Addressing the application of the sovereign immunity defense under the 11th Amendment in the inter partes review (IPR) context, the Patent Trial and Appeal Board (PTAB) dismissed three IPR petitions, finding that the sovereign immunity defense is applicable to a research foundation of a state university, and that the foundation had not waived its sovereign immunity because it had not asserted the challenged patent in district court or sought a declaratory judgment of validity. Covidien LP v. University of Florida Research Foundation, Inc., Case No. IPR2016-01274; -01275; -01276 (PTAB, Jan. 25, 2017) (Ippolito, APJ).

University of Florida Research Foundation (UFRF), the patent owner, filed a breach of contract action in Florida state court against petitioner concerning a patent license. In response, the petitioner filed a counterclaim seeking declaratory judgment that it did not infringe the licensed patent, and successfully removed the suit to federal district court. The petitioner then filed three IPR petitions against the patent at issue. Following removal, UFRF argued that it was an arm of the State of Florida through the University of Florida and, as such, was entitled to 11th Amendment immunity from petitioner’s declaratory judgment counterclaim. The district court agreed with UFRF, remanding the action back to state court. The petitioner appealed to the US Court of Appeals for the Federal Circuit. UFRF was also granted permission to file a motion to dismiss the IPR petitions based on its sovereign immunity under the 11th Amendment.

Examining the language of the 11th Amendment—“Judicial power of the United States shall not be construed to 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”—the PTAB noted that the Supreme Court of the United States has interpreted the amendment broadly to limit not only the judicial authority of the federal courts, but also to preclude certain administrative bodies from adjudicating complaints filed by a private party against a non-consenting state. In granting dismissal, the PTAB looked to the Supreme Court’s 2002 analysis in Federal Maritime Commission v. South Carolina State Ports Authority.

In Federal Maritime Commission, a cruise ship company filed a complaint against the South Carolina State Ports Authority (SCSPA) with the Federal Maritime Commission, seeking damages and injunctive relief from repeated denials of requests for permission to berth a cruise ship. The PTAB observed that the US Court of Appeals for the Fourth Circuit, in reviewing the nature of the procedures employed by the Commission, determined that “the Commission’s proceeding walks, talks, and squawks very much like a lawsuit and . . . its placement within the Executive Branch cannot blind us to the fact that the proceeding is truly an adjudication.” The PTAB also noted that, in reviewing the Fourth Circuit decision, the Supreme Court recognized that “the similarities between the Commission’s proceedings and civil litigation were ‘overwhelming.’” The PTAB also cited the 2007 Federal Circuit decision in Vas-Cath, applying the Federal Maritime Commission case to US Patent and Trademark Office (PTO) interference proceedings and recognizing that “[l]ike proceedings in the Federal Maritime Commission, contested interference proceedings in the PTO bear ‘strong similarities’ to civil litigation.”

After concluding that the patent owner was indeed an arm of the State of Florida, the PTAB examined the waiver issue and concluded that no waiver applied to the present case, as the patent owner had not asserted the challenged patent against the petitioner and had not sought a declaratory judgment of validity.

Practice Note: The patent owner in this situation had not asserted the challenged patent against the petitioner but rather had filed a breach of contract action over a license to the patent and also sought a declaratory judgment for an accounting under the license. Thus, as both the PTAB and the district court found, the patent owner had never consented to a waiver of its sovereign immunity.