PTAB: State Waives Eleventh Amendment Immunity by Filing Patent Infringement Lawsuit

By Gene Quinn
December 19, 2017

PTAB Chief Judge David Ruschke

PTAB Chief Judge David Ruschke

Earlier today the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) denied a motion filed by the University of Minnesota in a series[1] of inter partes review (IPR) cases. See Order Denying Patent Owner’s Motion to Dismiss. The University of Minnesota, the patent owner, argued that it is entitled to avoid IPR proceedings entirely because the State is entitled to sovereign immunity under the Eleventh Amendment of the U.S. Constitution. An expanded PTAB panel disagreed.

The PTAB, in a majority opinion authored by Chief Judge David Ruschke, agreed with the University of Minnesota that an IPR proceeding is an adjudicatory proceeding of a federal agency from which state entities may be immune. Nevertheless, the PTAB ruled that the University of Minnesota “waived its Eleventh Amendment immunity by filing an action in federal court alleging infringement of the patent being challenged in this proceeding.”

The PTAB acknowledged that the claim of Eleventh Amendment immunity has been recognized by the Board in prior cases, but that the specific issue of the waiver of Eleventh Amendment immunity is a question of first instance that has been raised now in multiple proceedings. In short, the PTAB decision explains that it is their view that States are still entitled to sovereign immunity, but that Eleventh Amendment immunity will be deemed waived if an infringement proceeding relating to the patent in question is filed in Federal District Court.

The PTAB found the Federal Circuit decision in Regents of Univ. of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003) to be persuasive on the waiver issue. The PTAB wrote:

Specifically, the Federal Circuit explained that because a state as plaintiff can surely anticipate that a defendant will have to file any compulsory counterclaims or be forever barred from doing so, it is not unreasonable to view the state as having consented to such counterclaims. Similarly, a party served with a patent infringement complaint in federal court must request an inter partes review of the asserted patent within one year of service of that complaint or be forever barred from doing so. Thus, it is reasonable to view a State that files a patent infringement action as having consented to an inter partes review of the asserted patent. That is particularly true where, as here, the State filed its patent infringement action well after the AIA was enacted.

(citations and quotations omitted).

The PTAB explained in a footnote that they were not concluding that inter partes review is a compulsory counterclaim under FRCP 13(a), but rather that the rationale of Knight (i.e., use it or lose it) was both quite similar and compelling.

The PTAB was unpersuaded by the University of Minnesota argument that any waiver of sovereign immunity should be limited to the venue where the patent infringement action is filed. “Although waiver is generally limited in this way in our court system, which is arranged geographically, it is not a bright-line rule,” wrote the PTAB.

Signing onto Ruschke’s majority opinion were Deputy Chief Scott Boalick, Vice-Chief Judges Scott Weidenfeller and Jacqueline Wright Bonilla, and Judges Robert Weischenk and Charles Boudreau. Judge Jennifer Bisk concurred with the opinion but wrote separately to explain that she did not think the decision went far enough and would have held that by seeking a patent a State “may not subsequently invoke sovereign immunity as a shield against reconsideration by the Patent Office in an inter partes review…”

This decision today by the PTAB directly calls into question the strategy to assign patents to Indian Tribes. See Saint Regis Mohawk Archive for more.

If a State is deemed to have waived sovereign immunity guaranteed by the Eleventh Amendment to the Constitution as a result of having filed a patent infringement action in Federal District Court, it seems virtually assured that Indian Tribes will be deemed to have waived sovereign immunity guaranteed by Statute if and when they have filed a patent infringement action in a Federal District Court.

This issue seems headed for the Federal Circuit, and has all the tell-tale signs of a case that will eventually find its way to the Supreme Court for final resolution.

_______________

[1] The IPR cases involved are: IPR2017-01186 (re: Patent 8,774,309); IPR2017-01197  (re: Patent No. 7,252,768); IPR2017-01200 (re: Patent 8,718,185); IPR2017-01213 (re: Patent 8,588,317); IPR2017-01214 (re: Patent RE45,230) and IPR2017-01219 (re: Patent RE45,230).

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 32 Comments comments.

  1. Valuationguy December 19, 2017 5:35 pm

    I can say now that this won’t survive scrutiny by the SCOTUS…..

    An IPR is NOT a counterclaim to a federal lawsuit and all the gobbledigook Ruschke tries to use to justify it is “horse droppings”. A patent owner has NO litigation advantage over the accused….who is ENTIRELY free to press his counterclaims IN FEDERAL COURT…a point that the PTAB concedes and is FATAL to their argument…..no matter HOW it effect the accused ability to press his case in IPR.

    His logic is as bad as Prost and Dyk’s…..trying to shoehorn a grossly unconstitutional practice by sheer gall and misdirection.

  2. Anon December 19, 2017 5:42 pm

    One wishes that Congress takes note and thinks twice before allocating power to the administrative agency of the USPTO.

  3. Gene Quinn December 19, 2017 6:10 pm

    Anon-

    I also hope the Supreme Court takes notice. We know they don’t limit themselves to what is on the record. This would be one good situation not to limit themselves to what is on the record!

    I also hope Andrei Iancu takes notice. He has said all the right things about the PTAB going too far. Once he gets confirmed he really needs to take immediate action.

  4. The Time Is Now To Act December 19, 2017 6:31 pm

    Any perverse legislation eventually infects and disables all affected participants in the ecosystem.

    The PTAB here chooses the only path they could; self preservation.

    Viruses only have one mode- spread the infection.

    Clearly, the PTAB believes Congress erred in its idea that States (or any patent holder) should reap benefit from investment in Innovation and patent ownership.

    In Oil States oral arguments, Mr.Stewart didn’t say ‘no’ when asked if the should PTAB decide infringement. Telling.

  5. EG December 19, 2017 8:24 pm

    Hey Gene,

    I would say that the Knight case isn’t dispositive on the issue of “waiver” of sovereign immunity, as it relates to the separate filing of an IPR which is a different forum from that of federal district court. Here’s the key statement of relevant holding in Knight:

    “We thus hold that when a state files suit in federal court to enforce its claims to certain patents, the state shall be considered to have consented to have litigated in the same forum all compulsory counterclaims.”

    Note the phrase (“in the same forum”). An IPR is not the “same forum,” therefore there is no “waiver.” The argument by PTAB that accused infringer would be barred from filing IPR if they don’t do so within a year of the filing the infringement action is specious-the accused infringer can still assert invalidity in the court infringement proceeding. But given PTAB’s penchant for playing “fast and loose” with the case law, I’m not surprised that they have ruled (incorrectly in my view) that “waiver” has occurred.

  6. Night Writer December 19, 2017 10:35 pm

    @5 EG.

    “different forum”–I guess it all comes down to that. Given the current anti-patent stance of the CAFC, I’d say they will be fine with the PTAB decision. SCOTUS liberals would be too.

  7. Patent Investor December 19, 2017 11:48 pm

    Just another panel specific outcome at the CAFC. I’m guessing Prost will somehow “end up” on the panel.

  8. Invention Rights December 20, 2017 12:06 am

    Wow. The hubris is unbounded. Political hacks are rewriting decades of legal jurisprudence. Why do Lee, Matal, and Ruschke insist on sticking their noses into infringement disputes? Ericsson can raise its validity defense in the real courts where UMinn actually waived immunity. There is absolutely no sense in the USPTO butting in. Surely the Supreme Court will put these guys in their place, even if Iancu does not.

  9. Bemused December 20, 2017 7:34 am

    Any way for Oil States or amici to submit to SCOTUS this PTAB order using something along the lines of a notice of supplemental authority (or a similar mechanism)? If SCOTUS needs to see yet another example of a rogue administrative agency run amok, this order would be a good example.

  10. Paul Morinville December 20, 2017 9:41 am

    Who do these government employees think they are? These people think they have no limits on their very limited power. They do not agree with separation of powers, property rights, stability of rights, due process, ethics, sovereignty, nothing. They are imposters pretending to perform a government service. They are dangerous people who call themselves judges assuming fake power of a black robe for the benefit of huge multinational corporations.

    It is disgraceful and damaging to the core credibility of all government.

    The PTAB must be eliminated. There is no other way to fix this mess.

  11. Gene Quinn December 20, 2017 10:04 am

    Bemused-

    I am not a Supreme Court procedural expert, but my thought is that someone should at least try. File a motion or something. It isn’t like that could do any harm and the worst the Court would do is say no.

    After I posted this articles someone on Twitter pointed out the irony, which as it turns out is more intellectually dishonest double talk. In Oil States the government argued that the PTAB is not an adjudicatory body, but rather they are just trying to fix mistakes made in the granting process. But here the PTAB issues an opinion that they are just like any other court. They applied waiver of sovereign immunity in order to create standing. In Oil States they told us there was no aggrandizement of the judicial power.

    It certainly seems that this holding is inconsistent with what the government argued in Oil States. For crying out loud they turn an administrative challenge to a patent at the PTAB into something that is equivalent to a compulsory counterclaim. There is nothing compulsory about an IPR. It is one of several available procedural options. I need to write that and someone needs to file something in Oil States!

  12. Anon December 20, 2017 10:29 am

    Comment 26 on this thread: http://www.ipwatchdog.com/2017/12/17/modest-patent-proposal/ and

    comment 36 on this thread: http://www.ipwatchdog.com/2017/12/13/brookings-efficient-infringer-narrative-biased-panel/

    run parallels to the thoughts being expressed on this thread, reflecting how the powers affecting patent law are simply running amuck currently.

    I will amend my previous portrayals of a strong patent system being under attack from the “Left” and the “Right” by adding that a strong patent system is also under attack by co-opted government forces of several branches of the government.

    “Left” and “Right” have been joined by “Up” (the Supreme Court) and “Down” (the USPTO).

    Must.
    Remain.
    Steadfast.
    And.
    Persevere.

  13. Gene Quinn December 20, 2017 12:16 pm

    Anon @12-

    There is no doubt the patent system is under attack from all angles. Left, right, center, and all 3 branches of government. Politically speaking, it seems that only Constitutional Conservatives (and of course Senator Coons and Congressman Massie) are in support of a strong patent system.

  14. Michael W. Shore December 20, 2017 12:23 pm

    This PTAB decision effectively overrules at least three Federal Circuit cases and one Supreme Court case.

    Regents of the University of New Mexico v. Knight, 321 F.3d 1111, 1123–24 (Fed.Cir.2003) held “when a state files suit in federal court to enforce its claims to certain patents, the state shall be considered to have consented to have litigated in the same forum all compulsory counterclaims, i.e., those arising from the same transaction or occurrence that gave rise to the state’s asserted claims.” The PTAB is not the same forum and an IPR is not a Rule 13(a) compulsory counterclaim.

    Similarly, in Tegic v The Board of Regents of The University of Texas System, 458 F.3d 1335 (Fed. Cir. 2006), a case I argued for UT, the Court held that the fact another action might be foreseeable to a sovereign, that does not mean the sovereign agreed to waive immunity to that action, especially where the original suit has the potential for the same relief (e.g. invalidation). The key language is at 1343-44: “Tegic also argues that its lawsuit was “fully foreseeable,” much in the same way that the defendant’s counterclaims in Regents of New Mexico were foreseeable. However, the court’s rationale in New Mexico was not merely that the compulsory counterclaims were foreseeable; it was that the resolution of the compulsory counterclaims was a foreseeable aspect of fully resolving the state’s claims. It is not sufficient that a state’s initiation of a civil action would make a related action “foreseeable.” It has not been shown that Tegic’s action is necessary to a “complete determination” of the claims brought by the University in the Texas court, or that the adjudication of Tegic’s claims of noninfringement and invalidity is not available in the Texas action. As the district court observed, to the extent Tegic’s participation is necessary to fully resolve the claims and counterclaims in the Texas action, Tegic may seek to intervene in Texas.”

    Like Tegic, Ericsson in the University of Minnesota case has a forum to litigate invalidity and “fully resolve the claims” without an IPR.

    As to the Supreme Court, PTAB is overruling Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 99, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984), where the Supreme Court stressed that a “State’s constitutional interest in immunity encompasses not merely whether it may be sued, but where it may be sued,” even when multiple forums are available to hear the same cause of action. Id.

    The PTAB decision also is contrary to College Sav. Bank v Florida Prepaid Postsecondary Edu. Expense Bd., 527 US 666 (1999) where the Court held “we think where the constitutionally guaranteed protection of the States’ sovereign immunity is involved, the point of coercion is automatically passed—and the voluntariness of waiver destroyed—when what is attached to the refusal to waive is the exclusion of the State from otherwise lawful activity.” Enforcing a patent is lawful activity. PTAB cannot force the states to waive their immunity to IPRs as a condition of enforcing patents in a different forum.

    Another interesting point in Florida Prepaid at 686 goes to the issue of fairness, and the Supreme Court was pretty clear on whether fairness should be an issue: “In the sovereign-immunity context, moreover, ‘[e]venhandness’ between individuals and States is not to be expected: “[T]he constitutional role of the States sets them apart from other employers and defendants.” The PTAB’s complaints about fairness as a basis for its ruling will never stand.

    I could go on, but I think this ruling will have three positive effects in the ongoing battle to end IPRs. First, it will galvanize 50 states and about 130 state universities to oppose it, a powerful political block. Second, it exposes through a stacked panel and horribly flawed reasoning that PTAB makes decisions for political reasons, not legal ones. And third, it will make the Supreme Court more likely to find IPRs unconstitutional, as if a group of APJs can now use IPRs to change fundamental constitutional principles, it shows they are rogue actors who are willing to take Article III powers and Article II powers into their hands.

    Thank you PTAB. You have sown the seeds of your final destruction.

  15. Michael Shore December 20, 2017 12:26 pm

    The University of Minnesota, as a sovereign, has an immediate right to appeal under the collateral order doctrine, as a sovereigns protection of its immunity is otherwise lost. This will be at the Federal Circuit shortly.

  16. The Time Is Now To Act December 20, 2017 1:19 pm

    Bemused @9, Paul @10, Gene @ 11- the idea Bemused presents has legs.

    It would seem that Ms. Ho for Oil States, Gary Lauder et al or U.S. Inventor or other pro Oil States amici are well positioned to make a supplemental filing. I wonder if someone could reach out to Ms. Ho and select amici for their thoughts.

  17. Michael Shore December 20, 2017 1:54 pm

    If this stands, will patent owners be able to go to PTAB and claim that serial IPRs are “cruel and unusual punishment” and therefore can be dismissed under the 8th Amendment? The PTAB is beyond rogue.

  18. The Time Is Now To Act December 20, 2017 1:55 pm

    Further to my post @14, counsel for University of Minnesota and the university itself for that matter may be well positioned and resourced to make such a motion/brief filing to SCOTUS.

  19. Michael Shore December 20, 2017 2:21 pm

    Another Federal Circuit case directly on point that the PTAB is apparently intent on overruling is A123 Systems v Hydro Quebec, the most important quote:

    “In BPMC, BPMC brought suit against the California Department of Health Services (“DHS”) in the Northern District of California, alleging infringement of U.S. Patent 4,874,693. 505 F.3d. at 1331. The district court dismissed the suit based on DHS’s assertion of Eleventh Amendment immunity. Id. DHS, however, had intervened in an earlier suit against BPMC, later dismissed for improper venue, seeking a declaration of noninfringement and invalidity of the same patent. Id. On appeal, BPMC argued that DHS’s intervention in the earlier declaratory judgment suit had waived its immunity in the later suit. We disagreed and held that where a waiver of immunity occurs in one suit, the waiver does not extend to an entirely separate lawsuit, even one involving the same subject matter and the same parties. Id. at 1339; see also Tegic, 458 F.3d at 1342–43 (holding that submitting to an infringement suit in one forum does not waive immunity in a separate infringement suit filed in a different forum).”

    An IPR covers the same subject matter, patent validity. If the IPR is filed by a defendant in litigation, it involves the same parties. So the decision of the PTAB is 100% in conflict with binding Federal Circuit precedent.

    Still another line of cases states that waiver as to forum is separate from a waiver as to substantive results, and just because one occurs does not necessarily mean the other has occurred as well.

  20. The Time Is Now To Act December 20, 2017 3:03 pm

    Michael- U Minn’s immediate right to appeal would seem, no doubt, to be a part of the PTAB’s strategy here in an effort to preempt action that otherwise would have been taken by the new Director. Comments during confirmatiln hearings by Director Nominee Iancu would lead one to believe he would at least take time to get this decision right for the integrity of the patent system and attraction of investment.

    Therefore, by using a quick trigger, PTAB pushes this past Iancu (at least in this instance) and on to the Fed Circuit.

    Rogue? No Doubt.

    Bringing down the ire of the 50 states and more in order to attempt abrogation of sovereign immunity without Congressional action is the definition of self destructive behavior. And, self destruct they will.

    I love America. And, the PtAB is not her way.

    Pure. Unabated. Deadly. Virus.

    We need Tamiflu for the PTAB

  21. Lost In Norway December 21, 2017 3:22 am

    Argh! Who in the *bleep* does the USPTO think they are? I get that the PTAB doesn’t like someone using a sovereign nation “loop hole” to sneak by their procedure, but… really? I mean, REALLY? They can’t just ignore all legal president and case law because they don’t like it. Can they? They have to be making it up as they go along.

    I have to admit that I used to think that PTAB wasn’t exactly rogue, just a bit drunk on their own new existence. But now… yup… totally rogue. They need to start listening to those agencies who are actually part of the constitution.

  22. Judge Rich's Ghost December 21, 2017 3:17 pm

    Putting aside the panel stacking in this PTAB matter, the opinion is just so poorly written. One would think that, if the top three PTAB judges are put on this matter to set forth agency policy, they could have written a better-reasoned decision. This is an incredibly important issue, and the PTAB provides only four pages of analysis, none of which seriously engages the material differences between this case and the controlling precedent.

  23. Gene Quinn December 21, 2017 3:54 pm

    Judge Rich’s Ghost-

    I agree with you, which is why I think this is far more a political decision and not a legal decision. Although in fairness, they have to realize this would be appealed regardless of the ruling and what they say on the matter will become irrelevant as the Federal Circuit steps in, and ultimately the Supreme Court. I personally think this has all the elements of a case going to the Supreme Court.

  24. Judge Rich's Ghost December 21, 2017 4:11 pm

    It is entirely reasonable to see this as a political decision, particularly in view the scolding Allergan received from Issa, Nadler, and Goodlatte at the last House hearing. All three of them were calling the Mohawk tribe deal a sham. This decision underscores the legitimate separation of powers concern with allowing a federal agency to make judicial decisions about property. The Founders knew what they were doing when they created to protections of Article III

  25. Anon December 21, 2017 4:16 pm

    Gene,

    Given your statements, I would think then that MORE rather then LESS care would have been shown.

    If the thought is that this decision will rise up through the Court chain and SET policy, then the very nature of the function of the Office to promulgate policy is front and center.

    The “LESS” that is shown here (but the top of the PTAB no less [pun intended]) almost amounts to an abdication of that policy promulgation role.

    As with most things in life, if you are going to do something, do that something well.

  26. Bemused December 21, 2017 4:41 pm

    Anon@24 said “…if you are going to do something, do that something well.”

    I submit that this was the best that the PTAB brain-trust (i.e. the top three PTAB “judges”) is capable of doing.

    Which is a terrifying thought given that these are the same dummies that are making decisions on patent validity.

    Dang, did I really just type that last part out loud?

    Sorry about that. [Not really]

  27. The Time Is Now To Act December 21, 2017 4:51 pm

    Hard to get something right and thorough rushing it out the door during the holidays for fear of what input from the new Director may bring.

    Does the new Director have powers of recall on ptab decisions made within a certain number of months of ruling or arrival in office?

    Since they ‘overruled’ their own prior case using questionable grounds, a re-setting of inconsistent policy by the Director seems within the mandate.

  28. mike December 21, 2017 5:00 pm

    to The Time is Now to Act @25 –

    “Does the new Director have powers of recall on ptab decisions made within a certain number of months of ruling or arrival in office?”

    Surely, all he needs to do is expand the panel and have the matter re-heard…

  29. Patent Investor December 21, 2017 5:25 pm

    @25 & 26

    He could also simply pass on the chance to defend the decision at the CAFC.

  30. The Time Is Now To Act December 22, 2017 3:17 pm

    Hope is an interesting thing. These words can provide some of it this Christmas and Holiday season:

    (paraphrased from Senate Confirmation Hearing)

    “Perhaps we can think of a new paradigm; of excitement for creating new things.” – Andrei Iancu

    I fear how much those words summon hope within but am inspired by them all the same.

  31. Joachim Martillo December 23, 2017 1:11 am

    Maybe PTAB Chief Judge Rushke’s order only looks self-evidently stupid to me because IANAL. Yet I have to ask. Isn’t Rushke asserting the following?

    1) If the Russian Federation has lettres patentes to the land on which the Russian Embassy is built, and

    2) if the Russian ambassador files a complaint in court that trespassers are trampling the land and constructing a building (infringing Russian Federation rights to a patented claim),

    the Russian Federation has now waived sovereign immunity with respect to its patented land claim.

    Wouldn’t that mean the following?

    If the DC police want to search the Russian embassy despite sovereign immunity, the police would merely have:

    1) to start building a police station on embassy land and

    2) to wait until the ambassador files a complaint, which would by Rushke’s (il-)logic implicitly waive sovereign immunity.

    Upon the waiver of the sovereign immunity, the police would then search the embassy, and in retaliation the Russian Federation would start to arrest or to expel US diplomats.

    I can only hypothesize the following.

    Because the crooks and clowns within the USPTO suspect that the jig is up on their nefarious schemes

    1) that post-grant review proceedings enabled and

    2) that involved:

    a) insider trading,

    b) collecting bribes, or

    c) something, that has not occurred to me,

    these crooks and clowns are now trying to take down the patent system by discrediting it by means of outrageously stupid legal actions and decisions as they go down in flames.

  32. Joachim Martillo December 23, 2017 11:56 am

    Comment#31 above evidences my problem with logorrhea. I don’t say in 10 words what I could say in a hundred .

    I should have just said that Rushke’s order essentially says the following.

    A sovereign property owner can’t enforce property rights in Article III court, in which a defendant trespasser/infringer has full rights to respond, without forfeiting sovereign immunity and becoming subject to Rushke and his gang of clowns and crooks, who will then strip the sovereign property owner of his property rights.

    Doesn’t something seem wrong with that Rushke’s holding?

    BTW, I have been looking over Matal’s intervenor brief that was prepared for the appeal of Telebrands Corp., Petitioner, v. Tinnus Enterprises, LLC, Patent Owner, Case PGR2015-00018.

    It is even stupider than the final written decision in the above PGR, which I discuss in How Do I Hate Post Grant Review? Let Me Count the Ways.

Our website uses cookies to provide you with a better experience. Read our privacy policy for more information.Accept and Close