Federal Circuit Decision: Assignor Estoppel Has No Place in IPR Proceedings

On November 9, 2018, in Arista Networks, Inc. v. Cisco Systems, Inc., the Federal Circuit held that assignor estoppel does not apply in inter partes review (IPR) proceedings. In this case, a former employee of Cisco Systems, Inc. (“Cisco”), who had assigned his invention as patented (U.S. Patent No. 7,340,597 – “the ‘597 patent”) to Cisco, left and formed his own company, Arista Networks, Inc. (“Arista”).  Arista instituted an IPR of the ‘597 patent. The Patent Trial and Appeal Board (“the Board”) held some of the claims of the ‘597 patent invalid. Cisco filed a cross-appeal with the Federal Circuit claiming that the invalidity decision of the Board should be reversed based on assignor estoppel.

The assignor estoppel doctrine prevents a party who assigns a patent to another from later challenging the validity of the assigned patent. 35 USC, Section 311(a) states in relevant part that “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. . .” Considering if Congress intended for assignor estoppel to apply in IPR proceedings, the Federal Circuit concluded that Section 311(a), by allowing for “a person who is not the owner of a patent” to file an IPR, unambiguously dictates that assignor estoppel has no place in IPR proceedings.

This decision allows inventor assignors, who would not be able to challenge the validity of their assigned patent in court based on assignor estoppel, to challenge the validity of such patent based on anticipation or obviousness by filing an IPR. As such, it provides fuel to the debate of whether assignor estoppel should exist at all in its current state. With this decision in mind, it may be time to restructure the doctrine and limit its reach, while making it applicable across all forums.