On April 21, the Supreme Court heard oral argument in Minerva Surgical, Inc. v. Hologic, Inc. As we highlighted in our argument preview, the question presented to the Court was “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.” In other words, the parties argued for and against the doctrine of assignor estoppel. This is our argument recap.
Robert Hochman argued on behalf of Minerva Surgical, Inc. He began his argument by stating that “[t]he Patent Act doesn’t provide for assignor estoppel and never has,” while it does provide for “invalidity [as] a defense in any action.” Hochman cited Supreme Court precedent allowing use of the invalidity defense in circumstances he claimed were “squarely contrary to assignor estoppel.” He ended his opening argument by saying that “assignor estoppel is particularly at odds with patent law policy.” In particular, as would become evident throughout the argument, Hochman sought to justify allowing courts to consider arguments by previous owners of patents that the patents are invalid due to the patentability requirement of enablement.
Chief Justice Roberts opened questioning by asking Hochman to weigh the possibility of abolishing assignor estoppel in order to protect against bad patents versus the reality that “assignor estoppel help[s] ensure the strength and stability of . . . patents.” In response, Hochman stated that “inventors have to provide . . . a description and enablement of what they’ve done . . . to the public in order to get the benefit” of exclusivity. He further explained that “our patent system depends on challenges to validity to make sure that we don’t over-protect; we don’t provide the benefits of patent exclusivity without the parties [and] inventors doing all the things necessary to earn that substantial public benefit.”
Justice Alito, viewing this issue as one of statutory interpretation, asked why this matter is a question for the Court and not Congress. He explained that “[t]here’s precedent supporting the doctrine in some form” and further highlighted that “[t]he Federal Circuit . . . has worked out a body of precedent on it.” In this same vein, he asked whether some of the Court’s precedent must be overruled to reject the doctrine of assignor estoppel. Hochman replied that only Formica must be overruled. He continued by saying that this precedent “doesn’t appear to have been settled.” Furthermore, he highlighted another case, Scott Paper, in which the Court “expressly allowed an assignor to challenge invalidity.” In a follow-up question, Justice Alito asked whether “an assignment can specify whether the assignor can challenge the patent or not, or would that be against public policy in some sense?” Hochman indicated public policy should invalidate such a provision. He responded that “it is critical that everyone be available to challenge the validity of patents.” And, in particular, he explained that “[a]ssignors in particular are super well positioned to do that and do the public service of invalidating bad patents and freeing up competition.”
As part of her line of questioning, Justice Sotomayor asked why the Court should “interfere when this type of defense has been approved for such a long period of time[.]” In response, Hochman claimed that thirty years had passed “without anybody thinking assignor estoppel was the law.” Furthermore, he stated that “it would be an astonishing inversion of the judicial hierarchy for this Court to infer congressional acquiescence to the Federal Circuit’s view on patent law even while this Court’s decision . . . had, for [thirty] years, left the doctrine dead.” In Hochman’s view, the Federal Circuit’s persistent use of the doctrine stemmed from the court’s “exclusive jurisdiction over patent law.”
Justice Gorsuch asked whether equitable estoppel would be better than estoppel by deed, the government’s preferred analogue to assignor estoppel. For example, he explained, “most of these cases involve small inventors assigning patents to very large corporations . . who are fully capable of examining the patent and may be in better position to identify its validity and who undoubtedly very rarely rely on these individuals.” What concerns Justice Gorsuch is “if we require material identically claims and get rid of reliance, we’re really just advantaging the . . . large purchasers to the disadvantage of the individual inventors.” Hochman responded that “that’s exactly right.”
In this case, Morgan Ratner argued for the government, as amicus curiae supporting neither party. Ratner began by stating that, in line with the petitioner’s view, “the Federal Circuit’s test for assignor estoppel is too broad” and explained that its application is “not how estoppel ordinarily works.” The government, however, did not agree with the petitioner’s view that the doctrine of assignor estoppel should be totally eliminated, as it has been used in lower courts for almost 150 years, the Supreme Court approved the doctrine almost a century ago, and Congress has not found it necessary to eliminate the doctrine. In particular, Ratner argued that the Court should adopt the requirements of estoppel by deed and apply those requirements in the context of assignor estoppel. In particular, she pressed for two requirements: an exchange of valuable consideration and materially identical claims. As part of her argument, she also resisted questions seeking to align assignor estoppel with equitable estoppel.
In his opening line of questioning, Chief Justice Roberts asked Ratner to clarify her definition of valuable consideration, as the government views the application of assignor estoppel to be necessary only in cases “where the assignor sells patent rights for valuable consideration.” Ratner explained that value is an implicit representation because there are some situations “in which someone agrees to transfer any rights to an invention before that invention exists or before any bargaining over the value of that invention.” In those cases, Ratner says, “you can’t really be said to implicitly represent that that invention has value.” In this way, the government is seeking to preserve the rights of inventor-assignors who assign their rights to their inventions before those inventions have been created, for example through employment agreements.
Justice Kagan asked Ratner to explain the difference between equitable estoppel and assignor estoppel. In response, Ratner stated that there are two key differences setting equitable estoppel apart: “The first is [the requirement of a] knowing affirmative misrepresentation, and the second is justifiable reliance on it.” She explained that “[i]t would be extremely difficult to show that in most cases.”
Justice Gorsuch asked a series of questions challenging Ratner to justify use of estoppel by deed rather than equitable estoppel. He also discussed some of his views on the question. For example, he indicated that, “if we’re going to look at estoppel doctrine, I guess I’m a little confused why we would look to . . . physical real estate as the example, where deeds, recorded deeds, have a special role in . . . our system and have a special validity, rather than personal property, where these elements, misrepresentation of facts and reliance, are required.” In response, Ratner argued that “the point is to preserve the conclusiveness of these transactions, just as they would be . . . if this were real property.” Moreover, she argued, similarly “as for personal property, . . . there might be other things, like a warranty of merchantability, that would also prevent someone from saying, at time one, this thing has value and, at time two, that it’s valueless.”
Justice Barrett asked how stare decisis influenced the government’s proposed doctrine in relation to a start-from-scratch approach. Ratner responded the the government “is somewhere in between those two things given the long period of time in which assignor estoppel has existed and in which Congress could have acted.” She explained that that stare decisis carried great weight in the formulating the government’s position.
In concluding her argument, Ratner stated that the government’s proposed test “puts intellectual property on par with other kinds of property, whereas the parties’ theories would create a mismatch in one direction or the other.” The petitioner’s approach, she explained, “would mean that sales of real property are protected by estoppel by deed and personal property may be protected by warranties of merchantability, but there would be no analog for intellectual property.” On the other side of the spectrum, however, the respondents’ approach and the doctrine as currently used by the Federal Circuit “would apply a reflexive rule that covers all invalidity disputes.” This, Ratner explained, “would mean that estoppel applies even in the absence of logically inconsistent positions, and that’s not consistent with historical estoppel doctrines.”
Matthew Wolf argued for the respondents. He began by focusing on the Supreme Court precedent, stating that “[i]n 1924, this Court held that assignor estoppel was manifestly intended by Congress.” Furthermore, he said, “Congress has maintained the relevant statutory language through multiple revisions of patent law.” With his focus on Congress, Wolf argued that the question of the existence and contours of assignor estoppel is not for the Court, but for the legislature.
Justice Thomas asked Wolf whether an amendment to the Patent Act was an appropriate way to establish assignor estoppel. Wolf replied by indicating this way of thinking is “backwards” because “this Court [has already] said that assignor estoppel was manifestly intended by Congress.” He also stated that “Congress was put on notice of the Supreme Court’s view of its intent and how it understood the assignment provision, and [Congress] re-ratified it in 1952.”
In the final line of questioning, Justice Barrett focused on the reenactment canon. Under this canon, she explained, there is a requirement of “a pretty well-established line of cases that would put Congress on notice.” In her view, however, the precedent discussed in this case, particularly from the Supreme Court, presents uncertainty. Wolf responded that “prior to 1952, we do not believe there is any uncertainty” due to the Westinghouse holding of Congress’s manifest intent. He further explained that in other cases the Supreme Court “said expressly and explicitly it was not overturning the doctrine.” Justice Barrett then stated that the language of two cases, Scott Paper and Lear, shows that the doctrine was not “completely embraced.” Wolf disagreed with this point, stating that Lear did not find that Scott Paper overruled Westinghouse. He also mentioned that a couple of circuit courts “in the intervening years between Scott Paper and the Patent Act expressly acknowledge that Westinghouse was the rule.” At the end of her time, Justice Barrett stated that “the fact that lower courts continued to apply [the doctrine] wouldn’t necessarily mean that, as we would view it, that it wasn’t a dead letter.”
In his rebuttal, Hochman clarified some alleged misstatements made by Wolf. Hochman ultimately argued that “[t]he doctrine doesn’t have any legs to stand on.” He explained that, “[i]f you’re outside the scope of patent protection, . . . the inventor, even an assignor, should be allowed to challenge it.”
After the arguments from both sides and the government, it is unclear exactly how the Court will rule. It does seem unlikely, however, that the doctrine as applied by the Federal Circuit will remain unchanged. The Court might adopt the government’s position that assignor estoppel should resemble estoppel by deed and require an exchange of valuable consideration and materially identical claims, or the Court might adopt Justice Gorsuch’s apparent position that assignor estoppel should resemble equitable estoppel and require a showing of reliance. And, finally, it is possible, albeit unlikely, that the doctrine of assignor estoppel will be overruled despite its longstanding history.