by Dennis Crouch
The traditional rule of assignor estoppel prevents prior owners of a patent from later challenging the validity of the patent. The doctrine stems from old property law cases and is based upon the idea is that the assignor “should not be permitted to sell something and later to assert that what was sold is worthless, all to the detriment of the assignee.” Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220 (Fed. Cir. 1988); see Westinghouse Elec. & Mfg. Co. v. Formica Ins. Co., 266 U.S. 342 (1924). Of course, most ‘assignors’ are inventor-employees who assign away rights well before even conceiving of their inventions. In his 2016 article, Mark Lemley argued that:
[T]he doctrine is out of touch with the realities of both modern inventing and modern patent law, and that it interferes with both the invalidation of bad patents and the goal of employee mobility.
Mark A. Lemley, Rethinking Assignor Estoppel, 54 Hous. L. Rev. 513 (2016).
In Arista Networks, Inc. v. Cisco Sys., Inc., 2017-1525, 2018 WL 5851331 (Fed. Cir. Nov. 9, 2018), the Federal Circuit was faced with the question of whether assignor estoppel applies to prevent an assignor from later challenging a patent in an inter partes review proceeding. In that framework, the court sided with Lemley and agreed to rethink the doctrine — holding that an inventor is not estopped from challenging his assigned patent in an IPR proceeding.
In this case, the inventor-professor-billionaire David Cheriton was formerly employed as Cisco’s chief product architect. After inventing an improved “logging module,” Cheriton assigned rights to Cisco who patented the invention. The assignment included several promises , including a promise to “do everything possible to aid said assignee, their successors, assigns and nominees, at their request and expense, in obtaining and enforcing patents for said invention in all countries.” Cheriton later left Cisco and founded Arista. At that point, Cisco turned around and sued Arista for infringement. Arista responded with the IPR challenge.
On appeal, the Federal Circuit began with a consideration of the common law approach — “that assignor estoppel is a well-established common-law doctrine that should be presumed to apply absent a statutory indication to the contrary.” Although the AIA obviously did not mention the doctrine, the appellate court found that the law had an “evident” statutory purpose that is contrary to the doctrine. In particular, the court focuses on Section 311(a) that states:
(a) In General.— Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent.
In reading the statute, the court decided that “plain language of this statutory provision is unambiguous. . . The plain language of § 311(a) demonstrates that an assignor, who is no longer the owner of a patent, may file an IPR petition as to that patent. . . . In sum, we conclude that § 311(a), by allowing “a person who is not the owner of a patent” to file an IPR, unambiguously dictates that assignor estoppel has no place in IPR proceedings.”
The legal analysis by the court could fairly be called low quality because it does not contend with the many other areas of patent law (and other areas of law) that allow for departures from the statute in order to allow for traditional common law doctrines. Take for instance, Section 282(b) that provides invalidity as a defense in “any” infringement lawsuit — of course as discussed above the court has held that 282(b) does not eliminate assignor estoppel.
I will note that the appellate panel questioned the ongoing viability of assignor estoppel as it applies in any patent case, but decided to narrowly focus its decision here on IPR proceedings rather than patent law cases as a whole.