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IP Alert
IP Alert: Assignor Estoppel Does Not Apply in IPR Proceedings

November 14, 2018

On November 9, in Arista Networks, Inc. v. Cisco Systems, Inc., the Federal Circuit held that assignor estoppel does not apply in inter partes review (IPR) proceedings.

Arista petitioned for IPR review of a patent owned by Cisco. The subject matter of the patent was invented by a Cisco employee, Dr. David Cheriton. Dr. Cheriton later left Cisco to co-found Arista Networks, a Cisco competitor. He has since resigned from his position there.

Cisco argued that Arista could not file an IPR petition due to the common law doctrine of assignor estoppel. Generally, the doctrine of assignor estoppel prevents a party who assigns a patent or is in privity with the assignor from challenging the validity of the assigned patent in later litigation. The doctrine is premised on the notion that, having accepted value for the patent, the assignor cannot later assert that the patent has no value because it is invalid. In its institution decision, the PTAB rejected Cisco’s argument, concluding that the assignor estoppel doctrine was inapplicable. The PTAB went on to invalidate some of the claims of the challenged patent. Both parties appealed, Cisco asserting that the PTAB had erred in not recognizing the doctrine of assignor estoppel.

The Federal Circuit first addressed whether the PTAB’s decision on assignor estoppel was an issue that was subject to judicial review. Patentability assessments in the PTAB’s decision to institute inter partes review are generally not subject to judicial review, and in this case the assignor estoppel issue had been presented in the institution decision. But the Federal Circuit concluded that assignor estoppel is unrelated to the PTAB’s preliminary patentability assessments, making it similar to other issues (e.g., time-bar) that are reviewable even if decided in an institution decision.

The Federal Circuit ultimately agreed with the PTAB that the doctrine of assignor estoppel is unavailable in the IPR context. The court focused its analysis on the language of section 311(a) that states “In General.— Subject to the provisions of this chapter, 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.” Arista argued that if Congress had intended to allow assignor estoppel, it would have drafted the statute to something narrower than “a person who is not the owner of a patent.” The court agreed, noting that by its plain language the statute “unambiguously leaves no room for assignor estoppel in the IPR context, given that the statute allows any person ‘who is not the owner of the patent’ to file an IPR.”

The court further observed that Congress has expressly incorporated equitable doctrines in other statutes, such as the statute governing International Trade Commission investigations. But Congress did not incorporate any equitable doctrines into section 311 governing IPRs. The court found this to be further evidence of Congress’s intent to not allow assignor estoppel to apply in the IPR context.

This decision is significant because it forecloses one potential line of defense that patent owners might otherwise have asserted against an IPR petition. Conversely, the decision opens an avenue of attack for a patent challenger who might be barred from challenging the patent in court because of assignor estoppel.

For more information on this ruling, please contact Fitch Even partner David A. Gosse, author of this alert.
—Fitch Even law clerk Zachary Van Engen contributed to this alert.

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