In Husky Injection Molding Systems Ltd., v. Athena Automation LTD., Nos. 2015-1726, 2015-1727 (Sept. 23, 2016), the Federal Circuit rejected Husky’s appeal of a PTAB inter partes review decision that certain challenged claims were invalid. Husky’s grounds for appeal were based not on the PTAB’s final decision finding anticipation of the claims, but on an argument that the Inter Partes Review should have never been instituted. According to Husky, the doctrine of assignor estoppel barred Athena from challenging the validity of the patent at issue.
In 2007, Husky’s former owner (“Schad”), and co-inventor of the patent as issue, assigned the patent to Husky shortly before selling Husky to a private equity group. After selling Husky, Schad formed Athena. A number of years later, Athena filed a petition with the PTAB requesting an Inter Partes Review of the patent at issue.
Seeking a denial of Athena’s petition, Husky argued in its preliminary response that Athena’s request was barred by assignor estoppel. Assignor estoppel is an equitable doctrine that prohibits a seller of a patent from challenging the validity of that patent. The doctrine is based on the doctrine of legal estoppel, which prohibits a grantor (typically, of real property) from challenging the validity of its grant.
The PTAB compared the broad statutory language in 35 U.S.C. § 311 that “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,” to language in 17 U.S.C. § 1337(c) allowing “all legal and equitable defenses” in an ITC investigation. The Board noted that the latter language was not present for IPRs, and granted Athena’s petition. The IPR commenced, and ultimately resulted in claims of the patent at issue being found invalid as anticipated. Husky appealed to the Federal Circuit.
On appeal, the Federal Circuit first considered 35 U.S.C. § 314(d), which provides that “the determination by the Director whether to institute inter partes review under this section shall be final and nonappealable.” The Federal Circuit further considered prior appeal findings that a decision to institute is not a final written decision, and remains nonappealable under § 314(d) even after the Board comes to a written and final decision on the merits. See, e.g., In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015), aff’d, Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016)(“Cuzzo II”).
The Federal Circuit did note that § 314(d) may have limits, specifically where an appeal “implicate[s] constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond `this section.'” Cuzzo II at 2141. However, these limitations were not found to be applicable to the present case.
The Federal Circuit concluded that the PTAB’s determination that assignor estoppel does not bar an assignor from petitioning for an IPR is not appealable. Accordingly, the appeal was dismissed for lack jurisdiction.
The Husky case broadens the scope of administrative decisions made by the PTAB that are not subject to appeal, and gives assignors a new tool which they can wield in a patent dispute. However, assignors should be cautious in using this tool, as they may find patent owners exploring equitable alternates, such as challenging the good faith in which the assignor originally sold the patent. Going forward, patent assignees might want to seek promises from assignors not to petition for institution in a patent assignment agreement as an added back stop to the expansion of assignor rights.