Federal Circuit Holds No Assignor Estoppel in AIA Proceedings

Recently, the Federal Circuit held that an ex-employee (of Cisco) who founded a competitor (Arista) can challenge their own assigned patent, finding that, after assignment, they are not the patent owner. The Court held that only the actual patent owner, and not an assignee, is barred from challenging their own patent under 35 USC 311(a). In holding that assignor estoppel does not apply, the Court also expanded issues that are appealable and reviewable by the Federal Circuit by relying on the WiFi One, SAS, and Cuozzo decisions. The Court found assignor estoppel was reviewable on appeal because “assignor estoppel, like the § 315(b) time-bar, ‘is unrelated to the Director’s preliminary patentability assessment or the Director’s discretion not to initiate an IPR even if the threshold ‘reasonable likelihood’ is present.’”

Lesson learned:
Patent owners typically spend considerable time and money building their portfolios. Parallel to that effort, patent owner employers need to be diligent in preparing, and having their employees or contractors execute, employment agreements or employment exit agreements that ensure assigning inventors cannot later challenge their own patents. Without this additional contractual effort, employers will not be able to use patent law to protect their ROI from attacks by ex-employee inventors.

This article appeared in the December 2018 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.