Court Opinion

ID: 9477768
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:30:35.641022+00
Date Added: 2024-06-11T17:46:02.085359
License: Public Domain

PAULINE NEWMAN, Circuit Judge,
concurring.
I agree with the court’s decision that the equities in this case favor imposing estop-pel on the assignor, and with the court’s recognition that elements analogous to es-toppel by deed may also be considered. However, I believe that the relationship between assignee and assignor is preferably treated under the laws of contract and transfers of property,1 rather than on a case by case equitable evaluation.
Assignor-assignee cases are typified by the facts at bar: the validity of the patent is attacked by the inventor/assignor who, having received the bargained-for consideration for the assignment, now seeks to impeach the invention (by challenging the validity of the patent) in order to use the subject matter for his own gain. Our decision today does indeed help to clarify the issues, but I write separately to state my belief that it is time to reaffirm the principle of assignor estoppel; that is, to reinstate assignor estoppel as the general rule rather than the exception. Such rule would place on the assignor/challenger the burden of proving that an apparently valid deed of assignment should not be enforced in accordance with the applicable laws of contracts and property transfers, rather than placing on the assignee the burden of proving that equity is on its side. See the discussion, in the majority opinion, of Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342, 45 S.Ct. 117, 69 L.Ed. 316 (1924) and other cases showing various policy and legal aspects that have been considered by courts.
The situation of the appellant Dr. Welter typifies modern industrial research environments, where inventor/assignors are supported by the assignee in salary, laboratory, staff, and equipment. Equally typical is the circumstance that subsequent investment by the assignee, in the development and commercialization of the invention, can dwarf the cost of making the invention itself. Much attention has been given to encouraging investment in research and commercialization of new products, and in providing incentives to offset the risk inherent in such activity. See, e.g., Report of the Advisory Committee on Industrial Innovation, U.S. Department of Commerce (1979). Giving realistic weight to our national interest in strengthening incentives for innovation, I believe that both public policy and experience weigh on the side of reaffirming the contractual integrity of patent assignments.
Students of the public policy invoked by the Supreme Court when it eliminated licensee estoppel in Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 *1228(1969), have acquired a cynical view of the fruits of that policy. See, e.g., Dreyfuss, Dethroning Lear: Licensee Estoppel and the Incentive to Innovate, 72 Va.L.Rev. 677 (1986). The policy stated in Lear—the policy that overrode and negated the contractual integrity of the license agreement—is to achieve "full and free competition in the use of ideas which are in reality a part of the public domain”. 395 U.S. at 670. But even Lear, the licensee, did not argue for any anticipated public advantage such as lower prices to the public. The only public benefit asserted, and obtained, was the invalidation of Adkins’ apparently improvidently granted patent. The private benefit, of course, was the elimination of Lear’s royalty obligation while it continued the manufacture of the gyroscope it had licensed from Adkins. See generally Milgrim, Sears to Lear to Painton: Of Whales and Other Matters, 46 N.Y.U.L. Rev. 17 (1971).
The Court in Lear apparently believed that “full and free competition” ensues when a patent is eliminated from the rolls. The experience of the marketplace is otherwise. The usual incentive to the patent licensee in taking the license is, and always has been, the opportunity for profit. If the destruction of a licensed patent would not enhance profits but instead facilitate the entry of competitors, this would surely be weighed by a licensee before embarking on a Lear-authorized challenge to the licensed patent. See Dreyfuss at 698-700 (discussing the value of lead time to a licensee). It is common experience — and common sense — that challenges to patent validity by either licensees or assignors, albeit serving the private interest of the challenger, carry scant public benefit. The nobler expectations of Lear have few testimonials.
The past rejection of assignor estoppel appears to be based on respect for Lear and a reluctance to depart from the basic policy as to licensee estoppel expressed therein. Yet, as the majority observed, the policy considerations are not identical. In my view they are sufficiently different that rehabilitation of the doctrine of assignor estoppel is merited. Placing legal emphasis on the property and transfer aspects of patent assignments does not exclude equitable considerations, and the usual defenses to the contract of assignment, e.g. fraud or failure of consideration, may always be raised by an assignor. However, I know of no other property right that is treated by law as exempt from the normal precepts of commercial bargain and sale. We should repair this gap between outmoded theory and market reality.
Patent rights are indeed vested with strong elements of public interest, but this does not exclude giving due weight to all the interests involved. Thus although I join the court’s judgment, I would decline to give sustenance to a theory of public policy that both weakens the rule of law and disserves the national interest.

. See 35 U.S.C. 261: Subject to the provisions of this title, a patent shall have the attributes of personal property.