Whether you are a state university or a company seeking to license or potentially challenge a state university patent, it has become increasingly important to understand how a state university’s sovereign immunity may shield the university’s patents from challenge in either a district court or at the Patent Trial and Appeal Board (PTAB).
The 11th Amendment states:
“The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or by citizens or subjects of any foreign state.”
The courts have interpreted the 11th Amendment to provide sovereign immunity to public universities that act as “arms of the state.” With state universities increasingly seeking to commercialize their research through technology transfer operations, the courts and PTAB recently have been called upon to determine if and how this sovereign immunity applies to state university patents.
In several recent PTAB cases, the PTAB found that state university patents are immune to challenge in inter partes review (IPR) proceedings. Since the passing of the American Invents Act, IPR proceedings have become a popular venue for invalidating patent claims given their lower cost and other advantages over district court litigation. In Covidien LP v. University of Florida Research Foundation Inc., IPR2016-1274 (PTAB Jan. 25, 2017), the PTAB held that, because of state sovereign immunity under the 11th Amendment, patents assigned to certain state universities cannot be challenged in IPR proceedings. The panel reasoned that the similar nature between IPRs and civil litigation was enough to afford the University of Florida Research Foundation immunity under the 11th Amendment. Likewise, in NeoChord, Inc. v. Univ. of Md., Baltimore, IPR2016-00208 (PTAB May 23, 2017), the PTAB dismissed Petitioner NeoChord’s instituted IPR proceeding after the University of Maryland, Baltimore (UMB) asserted sovereign immunity. The PTAB again reasoned that IPR proceedings were an appropriate venue for the assertion of 11th Amendment sovereign immunity and was unpersuaded by NeoChord’s arguments that UMB’s actions (i.e., briefing a response to the IPR petition) amounted to a waiver of the immunity.
Although the courts have found that sovereign immunity does apply to certain state university patents, courts are willing to find a waiver of this immunity in circumstances where a state university enforces its patents. Similarly, in Ericsson Inc. and Telefonaktiebolaget LM Ericsson v. Regents of the University of Minnesota, IPR2017-01186, IPR2017-01197, IPR2017-01200, IPR2017-01213, IPR2017-01214, IPR2017-01219 (PTAB Dec. 19, 2017), Ericsson sought review of a series of patents owned by the University of Minnesota after the University first sued Ericsson in district court for patent infringement. When Ericsson sought IPR review, the University moved to dismiss the IPR proceeding based on 11th amendment sovereign immunity. In finding that the University of Minnesota waived its immunity, the PTAB rejected arguments that the waiver should only apply to the district court where the University of Minnesota filed its action and reasoned that waiver is based on the need to ensure that the state does not selectively use its immunity as a litigation advantage.
Although the decisions in Covidien and NeoChord were not appealed to the Federal Circuit, the decision in Ericsson was appealed in February 2018. The degree to which the Federal Circuit will weigh in on the issue remains to be seen, but for the time being it appears that sovereign immunity it likely to have a significant impact on challenging the validity of certain state university patents making them potentially more valuable in some ways than other patents.
While the courts continue to address the issue, on November 7, 2017, the House Subcommittee on Courts, Intellectual Property, and the Internet (a subcommittee of the House Judiciary Committee) held a hearing on the issue of sovereign immunity in IPR proceedings. See https://judiciary.house.gov/hearing/sovereign-immunity-intellectual-property-system/. While the hearing mainly dealt with the related issue of tribal sovereign immunity in IPR proceedings, tribal sovereign immunity has some similarities to state sovereign immunity. Moreover, state sovereign immunity has Constitutional roots, whereas tribal sovereign immunity does not. Given these roots, it remains to be seen whether any Congressional action curtailing the use of state sovereign immunity in IPR proceedings would pass Constitutional muster, particularly in view of previous Supreme Court precedent. See e.g., Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627 (1999).
In the years to come, it will be interesting to see how courts balance the sovereign immunity afforded to state university patent holders against the “strong” federal policy, set forth in Supreme Court cases such as Lear v. Atkins, that specious patents should be invalidated so as to permit use of technology that belongs in the public domain. For the time being, it appears that courts may broadly and strictly enforce waiver of the immunity. Only time will tell if courts will be forced to revisit their interpretation of the 11th amendment.
Andrus Intellectual Property Law is pleased to announce that Christopher R. Liro has become a partner in the firm. Chris focuses his practice on intellectual property litigation in federal district and appellate courts, administrative proceedings before the PTAB, TTAB and ITC, and counseling clients in transactional matters, including licenses, joint development agreements, and dispute resolution. Chris is the Chairman of the Board of Directors of the State Bar of Wisconsin Intellectual Property and Technology Law Section.
Andrus was proud to once again sponsor the Milwaukee Bar Association's Judges Night event held February 6, 2018 at the Grain Exchange. The popular event allows MBA members an opportunity to interact with members of the federal and state judiciary as well as with other bar members.
In addition, Andrus was a sponsor of the #MemberMashup held February 22, 2018 at Nine Below. The MBA #MemberMashup is a networking series geared towards engaging new attorneys and connecting them to the Milwaukee legal community.
Check out future MBA events here.
In March, Andrus employees participated in a Workplace Giving Campaign in support of the United Performing Arts Fund (UPAF).