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12 November 2018Patents

Arista v Cisco: Fed Circuit says no assignor estoppel at PTAB

The US Court of Appeals for the Federal Circuit has ruled that assignor estoppel does not exist in the context of validity proceedings at the Patent Trial and Appeal Board (PTAB), in a long-running dispute between Arista Networks and Cisco Systems.

Chief Circuit Judge Sharon Prost delivered the decision on behalf of the Federal Circuit on Friday, November 9.

The equitable doctrine of assignor estoppel prevents an inventor who has assigned their patent to another from attacking the validity of that patent at the PTAB.

In this case, a former technical advisor at telecoms manufacturer Cisco, David Cheriton, co-founded computer networking company Arista—a competitor of Cisco—and then sought to challenge the validity of a Cisco patent.

Cheriton invented the subject matter of patent number 7,340,597, which covers a communications invention related to secure information networks, while employed at Cisco.

His new company, Arista, petitioned for an inter partes review (IPR) of the ‘597 patent’s claims, and the PTAB invalidated some (but not all) of the challenged claims on the grounds of obviousness.

In instituting the IPR, the PTAB declined to apply the doctrine of assignor estoppel.

Arista appealed against the PTAB’s decision to uphold certain claims of the patent, and Cisco cross-appealed regarding Arista’s ability to challenge the patent’s validity.

In a related investigation, the US International Trade Commission (ITC) had held that assignor estoppel prevented Arista from challenging the validity of the ‘597 patent. Cisco claimed that allowing the doctrine at the ITC but not at the PTAB “creates an inconsistency”.

Meanwhile, Arista argued that the PTAB had erred in its construction of the term ‘broadcast’ in relation to the patent’s claims, leading the board to “improperly reject” Arista’s obviousness challenge to certain claims of the ‘597 patent.

On Friday, the Federal Circuit agreed with Arista that “the board conducted its patentability analysis under an incorrect claim construction”, and remanded the matter for the board to re-consider.

However, it rejected Cisco’s argument that the board’s decision to invalidate certain claims should be reversed due to the doctrine of assignor estoppel.

Prost said that the language of the America Invents Act (AIA) “unambiguously dictates that assignor estoppel has no place in IPR proceedings”.

The “plain language” of the statute means than an assignor who is no longer the owner of a patent, such as Arista, may file an IPR petition in relation to that patent, such as the ‘597 patent, Prost said.

She added that the statute governing the ITC explicitly provides for equitable defences, such as assignor estoppel, whereas the AIA does not.

The Federal Circuit reversed and remanded the PTAB’s decision in relation to Arista’s appeal, and affirmed the board’s decision relating to assignor estoppel doctrine in Cisco’s cross-appeal.

But as the rivals reached a global settlement in relation to their IP conflicts (which included patents and copyright) in August, it is unclear whether the parties will litigate the PTAB matter any further.

The settlement included Arista paying Cisco $400 million in exchange for Cisco dropping the patent infringement complaints it made against Arista, which also dropped its antitrust claims against Cisco as part of the deal.

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