issuance.
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In a 5-4 decision, the Supreme Court has upheld prior precedent maintaining the doctrine of assignor estoppel:
When an assignor warrants that a patent is valid, his later denial of validity breaches norms of equitable dealing.
The baseline here is an issue of unfair dealing:
By saying one thing and then saying another, the assignor wants to profit doubly—by gaining both the price of assigning the patent and the continued right to use the invention it covers. That course of conduct by the assignor strikes us, as it has struck courts for many a year, as unfair dealing—enough to outweigh any loss to the public from leaving an invalidity defense to someone other than the assignor.
Implicit here is that assignor estoppel applies when the the assignor receives some compensation for transferring rights — that there is some deal. A transfer without compensation then would not imply the same warranty. Of course, inventors and others who assign their patent rights rarely offer an express “warrant that a patent is valid.” Doesn’t matter, the court found that , the court found that any assignment of any specific patent claims will typically include an implied warranty of validity. “[T]he assignment of specific patent claims carries with it an implied assurance.”
There is no warranty in cases where there is no explicit nor implicit representations:
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.
So, the warranty of validity is ordinarily implied when assigning “specific patent claims” but the court explains that a warranty would typically not exist if, for instance, the assignment occurred before the invention even existed.
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 (2016). And so the employee’s transfer of rights cannot estop him from alleging a patent’s invalidity in later litigation.
The court notes other situations where no warranty would be implied:
- Assignment before invention;
- Post-assignment change in the law that renders the patent invalid;
- Post-assignment amendment to the patent claims, and the amendment alters the validity.
On remand, the Federal Circuit will consider how these caveats play into the specific case here where the claims were apparently changed substantially post-assignment.
The detailed analysis in PatentDocs today includes this re employed inventors:
“The Court notes the common occurrence that an inventor assigns to an employer “future rights” in patents for later-developed inventions. Here, it is the assignee that determines which inventions to patent, and thus the assignor can have no representations to make.”
I do not think that such reasoning accounts for the facts (content and implications) of inventor oath/declarations OF ACTUALLY FILED applications.
Whether or not the assignee has decided what items to try to patent, presence of an oath/declaration remains what it is.
It may be why from a contractual standpoint some assignments specify the assignor(s) agree to execute such documents upon the Assignee’s request to […]. Some assignments also say the assignor(s) agree to testify on behalf of the assignee.
I think I was getting to the other point that to qualify as assignor estoppel, the warranty probably has to be part of some contract transferring ownership (which is why i was looking at consideration), just hadnt thought it through yet. Thinking about it more, I actually dont think consideration matters that much.
Today’s decision seems fine and sound to me. Still, they did not go anywhere near overruling Husky v. Athena, which means that ~75% of the point of the doctrine of assignor estoppel is worth no more than a wad of chewed gum.
+1
So now SCOTUS is going to allow the CAFC to mangle the contours of this decision?
You know; like they’ve mangled Alice / Mayo?
Can hardly wait for the “CAFC Gone Wild!” infomercial!
And coming soon to a video store near you! Just $9.95 while supplies last!
It seems like a credibility question. If an inventor or his company chooses to attack his own patent, won’t he be skewered in cross-examination? This seems very risky (although it would be very effective at the PTAB where patent disparagement is per se evidence of credibility).
“at the PTAB where patent disparagement is per se evidence of credibility”
I am curious as to why you would limit that sentiment to the PTAB….
Because I can’t imagine a jury of ordinary citizens falling for it.
And the CAFC and USSC have juries…?
/s
Have had a jury trial in Miami. 1st jury hung. 5 swallowed the BS. Lone holdout had some college education. Retried. 2nd jury had no one with even a GED. They swallowed the BS. Jury verdict reversed on appeal.
“If an inventor or his company chooses to attack his own patent, won’t he be skewered in cross-examination?”
Doesn’t seem especially vulnerable to me if they’re attacking from a 112(a) angle. “My patent remains valid, but the assignee got greedy and claimed stuff in a follow-on patent that I had never considered!” What’s so outrageous about that?
Sounds risky. Does anyone have an example of this strategy working in court?
You mean, besides today’s SCotUS decision?
I’m talking about calling the inventor as a hostile witness at trial. Did that happen here?
Ben,
Does your 112(a) position tie to my (previous) comments regarding new matter?
If so, then are aligned.
If not, can you explicate?
“If an inventor or his company chooses to attack his own patent, won’t he be skewered in cross-examination?” You may be right there, but there is also a simple response. Many inventors (researchers) at companies turn their disclosure information over to counsel (inside or outside) and then let the attorneys decide what to do with it. I have seen invention disclosures from inventors that contain lots of material that was not novel in addition to the purportedly novel aspects of the invention. It is not uncommon for those non-novel aspects of the disclosure to get included in the specification to support the novel aspects. An inventor could also argue that they aren’t lawyers or experts in patent law and simply turned over their results as instructed by their employment agreement. It would be for the patent experts to make the decisions regarding patentability. It also would not likely negatively affect credibility. I could see the opposite effect instead. A challenge is likely to be many years after the initial submission of the application, and an inventor could easily argue that in the interim time period they learned quite a bit more about the subject matter. They were willing to adjust their opinion, as any good scientist should, based on new information.
“Many inventors (researchers) at companies turn their disclosure information over to counsel (inside or outside) and then let the attorneys decide what to do with it.”
While certainly true, the same point as has been mentioned several times now still applies: The US has a ‘no new matter” rule, and the inventors — as part of their declaration — implicitly and explicitly note their “ok” of more than merely the claims as filed.
“and an inventor could easily argue that in the interim time period they learned quite a bit more about the subject matter. They were willing to adjust their opinion, as any good scientist should, based on new information.”
This is a valid point.
“[T]he court found that any assignment of any specific patent claims will typically include an implied warranty of validity. ‘[T]he assignment of specific patent claims carries with it an implied assurance.'”
Well…any “warranty/assurance” being given by the inventor is at best only of the “to the best of their knowledge” sort, as there is clearly no requirement that inventors themselves engage in any research, etc.
I agree.
That being said – and directly on point here – the declaration is what is at point (and the impact of having an inventor MAKE that declaration).
An inventor always possesses the self-wherewithall to NOT sign a declaration.
>any “warranty/assurance” being given by the inventor is at best only of the “to the best of their knowledge” sort,
Hopefully and logically not, but does SCOTUS actually say that?
I could imagine a patent purchaser loosing an infringement case and then asking for their purchase price back on the grounds of a “breach of the implied warranty of validity.”
This decision leaves other practical practice questions in addition to the one Dennis raised of whether [or not] “attorneys may want to begin to require inventors to sign a confirmatory assignment at the time of patent issuance.” In particular, what about the common corporate practice of having their employees signing assignments at the same time as the employees sign inventor declarations just before filing those applications?
Will either create assignor estoppel against the inventors even though the inventors had already previously assigned those patent rights in their employment agreement?
What effect will either have if the employee [typically] had no control, input or observation over what some patent attorney did to substantially change the claims the inventor had signed his or her declaration or assignment for?
If a corporation sells a bunch of patents to a PAE [common these days] and the PAE then sues one of that corporations major customers with one of those patents, is the corporation precluded from helping to defend its customer by assignor estoppel, and to what extent?
Will the PTO now apply assignor estoppel to IPRs or reexaminations [unlikely]? Will the Fed. Cir. do so in appeals therefrom if the issue was adequately asserted below?
P.S. Another practical question is how often will assignor estoppel even make any difference for inventor’s assignments to their employers, which make up the vast majority of patent related assignments? Inventors are rarely key defense witnesses for invalidating patent claims in litigation. Nor, I think, would assignor estoppel prevent depositions of such inventors in patent litigation for factual information?
“over what some patent attorney did to substantially change the claims the inventor had signed his or her declaration or assignment for?”
Paul,
Would not the fact that what is covered by a declaration is NOT (implicitly) just the claims, but the entire application, and the fact remains that the US has a ‘no new matter’ rule, which means that the only “later amended” aspect that could call into question the declaration is one that would also (necessarily)
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the no new matter rule?
I do ‘get’ that the declaration form is specific as to “claimed invention in the application,” but this comes immediately after the declaration statement of “The above-identified application was made or authorized to be made by me.”
The breadth here does at least indicate the level of implied coverage. Most all inventors are (or should be) aware that amendments are common in prosecution and the fact that a ‘no new matter’ rule limits the claims to matter in the application (as referenced in the declaration).
Well…the whole point of requiring definite “claims” is to clarify exactly “what the applicant regards as his invention.”
So…it’s only fair to acknowledge that the overall specification (w/o the claims) may in fact leave room for doubt about what “the invention” is. Hence, amended claims may indeed differ from what a given inventor reasonably believed he was assigning…
Except for the fact — as mentioned — in that the assignment covers the entire specification.
Your path brings with it a necessity to re-capture an oath/declaration at every instance of an amendment.
ANY change from the state of claims as filed — no matter how small — need be so recaptured (according to the logic you want to wield).
+1
Everything that the inventor regards as their invention is in the specification, but not everything in the specification is what the inventor regards as their invention.
OSitA,
Try again – read what the declaration covers.
It is simply not at point (or at least ONLY the thing at point) the part of the declaration that deals with “what the inventor regards as their invention.”
The declaration covers more than that.
See if you can grasp that – then once grasped, take that next step as to the necessary implications of that point.
As I am reading through quickly (starting with the dissents), I am struck with the depth of fracture on the occasion of Congress abrogating (or not) and conversely, subsuming (or not) Court cases into its actual writing of law.
The Justices appear to be very divided on a concept that should be universally understood and in place.
This fracture provides a foundation (apparently of sand, rather than stone) on many other patent concepts, and plainly bodes ill for Judicial resolution.
Congress — wake up and take notice.
Alito’s reference to the “Spider-Man” case was a direct shot at Kagan.
And rightfully so. The “pick and choose” selectivity is a bit two-faced.
Your practice note possibly only works if the employee gets some consideration from “reaffirming” the validity of claims, and is not coerced to do so. Even then, The employer already has rights in the patent , so it’s not really a transfer of rights where a warranty issue (or assignor estoppel) typically arises .
Anyway the ruling I think is what most people wanted to see. No estoppel in assigning a application whose claims are later broadened (or likely substantially changed).
Also, just thinking about it, I don’t think your practice note would work. Think about this— could I effectively recreate licensee estoppel by having a licensee affirm validity of the patent at issue? Almost certainly not. I think the representation has to come with an underlying transfer of rights rather than a separate affirmation.
Just what I was thinking. The emphasis in the opinion is on unfairness. So what is unfair if (a) one assigns rights today with no warranty and then (b) one year later, when the rights have already been assigned, do you affirm validity? Seems to me by that point, the assignee got whatever it got.
In most cases continued employment is sufficient consideration.
Consideration is not the issue. The issue is whether the assignor/employee has made any representations about the patent’s validity, and whether there is any unfairness in not holding him to it. An assignment can be perfectly valid but no estoppel attaches. (As SCOTUS indicated, in many employment situations, that would be the case — the employee agrees in advance to assign all his rights to the company. That is a valid assignment, but there is no assignor estoppel.)
I was addressing Jejxbejc’s comment that DC’s “practice note possibly only works if the employee gets some consideration from ‘reaffirming’ the validity of claims.” I was not addressing whether assignor estoppel would apply to a “confirmatory assignment.”
What to do when you have an employee inventor who has left the company while the application is still pending? Your repeated attempts at contacting the inventor leads you to treat him as unresponsive.
So when the claims issue broader than what the inventor says is his/her invention (in the inventor’s sole interpretation), what to do?
Not sure how important this consideration really is in the big picture. Assignor estoppel is not a frequently invoked defense. Too much time spent worrying about how to ensure that assignor estoppel will be an available defense down the line is not a productive use of one’s finite time and attention.
The best defense for a patent is to make sure that the claims really are valid. If you take care of that point, assignor estoppel becomes largely unimportant.
Get their new contact info and remind them of any continuing duty to assist with any patent applications they are inventors of that their employment agreement may require.
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