The Federal Circuit on June 14 affirmed Patent Office decisions in inter partes review (IPR) proceedings canceling patents the University of Minnesota owned, concluding that “state sovereign immunity does not apply to these proceedings.” The court’s conclusion is not limited to instances where, for example, a state university waives its sovereign immunity by asserting a patent in federal court proceedings. One broad import of the court’s holding therefore is that all state university patents are vulnerable to attack in PTO proceedings. Regents of the Univ. of Minn. v. LSI Corp., Appeal 2018-1559 (Fed. Cir. June 14, 2019); Regents of the Univ. of Minn. v. Ericsson Inc., Appeals 2018-1560 et seq. (Fed. Cir. June 14, 2019).
States typically have immunity from lawsuits brought by private parties, whether in court or as part of agency adjudications. That sovereign immunity does not extend to suits brought by the United States, including agency proceedings brought by the U.S, whether those actions are brought by the U.S. acting on its own initiative or upon information supplied by a private party. Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 767-68 (2002).
The University of Minnesota argued that its patents were immune from IPR proceedings because IPRs are similar to a dispute between the private party that requested initiation of the proceeding and the state patent owner. The Federal Circuit disagreed. According to the court (citing the Supreme Court decision in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016)), although the expanded role for third parties in IPRs may make them look more like civil litigation, the third party participation does not change the basic purpose and character of the proceeding, which is an agency action. While a third party request is required for the USPTO to institute a review, the decision of whether to do so is solely in the USPTO director’s discretion. Once instituted, the proceeding may continue without the third party petitioner’s participation and the proceeding can either cancel or confirm patent claims but it cannot award monetary or other relief against the patent owner.
In reaching its holding, the Federal Circuit relied on the analysis from its recent decision that tribal sovereign immunity does not apply to IPR proceedings because the “USPTO [was] acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant” (Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 1547 (2019)), (quoting Cuozzo, 136 S. Ct. at 2144). The court held that the factors in Saint Regis that supported the determination that IPRs are agency actions and not civil litigation were equally applicable to state sovereign immunity.
This blog post was written by Marshall Gerstein Special Counsel Julie M. Watson.