Fed.Cir. 11th Am. Case
Keywords
The Court of Appeals for the Federal Circuit ruled in a patent case that when a state initiates litigation-type federal administrative action, it waives sovereign immunity for federal court appeal. Vas-Cath, Inc. v. Curators of the University of Missouri, 2007 WL 150436 (Fed. Cir. Jan. 23, 2007).
The University of Missouri filed a patent application for an invention. Subsequently, but during the pendency of the University’s application, Vas-Cath filed a patent application for an invention that the University claimed was the same invention. The federal patent examiner could have initiated proceedings to resolve the competing claims, but the patent examiner did not do so. Instead, the patent examiner granted the Vas-Cath patent application. The University then initiated proceedings before the United States Patent and Trademark Office (PTO), claiming that the Vas-Cath patent interfered with the University’s patent rights. The PTO interference proceeding included production of documents, testimony, cross-examination, motions, and briefs. The PTO ruled in favor of the University. Vas-Cath appealed to the federal district court for the Western District of Missouri. The district court dismissed the suit, accepting the University’s argument that it had sovereign immunity under the Eleventh Amendment and therefore could not be sued in federal court.
The Federal Circuit reversed. The court noted that mere participation in the federal patent system does not waive immunity in federal court with respect to patent infringement of the state. (It was undisputed that the University of Missouri was entitled to the constitutional immunity of the state.) The court further observed that in a previous case, the Federal Circuit had held that a suit against a state university in federal court to obtain correction of inventorship was dismissed on Eleventh Amendment grounds, absent a sufficient showing of a lack of remedy under state law. Xechem Int’l, Inc. v. Univ. of Texas M.D. Anderson Cancer Center, 382 F.3d 1324 (Fed.Cir. 2004). However, the court focused on the fact that the University “requested the PTO to conduct litigation-type activity, obtaining a favorable agency ruling for which the statute authorizes judicial review.” The court stated: “The principles of federalism are not designed for tactical advantage.” The court concluded: “The University’s recourse to the PTO tribunal for adjudication of its claim of prior inventorship and thus of patent ownership negates the assertion of immunity to bar appeal of that adjudication. Principles of fairness and consistency prohibit selective assertion of immunity to avoid appeal by the loser after the University won the first round.”
In support of its decision, the court cited Lapides v. Board of Regents of Univ. System of Georgia, 535 U.S. 613 (2002), in which the state defendant was held to have waived its Eleventh Amendment immunity by voluntarily removing the case from state to federal court. The court further noted that the Federal Circuit has held that filing suit for a declaration of patent ownership waives immunity from all counterclaims arising from the same transaction or occurrence that gave rise to the state’s claims. Regents of the Univ. of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003). The federal circuit went farther in the University of Missouri case, holding that participation in a federal administrative proceeding sufficed to waive sovereign immunity to suit in federal court.
The University argued that it was coerced into requesting the PTO proceeding, because the PTO failed to initiate the interference and granted the patent to a junior applicant. The Federal Circuit was not persuaded: “This argument raises issues not of federalism, but of litigation tactics, for it is undisputed that the PTO decision cannot be reviewed in state court. And it is undisputed that no recourse was made to the Eleventh Amendment during the PTO proceeding.” Thus, the court held that the federal government’s award of a competing patent application did not coerce the state into waiving its sovereign immunity.
The Federal Circuit’s holding that “principles of fairness and consistency” can limit the protection conferred by the Eleventh Amendment could be useful in contexts other than patent litigation.