University of Minnesota v. LSI Corp. (Fed. Cir. 2019)

As expected based upon the Federal Circuit’s prior rulings on tribal immunity, the court has now also ruled that 11th Amendment Sovereign Immunity does not protect patents owned by individual states (such as Minnesota) from being cancelled via inter partes review (IPR).

We conclude that state sovereign immunity does not apply to [IPR] proceedings.

What does this mean — state owned patents can more easily be challenged.

By its terms, the 11th Amendment prohibits US (Federal ) courts from exercising power over suits “against one of the United States” that are brought by Citizens of another State or a Foreign State.

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.

Note, that the 11th Amendments does not prohibit actions against one State brought on behalf of another States or by the Federal Gov’t. Note also that the States also have inherent sovereign immunity that “neither derives from nor is limited by, the terms of the Eleventh Amendment.” Alden v. Maine, 527 U.S. 706, 713 (1999).

Although the terms of the 11th amendment appear to be directed to Article III court activities, immunity has also been found in administrative cases that the courts finds to be “similar to court adjudications.”

In its setup for this decision, the Federal Circuit walked through the patenting process — noting the many flaws and high likelihood that non-patentable claims are allowed to be patented. That foundation then highlights the need for further administrative action in fixing those bad patents — first reexaminations and reissues, and now inter partes review. Because this deeper look is costly, it makes sense to only target cases under dispute — fix the important patents and don’t worry about the rest. In other words, IPR proceedings should be seen as an extension of the examination process, not a court proceeding. The court explains briefly that “IPR represents the sovereign’s reconsideration of the initial patent grant.”

In the Allergan case, the Federal Circuit previously held that Native American tribal immunity does not protect tribal-owned patents from IPR challenges. Here, the court concluded that “the differences between state and tribal sovereign immunity do not warrant a different result than in Saint Regis. We therefore conclude that state sovereign immunity does not apply to IPR proceedings.”

= = = = =

In an interesting statement, the three judges on the panel – Judges Dyk, Wallach, and Hughes — added a non-binding set of “additional views” to their main opinion that identify am IPR proceeding as “an in rem proceeding to which sovereign immunity does not apply.” The court does not explain why it chose to include this unanimous statement as “additional views” rather than as the holding.