Sovereign Immunity’s Manifest Destiny just took a significant detour – to nowhere.
by: David Pridham | December 19, 2017
While the the patent industry quietly winds itself down to the inevitable year-end Holiday lull, our esteemed colleagues at the Patent Trial and Appeal Board (PTAB) just swung a wrecking ball through the office party festivities of the Sovereign Immunity crowd.
Earlier today, the PTAB ruled in Ericsson vs. Regents of the University of Minnesota that the State of Minnesota’s motion to dismiss has been denied in the case. The State had argued that it was shielded by the US Constitution’s Eleventh Amendment and was thus immune to such a proceeding. The PTAB disagreed with the argument and responded that by filing in Federal District Court, the State waived that immunity. So swings the ball…
From the decision:
“Petitioner does not dispute that Patent Owner is a State entity that can claim sovereign immunity under the Eleventh Amendment, at least with respect to this Motion. See Mot. 8–11; Opp. 1–2. The parties disagree, though, about whether Eleventh Amendment immunity can be invoked in an inter partes review. Mot. 2–8; Opp. 13–15. We agree with Patent Owner that an “IPR is an adjudicatory proceeding of a federal agency from which state entities are immune.” Mot. 7–8 (citing Covidien LP v. Univ. of Fla. Research Found., Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21) and NeoChord, Inc. v. Univ. of Md., Balt., Case IPR2016-00208 (PTAB May 23, 2017) (Paper 28)). Nevertheless, we determine, for the reasons discussed below, that Patent Owner has waived its Eleventh Amendment immunity by filing an action in federal court alleging infringement of the patent being challenged in this proceeding.”
The decision goes on in III. Analysis B, page 7 to read:
“But there is not “a bright-line rule whereby a State’s waiver of sovereign immunity can never extend to a . . . separate lawsuit.” Id. Instead, the rule governing waiver of immunity by litigation conduct rests on the need to avoid unfairness and inconsistency, and to prevent a State from selectively using its immunity to achieve a litigation advantage. Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613, 620 (2002); BPMC, 505 F.3d at 1340.”
The PTAB used an expanded panel to render its opinion: Ruschke filed the opinion and had Deputy Chief Scott Boalick, Charles Boudreau, Jacqueline Wright Bonilla, Scott Weidenfeller along with Robert Weischenk sign on. Judge Jennifer concurred and added, in part:
“I write separately to express my view that a state university, having availed itself of Patent Office procedures to secure patent rights from the public, may not subsequently invoke sovereign immunity as a shield against reconsideration by the Patent Office in an inter partes review proceeding of whether the agency improvidently granted a patent monopoly in the first instance.”
The implication from this point forward focuses squarely upon those entities and patent holder seeking immunity via assignment of their patents to Indian Tribes for protection. We saw the frenzy earlier this year. It can’t be a jolly holiday for those aggressive sovereign immunity investment fund managers that have already acquired or agreed to fund these types of efforts.
We have definitely not heard the last of this case or the opinions thereof and suspect we’ve just witnessed another patent case headed straight for the Supreme Court – with the notable stops along the way. Ball swings back through the crowd…