In separate non-precedential decisions issued by three different panels, the PTAB has permitted state university patent owners to invoke the Eleventh Amendment in Inter Partes Review proceedings. Each panel found that IPR proceedings are subject to a sovereign immunity defense, but one panel permitted the IPR to proceed with only the non-university patent owner.
The PTAB first addressed the Eleventh Amendment in three parallel decisions rendered in Covidien LP v. Univ. of Florida Research Foundation Inc., IPR2016-01274, -01275, -01276 (PTAB Jan. 25, 2017). In those cases, the University of Florida Research Foundation (UFRF) filed motions to dismiss relatively early in the proceedings, before filing a Patent Owner Preliminary Response.
The PTAB considered specific aspects of PTAB proceedings, “including discovery, depositions, protective orders, the imposition of sanctions, and an oral hearing”, and concluded:
On the whole, considering the nature of inter partes review and civil litigation, we conclude that the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment.
The PTAB also found that UFRF “is an arm of the State entitled to sovereign immunity.” Thus, the PTAB granted the motions to dismiss.
The PTAB addressed the Eleventh Amendment again in NeoChord, Inc. v. University of Maryland, IPR2016-00208 (PTAB May 23, 2017). In that case the University of Maryland raised the defense of sovereign immunity much later in the proceedings–on the eve of oral hearing–but only a few days after the Covidien decisions were published. The NeoChord panel noted that the Covidien decisions were not binding on it, and independently found that the Eleventh Amendment was available as a defense, albeit for largely the same reasons as the Covidien panel.
NeoChord raised several arguments against the defense, but the PTAB rejected each of them, finding no abrogation of Eleventh Amendment immunity in the Patent Act, and no waiver of immunity by obtaining the patent at issue, licensing the patent at issue, or participating in the IPR proceedings up to the oral hearing stage. The PTAB also disagreed that the IPR could proceed only with the licensee, finding that Maryland had retained rights under the license and so was a necessary and indispensable party. Thus, the PTAB granted the motion to dismiss.
The PTAB addressed the Eleventh Amendment most recently in Reactive Surface Ltd. v. Toyota Motor Corp., IPR2016-01914 (PTAB July 13, 2017). In that case, the patent at issue was jointly owned by the Regents of the University of Minnesota and Toyota, who filed a motion to dismiss under the Eleventh Amendment. The PTAB “agree[d] that the [University] cannot be compelled to join this proceeding against their will,” but “conclude[d] that the proceeding may continue in their absence.”
As to the availability of the Eleventh Amendment defense, the PTAB stated:
Both of those decisions [in Covidien and NeoChord] concluded that Eleventh Amendment sovereign immunity may be invoked in inter partes review proceedings. Although neither of those decisions is binding on us, we find their reasoning persuasive.
As to proceeding without the University, the PTAB noted that the IPR rules permit an IPR to proceed without a patent owner under several circumstances, and that the Federal Circuit previously had considered “whether to dismiss litigation in the absence of a sovereign defendant,” in Univ. of Utah v. Max-Planck-Gesellschaft zur Forderung der Wissenschaften e.V., 734 F.3d 1315 (Fed. Cir. 2013), and A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010). Although the Federal Rules of Civil Procedure do not apply in IPR proceedings, the PTAB used a standard based on the Federal Circuit decisions applying Rule 19(b):
[W]hen the absent sovereign party and a remaining party have identical “interests in the asserted patents,” the remaining party adequately represents the interests of the absent sovereign party under Rule 19(b)(1).
Since Toyota and the University “hold identical interests” in the patent at issue, and were “represented by the same legal counsel,” the PTAB determined that “Toyota would adequately represent the interests of the [University] in the challenged patent.” Thus, the motion to dismiss was granted in part, only as to the University.
Although three PTAB panels have held that IPR proceedings are subject to a sovereign immunity defense, the PTAB has not issued a precedential decision on this issue, and the Federal Circuit has not weighed in. Thus, whether state university owned patents really are immune from IPR challenges may be an open question for the time being.