In University Of Utah V. Max-Planck-Gesellschaft, the Federal Circuit was faced with deciding whether a patent inventorship dispute between two different state universities is a “dispute between two states” that falls under the Supreme Court’s exclusive jurisdiction. A divided panel of the court determined that it is not.

The Patents At Issue

The patents at issue are U.S. Patent 7,056,704 and U.S. Patent 7,078,196, directed to RNAi technology. The patents name Dr. Tuschl of the University of Massachusetts (UMass) as the inventor. The University of Utah (UUtah) believes that it’s researcher, Dr. Bass, should be named as sole or joint inventor of the patent.

The Defendants

UUtah brought suit in the U.S. District Court for the District of Massachusetts, seeking correction of inventorship under 35 USC § 256. UUtah originally named UMass as a defendant, but amended its complaint to name university officials instead when UMass moved to dismiss on the ground that the Supreme Court has exclusive original jurisdiction over disputes between states.

The officials moved to dismiss on the grounds that the claim was barred by sovereign immunity, that the Supreme Court had original exclusive jurisdiction, and that UMass was an indispensable party. The district court denied the motion.

Judge Reyna wrote the opinion for the Federal Circuit, which was joined by Judge Wallach. Judge Moore wrote a dissenting opinion.

Sovereign Immunity

The Federal Circuit quickly disposed of the sovereign immunity argument.

 [A] state university generally may not be sued for infringement, nor may it be forced to defend against an action for declaratory judgment of invalidity or non-infringement. …. But States do not enjoy sovereign immunity from suits brought by other States. …. Similarly, States are free to sue citizens of other States without raising sovereign immunity issues.

Supreme Court Jurisdiction

The majority opinion notes that Article III, § 2, cl. 2 of the Constitution provides for Supreme Court exclusive jurisdiction over disputes between states:

In all Cases . . . in which a State shall be Party, the [S]upreme Court shall have original Jurisdiction.”

Further, under 28 USC § 1251(a), “[w]hen a State sues another State, the [Supreme] Court’s jurisdiction is not only original, but exclusive.” On the other hand, “when a State sues the citizens of another State, the Supreme Court’s original jurisdiction is concurrent with the district courts,” in accordance with 28 USC § 1251(b)(3).

The majority determined that § 1251(a) does not apply to patent inventorship disputes:

We hold that a State has no core sovereign interest in inventorship. The inventors of a patent are “the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.” 35 U.S.C. § 100(f). …. [B]ecause States cannot be inventors, it follows that inventorship is not a core sovereign interest of the States.

In reaching this decision, the majority drew a sharp line between inventorship and ownership, and distinguished patent ownership from “State ownership of water rights, natural resources, or other property issues that ‘implicate serious and important concerns of federalism’ and rise to the level of core sovereign interests.”

The majority also noted that a decision on patent inventorship would not compel or restrain state action.

A judgment ordering the Director of the USPTO to correct inventorship will not require or restrain UMass from acting. Neither UMass nor its officials are required to cooperate with UUtah in petitioning for the correction of inventorship….. Thus, should UUtah prevail, the district court’s judgment would not directly restrain or compel UMass.

Indispensable Party

The majority also rejected arguments that UMass is an indispensable party under rule 19(b) of the Federal Rules of Civil Procedure. The majority outlined the following factors to be considered:

  1. the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;
  2. the extent to which any prejudice could be lessened or avoided by:
    1. protective provisions in the judgment;
    2. shaping the relief; or
    3. other measures;
  3. whether a judgment rendered in the person’s absence would be adequate; and
  4. whether the plaintiff would have an adequate remedy if the action were dismissed for non-joinder.

The majority also cited Federal Circuit precedent that provides this further guidance:

In weighing these factors, courts “should keep in mind the policies that underlie Rule 19, ‘including the public interest in preventing multiple and repetitive litigation, the interest of the present parties in obtaining complete and effective relief in a single action, and the interest of absentees in avoiding the possible prejudicial effect of deciding the case without them.’”

The majority found no error in the district court’s determination that UMass was not an indispensable party, approving the following findings:

  • UMass’s interests would be adequately represented by the other defendants
  • There was little risk of prejudice
  • Correction of inventorship would not be impacted by UMass’s absence
  • The availability of an alternative forum is not clear, because it is not certain that the Supreme Court would accept jurisdiction over a patent inventorship dispute between two state universities.

Thus, the Federal Circuit affirmed the district court’s decision denying the motion to dismiss.

Judge Moore’s Dissent

Judge Moore’s dissenting opinion finds fault with two aspects of the majority decision.

First, she does not agree that “a patent ownership dispute between two state universities is not a ‘controversy between two or more States,” that must be heard by the Supreme Court.

Section 1251(a) contains “uncompromising language”:

the Supreme Court has original and exclusive jurisdiction over “all controversies between two or more States.” ….  The majority errs when it concludes that § 1251(a) does not apply to this dispute because the “State has no core sovereign interest” in inventorship or patent ownership. …. The majority’s “core sovereign interests” test is at odds with the plain language of the statute, which contemplates “all controversies” between states fall within 1251, not just those involving core sovereign interests. There is simply no basis to limit the statute in such a way.

Second, she does not agree that “a patent owner is not an indispensable party to an action that seeks to reassign title to the patents-in-suit.”

The majority’s holding that UMass is not an indispensable party to this action is incorrect. We have held that when a plaintiff brings a declaratory judgment action seeking to invalidate a patent or hold it not infringed, the patentee is both a necessary and indispensable defendant in that action. …. It would be nonsensical to suggest that all patent owners must be joined in a suit seeking to invalidate the patent, but they need not be joined in a suit over patent ownership. Indeed, § 256(b) requires a court, before it orders a correction of inventorship, to provide “notice and hearing of all parties concerned,” i.e., those with an “economic stake” in the patent. …. Because UMass does not have identical interests with any of the named defendants, it is an indispensable party in this case.

 Will The Supreme Court Grant Certiorari?

In her dissenting opinion, Judge Moore states that the majority’s requirement for “a core sovereign interest to implicate the Supreme Court’s exclusive jurisdiction erodes the Court’s discretion to decide which controversies it will hear.” If the Supreme Court sees it that way, it is likely to take up this case for review and decide for itself the contours of its original exclusive jurisdiction.