PTAB Finds that Suing in Federal Court Waives Sovereign Immunity

| Peter LawKerry S. Taylor, Ph.D.

On December 19, 2017, a seven-judge expanded PTAB panel ruled that the University of Minnesota (UM) waived its Eleventh Amendment immunity defense when it filed a patent infringement action in federal district court.  Eleventh Amendment immunity had been the focus of several previous PTAB decisions, but these previous decisions did not involve a sovereign who had filed an infringement action in federal court before an IPR petition was filed. 

In early 2017, the PTAB held that a state university was immune from IPR challenge under Eleventh Amendment state sovereign immunity.  Covidien LP v. Univ. of Florida Research Found. Inc., IPR2016-01274, Paper 21 at 27.  Mindful of the Covidien decision, Ericsson Inc. filed several IPR petitions against the Regents of UM and noted that the Covidien case was distinguishable because the University of Florida had not waived its sovereign immunity by asserting its patent in federal district court, whereas UM had asserted its patent in the US District Court of Minnesota.  UM moved to dismiss Ericsson’s IPR petitions, arguing that filing of the lawsuit in federal district court did not constitute a waiver of immunity at the PTAB.

In deciding UM’s motion to dismiss, the PTAB held that filing an action for patent infringement in federal court waives the patent owner’s Eleventh Amendment immunity in IPR as to that patent.  Addressing UM’s arguments that waiver should only apply in the forum in which the action is filed, the PTAB noted that, although a State’s waiver of Eleventh Amendment immunity in one action “does not necessarily extend to a separate action, . . . there is not a ‘bright-line rule whereby a State’s waiver of sovereign immunity can never extend to a . . . separate lawsuit.’” Ericsson Inc. v. Regents of the Univ. of Minn., IRP2017-01186, Paper 14 at 7 (citing Biomedical Patent Mgmt. Corp. v. Cal., Dep’t of Health Servs., 505 F.3d 1328, 1339 (Fed. Cir. 2007)). The PTAB reasoned that a State that files an infringement action in federal court can reasonably be viewed as consenting to an IPR of the asserted patent.   The PTAB stated that it would be unfair and inconsistent to allow a sovereign to sue in federal court, and then allow that sovereign to assert Eleventh Amendment immunity to bar IPR at the Patent Office.  The PTAB’s decision applies to the other co-pending cases between Ericsson and UM:  IPR2017-01179, IPR2017-01219, IPR2017-01200, IPR2017-01213, and IPR2017-01214, IPR2017-01275, and IPR2017-01276.

With UM’s motions to dismiss denied, the IPRs will proceed either to institution or denial based on the merits of the petition.  If the PTAB does not institute IPR, UM will likely not have any reason to pursue review of the PTAB’s decision on waiver.  If, however, IPR is instituted, and the cases proceed to a final written decision, UM may try to appeal the waiver decision, should the outcome of the final written decision be at least partially unfavorable for UM.    

The PTAB convened a seven-judge panel for this decision, instead of the standard three-judge panel.  The PTAB stated that the panel was expanded “due to the exceptional nature of the issues presented.” IPR2017-01186, Paper 14 at 3.  The PTAB noted that Eleventh Amendment immunity continues to be raised before the Board, and that there are multiple cases which present the issue of waiver in the Eleventh Amendment context, but this issue has not yet been addressed.  Id.  By using an expanded, seven-judge panel, the PTAB may be trying to establish a guideline for other PTAB panels to follow.  It is possible that this decision might be designated as precedential or informative in the future.  

In addition, this seven-judge panel decision is noteworthy because the expanded panel also determined that Eleventh Amendment immunity is available as a defense in IPR, and can substantiate dismissal of the IPR when there is no waiver.