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Justices Vacate Ruling Against Inventor Said to Have Infringed His Own Patent

The case pits an inventor who assigned his patent against the company that later expanded it to remove key language about what features are protected.

WASHINGTON (CN) — Backing an inventor who faces a $5 million judgment for supposedly infringing his own patent, the Supreme Court ordered a new look Tuesday at his claim that the patent he assigned was expanded improperly.

Sidley Austin attorney Robert Hochman represented the inventor's alter ego, Minerva Surgical, and celebrated the strong win, as he called it.

"We are very pleased with the result, and we think we stand in good step at the Federal Circuit on remand both to demonstrate that assignor estoppel should not apply, and that what occurred here was a broadening of claims that were not assigned," Hochman said in a phone interview.

The appeal stems from a device Csaba Truckai invented in the 1990s for treating abnormal uterine bleeding. Hologic Inc. became the assignee of the patent after a series of mergers and for years stood as a leader of the market for such products.

Truckai threatened that dynamic, however, by patenting a new device with the same utility but using plasma as the heat source for destroying the uterine wall. "The FDA-approved success rate for Truckai’s new device is 93%, far higher than the FDA-approved success rate for Hologic’s device of 77.7%," according to the petition filed by Truckai's company Minerva Surgical. "It completely stops bleeding 73% of the time, twice as often as Hologic’s device."

In 2015, right around when the Food and Drug Administration approved Truckai's new invention, Hologic rejiggered the old patent he had assigned it, removing language that described the applicator head as moisture permeable. It then brought a patent-infringement case against Minerva, whose new device boasts a moisture-impermeable applicator head.

Minerva argues that Hologic had improperly broadened the scope of a patent to a now-obsolete device, but Hologic argues that the company’s claims were prevented by assignor estoppel — a doctrine of law that bars a patent’s seller from attacking that validity in litigation.

The Federal Circuit affirmed a $5 million judgment against Minerva, setting the case up for September oral arguments before the Supreme Court. Vacating the decision in a 5-4 split Tuesday, the Supreme Court upheld the doctrine of assignor estoppel while also "clarify[ing] that it reaches only so far as the equitable principle long understood to lie at its core."

"The doctrine applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent," Justice Elena Kagan wrote for the majority.

She emphasized later that "another post-assignment development — a change in patent claims — can remove the rationale for applying assignor estoppel."

Here, it is Minerva's claim that the new claims are materially broader than the old claims, so it can hardly be said to speaking to the validity of such claims.

"And if he made no such representation, then he can challenge the new claims in litigation: Because there is no inconsistency in his positions, there is no estoppel," Kagan wrote, referring to the patent assignor, in this case Truckai. "The limits of the assignor’s estoppel go only so far as, and not beyond, what he represented in assigning the patent application."

The Federal Circuit deemed it "irrelevant" whether Hologic had expanded the assigned claims, even though such conclusion barred Minerva from contesting the new claim’s validity.

"For the reasons given above, that conclusion is wrong," Kagan wrote, joined by Chief Justice John Roberts and by Justices Stephen Breyer, Sonia Sotomayor and Brett Kavanaugh. "If Hologic’s new claim is materially broader than the ones Truckai assigned, then Truckai could not have warranted its validity in making the assignment. And without such a prior inconsistent representation, there is no basis for estoppel."

The Federal Circuit must decide on remand whether Hologic did indeed expand the original patent beyond the claim assigned to it.

"Resolution of that issue in light of all relevant evidence will determine whether Truckai’s representations in making the assignment conflict with his later invalidity defense — and so will determine whether assignor estoppel applies," Kagan wrote.

Minerva's attorney Hochman said the majority laid substantial groundwork for them to demonstrate before the Federal Circuit that the broadened claims that Hologic asserted to try and keep up with Minerva are invalid.

As for Hologic, Arnold & Porter attorney Matthew McManus Wolf said they are ready for another day of arguments.

"We are very pleased with the decision today and look forward to concluding the case at the Federal Circuit," Wolf said Tuesday in an email.

The majority opinion inspired two dissents, with Justice Samuel Alito complaining in one about the great lengths taken by his colleagues to avoid overruling the court's 1924 decision in Westinghouse v. Formica that unanimously approved assignor estoppel.

In a separate dissent, this one joined by Justices Clarence Thomas and Neil Gorsuch, Justice Amy Coney Barrett accused the majority of endorsing a "version of assignor estoppel [that] does not appear in Westinghouse — nor, to my knowledge, in any other judicial decision."

"The new version might be preferable to the old, but if Congress truly had ratified Westinghouse, it would have endorsed the Westinghouse version," she wrote.

What Congress did instead, Barrett continued, was "unravel" Westinghouse through the Patent Act of 1952. Lawmakers specified in that statute that patents have "the attributes of personal property."

Barrett said this language "directly undermined an interpretation that treated patents like deeds conveying land."

Kagan downplayed what she called the charge in Barrett's "worked-up dissent" that the 1945 case Scott Paper v. Marcalus Mfg. Co. cast doubt on assignor-estoppel doctrine's continuing validity.

Though she noted that the court could not find any precedent for applying estoppel in Scott Paper, she said it still "reaffirmed ... the principle of fairness on which assignor estoppel rests in more common cases, where the assignee is not claiming to control a device unequivocally part of the public domain."

Along with a third decision, Lear, Inc. v. Adkins, Kagan said that Scott Paper and Westinghouse "show not the doctrinal 'eviscerat[ion]' Minerva claims, but only the kind of doctrinal evolution typical of common-law rules."

Going on to lay out the limits of the doctrine, Kagan cautioned that "assignor estoppel should apply only when its underlying principle of fair dealing comes into play."

"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," she continued. "And so there is no ground for applying assignor estoppel."

Hochman, the attorney for Minerva, said the opinions give insight into how both Justices Kagan and Barrett navigate the prior decisions at work.

"It goes without saying these days that several individual justices have spent a fair amount of effort thinking about and working out on the page their approach to precedent in general," Hochman said, "and this case pushed that button.

"But at the end of the day, where we landed is not terrible surprising, especially after oral arguments," Hochman added. "I think the court is quite clear that it's a very substantial narrowing of the doctrine — narrower than what the court had previously defined."

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