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 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.