11th Amendment Sovereignty Reach to be Tested

The availability of state sovereign immunity shields against IPR petition challenges to patent claims of state-chartered universities and their affiliates is a hot topic within TTO circles. Where available PTAB immunity increases patent value and royalties. Issues still under consideration, however, include:

  • How broad is the immunity’s reach from state capitals beyond state-chartered university affiliates?
  • When must non-waiver status be asserted?
  • When is it legally presumed to have been abandoned?
  • Does it apply to other PTO proceedings like reexaminations?
  • Are there any district court patent proceedings to which it does not apply?
  • If you assert a patent in a district court enforcement proceeding is it then considered waived at PTAB?
  • Can its protective shield be shared with non-state chartered universities or other co-owners?

The extent of state sovereign immunity’s availability under the 11th amendment has been considered again at PTAB. A petition against a state-chartered university was rejected when the university in question was found not to have waived its immunity despite its initial engagement in the preceding. This post highlights some of these issues and also links to an IPWatchdog post that does so in more depth. PTAB is an expensive and deadly procedure for all university patent holders. Yet only same have 11th Amendment immunity. CAFC will have to clarify some of these issues. One open question is how its eventual clarification will bear on the formation of friendly “ownership alliances” with state agencies or with state-chartered universities. Continue reading 11th Amendment Sovereignty Reach to be Tested

Relevant Random Developments

The PTAB has issued a second ruling that a state-affiliated university (this time the University of Maryland) is entitled by the 11th Amendment to escape PTAB review by its waived sovereign immunity. The university’s participation in the proceedings did not constitute a waiver. It is not yet clear how the PTAB will act regarding a non-state and state joint patent if an IPR petition is filed regarding such a jointly-owned patent. It would seem that any PTAB patent dispute involving a qualifying state entity would be similarly exempted even if joint ownership of the patent in question constitutes the only connection between the joint holders. We are hesitant however to predict PTAB reasoning or decision-making.

As you must be aware by now, SCOTUS has just held that a patent’s sale or conditional sale anywhere in the world exhausts the patentee’s US patent rights. Conditional sales to universities for research purposes will have to be carefully and quickly converted to licenses. This SCOTUS ruling penalizes manufacturers who sell products at special prices to specific users who could not otherwise afford the product including universities for research purposes. Whether it will be applied retroactively is unknown.

In other news …

According to POLITICO here is the latest in the on and off romance between big tech and President Trump. His climate-change decision announced today may affect its temperature. We do not expect it to change White House views regarding Patent Reform whatever they are. At this point not only are these views unclear but high-tech seems to have many other serious concerns, especially regarding US H-1 B visa availability.

Big Tech and Trump are scheduled to meet on June 19th. ORACLE, CISCO TO ATTEND TRUMP MEETING – Add another name to the guest list at the White House meeting with technology executives on June 19: Cisco CEO Chuck Robbins, Steven reports. Oracle has also confirmed that CEO Safra Catz will attend the meeting. The Trump administration established the American Technology Council at the start of May to “transform and modernize” the federal government’s IT and digital services. Executives at the meeting are expected to discuss IT modernization, cybersecurity, data analytics and immigration, among other topics.

TECHIES’ LAST-DITCH CALL TO TRUMP ON CLIMATE. Valley heads including Apple CEO Tim Cook and Tesla CEO Elon Musk were among the business leaders who made 13th-hour calls to President Donald Trump to support the U.S. remaining in the Paris climate accords. These occured, after multiple news reports suggested that he is planning to drop out according to the Wall Street Journal. Musk also later tweeted that if Trump followed through with announced plans to withdraw from the deal backed by nearly almost 200 other countries, he “will have no choice but to depart councils.” Other major tech companies including Facebook, Google and Salesforce have put their names to a full-page ad running today in The New York Times and The Wall Street Journal, calling on Trump to “advance U.S. interests by remaining a full partner in this vital global effort.” Trump is preparing to announce the US withdrawal today. To read more etc.

Continue reading Relevant Random Developments

What’s ahead re Patent Reform in 2017

This concise but thorough Gene Quinn menu of things to come in patent reform 2017 is must reading.  Readers concerned about commercializing life science must also keep a eye on rumblings about prescription drug price controls. Any such activity will add more uncertainty to private sector life science investment.

Patent Reform 2017: Changes coming from the Judiciary, Legislative and Executive Branches  By Gene Quinn on Feb 12, 2017 12:30 pm

While calls for widespread patent reform are not as loud as they have been in previous years, 2017 is shaping up to be a year where we may still see significant change to U.S. patent laws. What will the changes to U.S. patent laws look like over the next year? The better question may be to first ask whether those anticipated changes will be coming from the judiciary, legislative or executive branch, all of which will take center stage at some point in 2017.


Solomon Does It Again

Here is Neal Solomon’s last installment of his three-part IPWatchdog condemnation of our weakened patent system. As usual, Neal not only is right-on, he backs-up his analysis with relevant rulings and reason. No need for us to guild the lily. Just read it when you get a chance.

State Research University Immunity from PTAB Review

In a recent post, patent law guru Dennis Crouch discussed PTAB’s 11th Amendment Sovereign Immunity decision exempting state research universities and their affiliates from IPR review.

For those of us inclined to suspect PTAB’s justifiable fears of constitutional elimination (which also could nullify AIA itself which has no savings clause) one reader’s anonymous comment was intriguing …

“Believe me, PTAB considered all angles before this decision. My informed speculation would be this decision is from the solicitors office and the political branch and was given to the panel. It’s pure self preservation. To ignore the 11th as this juncture, would create a SCOTUS scenario, in which the entire framework of the IPR construct would need to be squared against a separation of powers and federalism framework implicated by the purpose behind the 11th amendment. Screwing the requestor and dismissing under the 11th, allows the IPR construct to survive another day. And the longer PTO can keep the IPR construct in place, the better chance it has to survive.”

Sovereign Immunity Excuses University of Florida from IPR Challenge by Dennis Crouch

As public universities continue to obtain more patents, issues of sovereign immunity continue to arise. In a recent decision, the Patent Trial and Appeal Board (PTAB) dismissed a trio of inter partes review proceedings against the University of Florida based upon its claim of sovereign immunity.[1]

The 11th Amendment to the US Constitution limited the “Judicial power of the United States” so that it does not “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.”[2] Although the text of the amendment appear to include several important limitations that might exclude an administrative action (“judicial power; “suit in law or equity”), the Supreme Court has broadly interpreted the statute precluding many adjudicative administrative proceedings.  For anyone who is not an American lawyer, you may need to pause here to recognize that each of the 50 American states are treated as sovereign governments and, although the Federal Government sets the “supreme law of the land,” its powers are limited by the U.S. constitution and federalist structure.

The Supreme Court has interpreted this amendment to encompass a broad principle of sovereign immunity, whereby the Eleventh Amendment limits not only the judicial authority of the federal courts to subject a state to an unconsented suit, but also precludes certain adjudicative administrative proceedings, depending on the nature of those proceedings, from adjudicating complaints filed by a private party.  Following Supreme Court precedent from other areas of law, the Federal Circuit held in Vas-Cath[3] that Missouri’s sovereign immunity allowed it to avoid an interference proceeding.

The petitioner Covidien argued that the PTAB should think of the IPR as an in rem action directed at the patent rather than at the patent owner.  However, the PTAB rejected that argument – finding that the procedural elements of inter partes reviews and estoppel provisions make it look much like contested litigation – the very thing protected by the 11thAmendment.

The Panel:

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. Although there are distinctions, such as in the scope of discovery, we observe that there is no requirement that the two types of proceedings be identical for sovereign immunity to apply to an administrative proceeding. Further, we note that there are several similarities between civil litigation and inter partes review that are not unlike those compared in Vas-Cath for interferences.

Outcome here – Dismissed before Institution based on Sovereign Immunity of the patentee.  Moving forward it will be interesting to see whether the Federal Circuit is willing to hear an appeal or instead apply the standard law that institution decisions are not subject to appeal.

The dispute between the parties extends back to a license agreement between UFL and Medtronic/Covidien of the patent at issue. UFL exerted its right to audit the books, but was refused by Medtronic.  UFL then sued in state court on the contract.  Medtronic counterclaimed for DJ of invalidity/noninfringement and removed the case to federal court on the patent claims and on diversity grounds.  The district court however remanded back to state court on sovereign immunity grounds.  That remand is now on appeal at the Federal Circuit, although the court has just issued a show-cause – asking whether the case should be transferred to the 11th Circuit.  Under the AIA-revised statute, cases go to the Federal Circuit if either the civil action “arises under” US patent law or a “compulsory counterclaim” arises under patent law.  Here, it is clear that the counterclaim is a patent claim, but the big question is whether it is “compulsory” – normally defined as one that “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.”[4]

Of interest though, in the order to show cause, the court suggests that it might keep the case in the “interest of justice” rather than transfer it. [5][federalcircuitjurisdictionorder]

= = = =

[1] See Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017).

[2] U.S. CONST. amend. XI.

[3] Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007).

[4] Fed. R. Civ. P. 13(a)(1)(A).

[5] 28 U.S


Happy New Year and Welcome

In the interest of providing improved and enriched access to our reports, we have created a new website found at ipstrategic.com.  On the site, you will find reports currently going back about three months, presented in a user-friendly format with a search function and related links to relevant content. Going forward, our intent is to offer readers an enhanced resource offering views of developments within the intellectual property arena.  We encourage you to subscribe to the reports as they are made available, by simply providing your email address in the form found in the lower left-hand navigation bar. By doing so you will receive an alert as new reports are posted. Continue reading Happy New Year and Welcome

Cures Act High Priority in Lame Duck Session

The two-part, four-week lame duck session (LD) is about to begin. Altered by unforeseen election results, pre-election LD plans have necessarily been altered. Traditionally, a Republican occupied White House and a present and future Republican majority in both chambers would signal smooth LD sailing, clearing a path for the next President. This year’s LD session may be different. On the Republican side, fiscal conservatives may clash with advocates for the debt-funding stimulus of infrastructure and tax cuts. Among Democrats, progressives and centrists may clash over “what went wrong“as their progressive and more pragmatic factions fight it out. Continue reading Cures Act High Priority in Lame Duck Session

The FTC’s PAE Study: Doing More Harm Than Good

Kindness of Adam Mossoff, here is a useful IPWatchdog essay by CPIP Senior Scholar, Professor Kristan Osenga.

Professor Osenga explains why the FTC’s recently released Patent Assertion Entity (PAE) “study” will do more harm than good because of; its small sample size and selection bias, its arbitrary categorization of patent licensing companies, and its unsupported and unjustified policy recommendations. The entity definitions within the report are nevertheless important because they define its subject matter and thus the scope of its recommendations. The FTC dismisses the term, “trolls”, distinguishes NPE’s from PAE’s the divides the latter into two types sub-classifications.  Continue reading The FTC’s PAE Study: Doing More Harm Than Good

Will Zombie Patent Trolls Haunt the Hill in 2017?

A New York Times (NYT) article last week projected the economic growth policies likely to be supported by President Clinton if elected. It references a recent speech by Jason Furman who currently chairs President Obama’s Council of Economic Advisors. We expect him to influence Clinton administration execution of her commitment to close the “inequality gap”. Continue reading Will Zombie Patent Trolls Haunt the Hill in 2017?