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.