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Tribal and State University Sovereign ImmunityPhiladelphia Intellectual Property Law Association (PIPLA) January 18, 2018
CONFIDENTIAL AND PROPRIETARY
Why should you care about Sovereign Immunity?Government entities (sovereigns) are immune from lawsuits unless the sovereign waives or Congress abrogates“the king can do no wrong”Has been extended to state universities and state university research foundationsA state generally cannot be sued for patent infringement in federal court without consentSovereign Immunity now applies to interpartesreview (IPR) proceedings at the USPTO
Sovereign Immunity - 11th amendment
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TegicCommc'ns Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d 1335, 337 (Fed. Cir. 2006)Established that a sovereign entity chooses the forum where it may be sued and extent of litigation waiver is limited to compulsory counterclaims in the same forum
Sovereign Immunity - 11th amendment
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Sovereign Immunity in Administrative Proceedings
Supreme Court holds that sovereign immunity extends to administrative proceedingsFederal Maritime Commission (“FMC”) v. South Carolina State Ports(2002)5-4 decision,If the administrative proceeding is similar to federal court litigation, then sovereign immunity can applyHow similar? If it “walks, talks, and squawks very much like a lawsuit”
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Four Patent Trial and Appeal Board (PTAB) panels have found that sovereign immunity applies in IPRsIPR proceedings are similar to federal district court proceedingsIPR is adversarial, with motion practice, depositions, evidence governed by Federal Rules of Evidence, oral hearings, trial
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Sovereign Immunity in Administrative Proceedings
Covidien LP v. Univ. of Florida Research Found., Inc.(IPR2016-01274, IPR2016-01275, IPR2016-01276)Originally breach of license case in state courtRemoved to federal court but remanded on basis of sovereign immunityCovidien also asserted IPRsIn case of first impression, PTAB found that UFRF was sovereign and entitled to sovereign immunity from IPRs applyingFMC
PTAB Cases
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Neochord, Inc. v.Univof Maryland, Baltimore and Harpoon Medical, Inc.(IPR2016-00208)Motion to dismiss filed 5 days afterCovidiendismissal and one day before trialUM licensed its patent to Harpoon Medical but retained substantial rightsPTAB followsCovidienreasoning and grants sovereign immunitySovereign immunity applies only to UM, not Harpoon MedicalPTAB finds that UM is a “necessary and indispensable party” and IPR cannot proceed without UMNo waiver of sovereign immunity by participating in IPR
PTAB Cases
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Reactive Surfaces, LTD v. Toyota Motor Corp.,(IPR2016-01914, IPR2017-00572)University of Minnesota and Toyota are co-owners of the patent through equal inventor assignmentsPTAB grantsUMinnsovereign immunitySovereign immunity applies only toUMinn, not ToyotaPTAB finds that Toyota would adequately represent the interests ofUMinnIPR can proceed withoutUMinn
PTAB Cases
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Ericsson, Inc. v. University of Minnesota,(IPR2017-01197, IPR2017-01186, IPR2017-01219, IPR2017-01200, IPR2017-01213, IPR2017-01214)Found sovereign immunity applies to IPRs, but could be waivedUMinnsued AT&T, Sprint, T-Mobile, andCellcoin federal district court for infringement of 6 patentsEricsson as supplier/indemnorintervened in litigation over the objection ofUMinnUMinnmoved to dismiss IPRs based on sovereign immunityPTAB decided that filing district court litigation where Ericsson later intervened waives immunity to IPRs filed by Ericsson based upon idea that IPRs are equivalent to a compulsory counterclaim
Pending PTAB Cases
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The LSI and Ericsson orders violatePennhurst State Sch. & Hosp. v.Halderman, 465 U.S. 89, 99, 104S.Ct. 900, 79 L.Ed.2d 67 (1984) holding “immunity encompasses not merely whether [a sovereign] may be sued, but where it may be sued,” even when multiple forums are available.InCollege Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd.,527 U.S. 666, 687, 119S.Ct. 2219, 144 L.Ed.2d 605 (1999), the Court held a sovereign cannot for coerced into waiving immunity to engage in a lawful activity. Enforcing a patent in district court and waiving immunitythereis a lawful activity that cannot create a compulsory waiver in another forum.The Orders violateRegents of the University of New Mexico v. Knight, 321 F.3d 1111, 1123–24 (Fed.Cir.2003),Tegicv The Board of Regents of The University of Texas System, 458 F.3d 1335, 1343-44 (Fed. Cir. 2006) andA123 Systems, Inc. v Hydro-Quebec, 626 F3d 1213, 1216 (Fed. Cir. 2010). As toKnight, the PTAB is not thesame forumchosen by the sovereign, and an IPR is not a Rule 13(a) compulsory counterclaim. As toTegicandHydro-Quebec, an IPR is notnecessaryto litigate invalidity when a district court counterclaim is available to address the same subject matter between the same parties -- invalidity.
University of Minnesota Appeal
Tribal Immunity
TheEricssonIPR holding cannot apply to tribes because tribal immunity may not be waived by implication, not even in litigation as to “related matters ...aris[ing] from the same set of underlying facts,”McClendon v. United States, 885 F.2d 627, 630 (9th Cir. 1989). Tribal immunity does not permit an implicit waiver by litigation, even as to compulsory counterclaims.United States v. U. S. Fid. & Guar. Co., 309 U.S. 506, 513 (1940)(“Possessing ... immunity from direct suit, we are of the opinion [the Indian nations] possess a similar immunity from cross-suit.”);Okla. TaxComm’nv. Citizen Band Potawatomi Indian Tribe of Okla.,498 U.S. 505, 509 (1991)( “Tribe did not waive its sovereign immunity [to counterclaim] merely by filing an action for injunctive relief.”). A tribe does not expressly or implicitly waive its immunity by seeking removal from state to federal court.Contour Spa at the Hard Rock v. Seminole Tribe of Florida, 692 F.3d 1200, 1208-1209 (11thCir. 2012 (adhering toPotowatomi, rejecting application ofLapidesto tribes);Bodiv. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1017 (9th Cir. 2016)(same). A tribe does not waive its immunity to federal court proceedings by participating in a prior administrative proceeding.Kescoliv.Babbit, 101 F.3d 1304, 1310 (9thCir. 1996);Quileute Indian Tribe v. Babbitt,18 F.3d 1456, 1459–60 (9th Cir.1994).Given this overwhelming precedent, this Board may not apply the reasoning ofEricssonto the Tribe.
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Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA,inc, andAkornInc. v. Saint Regis Mohawk Tribe,(IPR2016-01127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, IPR2016-01132)Pharmaceutical companies filed IPRs against Allergan’s patents covering Restasis (dry-eye medication)Allergan assigned the patents to the St. Regis Mohawk Tribe and the tribe licensed them back to Allergan, but retained substantial rightsFollowing the assignment, the tribe moved to terminate the IPRs on sovereign immunityBriefing on the motion is complete (three rounds, plus amicus)PTAB denied discovery on ex parte contacts with panel, mandamus likely to set up a due process grounds on appeal
Tribal Sovereign Immunity
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Limitations on Sovereign Immunity
States may waive immunityState constitutions may grant limited waiver, or may not waive liability, but waiver must be explicitImplied waiver is found for compulsory counterclaims.Entity seeking Sovereign Immunity needs to be a sovereignAn arm of the stateState law definition of the entityDegree of state control?Who funds the entity/who pays a judgment?Congress can abrogate sovereign immunity
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Pending Questions
Does an infringement case create an implied wavier of immunity for IPRs?Are dismissals on sovereign immunity appealable?Is aPTABdecision on sovereign immunity part of an “institution decision”?Husky v. Athena: test for whether an issue is closely tied to institutionWiFiOne, LLC v Broadcom Corp.enbancdecision that timing of an IPR filing an issue that can be appealedDenial of sovereign immunity is clearly appealable under the collateral order doctrine because the sovereign’s immunity is otherwise lost
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Strategy and Implications
Can you avoid IPR by structuring jointly developed patents as a license vs. co-ownership?UMinn/Toyota case says patent ownership mattersAvoiding co-ownership could prevent an IPR from proceeding without the sovereignCan private companies protect themselves by partnering with universities or tribesPTAB decisions dismiss IPRs where one party is a sovereign and the sovereign retained substantial rightsMarketing the sovereign immunity advantageEnforcementJointSovereign OnlyPatent Bank
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Thank You
CONFIDENTIAL AND PROPRIETARY

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Sovereign Immunity - pipla.org