Semiconductor Energy Laboratory v. Yujiro Nagata: Assignor Estoppel is Affirmative Defense, No Supplemental Jurisdiction

Semiconductor Energy Laboratory (“SEL”) appealed the decision of the District Court of California that dismissed with prejudice SEL’s complaint versus Yujiro Nagata (“Nagata”) due to a violation of Fed. R. Civ. P. 12(b)(1) — lack of subject matter jurisdiction. The court also declined to exercise supplemental jurisdiction over a number of state law claims. Ultimately, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the decision of the district court stating in part: “[b]ecause the district court did not err in holding that there is no federal cause of action based on assignor estoppel and did not abuse its discretion in declining supplemental jurisdiction over the state law claims, we affirm.”  See Semiconductor Energy Laboratory Co., v. Yujiro Nagata.


SEL is now the owner of United States Patent 6,900,463 (“’463 patent”). In 1991, Dr. Yujiro Nagata, who is a named co-inventor of the ‘463 patent, assigned his rights to applications and patents related to the ‘463 to SEL’s founder Dr. Shunpei Yamazaki. Subsequently, in 2009, SEL initiated a patent infringement suit against Samsung, Inc., asserting the ‘463 patent (among others) in the District Court for the Western District of Wisconsin. Shortly after brining the suit, SEL learned that Nagata agreed to assist Samsung in the suit, as a fact witness. Although the suit eventually settled, SEL contended that it was for “less money than it would have otherwise [received]” had Mr. Nagata not been involved.

SEL filed a lawsuit against Nagata in the Northern District of California. In its amended complaint SEL alleged the following against Nagata: (1) Declaratory Judgment – Violation of Federal Patent Law, (2) Declaratory Judgment – Anticipatory Breach of Contract, (3) Slander of Title, (4) Quiet Title and (5) Unjust Enrichment.  SEL sought a declaratory judgment, which happened to be its only supposed claim of a federal cause of action, and was based squarely on the doctrine of assignor estoppel. SEL alleged “when Nagata signed the Declarations and Assignments, he intentionally relinquished any right to attack the enforceability of the patents subject to his assignment by virtue of Federal patent law estopping such attacks.” However, the CAFC agreed with the District Court and disagreed with SEL. The CAFC referenced precedent that showed that “assignor estoppel” is an equitable “doctrine that prohibits an assignor of a patent or one in privity with him, from attacking the validity of the patent when he is sued for infringement by the assignee.” (Emphasis Added).

SEL alleged that by rejecting his assignment relating the ‘463 patent during the Wisconsin litigation, that Nagata violated federal patent law. Conversely, Nagata insisted that federal law does not recognize an affirmative cause of action based allegedly on assignor estoppel. The CAFC agreed with Nagata, stating that because assignor estoppel is a form of estoppel that it is therefore an affirmative defense pursuant to Fed. R. Civ. P. 8(c)(1), not a claim for relief.

The basic premise of assignor estoppel is that the assignor cannot defend or counterclaim the patent he assigned is invalid or unenforceable. The district court stated  “it simply makes no sense to use a doctrine intended to prevent a party from advancing a particular claim or defense in a legal case as a way to sue a non-party who has made no claim or defense in a legal case.” From the wording of the district court opinion it seems as though perhaps SEL might have had better luck if Nagata was actually a party in the suit, rather than an expert witness.  The CAFC echoed the sentiments of the lower court by saying “we are not inclined to transform the shield into a sword. The relief requested by SEL is akin to seeking a declaratory judgment of patent validity, which is not a viable cause of action.”

As mentioned in the opinion, perhaps a more appropriate remedy for SEL would have been to question or attack the credibility of Nagata during the Wisconsin litigation during cross-examination. The CAFC made its ultimate conclusion on the side of Nagata by pointing out that assignor estoppel doctrine would not bar Nagata’s testimony because “he was neither in privity with the defendant nor a party to the Wisconsin proceedings; and his conduct in rejecting his signature on the assignment documents in that case merely challenged the veracity of those underlying contracts, not the validity of the ‘463 patent itself.”

In accordance with 28 U.S.C. § 1367, the CAFC affirmed the district court’s ruling of rejecting supplemental jurisdiction and agreed that the district court did not abuse its discretion.

The case was before Circuit Judges Lourie, Bryson and Wallach – with Lourie writing the majority opinion.



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