Assignor Estoppel May Apply to A Competitor That Never Owned (Or Assigned) the Patent

By Dorothy Wu Chiang. A member of our Patent Practice Group

 

 

 

When companies hire top talent away from competitors, they may very well also acquire patent exposure along with their new personnel through the doctrine of assignor estoppel. A recent decision in the Federal Circuit, MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc., demonstrates how broadly assignor estoppel may be applied. In general, assignor estoppel prevents a company that sells a patent from challenging its validity in later litigation. However, under MAG, a company that never owned the patent may also be barred if it has hired an inventor named in the patent.

MAG Aerospace sued B/E Aerospace for infringement of three patents that named one of B/E’s leaders as an inventor. In this case, the inventor conceived of the patents well before joining B/E and had never worked for MAG; he invented the technology during his time at Evac International Oy, which later transferred the patents to MAG.

B/E defended the infringement claim in part by asserting that the patents were invalid.  The district court granted MAG summary judgment on that question, ruling that the doctrine of assignor estoppel prevented B/E from challenging the validity of the patents.

Assignor estoppel applies if a named inventor on a patent is “in privity” with the company being sued. In Shamrock Technologies, Inc. v. Medical Sterilization, Inc. (1990), the Federal Circuit held that the doctrine requires a court to consider a number of factors when determining whether this relationship exists, including:

• The inventor’s leadership role at the new employer;
• The inventor’s ownership stake in the defendant company/new employer;
• Whether the accused company changed course from manufacturing non-infringing goods to allegedly infringing activity after the inventor was hired;
• The inventor’s role in the allegedly infringing activities;
• Whether the inventor was hired to start the allegedly infringing operations;
• Whether the decision to manufacture the allegedly infringing product was made partly by the inventor;
• Whether the accused company began manufacturing the allegedly infringing product shortly after hiring the inventor; and
• Whether the inventor was in charge of the allegedly infringing operation.

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