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Assignor estoppel bars assignor from challenging patent validity at the district court but not the PTAB

Assignor estoppel bars assignor from challenging patent validity at the district court but not the PTAB

Hologic v. Minerva Surgical was decided on April 22, 2020 on appeal from the District of Delaware. A named inventor of the eventual asserted patents (the ‘183 and the ‘348) assigned his rights to the relevant patent applications to a company that would later be acquired by plaintiff Hologic. Years after the transfer, the inventor founded the accused infringer, defendant Minerva. The inventor “served as Minerva’s President, Chief Executive Officer, and a member of its Board of Directors.” After Hologic sued Minerva for infringement of the ‘183 and ‘348 patents, Minerva asserted “the invalidity defenses of lack of enablement and failure to provide an adequate written description in district court.” Minerva also filed petitions for IPR. The Board invalidated the ‘183 patent as obvious. The district court granted Hologic’s motion for summary judgment that the doctrine of assignor estoppel barred Minerva from challenging the validity of the asserted patents in district court. The district court also granted summary judgment of no invalidity, and of infringement of the asserted ‘183 and ‘248 patent claims.

“The jury found… that Hologic was entitled to $4,200,529.75 in lost profits and $587,138.48 in royalties for sales not included in lost profits.” “[T]he jury was not asked to separately apportion damages between the two patents.” The Federal Circuit later affirmed the Board’s finding that the ‘183 patent was invalid. The district court denied Hologic’s motions for a permanent injunction, supplemental damages, enhanced damages, and ongoing royalties for infringement of the ‘183 patent claims as moot given the PTAB invalidity. Because the jury did not find willful infringement of the ‘348 patent, the district court denied Hologic’s motion for enhanced damages. The district court awarded supplemental damages for Minerva’s continued infringement of the ‘348 patent but declined to award an enhanced royalty for post-verdict sales. The court denied Minerva’s motion for JMOL of no damages or, alternatively, for a new trial on reasonable royalty damages.

The district court determined that the Federal Circuit decision affirming the invalidity of the ‘183 patent “did not affect the jury verdict because a finding that the method claims of the ‘183 patent are not valid does not affect the finding of infringement as to the apparatus claim of the ‘348 patent, and the jury’s damages determination can be adequately supported by the finding of infringement of Claim 1 of the ‘348 patent.” The district court further held that the invalidity of the ‘183 patent does not affect the findings of assignor estoppel as to the ‘348 patent. Both parties appealed.

The Federal Circuit affirmed the denial of a permanent injunction, enhanced damages, and ongoing royalties for infringement of the ‘183 patent; affirmed the summary judgment of no invalidity as to the ‘348 patent; affirmed the summary judgment of infringement; affirmed the denial of JMOL of no damages, or alternatively, for a new trial on reasonable royalty damages; affirmed the district court decision regarding supplemental damages; and vacated the district court’s interest award.

The district court did not abuse its discretion in denying Hologic relief following a finding of infringement of the ‘183 patent. Assignor estoppel did not preclude Minerva from relying on the Federal Circuit’s invalidation of the ‘183 patent claims. “Although Minerva would have been estopped from challenging the validity of the ‘183 patent claims in district court, it was able to challenge their validity in an IPR proceeding and, hence, circumvent the assignor estoppel doctrine. Minerva had the right to do so under the AIA and [Federal Circuit] precedent.” The Federal Circuit “has held that the doctrine of assignor estoppel does not bar an assignor from filing a petition for IPR.” The Federal Circuit’s “affirmance of the Board’s invalidity decision… is dispositive of the validity of the ‘183 patent claims, regardless of how the validity question came to [the Federal Circuit], and regardless of whether assignor estoppel bars Minerva from challenging the patent’s validity in this district court case.”

The district court did not abuse its discretion in holding that assignor estoppel precludes Minerva from challenging the validity of the ‘348 patent. “[T]he equities weigh in favor of” applying equitable estoppel in this case. The inventor “executed a broad assignment of his patent rights” to a company later acquired by Hologic. The inventor “then founded Minerva and used his expertise to research, develop, test, manufacture, and obtain regulatory approval for the [accused product].”

The district court did not err in awarding damages “based on Minerva’s infringement of claim 1 of the ‘348 patent alone, where the jury verdict did not apportion damages between the ‘348 and ‘183 patents and where the ‘183 patent claims were held invalid following the jury verdict.” “The general rule is that when a jury was told it could rely on any of two or more independent legal theories, one of which was defective, the general verdict must be set aside.” The Federal Circuit has recognized an exception to this general rule: “[a] single damages award can be sustained if, despite the fact that some of the asserted claims were held invalid or not infringed subsequent to the award, undisputed evidence demonstrated that the sustained patent claim was necessarily infringed by all of the accused activity on which the damages award was based.” Here, “Hologic’s damages expert explained to the jury that the same royalty rate he used in his damages calculation would apply to either the ‘183 patent or ‘348 patent, individually or the two patents collectively, since they both cover the entire procedure and device respectively.”
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The district court did not abuse its discretion in its award of supplemental damages. “Hologic argue[d] that the district court undercounted the number of infringing sales and, specifically, that the court should have included $4.011 million from the sales of a certain design-around product that Minerva began selling.” The Federal Circuit disagreed. “Hologic is not entitled to supplemental damages based on sales of products that Hologic did not accuse of infringement.”

The district court did not err in refusing the increase the royalty rate for infringing sales after the district court entered judgment on the jury verdict. “An assessment of prospective damages for ongoing infringement should take into account the change in the parties bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability.” “[T]he district court entered summary judgment of infringement and thus it, rather than the jury, made the determination of liability.” “[N]o change in the parties’ bargaining positions or economic circumstances could have resulted from the determination of liability between the jury’s verdict and the district court’s ruling on post-trial motions because no determination of liability occurred during that time period.”

The district court did not err in refusing to enhance the royalty rate for supplemental damages under § 284. “Here, the jury determined that Minerva did not willfully infringe claim 1 of the ‘348 patent. Additionally, there was [not] a finding by the district court of any post-verdict willful infringement.” A district court is not required to award enhanced damages or discuss the Read factors absent a finding of willful infringement.

Applying Third Circuit law, the Federal Circuit held that “the district court erred by using an incorrect judgment date in its calculation of pre- and post-judgment interest on the supplemental damages award.”

Judge Stoll wrote a separate opinion to “suggest that it is time for [the Federal Circuit] to consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office.”