Prestigious research universities that develop their own patents appear no more likely to enjoy sovereign immunity at the Patent and Trademark Office than Indian tribes that buy theirs.
The U.S. Court of Appeals for the Federal Circuit signaled strongly Monday that its same rationale for turning away Native American sovereign immunity last summer in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals will apply equally to state sovereign immunity.
Wolf, Greenfield & Sacks partner Michael Albert argued for the University of Minnesota that state sovereign immunity is of constitutional dimension and must shield state-owned patents from the administrative review mechanism established by the 2011 America Invents Act.. Under Supreme Court decisions such as Federal Maritime Commission v. South Carolina Airports Authority, states “have constitutional immunity from any adversarial adjudications to which they didn’t consent at the founding,” he argued.
Neither Dyk nor Judges Evan Wallach and Todd Hughes sounded persuaded.
“Your problem is that we went through all this in Saint Regis, and distinguished the FMC case, and held that there was no tribal sovereign immunity,” Dyk told him. “I’m having difficulty seeing why the reasoning of that, while limited in context to tribal sovereign immunity, doesn’t apply equally to state sovereign immunity.”
Whatever the court decides in Regents of the University of Minnesota v. LSI could have profound impact on university patenting. The attorneys general of 14 states signed an amicus brief supporting Minnesota. The universities of Florida, Texas, Michigan and Utah are among those that have had patents subjected to inter partes review.
Monday’s case began when the University of Minnesota sued four different wireless service providers in Minnesota federal court, accusing their 4G LTE technology of infringing a handful of university patents. Ericsson Inc. intervened because it supplied the equipment. Two years later, the university brought separate suits against LSI Corp. and Avago Technologies.
Ericsson, LSI and Avago petitioned for inter partes review at the Patent Trial and Appeal Board. The university invoked its sovereign immunity and sought to dismiss the IPRs. The PTAB refused. Then-Chief Judge David Ruschke wrote for the board that the university had waived its sovereign immunity by initiating the lawsuits.
On Monday, Albert argued that waiver should not apply because the IPRs are separate legal proceedings from the district court suits. He ran into continuous pushback from the Federal Circuit panel.
Wallach pointed out that the university is engaging in business activities. “Under traditional notions of fair play, if a state sues civilly in the patent context, why shouldn’t it be put to the choice between allowing all lawful means” of defense, he asked.
“Even-handedness between businesses and states is not to be expected” under the U.S. Supreme Court’s sovereign immunity caselaw, Albert argued.
Dyk argued that the state is under no compulsion to appear before the PTAB—the PTAB can review a patent without the owner’s participation. Albert said that would expose the state to a default judgment, but Judge Todd Hughes disagreed.
“The director still has to make the threshold determination to institute the IPR in the first place, and then the PTAB still has to make the determination that the patents aren’t valid,” Hughes said. “You don’t default by not responding.”
More troubling for the university, the judges suggested repeatedly the outcome is controlled by Saint Regis, which held that IPRs are not sufficiently similar to private civil litigation to warrant sovereign immunity.
Albert argued that the U.S. Supreme Court’s decision last year in SAS v. Iancu put that notion to rest, but Hughes said Oil States v. Greene’s Energy, which described IPRs as an agency’s second look at a decision to grant a patent, was more on point because the case dealt with constitutional issues.
By contrast, Kilpatrick Townsend & Stockton partner Kristopher Reed enjoyed smoother sailing. “As you intimated in your questions, the Saint Regis decision decides this appeal,” he told the court.
The judges in that case considered Minnesota’s leading precedent, FMC, “looked right at the decision and still concluded IPR is more like an agency enforcement action than a civil suit brought by a private party.”
“We relied very heavily on FMC in Saint Regis,” Wallach agreed.
DOJ attorney Courtney Dixon kept her remarks brief. “When the director of the USPTO initiates inter partes review, it’s the United States acting in its role as a superior sovereign to reconsider its prior grant of a patent,” she said. “Neither states nor Indian tribes have immunity against the United States, so we think a clear application of Saint Regis controls here.”
The Saint Regis Mohawk Tribe is currently asking the U.S. Supreme Court to review the Federal Circuit’s tribal immunity decision.