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Assignor Estoppel is Not a Defense in Inter Partes Reviews
August 07, 2017

The Patent Trial and Appeal Board (“PTAB”) recently designated as “precedential” a PTAB opinion issued in 2013 finding that assignor estoppel is not a defense for patent owners in inter partes review proceedings (“IPR”).  Athena Automation Ltd. v. Husky Injection Molding Sys. Ltd., IPR2013-00290, Paper 18 (P.T.A.B. October 25, 2013; designated precedential on August 2, 2017).  In response to Athena’s petition for an IPR, Husky, the patent owner filed its preliminary response asserting that Athena was barred from challenging the patent under the doctrine of assignor estoppel.  According to Husky, one of the named inventors on the challenged patent was in privity with Athena because he was the founder, co-owner, President, CEO, and a director on the Board of Directors at Athena.  

In declining to find assignor estoppel, the PTAB reasoned that under the AIA, 35 U.S.C. § 311(a), “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.”  Consequently, the PTAB held that under the statute, an assignor of a patent, who is no longer an owner of the patent at the time of filing of an IPR petition, may file a petition requesting inter partes review. The PTAB contrasted patent challenges brought under 35 U.S.C. § 311(a), to patent disputes brought to the International Trade Commission (“ITC”) under 19 U.S.C. § 1337(c).  The PTAB noted that Congress provided explicitly that “[a]ll legal and equitable defenses may be presented in all cases” under 19 U.S.C. § 1337(c) at the ITC, while there was no such provision under § 311(a).  Then, the PTAB reasoned that the ITC concluded from this statutory mandate that it must consider the equitable defense of assignor estoppel that prohibits an assignor of a patent or patent application, or one in privity with him, from attacking the validity of that patent later when sued for infringement by the assignee at the time of the infringement lawsuit, citing to Semiconductor Energy Lab. Co., Ltd. v. Nagata, 706 F.3d 1365, 1369 (Fed. Cir. 2013).  Because Congress did not issue a similar mandate to the Patent Office in connection with AIA post-grant reviews, the PTAB concluded that it “presents a clear expression of Congress’s broad grant of the ability to challenge the patentability of patents through inter partes review,” and declined to deny the Athena’s IPR petition based on the doctrine of assignor estoppel.

Husky appealed the PTAB’s final written decision to the Federal Circuit, focusing exclusively on whether assignor estoppel may bar a party form filing a petition for an IPR.  Husky Injection Molding Sys. Ltd. v. Athena Automation Ltd., 838 F.3d 1236 (Fed. Cir. 2016).  The Federal Circuit first considered the interpretation of 35 U.S.C. § 311(a) and noted that the statute presented “a clear expression of Congress’s broad grant of the ability to challenge the patentability of patents through inter partes review.”  Next, the Federal Circuit analyzed whether PTAB’s institution decision related to the PTAB’s ultimate authority to invalidate a patent, and concluded that it did not.  The Federal Circuit further noted that, “the PTAB’s invalidation authority derives from the patent challenged and the type of the review requested; it is not a question of who petitions for review.” The Federal Circuit concluded that it lacked jurisdiction to review the Board's determination on whether assignor estoppel precluded the Board from instituting an IPR, and therefore dismissed Husky's appeal.

On August 2, 2017, the PTAB designated this decision as a precedential decision, making it the ninth precedential PTAB decision under AIA trial practice. Standard Operating Procedure No. 2, (Rev. 9, Sept. 22, 2014 (“SOP”)), provides categorization of PTAB decisions.  The SOP provides that PTAB decisions may be assigned to one of four categories: (1) routine, (2) informative, (3) representative, or (4) precedential.  Every PTAB decision is by default, a non-binding routine opinion unless designated otherwise.  A representative opinion typically provides a sampling of outcomes on a particular type of matter.  An informative opinion may provide guidance on recurring issues, and issues of first impression or may provide guidance on PTAB rules and norms. A precedential decision is binding authority in future cases with similar issues.

The designation of this decision as a precedential opinion is binding authority in future cases asserting assignor estoppel, and will remain binding unless superseded by changes in rules or another Board decision.

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