Supreme Court Takes Up Minerva v. Hologic, And Worker Freedom Is In The Balance
The “Don’t Talk Smack About Your Own Patent” Rule
|Joe Mullin||Jan 12|
In this newsletter, I’m going to dig into the many interesting and weird patent cases, especially ones that will be missed by mainstream press coverage. But even cases that go to the Supreme Court get little coverage. So this week I’m going to take a look at Minerva Surgical v. Hologic, which the Supreme Court announced on Friday they will be hearing this year.
The case revolves around a little-known fun fact in patent law: There’s actually a rule against talking smack about your own patents. This rule, called “assignor estoppel,” has a long history of being used to limit workers’ freedom to change jobs and compete against their former employers. On Friday, the Supreme Court said it would take up the case Minerva Surgical v. Hologic, which will address this problematic legal doctrine head-on.
Assignor estoppel stops inventors from arguing that the patents that bear their name are invalid. It seems counter-intuitive that inventors would want to offer such testimony, but for reasons we’ll get into below, it happens more than you might think. This ban on smack-talking one’s own patents works out very well for patent-owning companies, and very badly for employees who are also inventors. Unfortunately, this rule has been reinforced and expanded in recent decades by America’s top patent court, the Federal Circuit. The good news is, the rule has now drawn the attention of the Supreme Court, so it could be limited in a serious way, or perhaps even thrown out altogether.
When Patents Attack… Their Own Inventors
Estoppel is a legal doctrine that “prevents one from asserting a claim or right that contradicts what one has said or done before, or what has been legally established as true.” Assignor estoppel prevents inventors (the “assignors”) from arguing in court that their patents are invalid. Just as with so many problematic patent ideas, it’s an idea that’s rooted in a real estate metaphor. The idea is that, just as with a deed of land, if an inventor sells a patent to someone, then the inventor can’t turn around and devalue that patent or suddenly claim that it’s worthless.
The Federal Circuit, a specialized patent appeal court created in 1982, has applied the rule with boundless enthusiasm. In fact, the Federal Circuit “has never once refused to apply the doctrine,” according to Mark Lemley in his 2016 paper Rethinking Assignor Estoppel (p. 524).
Lemley’s paper explains the rationale for assignor estoppel: “The idea is that it is unfair for me to sell you something, take the money, and then reveal that the thing I sold you was actually worthless. I am depriving you of your expectation, and I am profiting from that deceit.”
But the premises of that rationale are all wrong. First, modern inventors aren’t, for the most part, selling their own patents for a profit. “Employees are regularly required to assign their patented inventions as a condition of employment,” Lemley explains. This deal happens at the outset of employment, so the inventors are assigning away things they haven’t even invented yet—at their bosses’ insistence. These agreements even allow a company to apply for a patent in an employee’s name without that employee’s signature.
Further, the inventor-employee’s involvement is sometimes minimal. They’re more or less handing off some paperwork to patent attorneys, and letting the lawyers see what kind of patent scope they can get from the U.S. Patent and Trademark Office. Yet after this sometimes marginal involvement in creating the patent, the inventor will be permanently stopped from testifying about the invention in court. That’s true even if the patent has changed hands, and gone on to a new owner who has a wholly different view of the scope of the patent than the inventor ever had.
The idea that workers are pushed into creating patents that they don’t think are particularly amazing might be news to Federal Circuit judges, but it’s not going to surprise programmers, who know very well that sometimes employers push hard to get patents on marginal inventions.
"I worked on a whole bunch of patents in my career over the years and I have to say that every single patent is nothing but crap," said Stephan Brunner, a programmer quoted in the 2011 NPR piece “When Patents Attack.” Brunner went on:
I can't tell you for the hell of it what they're actually supposed to do. The company said we have to do a patent on this. ... Personally, when I look at them, I'm not proud at all. It's just like mungo mumbo jumbo that nobody understands and makes no sense from an engineering standpoint whatsoever.
The Supreme Court didn’t create the assignor estoppel rule, and it has never really approved of it. Its few rulings on the matter have placed limits on the rule. This history is well-covered in Minerva Surgical’s petition asking for Supreme Court review. The Supreme Court first took up assignor estoppel in a 1924 case, Westinghouse Electric v. Formica Insulation.
By that time, lower courts had already been applying the doctrine for decades, and the Supreme Court, which rarely took patent cases, didn’t want to rock too many boats at once. “In view of the usual finality of patent decisions in the Circuit Courts of Appeal, this court will not now lightly disturb a rule well settled by 45 years of judicial consideration and conclusion in those courts,” wrote Chief Justice William Taft.
Still, the high court narrowed how it could be applied. Assignor estoppel didn’t come up again until 1945, in Scott Paper v. Marcalus Mfg., when the court again criticized it and narrowed it.
Inventor Control, Worker Control
Patent disputes that involve assignor estoppel sometimes fall into a particularly ugly category of IP lawsuit—ones that are really about controlling the mobility and freedoms of workers. Accusing a former worker of infringing on intellectual property can be used as a replacement for non-compete agreements. Non-competes are generally barred in some states (California, notably) and face limits in others. These agreements have, for good reason, received some really bad press in recent years.
Non-competes can be a lethal threat to startups, which often get their initial talent by hiring away from the industry giants. When a non-compete can’t be used, a predatory and devastatingly expensive patent lawsuit can be the next best thing. Assignor estoppel can make this situation even worse, because the big player may have patents on which one of the startup’s recent hires is a named inventor.
“It is a familiar scenario when an established high-technology company files a patent suit against a small startup founded by its former employees,” writes startup lobbying group Engine Advocacy in its brief encouraging the Supreme Court to take up the Minerva v. Hologic case. “This is a common scenario in assignor estoppel cases.” The brief goes on to rattle off seven different cases, ranging from 1989 to 2019, in which an inventor’s previous employer sues the inventor’s new company and uses assignor estoppel to prevent invalidity challenges.
Why does this keep happening? Plenty of companies might be happy to offer paeans to capitalism when a competitor isn’t breathing down their neck. But it’s hard to stomach new entrants to your market, especially when the new competitor is doing well. That’s why, Engine points out, established companies can and do file patent lawsuits for reasons that have nothing to do with protecting intellectual property, including “anger, injured feelings, or a desire to prevent a startup from hiring away engineers.” The brief continues:
Employee-inventors who have assigned rights in this perfunctory way face situations where current (or former) employers can effectively prohibit them from branching off and practicing in the same field. If an employee’s previous work is (or can be) embodied in a low-quality patent, that creates a serious threat that her previous work will fuel meritless lawsuits where invalidity issues cannot be asserted in defense.
Lemley, who wrote the seminal paper on assignor estoppel, also contributed a brief on behalf of some law professors, saying the high court should take up the Minerva case. It, too, points out that the Federal Circuit’s view on assignor estoppel hurts employee mobility and the public interest:
Assignor estoppel prevents the inventor and her privies from challenging the inventor’s patents. Yet these parties are at times in the best position to challenge the patent. The current reach of the doctrine even prevents these parties from challenging the scope of the claims, no matter how broad and how far removed they are from the inventor’s contribution. And it does so whether or not the inventor had any say in the scope or even the filing of the patent. That broad reading of the doctrine serves no valid purpose. It can’t be justified by history. And it interferes with the policy goal of ensuring that only valid patents limit competition.
The case now before the Supreme Court involves an inventor who has moved between companies. Inventor Csaba Truckai, created a surgical method and related device for treating severe menstrual bleeding. In 1998, he assigned the patents to a company he founded, Novacept. By the time Novacept got FDA approval for the device in 2001, Truckai wasn’t in charge of day-to-day operations. Novacept and the Truckai patents were later sold for $325 million, to the company that later became Hologic. In its brief, Hologic points out that Truckai personally got about $8 million from that deal.
Truckai went on to invent an improved device and founded a second company, Minerva Surgical, to implement it—and thus compete with Hologic. That led to the present dispute. Hologic says that the new device sold by Minerva still infringes Truckai’s old patents, while Minerva says it’s using a much new and improved device that doesn’t infringe.
The question is, what can Truckai say about it?
While Minerva is asking the high court to abolish assignor estoppel altogether. Hologic is asking for assignor estoppel to be expanded, and applied to the one venue that it doesn’t currently apply—at the Patent Trial and Appeal Board, which doesn’t allow assignor estoppel in its patent reviews (inter partes reviews).
Westinghouse Electric v. Formica Insulation—the first Supreme Court case to consider assignor estoppel, cited by both sides in this case—is an employee move case, just like the many cases cited in the Engine brief. In that case, the inventor, Daniel O’Conor, started work as an engineer at Westinghouse in 1907. There, he invented a method of manufacturing laminate by coating paper with Bakelite, an early plastic, and heating it. Ultimately, O’Conor and a Westinghouse sales agent, Herbert Faber, grew to believe that this new material wasn’t properly appreciated by Westinghouse. They went on to found their own company, Formica (“For Mica,” since they were creating a product meant to replace the insulating mineral mica). By 1930, Formica moved away from industrial use, towards the decorative laminate products like kitchen counters that Formica is still famous for.
Faber and O’Conor were sued repeatedly by Westinghouse, but courts ultimately upheld their right to compete. The Federal Circuit’s view of assignor estoppel has effectively rolled back the clock, empowering patent-owning companies to abuse their former workers. Hopefully this particular type of patent bullying will be soon be reined in by the Supreme Court.
Photo: Beatrice Murch / flickr
More Coverage and Briefs
Thanks for reading. This post is a good time for a reminder that this is a personal newsletter, which doesn’t reflect the views of anyone but myself. That includes my past, current, and future employers.
Supreme Court Briefs for Minerva Surgical v. Hologic:
Minerva Surgical Inc. Petition for Cert
Hologic Inc. Brief in Opposition
Minerva Surgical Inc. Reply Brief
Engine Advocacy Amicus in Support of Minerva
IP Law Professors’ Amicus in Support of Minerva
Below are the few articles I found about this case:
Supreme Court Will Hear Assignor Estoppel Case (Dennis Crouch / Patently-O)
Supreme Court Will Review Doctrine of Assignor Estoppel (Eileen McDermott / IP Watchdog)
Justices To Review Assignor Estoppel In Patent Cases (Law360 / paywalled)
Supreme Court Will Decide if Turnabout Is Fair Play in Patent Law (Scott Graham / Law.com / paywalled)