State University’s Filing of Patent Infringement Action Waives Sovereign Immunity to IPR Proceedings

The Patent Trial and Appeal Board (“PTAB”) recently held that sovereign immunity under the Eleventh Amendment is waived in the context of inter partes review (“IPR”) by a state’s filing of a patent litigation in federal court.  Ericsson Inc. v. Regents of the University of Minnesota, IPR2017-01186, Paper No. 14.

The PTAB first addressed whether Eleventh Amendment immunity is available to states in an IPR proceeding.  Applying the Federal Circuit’s reasoning in Vas-Cath, Inc. v. Curators of Univ. of Mo., 473 F.3d 1376 (Fed. Cir. 2007), the Board held that since IPRs are similar to court proceedings, Eleventh Amendment immunity may be asserted in an IPR proceeding.

The PTAB next discussed the circumstances under which the immunity may be waived for the purposes of an IPR proceeding.  Acknowledging that waiver of immunity in one proceeding does not necessarily extend to a separate action, the PTAB observed that the state’s litigation conduct must be taken into account so as to avoid unfairness and inconsistency.  It observed that a party sued for patent infringement is “forever barred” from filing an IPR if not requested within one year of service of the complaint. (citing Regents of Univ. of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003)).  It therefore found that as the state’s litigation conduct compels a defendant to file the IPR, it would be unfair and inconsistent to allow the state to use its Eleventh Amendment immunity to achieve a litigation advantage.

In reaching its decision, the PTAB rejected the principle that waiver of sovereign immunity is generally venue-specific.  The Board distinguished relevant Federal Circuit case law because those cases did not “address waiver with respect to separate proceedings in a single forum created by Congress, such as the post-issuance review proceedings under the AIA.”  The PTAB held that because an IPR cannot be filed in the same forum where the state-owned university filed a patent infringement action, the state’s selective assertion of Eleventh Amendment immunity at the USPTO in the IPR proceeding results in substantial unfairness to the petitioner.

Administrative Patent Judge Jennifer S. Bisk issued a concurring opinion in which she observed that IPRs do not resemble civil litigation and represent “no more than the Patent Office’s reconsideration of its initial decision to “take[] from the public rights of immense value, and bestow[] them upon the patentee” in the form of a patent grant.”  (citing United States v. Am. Bell Tel. Co., 128 U.S. 315, 370 (1888)).  She thus opined that sovereign immunity is inapplicable in the context of IPRs and does not bar the Board from reviewing the patent.

The majority decision rejecting forum-specific waiver is questionable since an IPR at the USPTO is not necessarily a “related action” that may be anticipated as a result of filing an infringement action in federal court. Regents of the Univ. of N.M., 321 F.3d at 1126 (Fed. Cir. 2003).  In addition, a defendant in an infringement lawsuit still has the choice of alleging invalidity by way of a counterclaim.  Further, the Board’s decision in an IPR does not necessarily result in a “complete determination” or “full resolution” of the claims between the parties.  Tegic Communs., 458 F.3d at, 1344 (Fed. Cir. 2006).  Depending upon the outcome, the district court would still need to adjudicate outstanding issues of infringement.  It remains to be seen whether this judgment will be upheld on appeal.