Sovereign Immunity of State Universities: Can It Shield Them from AIA Patent Challenges?

05 October 2016 PTAB Trial Insights Blog
Author(s): Stephen B. Maebius

In what appears to be a case of first impression, the PTAB is poised to rule on the question of whether state sovereign immunity prevents an IPR challenge from being maintained against a University of Florida (“UF”) patent (IPR2016-01274).  Under the 11th Amendment to the Constitution, “[t]he 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.”  State university patent owners who have availed themselves of the remedies offered by infringement litigation in federal courts, have still been able to use the sovereign immunity shield of the 11th Amendment to prevent other suits against them challenging validity of their patents (see “Critics Take Aim At Califorinia’s Patent Shield”).  While the use of state sovereign immunity as a shield in patent litigation is not new, this appears to be the first instance of it being asserted as a defense in an IPR or AIA proceeding.  Covidien was a licensee of the UF patent in question.  When UF brought an action in state court seeking an accounting of royalties due under its license agreement with Covidien, Covidien try to remove the case to federal district court with a counterclaim of non-infringement of the patent under federal law.  The federal district court decided that UF (more specifically UF Research Foundation, the entity holding the patent) was an instrument of the State of Florida entitled to sovereign immunity, so it dismissed the federal action.

Thereafter, Covidien filed IPR petitions against the UF patent.  Prior to filing a preliminary response in the IPR proceedings, UF requested authorization to file a motion to dismiss the IPRs based on sovereign immunity.  The Board granted this request, authorized an opposition by Covidien, and also extended the due date for UF’s preliminary response to accommodate the briefing on the sovereign immunity issue.  The UF motion to dismiss argues that IPRs are adjudicatory proceedings (like federal district court litigation) and therefore, sovereign immunity prevents it from being subject to an IPR absent its consent, which it has not provided.

The opposition to UF’s motion to dismiss filed by Covidien argues that IPRs are not adjudicatory proceedings because the Patent Office itself is deciding whether to correct or retract a grant of the patent that it created.  Covidien further argues they are not adjudicatory proceedings because the Patent Office may continue them even if the petitioner drops out, so they more closely resemble reexamination proceedings.

Stay tuned to see how the PTAB rules in this interesting case!

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