## Facts

- Dr. Clarence Joseph Welter worked for Diamond’s predecessor from 1959 to 1974 and invented a swine vaccine against transmissible gastroenteritis (TGE) during that employment.
- Welter executed a written assignment transferring all patent rights arising from his TGE vaccine patent application to Diamond’s predecessor for valuable consideration.
- The application issued as three patents, which were owned by Diamond Scientific Co. as successor in interest.
- After leaving Diamond, Welter formed Ambico, Inc., which manufactured and sold a TGE vaccine that Diamond alleged infringed the three patents.
- Diamond sued Welter and Ambico for patent infringement.
- Defendants asserted affirmative defenses that the patents were invalid under 35 U.S.C. §§ 102, 103, and 112.
- Diamond moved to strike the invalidity defenses based on assignor estoppel; the district court granted the motion and certified an interlocutory appeal.

## Issues

1. Whether assignor estoppel bars an inventor who assigned patent rights from later challenging the validity of the assigned patents when sued for infringement by the assignee.
2. Whether assignor estoppel also bars invalidity challenges by a company in privity with the assignor-inventor.

## Decision

- The Federal Circuit affirmed the order striking the invalidity defenses.
- The court held that assignor estoppel barred Welter, as assignor-inventor, from asserting invalidity of the patents he assigned.
- The court held that Ambico was in privity with Welter and was likewise barred from asserting invalidity.
- The court rejected the argument that post-*Lear* public policy against insulating invalid patents required elimination of assignor estoppel in this setting.

## Legal Principles

- Assignor estoppel is an equitable doctrine preventing an assignor of patent rights from later contending, in litigation against the assignee, that the assigned patent is invalid.
- The doctrine extends to parties in privity with the assignor, including closely related entities formed or controlled by the assignor that stand in the assignor’s shoes in the infringement dispute.
- In applying assignor estoppel, courts weigh equitable considerations, including the assignor’s receipt of value for the assignment and the unfairness of permitting the assignor to sell patent rights and later claim they were worthless through invalidity defenses.
- Public policy favoring challenges to invalid patents does not categorically override assignor estoppel; the doctrine may remain available where equitable considerations in the assignor–assignee relationship predominate.

## Conclusion

The Federal Circuit held that an inventor who assigns patent rights for value, and a company in privity with him, may be estopped from asserting patent invalidity defenses in an infringement action brought by the assignee, and it affirmed the striking of invalidity defenses under §§ 102, 103, and 112.


Diamond Sci. Co. v. Ambico, Inc., 848 F.2d 1220 (Fed. Cir. 1988)