On May 23, 2017, in NeoChord, Inc. v. University of Maryland, Baltimore and Harpoon Medical, Inc., the Patent Trial and Appeal Board (“PTAB”) granted the University’s motion to dismiss and terminate an inter partes review (“IPR”) of its patent based on sovereign immunity, concluding that Eleventh Amendment Immunity is a valid defense to an IPR under the facts of this case.

NeoChord filed a Petition seeking an IPR of the University’s patent, which the University had exclusively licensed to Harpoon. The University did not file a Preliminary Response to the Petition. Afterwards, the PTAB instituted the IPR and issued a Scheduling Order. In accordance with the Order, the University filed its Response to the Petition, and NeoChord filed a Reply. The day prior to oral argument on the merits, however, the University requested permission to file a motion to dismiss based on sovereign immunity. The Board authorized the filing of the motion, and the University moved to terminate the IPR, asserting that it was protected by Eleventh Amendment immunity under Maryland State law. The University argued that it was entitled to the sovereign immunity defense on the grounds that it is “an ‘arm of the State of Maryland,’ and the [patent] is ‘property of the State.’” After addressing several arguments raised by NeoChord, the Board granted the motion.

First, the PTAB addressed the issue of whether the University was able to assert sovereign immunity in an IPR proceeding. The PTAB stated that the Supreme Court in Federal Maritime Commission v. South Carolina State Ports Authority explained “that [an] agency proceeding ‘walks, talks, and squawks’ like a court proceeding for purposes of the Eleventh Amendment analysis.” The Board also noted that the Federal Circuit in Vas-Cath, Inc. v. Curators of University of Missouri had found that patent interference proceedings “may be treated like Court proceedings for Eleventh Amendment purposes . . . .” The PTAB found the Federal Circuit’s analysis in Vas-Cath instructive because “the Board’s inter partes rules bear resemblance to the Board’s interference procedures,” since they “involve[] adverse parties, examination of witnesses by motion for observation, cross-examination of witnesses by deposition, findings by an impartial federal adjudicator, and power to implement the decision, e.g., by cancellation of claims . . . .”

NeoChord also argued that the sovereign immunity was not available as a defense because of the Supreme Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), which distinguished IPR proceedings from district court trials. However, the PTAB rejected this argument because the analysis in Cuozzo was “made in the context of determining the claim construction standard for [IPR] proceedings.” The Board decided that Federal Maritime Commission “remains the primary case law for analyzing the availability of the Eleventh Amendment . . . . ” Accordingly, the PTAB concluded that sovereign immunity applied in IPR proceedings.

The PTAB also noted that Congress could revoke sovereign immunity where certain condition are met. However, the PTAB concluded that Congress had not abrogated Eleventh Amendment immunity with respect to IPR proceedings, and that the State of Maryland had not “expressed an intent to waive” this immunity. Thus, there was no revocation.

Additionally, the PTAB addressed the issue of whether the University had waived the sovereign immunity defense through its participation in the IPR proceedings and by failing to raise the defense until the oral hearing. The PTAB concluded that the defense can be raised at any time “unless State law provides for waiver by participation in judicial proceedings.” Here, the PTAB held that precedent under Maryland law did “not provide for waiver of State sovereign immunity for reason of delay.” Further, the PTAB noted there was “no indication that the University . . . delayed for any tactical reasons.” Thus, there was no waiver.

The PTAB also considered whether the University waived its sovereign immunity defense by providing an exclusive license to Harpoon Medical for the asserted patent. The PTAB cited provisions of the license agreement it found relevant, most notably a clause in the agreement entitled “State Immunity and Limitations of Liability.” The Board found that this provision in the “agreement operate[d] as a savings clause to preserve the defense of sovereign immunity, i.e., with respect to non-parties.” Through this provision, the PTAB found that the University preserved the defense.

Finally, the PTAB addressed the issue of whether the Board could continue the proceedings without the University. NeoChord argued that Harpoon Medical “should be considered the real party-in-interest and the ‘effective patentee’ for purposes of this [proceeding]” (internal quotations omitted). The PTAB rejected this argument, finding that the University had retained rights under the license and had transferred “less than ‘substantially all’ rights to Harpoon Medical.” Because of this, the PTAB concluded that the University was “a necessary and indispensable party to this proceeding,” and the IPR could not continue without the University.

The PTAB “recognize[d] that the University’s assertion of sovereign immunity creates special treatment for a State entity.” However, the Board reasoned that “the Supreme Court has explained that any asymmetry is the result of the Eleventh Amendment . . . .” Thus, the PTAB granted the University’s motion to dismiss and terminate the IPR against the University’s patent.