In a rare order by an expanded panel that included the chief, deputy chief and vice chief judges, the Patent Trial and Appeal Board (PTAB) denied the patent owner’s motions to dismiss based on sovereign immunity under the 11th Amendment in six parallel inter partes review (IPR) proceedings. Ericsson Inc. and Telefonaktiebolaget LM Ericsson v. Regents of the University of Minnesota, Case Nos. IPR2017-01186; -01197; -01200; -01213; -01214; -01219 (PTAB, Dec. 19, 2017) (Ruschke, Chief APJ) (Bisk, APJ, concurring). The PTAB explained that while the sovereign immunity defense under the 11th Amendment is generally available to a patent owner in an IPR proceeding, asserting the patent in district court litigation effectively waives sovereign immunity.
Underscoring the significance of the issue, the PTAB initially explained that the chief judge had expanded the panel under 35 USC § 6 and the PTAB’s Standard Operating Procedures. In particular, the PTAB noted that the issue of waiver of sovereign immunity had been raised before but not previously addressed by the PTAB. Citing to US Court of Appeals for the Federal Circuit authority in Vas-Cath, where 11th Amendment sovereign immunity was held to be available for interference proceedings before the Board of Patent Appeals and Interferences, the PTAB further pointed to its prior decisions, including Covidien v. University of Florida Research Foundation (IP Update, Vol. 20, No. 2), in which it previously determined that 11th Amendment immunity is available to states as a defense in IPRs.
The PTAB noted that whether a state waives its 11th Amendment immunity when it files a district court action is a matter of first impression. Analogizing the filing of an IPR to a compulsory counterclaim, the PTAB determined that the facts of the case were similar to those in the 2003 Federal Circuit decision in Regents of Univ. of New Mexico v. Knight, where the Court found that a state had waived its sovereign immunity defense as to compulsory counterclaims. After noting that when a state files a patent infringement action in federal court it triggers the one-year statutory bar for an IPR under 35 USC § 315(b), the PTAB expressed its primary concern of fundamental fairness to defendants in such a situation: “It would be unfair and inconsistent to allow a State to avail itself of the federal government’s authority by filing a patent infringement action in federal court, but then selectively invoke its sovereign immunity to ensure that a defendant is barred from requesting an inter partes review of the asserted patent from a different branch of that same federal government.”
Significantly, the PTAB observed that the patent owner itself had acknowledged as much in a motion to dismiss in a separate IPR proceeding. In that case, the patent owner had addressed a hypothetical in which a patent assertion entity assigned ownership of a patent to a state in order to invoke 11th Amendment immunity and avoid an IPR. The patent owner acknowledged that the state would have to join any infringement action, and that “[b]y voluntarily invoking federal jurisdiction in the infringement litigation, the state entity could be deemed to have waived its sovereign immunity to the IPR.” The PTAB ultimately found unpersuasive the patent owner’s argument that any waiver of sovereign immunity should be localized to the venue where the patent owner filed its infringement action.
Practice Note: The PTAB’s order was issued pre-institution and before the patent owner had submitted its preliminary response. At the time of this writing, the PTAB has issued a stay of the preliminary response because the patent owner appealed the order to the Federal Circuit and filed a motion to stay with the PTAB.