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PTAB Definitively Bars Assignor Estoppel Defense in IPR Proceedings

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In August, the Patent and Trademark Office affirmed the bar on the defense of assignor estoppel in inter partes review (IPR) proceedings by designating the decision in Athena Automation Ltd. v. Husky Injection Molding System Ltd. precedential. Athena, the ninth precedential decision since the passage of the AIA, "determines the doctrine of assignor estoppel is not an exception to 35 U.S.C. § 311(a)."1 This designation follows the Federal Circuit's dismissal on appeal for lack of jurisdiction to review the PTAB's decision.

The PTAB's Decision and Reasoning

In 2013, Athena filed a petition for inter partes review of Husky's patent, U.S. Patent No. 7,670,536 (the '536 patent).2 In its preliminary response, Husky argued Athena was barred from bringing the petition by assignor estoppel.3 "[A]ssignor estoppel is an equitable doctrine that prohibits an assignor of a patent or patent application, or one in privity with him, from attacking the validity of that patent when he is sued for infringement by the assignee."4 Specifically, Husky argued that Athena was in privity with Robert Schad, a named inventor of the ’536 patent and founder, co-owner, President, CEO, and one of only two directors on the Board of Directors of Athena.5

The PTAB's decision barring the defense of assignor estoppel relied on differences between 35 U.S.C. § 311 (the statute granting the PTAB authority to institute IPR) and 19 U.S.C. § 1337 (the statute granting the ITC authority to investigate patent-infringing imported goods).6 Section 311 of Title 35 permits "a person who is not the owner of a patent" to file a petition to institute inter partes review of a patent.7 The PTAB concluded "a person who is not the owner of a patent" includes an assignor of a patent, because the assignor is "no longer the owner of the patent at the time of filing."8 Further, the PTAB reasoned § 311 constitutes a "clear expression of Congress' broad grant of the ability to challenge the patentability of patents through inter partes review."9 The PTAB argued, in contrast, that Congress' grant of authority to the International Trade Commission included a statutory mandate providing that "[a]ll legal and equitable defenses may be presented in all cases."10 Accordingly, absent explicit inclusion of equitable defenses in 35 U.S.C. § 311, the PTAB dismissed Husky's assertion of assignor estoppel.

The Federal Circuit Majority Dismisses for Lack of Jurisdiction

Husky's appeal to the Federal Circuit was similarly unsuccessful, because the Federal Circuit majority concluded it lacked jurisdiction to review the PTAB's decision.11 Circuit Judge Lourie, joined by Circuit Judge Stoll, focused on the statutory "bar&" on review of the Director's decision whether to institute inter partes review. Section 314 of Title 35 states "[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."12 Since its passage, the Federal Circuit and Supreme Court have concluded this "broadly worded bar on appeal" permits review of the Director's determination under a two-part test.13 The first part of the test generally bars review of challenges based on ";application and interpretation of statutes related to the Patent Office's decision to initiate inter partes review" but specifically permits review of decisions in three categories: decisions that (1) "implicate constitutional questions," (2) "depend on other less closely related statutes," or (3) "present other questions of interpretation that reach, in terms of scope and impact, well beyond this section."14 Under the second part of the test, challenges "grounded in a statute closely related to the decision to institute" that are also "directed to the Board's ultimate invalidation authority" may be reviewed.15

The majority disagreed with Husky's argument that the issue of assignor estoppel is both "well beyond" § 314(d) and "necessarily implicates the Board's invalidation authority."16 Under the first part of the § 314(d) analysis, the majority determined the PTAB&'s decision did not fit any of the three categories identified.17 Neither Husky nor Athena argued assignor estoppel implicates a constitutional issue.18 Although "the doctrine of assignor estoppel does not derive from statute," the court reasoned that interpretation of § 314 "necessarily requires an interpretation of 35 U.S.C. § 311(a)," a "very closely related" statute.19 Because sections 311 and 314 are "very closely related," rather than ";less closely related," review is not permitted under the second category. For the third category, the majority concluded the "impact of assignor estoppel[] cannot be divorced from the very precise scope of § 314" and is therefore not a question of interpretation that reaches "well beyond this section."20 Because the issue of assignor estoppel does not fall into any of the three categories for which review is permitted, the court continued its review under the second part of the test.

Under step two, the majority similarly concluded the question at issue was not available for review.21 As noted above, step two of the analysis permits review of "closely related" statutes that further implicate "the Board "ultimate invalidation authority." The court reasoned the issue of assignor estoppel was not directed to the Board's authority because "the Board'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."22 Finding no exception to the appeal bar found in § 314(d) that would permit review of the issue of assignor estoppel, the majority concluded the court lacked jurisdiction and therefore dismissed Husky's appeal.23

Circuit Judge Plager's Dissent

Circuit Judge Plager dissented from the majority's conclusion, arguing the Board's ruling "on the application of assignor estoppel to this case is clearly subject to this court's judicial power of review."24 He argued assignor estoppel is an equitable doctrine and should not therefore be subject to the Board's interpretation of a statute.25 Noting a "presumption favoring review," he also argued one interpretation of § 314(d), proposed by Justice Alito in Cuozzo, is "Congress wanted to avoid[] piecemeal appellate review."26 Additionally, he questioned the majority's implementation of the Cuozzo two-part test, arguing it is unclear that § 311 may be less clearly related to § 314, which would permit review under the second category of the test.27 Circuit Judge Plager further posited that "questions of interpretation that reach, in terms of scope and impact, well beyond this section" could include any sections beyond § 314, which would permit review under the third category of the Cuozzo test.28 Ultimately, Circuit Judge Plager refused to offer an opinion regarding whether assignor estoppel should be applicable in inter parties review, because it should be evaluated under "proper judicial review."29

Practical Implications of Athena v. Husky

These decisions create an opportunity for defendants in litigation and identify a potential risk for assignees. Because Athena clearly bars an assignor estoppel defense in IPR review, defendants facing infringement contentions in district court should strongly consider IPR proceedings early in litigation, particularly when the defense of assignor estoppel may be an obstacle in later litigation. Prior to litigation, parties negotiating patent assignments should consider alternative means to ensure an assignee's good faith assignment of patent rights. For example, an assignee might include contractual terms that bar the assignee's participation in PTAB proceedings related to the assigned patent.

Circuit Judge Plager also cautioned the Cuozzo two-part test "open[s] the door to possible manipulation by parties in presenting and arguing cases before the Board and this court."30 Athena provides a roadmap when seeking judicial review of a Director's decision to institute inter partes review and affirms judicial review is available when issues implicate constitutional questions, when a statute "less closely related" to § 314(d) can be implicated in the analysis, when an issue of interpretation that reaches "well beyond § 314(d) is raised, and when a challenge is both "grounded in a statute closely related to the decision to institute" and implicates "the Board's ultimate invalidation authority." In particular, parties seeking to avoid, or ensure, Federal Circuit review should carefully consider the relationship between 35 U.S.C. § 314(d) and any implicated statutes. 

2 Case IPR2013-00290, slip op. (PTAB Oct. 25, 2013) (Paper 18).
3 See id. at 12.
4 Semiconductor Energy Lab. Co., Ltd. v. Nagata, 706 F.3d 1365, 1369 (Fed. Cir. 2013).
5 Case IPR2013-00290, slip op. at 12.
6 Id. at 12-13.
7 35 U.S.C. § 311(a).
8 Case IPR2013-00290, slip op. at 12 (emphasis in original).
9 Id. at 12-13.
10 Id. at 13 (citing 19 U.S.C. § 1337(c)).
11 Husky Injection Molding Sys. Ltd. v. Athena Automation Ltd., 838 F.3d 1236, 1247 (Fed. Cir. 2016).
12 35 U.S.C. § 314(d).
13 Husky, 838 F.3d at 1242-45 (quoting St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373, 1376 (Fed. Cir. 2014) and discussing In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015), cert. granted sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 890 (2016) and aff'd sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) and Achates Reference Publ'g, Inc. v. Apple Inc., 803 F.3d 652, 657 (Fed. Cir. 2015), cert. dismissed sub nom. Achates Reference Pub., Inc. v. Apple, Inc., 136 S. Ct. 998, 194 L. Ed. 2d 17 (2016)).
14 See id. at 1245 (quoting Cuozzo, 136 S. Ct. at 2141).
15 Id. (internal quotations omitted).
16 See id. at 1245-46.
17 Id.
18 Id. at 1245.
19 Id. at 1246 (emphasis in original).
20 Id.
21 Id. at 1247.
22 Id. at 1247 (quoting Achates, 803 F.3d at 657) ("The Board may still invalidate a claim challenged in a time-barred petition via a properly-filed petition from another petitioner."). Note that the Federal Circuit's reliance on Achates opens the door for attack on the PTAB's decision. See Wi-Fi One, LLC v. Broadcom Corp., IPR2015-1944, -1945, -1946, Federal Circuit Rehearing Order (seeking briefing regarding the consequences of the Federal Circuit's potential overruling of Achates) (available at
23 Id.
24 Id. at 1249, 1253 (Plager, J., dissenting).
25 Id. at 1252.
26 Id. at 1251 (citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2151 (2016) (Alito, J., concurring in part and dissenting in part)). In Cuozzo, Justice Alito also argued ";§ 314(d) does not say that an institution decision is 'not subject to review.'; Instead, it makes the institution decision 'nonappealable.'" Cuozzo, 136 S. Ct. at 2151.
27 Id. at 1252.
28 Id. at 1252-53.
29 Id. at 1253.
30 Id. at 1252.


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