To Avoid an Allegation that a Patent Assignor Is Estopped from Arguing that an Asserted Patent Is Invalid, the Assignor Estoppel Defense Should Be Disclosed in a Timely Fashion or the Late Disclosure Should be Substantially Justified and Harmless

Abstract

When deciding if a party should be precluded from asserting assignor estoppel within two weeks of the close of fact discovery, a Massachusetts Court looked to Federal Rules of Civil Procedure 26 and 37 to decide if the defense was timely disclosed and, if not, whether the late disclosure was substantially justified or harmless. The court held that the defense was timely disclosed under Rule 26 and substantially justified and harmless under Rule 37.

Background

Abiomed sought a declaratory judgment that its “Impella” line of intravascular blood pumps did not infringe Maquet’s patent. (Abiomed initially filed declaratory judgment on multiple Maquet patents, but currently only one patent at issue remains.)

Maquet counterclaimed that Abiomed infringed its patent, and Abiomed responded by arguing that the asserted patent claims were invalid.
Maquet then argued that Abiomed was barred from a defense that the claims were invalid because of the assignor estoppel doctrine that prevents the assignor of a patent from asserting that the patent is invalid.

The parties had already filed motions for summary judgment on validity, where Maquet argued that Abiomed is precluded from challenging the validity of Maquet’s asserted claims.

Abiomed filed a separate motion to (1) preclude Maquet from asserting an assignor estoppel defense; (2) prevent Maquet from seeking additional discovery on its assignor estoppel theory; and (3) strike Maquet’s letter to the court concerning the theory. The court denied the motion.

The Abiomed Decision

The court explained that assignor estoppel is an equitable remedy prohibiting an assignor of a patent, such as an inventor or one in privity with an assignor, such as an inventor’s employer, from challenging the validity of a patent when the assignee asserts a patent infringement claim against the assignor or one in privity with the assignor.

Dr. Walid Abdoul-Hosn, a named inventor of the asserted patent, assigned the patent to Maquet while he worked at Maquet. Dr. Abdoul-Hosn left Maquet and began working for Abiomed in 2007, about a year after the patent was granted. Abiomed first sold the allegedly infringing article, the Impella, in the U.S. in 2008.

Maquet argued that Dr. Abdoul-Hosn was in privity with Abiomed because he helped design the infringing elements of the Impella, and therefore assignor estoppel should apply, preventing Abiomed from challenging the validity of the asserted patent. The dispute here, however, did not involve the merits of the assignor estoppel claim. Instead, the dispute centered on whether Maquet should be able to assert assignor estoppel under Rules 26 and 37 of the Federal Rules of Civil Procedure. The court held that Maquet did not violate Rule 26 and would not have been precluded under Rule 37, allowing them to assert assignor estoppel.

Rule 26 requires a party to disclose the name, contact information, and knowledgeable subjects of any witness likely to have discoverable information relating to its claims or defenses and to supplement the disclosures, as necessary.

Maquet disclosed Dr. Abdoul-Hosn on its initial and subsequent disclosures. Additionally, four days after Dr. Abdoul-Hosn’s deposition, Maquet informed Abiomed by email that it intended to assert assignor estoppel. On the last day of fact discovery, Maquet supplemented an interrogatory response to include its assertion of assignor estoppel. Therefore, the court held that Maquet did not violate Rule 26, timely disclosing Dr. Abdoul-Hosn and its assignor estoppel defense.

Even though the court held that Maquet did not violate Rule 26, it went on to opine on the merits of Rule 37.

Rule 37 states that a witness and/or the information that they were to provide can be precluded if a party violates Rule 26 unless the failure was substantially justified or harmless. In this case, the court held that even if Maquet’s notice under Rule 26 was late, it would have been substantially justified and harmless. It would have been substantially justified because Marquet learned of Dr. Abdoul-Hosn’s involvement in the research, design, development, and manufacture of the Impella during his deposition, just over two weeks from the close of fact discovery. It was harmless because Abiomed would not have suffered significant prejudice from the late disclosure.

Further, the court reasoned that Abiomed was not significantly prejudiced because fact and expert discovery was closed, Dr. Abdoul-Hosn had been deposed, Abiomed did not seek additional discovery related to assignor estoppel, and Maquet’s motion to compel additional discovery relating to assignor estoppel had been denied. Additionally, Abiomed was able to cite substantial evidence refuting that it was in privity with Dr. Abdoul-Hosn in its rebuttal to Marquet’s motion for summary judgment on validity, which included its assignor estoppel claim. Thus, the court held that even if Maquet had violated Rule 26, preclusion was not necessary under Rule 37.

Strategy and Conclusion

To avoid allegations that the assignor estoppel defense has been waived it is recommended to assert the defense as soon as information indicates the defense is available.

Further Information

The Abiomed decision can be found here.