Guest Post by Rob Merges, UC Berkeley
In the immediate, practical sense, the Minerva opinion registers like the mildest tremor on the landscape of patent law. With a few tweaks of the standard patent assignment agreement, and putting aside the potential that the Federal Circuit will bollix up the follow-through, the opinion changed very little.
But, sometimes, a ripple on the surface denotes more dramatic movement in the deep crust. So it may be with this prosaic little case of assignor estoppel. Justice Barrett’s dissent signals a potentially radical reappraisal of the many common law rules that supplement, permeate and modify the body of operational U.S. patent law. If the signals are portents, then many settled doctrines of patent law – and other fields of IP law as well – have been quietly but surely put into play.
Holding
The holding in Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265 (U.S. June 29, 2021) is that assignor estoppel survives. It has, one might argue, a slightly slimmer profile than in the strongest form of the doctrine, which, borrowing from “warranty of title” principles in real property, is that an assignor is estopped from attacking any patent on an assigned invention. In Minerva, the Court returned the doctrine to its equitable roots. From now, only some assignments give rise to estoppel: only those that include an implicit or explicit representation that the inventor believes the assigned (and claimed) invention to be valid. As put by Justice Kagan: “The doctrine applies when, but only when, the assignor's claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *3 (U.S. June 29, 2021). The idea is that, to be estopped from making a statement (“this patent is invalid”), one must be on record as having made a prior, contradictory, statement (“I believe this patent to be valid”). A simple assignment – “I assign my rights to you” – is presumably not enough to show such a representation. Something more is needed now.
It remains to be seen what kind of representations are good enough. The lower courts will need to work out what constitutes an “implicit” representation of validity. Perhaps signing a conventional inventor’s oath in additional to a standard, simple assignment will be enough. The oath is required by the PTO at the time a patent application is filed, and it usually includes a statement that the signing party believes they are an inventor or co-inventor of a claimed invention. Perhaps some supplemental language in the standard assignment form might become conventional instead: something along the lines of “my invention may include embodiments, and be covered by claim language, not present in any draft specification made as of this date [of signing], and I acknowledge that these embodiments and claim variants are included in what I mean by ‘my invention’.”
However practitioners absorb and apply the majority holding, little will probably change. Because of its specific facts, the biggest ramification is that Minerva could call attention to the common practice of third party acquisition – and later amending – of “open applications”, pending patents used as the basis of later-filed, broader claims, often in an attempt to capture later-developed embodiments. (These broadening amendments are likely to run into validity challenges under the written description requirement. See Merges, Software and Patent Scope: A Report from the Middle Innings, 85 Tex. L. Rev. Vol. 1627, 1652-54 (2007) (describing a “misappropriation [of third party inventions] by amendment” rationale for written description in broadening-amendment cases). Putting this aside, Minerva is an unremarkable thumb-screw adjustment to patent doctrine, in keeping with many recent Supreme Court cases. See, e.g., Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015) (re-affirming prohibition on post-patent-expiration royalties, with some “safe harbor” practices advocated to soften the impact of the doctrine); Stanford University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011) (re-affirming assignment priority rules in cases of conflicting patent assignments).
Dissent
On the other hand, if the approach announced by the dissent takes hold, or is extended to other doctrinal areas, the resulting legal changes could be felt on a massive scale. It might invite open season on a host of never-codified common law rules long understood to apply in the patent context.
The evidence of this potential movement is in the three-Justice dissent from the still-new pen of Justice Barrett. This dissent applies the ascendant principles of interpretive textualism in a way that challenges reams of Supreme Court precedent on how statutory patent law fits into its common law backdrop. The dissent emphasizes that the Patent Act never mentions assignor estoppel. “Not one word in the patent statutes supports assignor estoppel, and the majority does not claim otherwise. ‘[T]his Court [doesn't] usually read into statutes words that aren't there,” Romag Fasteners, Inc. v. Fossil Group, Inc., 140 S.Ct. 1492, 1495 (2020), but that is just what the majority has done in this case.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *11 (U.S. June 29, 2021) (Barrett, J., dissenting). Justice Alito agrees with this aspect of the Barrett dissent. “[T]he majority . . . adopts a text-blind method of statutory interpretation with which I cannot possibly agree.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *11 (U.S. June 29, 2021) (Alito, J., dissenting).
And again: “The Patent Act of 1952 sets forth a comprehensive scheme for the creation and protection of patent rights. But it nowhere mentions the equitable doctrine of assignor estoppel, which precludes inventors who file patent applications from later saying that the patent is invalid. To the contrary, where the Act does address invalidity defenses, it states that invalidity “shall” be a defense “in any action involving the validity or infringement of a patent.” 35 U.S.C. § 282(b). The text includes no exception for actions in which the inventor is the defendant.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *13 (U.S. June 29, 2021).
Justice Barrett’s opinion also narrowly cabins traditional rules about Congressional ratification of prior cases, and traditional understandings of the perpetuation of well-recognized common law rules. The dissent hints that there are broad, preclusive effects that flow from the text of the Patent Act. If aggressively pursued, this tack could result in attacks on doctrines such as patent exhaustion, prohibitions on post-expiration patent royalties, and a host of other common law rules that routinely and conventionally augment the text of the Patent Act.
This is not only ahistorical. It is counterproductive. Because many common law principles apply to patent transactions – assignments, licenses, mortgages, and the like – this restrictive approach undermines the private law function of patents. The uses of patents in business arrangements and organizations are often overlooked in discussions of patents and patent policy. (I review the history of the “private law of patents” at length in my [plug alert] forthcoming book, American Patent Law: A Business and Economic History, 1790-Present (Cambridge Univ. Press, 2021).) But for many inventors and companies, patents are important assets in the raising of money and the execution of business strategies. It is ironic, perhaps, that Supreme Court Justices labeled “conservative” would threaten to undermine private law arrangements having antecedents back to the 1790s. But here we are.
The Barrett dissent also shows an indifference to practical consequences that is – regrettable. And quite inconsistent with the very long history of patent jurisprudence at the Supreme Court. By tradition we would expect the big C Court to at least engage in the big policy questions at stake here: Would the abrogation of assignor estoppel lead to more, and more effective, patent challenges? Would the unsettling of patent assignments – the opening of a new level of invalidity risk faced by patent assignees – be good or bad overall? Is it fair for an inventor to challenge a patent on which she is listed as a contributor?
To her credit, Justice Kagan does engage with this tradition. She says, for example, that: “Lear [v. Adkins] counseled careful attention to the equities at stake in discrete patent contexts—and expressly distinguished assignor from licensee estoppel.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *8 (U.S. June 29, 2021). And in footnote four of the opinion Justice Kagan addresses the crux of the policy conflict that informs the Minerva decision:
“Even beyond promoting fairness, assignor estoppel furthers some patent policy goals. Assignors are especially likely infringers because of their knowledge of the relevant technology. By preventing them from raising an invalidity defense in an infringement suit, the doctrine gives assignees confidence in the value of what they have purchased. That raises the price of patent assignments, and in turn may encourage invention.”
Id., at *9, fn 4.
Justice Barrett would ignore these issues. She would have it that the interweaving of common law principles can occur only under narrow circumstances. The starting point, the main focus, is on whether the text of the Act codifies a legal rule. Where the text does not codify a rule, that same text must be closely parsed to see if it is at all inconsistent with the proposed rule. Often, Justice Barrett implies, it will be.
Traditional practice is stood on its head here. Justice Taft in Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1924), asked whether the statute explicitly precluded assignor estoppel. (This just ahead of Taft’s terrific discussion of the application of common law bona fide purchaser rules in the patent context – another classic case of patent law supplementation.) Justice Barrett asks instead whether the 1952 Patent Act implicitly “incorporates” the estoppel doctrine. Minerva, supra, at *18 (U.S. June 29, 2021) (Barrett, J., dissenting). Barrett is quick to conclude that a rule not spelled out in the text of the Patent Act will often be precluded by general language in the Act. In Minerva, the general statement in 35 U.S.C. § 282 that one accused of infringement can argue invalidity becomes in the hands of Justice Barrett a rule precluding common law principles that might limit validity challenges. Under this logic, rules not mentioned in the Act are treated as a “gloss” on the text of the Act: a bad thing, unless ratified by Congress or very deeply grounded in the past. (The 1000 year history of estoppel by deed meets the test; the “shaky”, merely hundred year history, of assignor estoppel does not.)
Conclusion
The merit of the majority opinion is that for the most part it left well enough alone. It did not question the underlying fairness of assignor estoppel. And it fell back on, rather than sought to minimize, the long history of the doctrine as an adjunct to statutory patent law. Justice Kagan summarized the doctrine this way:
“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.”
Minerva, at *9 (U.S. June 29, 2021) (footnote omitted).
As Justice Kagan put it: “Assignor estoppel was by 1952 . . . a background principle of patent adjudication, and Congress gave no indication of wanting to terminate it or disturb its development. Nor has Congress done so since that time.” Minerva Surgical, Inc. v. Hologic, Inc., No. 20-440, 2021 WL 2653265, at *7 (U.S. June 29, 2021) (Kagan, J.).
Whatever one thinks of Supreme Court stewardship of patents over the years, the Court has always at least tried to steer the system toward its founding goal of encouraging invention while limiting the economic drag of patents. The radical dimension of the dissent is in its disregard for all this: its insistence that the key questions, and the only answers to be legitimately sought, are ones of textual meaning. Whatever its appeal or justification in other fields, this approach is simply inconsistent with the very long history of U.S. patent law. The text of the Patent Act is, and is rightfully, the essential focal point of many patent decisions. But common law rules of all shapes and sorts are an essential part of patent law. The common law backdrop helps facilitate patent-based transactions, and private ordering in general. The best readings of the Patent Act never lose sight of this.
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