On November 9, 2018, the Federal Circuit issued an opinion in Arista Networks, Inc. v. Cisco Systems, Inc., an appeal from the Patent Trial and Appeal Board’s Final Written Decision in an inter partes review filed by Arista Networks, Inc. against certain claims of Cisco Systems, Inc.’s U.S. Patent No. 7,340,597.
Assignor estoppel is a common-law doctrine that prevents a party, and the party’s privies, from challenging the validity of a patent assigned by the party to a third party. As the Federal Circuit explained in Arista Networks, “[t]he doctrine often arises in factual scenarios similar to the facts of this case, where an employee invents something during his or her tenure with a company, assigns the rights to the invention to his or her employer, then leaves the company to join or found a competing company.” Slip op. at 17.
The question before the Federal Circuit in Arista Networks was whether Congress intended for assignor estoppel to apply in IPR proceedings.2
Cisco argued that because assignor estoppel is a well-established, common-law doctrine, it should be presumed to apply in IPRs absent a statutory indication to the contrary. The Federal Circuit acknowledged that “where a common-law principle is well established, … the courts may take it as given that Congress has legislated with an expectation that the principle will apply except ‘when a statutory purpose to the contrary is evident.’” Slip op. at 20 (citations omitted). But in Arista Networks the Federal Circuit found that “a statutory purpose to the contrary is evident.”
In that regard, the court agreed with Arista’s argument that 35 U.S.C. § 311(a)3 “unambiguously leaves no room for assignor estoppel in the IPR context, given that the statute allows any person ‘who is not the owner of a patent’ to file an IPR.” Slip op. at 21. According to the court, the plain language of § 311(a) delineates who may file an IPR petition, i.e., anyone who is not the patent owner.
The Federal Circuit was not swayed by Cisco’s argument that its ruling would promote forum shopping between district courts (where assignor estoppel applies) and the PTAB (where, pursuant to the Federal Circuit’s Arista Networks decision, assignor estoppel does not apply). According to the court, that is an issue for Congress to address should it see fit to do so.
While patent assignors are estopped in district court litigation from challenging the validity of patents they have assigned, no such estoppel applies in the PTAB. Thus, in view of Arista Networks, PTAB proceedings now provide patent assignors with a mechanism for challenging the validity of patents they have assigned.