Assignor Estoppel: Privity Is Key

In MAG Aerospace Indus., Inc. v. B/E Aerospace, Inc., Nos. 15-1370, -1426 (Fed. Cir. Mar. 23, 2016), the Federal Circuit affirmed summary judgment of no invalidity based on assignor estoppel.

Assignor estoppel prevents the assignor of a patent, or one in privity with an assignor, from attacking the patent’s validity. Privity, like assignor estoppel, is determined by balancing the equities.  In this case, one of the inventors, Mr. Pondelick, assigned the patents-in-suit to his former employer, who in turn assigned them to MAG. Mr. Pondelick later joined B/E.

At the district court, MAG asserted that assignor estoppel bars B/E from asserting the patents-in-suit are invalid, because Mr. Pondelick now works for B/E. In response, B/E argued that it should not be barred by assignor estoppel, because Mr. Pondelick joined B/E after the decision to develop the accused toilet was made and Mr. Pondelick had only a negligible financial interest in B/E.

The district court evaluated the parties’ arguments in light of the factors enumerated by the Federal Circuit in Shamrock Technologies, Inc. v. Medical Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990). Applying those factors, the district court found that (1) B/E availed itself of Mr. Pondelick’s knowledge to conduct the allegedly infringing activities, (2) Mr. Pondelick joined B/E to develop the accused toilets, and (3) he joined as the Director of Engineering and later became the VP and GM of the division responsible for manufacturing the accused toilets. Thus, the court found that Mr. Pondelick was in privity with B/E. Finding no abuse of discretion, the Federal Circuit affirmed.