On April 21, 2021, the Supreme Court hears oral arguments in Minerva Surgical Inc. v. Hologic Inc. The case involves the issue of whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.
Supreme Court practice expert Daniel Ortiz joins us to discuss the case and review the oral arguments.
Prof. Daniel Ortiz, Michael J. and Jane R. Horvitz Distinguished Professor of Law and Director, Supreme Court Litigation Clinic, University of Virginia School of Law
Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's Practice Groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at www.fedsoc.org.
Nick Marr: Welcome, everyone, to The Federalist Society's teleforum conference call. As it's Friday afternoon, April 23, 2021, I hope you're still with us after this busy week of programming. We're grateful for you being here.
We've got a Courthouse Steps Oral Argument Teleforum on a case called Minerva Surgical v. Hologic Inc. I'm Nick Marr, Assistant Director of Practice Groups at The Federalist Society. As always, please note that expressions of opinion on our call today are those of our expert.
We are very pleased to be joined this afternoon — we're very grateful for his time — by Professor Daniel Ortiz. He's Michael J. and Jane R. Horvitz Distinguished Professor of Law and he's a Director of the Supreme Court Litigation Clinic at the University of Virginia School of Law, which is where he became involved in this case — or aware of this case — in the first place. So we're very grateful for Professor Ortiz being here today. And with that, Professor, the floor is yours.
Prof. Daniel Ortiz: Well, thank you, Nick, and thank all the listeners who are coming out so late on a Friday afternoon. I realize the martini hour is nigh, so I'll try to be as clear and concise as I can be. I want to apologize — or at least warn you — of the perspective I'll be offering here. I can't really speak as an IP expert. It was, in fact, one of my Dad's greatest disappointments, as an IP lawyer himself, that I focused elsewhere.
To the extent that I can claim any expertise in the case, it's as a generalist Supreme Court practitioner who participated in the case through a clinic here at UVA. We submitted an amicus brief in support of Hologic, but that's not my job today. My job is different. I'm happy to talk about that brief if you want during the question period. But in my presentation, I want to focus more objectively on the issue in the case and more specifically on the oral argument.
So first, the issue. I mean, it's a really classic one, but sort of displaced or located in technical patent law. The general issue is the extent to which a statutory provision overrides the common law, something that everyone is familiar with from law school. Here, in particular, it's whether 35 U.S.C. § 282, which says, "Invalidity shall be a defense in any action involving the validity or infringement of a patent," with the emphasis on the phrase "in any action," abrogates the patent doctrine of assignor estoppel, which prevents an assignor from impeaching in District Court proceedings the validity of a patent it assigned.
Now, for those of you who aren't IP nerds, or maybe being patent nerds, in particular, this may seem a very narrow parochial issue but wanting knowledge of some importance to patent practice and policy. I want to argue that actually, it turned out that that view is wrong and show how the oral argument demonstrated, as it veered from say stare decisis to close parsing of precedent to patent policy, patent medi-policy, and law and economics, that there was a lot more going on in the case and there are many different perspectives from which to view it.
So I want to show that there's something in this case for everyone. In fact, that's why my clinic students who did most of the heavy lifting here in our briefing found it so rewarding. It was also a case, I think, as the oral arguments showed where amici, and one in particular, had a big effect in defining the issues and sketching out the lines of analysis for the court.
First, the facts. They're pretty complex so I'm just going to give you the simplified version of them. I think that's sufficient to understand what's going on. There's a guy, Truckai, an inventor who assigned his patent rights to a company that was ultimately taken over by Hologic. Then he went off and ultimately founded Minerva and created a device which competed with the one Hologic had patented based on his earlier work. Hologic then sued for infringement.
There was also — and I can talk about it later if you're interested — a parallel inter partes review proceeding going on. But I don't want to complicate it too much now. At the trial, Minerva attacked the validity of the patent in defending against infringement, and Hologic asserted this doctrine of assignor estoppel against it, claiming that since Minerva and Truckai were in privity, Minerva could not impugn the validity of the patent. Now, the District Court held that the doctrine applied and largely found against Minerva.
Then on appeal to the Federal Circuit, Judge Stoll found that Circuit precedent for close Minerva's argument that Section 282 overrode the common law doctrine. Really interestingly though, she also wrote a separate individual opinion noting that the Federal Circuit's approach was somewhat contradictory since it had held in another case, Arista, that the American Invents Act abrogated the doctrine of assignor estoppel in IPR proceedings. So she called for an en banc review thinking that what's sauce for the goose should be sauce for the gander, or at least they should be consistent and noted the worry about the practical inconsistencies.
Now, technically this relevant section of the American Invents Act, 35 U.S.C. § 311(a), is a little bit different. It doesn't use any proceeding, any action language. It says, "A person who is not the owner of a patent may file an IPR." So you could technically argue that one provision could abrogate the doctrine where the other could not, but many people thought that it should be applied consistently.
The parties filed cross-petitions for rehearing en banc before the Federal Circuit, and the Federal Circuit denied them both. Minerva then filed a Petition for Certiorari in the Supreme Court, and Hologic filed a cross-petition. The Supreme Court granted Minerva's and denied Hologic's.
In the briefing, Minerva took the position that the statute overrode the common law doctrine. Hologic, of course, took the opposite position. Minerva then also argued that if the court retained assignor estoppel, it should limit it by requiring express representation and assigning reliance, which in effect would largely assimilate the doctrine to traditional equitable estoppel.
So as framed by the parties, it was largely an issue of statutory construction, and in particular, whether the statute abrogated the common law. It wasn't actually talked about much directly in these terms, but you could say that the parties' arguments were joined on canon the statutory construction that statutes and derogation of the common law should be strictly construed or the canon that Congress is generally presumed to legislate against the background law, and whether those applied or not.
As you would imagine, that kind of inquiry raised a lot of issues like how specific does the statute have to be to override the common law, how settled does the common law have to be, how important does the common law policy have to be, things like that. The amici actually briefed it somewhat differently. There's most discussion of the United States' brief, which offered an intermediate position.
The United States put forward a proposal that the doctrine should be retained but modified in two critical ways. It should apply in the United States' view only where there was "valuable consideration for the assignment" and when the rights assigned were "materially identical to the claims that were being litigated over." There were other amici which helped shape the argument, but I think it fair to say that they were less important, and we were one of those.
The oral argument, I said before, was really interesting. The court talked about everything that you could imagine, pretty much, and the three attorneys did a great job. The most embarrassing moment came at the very end when the Chief Justice tried to end the argument forgetting that Rob Hochman, who represented Minerva, had not yet had a chance to offer up his rebuttal. It showed a bench that was surprisingly well prepared for what you might have thought was a pretty much technical down in the weeds issue.
And perhaps even more surprisingly, the bench was really engaged. In short, it was a good example of the Supreme Court doing what you'd hoped that it would -- usually do. They talked about, as I said, from several different perspectives. In the discussion of how the parties framed the issue, there was lots of talk about how settled assignor estoppel was, whether the courts were in court and lower courts had moved away from it or settled it more firmly in the series of cases that found some exceptions with it and abrogated a different doctrine called licensee estoppel.
There were questions, particularly from Justice Thomas, about whether other common law doctrines, particularly of claim and issue preclusion, would also be derogated from under the petitioner's theory. I think these were all pretty much expected from the briefing, but they were handled well, I thought, by both the attorneys and the justices.
More surprisingly, several of the justices raised issues of stare decisis. For example, if the law was settled as the respondent's claim, they ask could the Court now overrule it or is that something that Congress had to do. Justices Alito and Kagan seemed particularly interested in this large background issue. And in the case of some justices — I think maybe Justice Kagan in particular — it seemed that the shadow of stare decisis as a larger doctrine and its potential role in other cases might affect somewhat how the Court ends up looking at the case.
The Chief Justice asked two questions right off the block, and I think that those questions show the wide range of the inquiry. His first question was one of medi-policy that is taken back to fundamentals. He said, "Which parties' view was more consistent with promoting the progress of science and the useful arts?" This brought up the issue, among other things, of the proper perspective to take in the case -- sort of whether it should be ex post or ex ante. Ex post meaning invalidating bad patents -- bad patents are a bad thing so the law should strive to invalidate them. The ex ante perspective being more you have to worry about settling property rights.
The second question he asked was very doctrinal specific and practical. He asked Rob Hochman, who was representing Minerva, "How do you feel about the government's approach?" Several justices kept coming back to this, focusing on each of the two parts of the government's proposed test. Now, if you remember the first part was that the assignment had to involve "valuable consideration," and several justices seemed to be interested in whether employee inventors would be covered -- meaning inventors who worked for a corporation rather than inventors who should work by themselves. And what was most interesting about that is it seemed that it might cut both ways with different -- or different ways with different justices.
Justice Gorsuch, for example, thought that it was a good thing that employee inventors not be covered and sort of mentioned David and Goliath, things like that. He thought that this applying it to employee inventors might actually impede innovation. I think he was largely jogged in that direction by an amicus brief that was submitted -- a very good amicus brief that was submitted by a group of law professors. Some other justices — I'm thinking here of particularly the Chief Justice — seemed to think, well, if it is important, that employee inventors actually be covered. So we'll see which way that goes.
The other bit of the government's test was that the rights assigned had to be "materially identical to the claims that were later being litigated over." Here they request a lot of questions about how that would work in practice -- whether it would explode litigation, meaning that you'd have to have litigation within litigation about how similar the claims were. Justice Barrett, in particular, asked whether this involved the battle of the experts. Other justices thought that it was important maybe — Justice Kagan in particular — and was worried about claims expanding too much beyond what the assignor originally thought. And several were very interested in how much distance there was in practice between Minerva and the government's view -- so a lot of questions asked about that.
Several justices also asked law and economic questions concerning incentives that would be created by each of the rules. The Chief Justice's initial question, for example, did that. Justice Alito asked a question about whether Minerva's proposed rule, which would abolish assignor estoppel, could be contracted around. There were two justices whose thinking or questions surprised me a little because they were thinking very hard about change circumstances and how the law would change, and these larger questions of how you handle a doctrine that might be settled when everything around it, or some of the things around it, have moved.
For example, Justice Sotomayor asked questions about how this doctrine surrounding assignor estoppel had changed since it was adopted and recognized in the 1920s. She pointed out that issues that once sounded in claim construction now sounded more invalidity and how that might make -- that change in doctrinal analysis might make a difference. Justice Breyer, on the other hand, asked an even larger question, I think, about how changes in employment market, complexity of inventions, and the nature of invention in itself might, since the time of Westinghouse, the case that recognized — the Supreme Court recognized assignor estoppel — might make a difference.
I know the bottom line is what you're interested in. You all want to know whether I think the petitioner or respondents will win. If I can say with great certainty, yes. But joking aside, this is a case that's particularly going to be hard to predict the winners or the losers. There's a lot of interest in the United States' intermediate position, but on the other hand, there's a lot of really hard questioning it -- questioning about it.
Different justices seem to be taking different positions on different parts of it, and it's possible for the Court to adopt, I think, one part of it without adopting the others. So they could drop the valuable consideration thing, or at least say that that doesn't mean that employee inventors aren't covered, but adopt the material identical part. They are, technically, speaking logically independent. I think it's hard -- they might adopt the government's proposal but maybe not in the form that the government actually proposed it.
It looked like to me that Justice Gorsuch was the one who was most interested in abrogating the doctrine and Justice Alito was the one least interested in abrogating it, and the others were pretty much hard to read. But again, that's just an individual view from someone who's not an IP expert. My only advice -- bottom line, stay tuned -- can't offer you any more certainty than that. So I think that's a good place to end if you all -- if anyone has any kinds of questions, which I might be able to field, I'd be happy to talk.
Nick Marr: Okay, great. Let's open up the floor for questions now. One second here, Dan. Actually, it looks like our software platform might be a little bit funky right now.
Prof. Daniel Ortiz: Okay. I'm happy to stay by --
Nick Marr: Okay.
Prof. Daniel Ortiz: -- or go home for my own martini.
Nick Marr: Let's see. Well, you might have already addressed this but what -- I always like to ask, what was the most surprising part to you? Did people ask questions you didn't expect -- things like that?
Prof. Daniel Ortiz: The most surprising part for me, as I said, was the Chief Justice forgetting that someone hadn't had their turn — their final turn yet — and ending the argument. That was interesting, just in the kind of cute little way. For me, the most unexpected part of the argument was Justice Sotomayor and Justice Breyer's interest in how -- in Justice Sotomayor's case the surrounding doctrine had changed and how you take that into account in figuring out whether it's appropriate to retain, modify, or abolish a doctrine. That's a kind of very general medi-legal question.
Then Justice Breyer's question, I guess, is not so surprising for him since he often has a -- takes a kind of pragmatic or purpose approach. The idea -- it was a real interesting question -- the world has changed since 1920 when Chief Justice Taft recognized this doctrine. Inventions are different, things are much more complex, employment markets have changed -- all these things that bear in some way on at least how the Taft Court might have looked at it originally and how we should look at it now -- those are different. How should that affect our analysis? So I thought it's not really a "legal" question but, of course, it's something that you would think would be of importance to at least some of them.
Nick Marr: Great, and we actually do have a question.
Questioner 1: So thank you very much for this very interesting piece here. You mentioned these broad policy questions, particularly the law and economics. I was wondering if you could elaborate on that a little bit, particularly as it pertains to the economic consideration of "innovation" and how the Chief Justice understood how to think about measuring such a thing. Or if they had any sense of what they were talking about when it came to weighing the different -- yeah, thank you.
Prof. Daniel Ortiz: What the Chief Justice -- the question he was teeing up, or the issue he was teeing up, is an important one in IP and property law, generally, which is when you are evaluating any particular doctrine, to what extent is it appropriate to adopt an ex post rather than an ex ante perspective. So as he put it, we want to -- bad patents are in some sense a bad thing, and so there is a policy against granting monopoly rights that shouldn't be granted, and that's economically harmful, impedes the progress of invention, all of that.
So on the other hand, it's important for property rights to be settled because if property rights are unsettled people won't trade property and that will, to some point, potentially impede the progress of invention. Someone is thinking of making a trade, assigning patent rights. If the assignee believes that those patent rights aren't really settled, or less settled than they might be otherwise, presumably the trade is going to be less valuable kind of thing. So I think what he was doing was trying to say to what extent should we look at the central patent issue as laid out in the patent clause of the Constitution. Should we look at it ex post, ex ante? And how under each approach -- how would things weigh?
It's a very big and really interesting question. I don't think that the -- but the lawyers, I don't think, grappled with it at the level that he pitched it out, and they offered more particular responses on a much more focused level from each side. But I think what he was doing up there -- what he was doing in throwing out that first question was basically trying to get to the very bottom of it and say we have these two conflicting perspectives we could take on it, and each one would seem to point or was argued among the -- in the briefs that each one pointed in a somewhat different direction. So what do we do with that? How do we balance it? So it was a wonderful -- he was like going to the very bottom of the case. And he didn't use law in economic terms, but the analysis he was -- so the question he was asking is traditionally seen as one.
Questioner 1: Oh, I'm right there with you. I guess my question was as he was trying to "get to the bottom of it" it seemed to me to also imply some notion of some normative we'll call it framework to evaluate what's being done. There was no clean way in which he said doing it before or after or weighing these considerations -- he didn't give anything that was kind of substantive in that space. He just kind of suggested that the evaluation of the sequencing might have these other policy considerations. Is that what I should take from this?
Prof. Daniel Ortiz: Well, yeah. No, he was asking for the lawyer's advice on how we have these two different perspectives -- how do they weigh against each other kind of thing. I don't think he was tipping his hand that one was necessarily more appropriate than the other. But both, as you suggested, were substantive or normative positions, and that are just different ways of trying to think about what best promotes the progress of invention.
Questioner 1: But then again he never gives us any intuition of what he means by progress of invention.
Prof. Daniel Ortiz: Well, no. I guess he -- but I don't think he -- I mean, there was no indication that he had anything very specific. I think that was --
Questioner 1: Oh, okay.
Prof. Daniel Ortiz: -- on the 35,000 feet kind of view of it. You know, how are we going --
Prof. Daniel Ortiz: to get more and better -- if we -- we have two different perspectives to look at the issue from, which is more appropriate if our aim is actually to get better and more innovation?
Questioner 1: I see -- I see. I think I'm maybe making too fine a point on something that he probably just brushed over. Because it seemed that he was -- when you mentioned law and economics I said, "Okay, so exactly what he was pointing to." But I think I understand what you're saying. It's kind of like the way he teed it up.
Prof. Daniel Ortiz: Right.
Questioner 1: Thank you.
Prof. Daniel Ortiz: Yeah.
Nick Marr: With that, no questions in the queue right now. The floor is wide open. So Professor, nothing right now. If one pops up --
Nick Marr: -- I'll let you know, but I'll send it back to you in case -- either if you have anything more to add or if you want to wrap up a little bit early this afternoon then --
Prof. Daniel Ortiz: I'm happy to wrap it up early. The old adage is that there's no more dangerous place to stand than between undergraduates and free food. I think that's true as well as lawyers and their weekend preprandials.
Nick Marr: Okay, sounds good. Well, go ahead and close it out.
Prof. Daniel Ortiz: Okay. Well, no I don't actually have -- I've given my presentation. I'd be happy to entertain questions, but I don’t really have much to say. I thank everyone for taking the time to listen, and I hope some of you find the case as interesting as I do. And I'd be happy to talk with anyone individually, again, offering what little I can in terms of specialized perspective on this or talk with people after the decision comes down. Luckily, this time of year we won't have long to wait.
Nick Marr: Alrighty. Well, thanks very much, Professor. And on behalf of The Federalist Society, I will offer our thanks for the benefit of your valuable time and expertise today, also to our audience for calling in with your great questions. As a reminder, be checking your emails and our website for announcements about upcoming Teleforum calls, Zoom events, and more. But until next time, everyone have a great weekend, thanks very much for calling in. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.