On 9 November 2018 the Federal Circuit in Arista Networks, Inc v Cisco Systems, Inc (2017-1525, 2017-1577) held that the assignor estoppel is not available in inter partes review proceedings.
Assignor estoppel is a common law doctrine that prevents a party that assigns a patent to another party from later challenging the validity of the assigned patent. In this case, David Cheriton, the named inventor of the patent at issue, (US Patent 7,340,597 (the '597 patent)) was employed by Cisco at the time of invention and assigned the '597 patent to Cisco. Cheriton subsequently left Cisco to found Arista, where he worked for several years before resigning in 2014.
In 2015 Arista challenged the validity of the '597 patent in an inter partes review proceeding. In 2016, the Patent Trial and Appeal Board in that inter partes review issued a final written decision upholding the validity of certain '597 patent claims but invalidating other '597 patent claims as anticipated or obvious. Therefore, the board rejected Cisco's argument that the doctrine of assignor estoppel barred Arista from challenging the '597 patent's validity. Arista appealed the board's claim construction and validity determinations; Cisco cross-appealed the board's refusal to apply the doctrine of assignor estoppel to Arista.
In a decision by Chief Judge Prost (joined by Judges Schall and Chen) the Federal Circuit held that the assignor estoppel is not available in inter partes reviews.
As a threshold matter, the Federal Circuit first determined that the board's decision not to apply assignor estoppel to Arista was reviewable on appeal, pursuant to its prior precedent in Wi-Fi One, LLC v Broadcom Corp.(1) In Wi-Fi One, the en banc Federal Circuit indicated that questions which were not closely related to the merits of the board's decision to initiate inter partes review proceedings under 35 USC § 314(a) could be subject to appellate review. As the assignor estoppel question was controlled by a different statute – 35 USC § 311(a) – the Federal Circuit held that the assignor estoppel question was reviewable on appeal.
Turning to the substance of the question, the Federal Circuit noted that Section 311(a) states in relevant part that "[s]ubject 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".
According to the Federal Circuit, the plain language of Section 311(a) "demonstrates that an assignor, who is no longer the owner of a patent, may file an inter partes review petition as to that patent".
In reaching that conclusion, the Federal Circuit rejected Cisco's arguments on cross-appeal that assignor estoppel should apply to inter partes reviews. As to Cisco's primary argument that assignor estoppel is a "well-established common law doctrine that should be presumed to apply absent a statutory indication to the contrary", the Federal Circuit concluded that such contrary indication was evident from the plain and unambiguous language of Section 311(a). The Federal Circuit also rejected Cisco's argument that Section 311(a) "does not directly speak to the question of assignor estoppel in [inter partes reviews]". According to the Federal Circuit, Section 311(a) "delineates who may file an [inter partes review] petition". Lastly, the Federal Circuit rejected Cisco's argument that denying assignor estoppel in inter partes reviews, while allowing it at the International Trade Commission and in district court, would invite forum shopping. According to the Federal Circuit, "such a discrepancy between forums—one that follows from the language of the respective statutes—is consistent with the overarching goals of the inter partes review process that extend beyond the particular parties in a given patent dispute".
As to the issues that Arista raised on appeal, the Federal Circuit held that the board had erred in its construction of the claim term 'broadcast', and remanded the case to the board to reconsider the validity of the '597 patent claims in view of the Federal Circuit's claim construction.
For further information on this topic please contact Christopher Loh at Venable LLP by telephone (+1 410 244 7400) or email ([email protected]). The Venable LLP website can be accessed at www.venable.com.
Endnotes
(1) 878 F3d 1364 (Fed Cir 2018).
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