Toyota Requests Adverse Judgment After University of Minnesota is Dismissed from IPR on the Basis of Sovereign Immunity

| Peter Law

A closely watched case on sovereign immunity, Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp., IPR2017-00572, has now been terminated by the patent owner’s request for adverse judgment.

On July 13, 2017, the PTAB dismissed the Regents of the University of Minnesota (UMinn) from IPR proceedings on the basis of UMinn’s sovereign immunity, but allowed the IPR to proceed against Toyota, a co-owner of the challenged patent, holding that Toyota would adequately represent UMinn’s interest in the challenged patents. The PTAB Grants the University of Minnesota Sovereign Immunity but does not Terminate IPR July 20, 2017. Reactive Surfaces, IPR2017-00572, Paper 32 at 17. This decision stood in contrast to a previous PTAB decision in which the IPR was not allowed to proceed against a licensee, Neochord, after the licensor, University of Maryland, had been dismissed on the basis of sovereign immunity. See Neochord, Inc. v. Univ. of Md., Balt., IPR2016-00208, Paper 28 at 20 The PTAB Terminates IPR Based on Sovereign Immunity of University of Maryland May 26, 2017.

On August 21, 2017, Toyota filed its POPR, and on November 9, 2017, the PTAB instituted IPR. IPR2017-00572, Paper 37. Although Reactive Surfaces’ petition challenged Claims 1-23 of U.S. Pat. No. 8,252,571 (the ’571 patent), the PTAB only instituted IPR of Claims 22-23. Id. at 19. On January 23, 2018, Toyota requested adverse judgment on instituted Claims 22 and 23, which Reactive Surfaces did not oppose, and which the PTAB granted. IPR2017-00572, Paper 42 at 2. Thus, the proceedings of this IPR are now terminated.

Since this trial ended on the grant of adverse judgment against patent co-owner Toyota, it is unlikely that this case will ever reach the Federal Circuit. This means that the discrepancy between this case and Neochord, where IPR is allowed to proceed against a co-owner but not against a licensee, will likely remain unresolved at the Federal Circuit for the time being.

The PTAB’s decision also did not state whether UMinn had any input in Toyota’s strategy to request adverse judgment. Thus, from the record, it is not clear whether Toyota adequately represented the interests of UMinn in this case.