Article by Clyde Shuman
The U.S. Court of Appeals for the Federal Circuit, in a precedential opinion, held that judicial estoppel did not prevent the patent owner from relisting a previously removed inventor. As a result, the Court vacated the district court’s judgment o patent invalidity based on judicial estoppel and remanded for further proceedings. Egenera, Inc. v. Cisco Systems, Inc., Appeal Nos. 2019-2015, 2019-2387 (Fed. Cir., Aug. 28, 2020).
By way of background, Egenera owned a patent which claimed a platform for automatically deploying a scalable and reconfigurable virtual network. Egenera sued Cisco in 2016, alleging that Cisco’s enterprise server systems infringe various claims the patent. Cisco responded by filing a petition for inter partes review (“IPR”) challenging all of the patent’s claims.
According to Egenera, upon reviewing the asserted patent after Cisco’s IPR petition, it realized that all claim limitations had been conceived before one listed inventor had started working there. As a result, one month after responding to the IPR petition, Egenera separately petitioned the PTO to remove the individual as a listed inventor. (By that point, the particular individual, as well as most of the named inventors, no longer worked for Egenera.)
Following a three-day bench trial on inventorship, the district court found for Cisco that the individual in question had conceived a key part of the claimed invention. The court further held that Egenera was judicially estopped from using 35 U.S.C. § 256 to restore the individual as an inventor. The district court therefore held that the asserted patent was invalid for improper inventorship.
Egenera appealed.[1]
On appeal, the Federal Circuit first asked whether Egenera could correct the improper inventorship, even absent judicial estoppel. The Court noted that correction via § 256 is permissible if “through error a person is named . . . as the inventor, or through error an inventor is not named.” (The district court had reasoned, in a footnote, that the individual’s removal by petition was “a considered act that is unlikely to qualify as an omission ‘through error.’”)
The Court noted that, per its precedent, “error” in § 256 includes “all varieties of mistakes—honest and dishonest”—rather than only unintentional inaccuracy. “Error” has been construed to “embrace more than simply honest mistakes.” The Court described § 256 as “a savings provision, functioning to prevent invalidation when correction is available.”
The Court rejected Cisco’s argument that the cited precedent was not applicable in light of the amendment to § 256 under the America Invents Act (“AIA”). Although the Court had not yet addressed the impact of the AIA on its § 256 precedent, it found Cisco’s interpretation contrary to the statutory language, the structure of the AIA and the AIA’s legislative history.
The Court held that the AIA did not narrow the meaning of “error.” Accordingly, per the Court, § 256 does not exclude “considered acts,” or even “deceptive intention,” from the meaning of “error.” “Error” is simply the incorrect listing of inventors. The Court concluded that the omission of the individual as an inventor was “error.”
The Court then addressed whether judicial estoppel was applicable, holding that, under the facts, the criteria for judicial estoppel were not met.
The Court separately addressed the factors to be considered in determining whether judicial estoppel applies, as delineated by the U.S. Supreme Court in New Hampshire v. Maine, 532 U.S. 742, 750–51 (2001): (1) whether a party’s earlier and later positions are “clearly inconsistent”—i.e., “mutually exclusive”; (2) whether the party “succeeded in persuading a court to accept” the earlier position; and (3) whether the party would “derive an unfair advantage or impose an unfair detriment” on the other side if not estopped.
With respect to the first New Hampshire factor, the Court found that, Egenera did not advance any “clearly inconsistent” positions. Referring to Egenera’s PTO petition to delete the individual as an inventor followed by asking the district court to add him back in light of the claim construction, the Federal Circuit held that the district court’s conclusion that the PTO petition and subsequent suggestion to relist the individual were clearly inconsistent, was incorrect. Per the Court, “We do not think that multiple corrections under § 256 are per se ‘mutually exclusive.’ In any event, the district court’s intervening claim-construction and inventorship determinations further justify any seeming inconsistency.”
The Court noted that Egenera’s PTO petition was consistent with its presumption of certain claim construction. Again, per the Court, “Indeed, it may well be that [the individual] would not be an inventor under Egenera’s preferred construction; but inventorship under that claim construction was not decided. And Egenera consistently protested the [ ] construction both at the district court and on appeal—a construction that the inventorship question was directly predicated on.” Accordingly, per the Court, at least due to the intervening claim construction, it was not “mutually exclusive” to again request formal correction of inventorship and the district court thus erred in discerning “clearly inconsistent” positions.
For the second New Hampshire factor, the Court found that Egenera did not succeed in persuading a court or court-like tribunal to accept its first position on inventorship. The Court found that the PTO petition did not include any underlying statements of fact, but merely said that the individual’s listing as an inventor was erroneous and that all the co-listed inventors agreed or did not disagree. The Court further found that “[t]he PTO did not cast these statements into the crucible of examination. Rather, it agreed that all the signatures and fees were in order.
The Court noted that, under 37 C.F.R. § 1.324(b), the PTO examines a request only for the presence of supporting statements and the required fee. No substantive examination occurs, and the PTO does not consider the substantive adequacy of the petition.
Accordingly, even though it agreed that judicial estoppel can occur in an administrative tribunal, the Court disagreed that a § 256 petition, absent more, counts as “persuasion” of a “court” for judicial-estoppel purposes.
The Court took pains to point out that its determination was narrow. “We do not hold that judicial estoppel cannot apply to statements made during substantive prosecution, ex parte reexamination, or other quasi-adjudicatory proceedings—an issue not before us. And we do not go so far as to say that other theories of estoppel cannot apply to ministerial filings or representations before the PTO. But judicial estoppel cannot be stretched beyond persuading a tribunal, and it does not apply here.”
For the third New Hampshire factor, the Court found that Egenera would gain no unfair advantage, and Cisco would suffer no unfair prejudice, if judicial estoppel were not applied. The Court rejected Cisco’s argument that Egenera’s disavowal of the individual’s inventorship enabled it to argue for an earlier priority date to bolster its IPR and litigation position, noting that the PTAB considered Cisco’s prior art without addressing Egenera’s priority arguments. The Court also found that Cisco failed to explain how any advantage conferred on Egenera by failure to estop would be “unfair” under the facts. The Court also noted that even the district court did not identify any unfair prejudice in refusing to estop.
The Court also rejected Cisco’s dismisses the third New Hampshire factor as purely optional under First Circuit law, noting what it called “abundant First Circuit precedent signifying the importance of this factor.”
Concluding the Court found that the district court legally erred as to each New Hampshire factor. The Court held that the district court abused its discretion by applying judicial estoppel.
[1] Egenera also appealed the district court’s claim construction, which the Federal Circuit affirmed. That portion of the decision is not discussed.
