Property, intangible

a blog about ownership of intellectual property rights and its licensing

When an Assignor is Not Estopped

Assignor estoppel is an equitable doctrine that precludes the assignor of a patent from later challenging the validity of the patent. The reach of the doctrine is limited, though, as explained in Borgwarner, Inc. v. Honeywell International, Inc. 

The patents-in-suit are for a titanium compressor wheel made by investment casting. In mid-2000, Plaintiff BorgWarner engaged an outside company, B & R Molding, to create dies to be used to make the wax patterns that are used to make the investments for casting the wheels.  Robinson, of B & R Molding, identified some problems with the wheel design that meant that the die wouldn’t release properly and recommended a redesign to make the tool “pullable.” Robinson told BorgWarner that he had created a toolset similar to the one BorgWarner wanted for a previous client.

BorgWarner incorporated the changes into its design.  In June, 2001, BorgWarner filed patent applications related to the wheel, naming two BorgWarner employees as the inventors.

Enter Honeywell, the defendant.  In 2003, before any patent issued, Honeywell approached Robinson and obtained an assignment of “whatever rights, titles, and/or interests [he] may have” in the various applications related to the patents-in-suit. Robinson had no problem signing the assignment; he thought any patent would be invalid because of his prior work and told Honeywell so. 

Honeywell ultimately get sued on the patents.  BorgWarner claimed that Honeywell was estopped from challenging the validity of the patents on the assignor estoppel theory.  Assignor estoppel applies not only to the assignor, but all those in privity with him or her, as Honeywell was with Robinson. 

The court didn’t buy the theory, though.  Why didn’t it work for BorgWarner?  The court explained why normally an assignor is not allowed to challenge the validity of what he or she has assigned away:

(1) to prevent unfairness and injustice; (2) to prevent one from benefiting from his own wrong; (3) to adopt the analogy of estoppel by deed in real estate; and (4) to adopt the analogy to a landlord-tenant relationship. “Courts that have expressed the estoppel doctrine in terms of unfairness and injustice have reasoned that an assignor should not be permitted to sell something and later to assert that what was sold is worthless, all to the detriment of the assignee.”

The court pointed out that the doctrine is to protect the interests of the assignee against subsequent challenges from the assignor.  If there was an assignor estoppel here, it would protect Honeywell from a claim by Robinson that what he assigned was worthless.  But that’s not the challenge here; in fact, Honeywell agrees with Robinson that the assignment is worthless because the patent is invalid. 

No easy out for BorgWarner here on a validity challenge, but nice try on a long shot.  BorgWarner’s claim that Robinson was estopped from challenging inventorship was also denied.

Borgwarner, Inc. v. Honeywell International, Inc.
, Civ. No. 1:07cv184 (W.D.N.C. Sept. 27, 2010).

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