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State’s Patent Infringement Is Not Actionable in Federal Court Even When No State Forum Is Available for Suit, Provided Other State Remedies Are Available

August 09, 2006
Blackford, Christopher T.

Decision icon Decision

Last Month at the Federal Circuit - September 2006

Judges: Rader, Schall (concurring), Gajarsa (author)

[Appealed from: W.D. Mo., Judge Wright]

In Pennington Seed, Inc. v. Produce Exchange No. 299, No. 05-1440 (Fed. Cir. Aug. 9, 2006), the Federal Circuit affirmed the district court’s dismissal of the Original Complaint filed against the University of Arkansas (“the University”) and the First Amended Complaint filed against four University officials due to Eleventh Amendment immunity and lack of personal jurisdiction.

U.S. Patent No. 6,111,170 (“the ’170 patent”), the patent-in-suit, which issued to AgResearch Limited and is licensed to Pennington Seed, Inc. (collectively “Pennington”), is directed to a type of nontoxic fescue grass that does not adversely affect livestock that grazes upon it. In its Original Complaint, Pennington sued the University for infringement and conversion of the ’170 patent. The district court dismissed the Original Complaint for failure to state a claim upon which relief can be granted because the Eleventh Amendment bars the action against the University in federal court. However, the district court granted Pennington’s motion to file the First Amended Complaint, in which Pennington sued four University officials for infringement of the ’170 patent, deprivation of federal rights, and conversion. The district court subsequently dismissed the First Amended Complaint based on Eleventh Amendment immunity again and for lack of personal jurisdiction.

First, the Federal Circuit affirmed the district court’s finding that Pennington’s claims were barred by the Eleventh Amendment because, although the district court found that no state forum exists in Arkansas in which to contest patent infringement, the district court did not find that other available state remedies were so insufficient that they violated the Fourteenth Amendment. The Court explained that the Eleventh Amendment prevents citizens from bringing suit against a state in federal court without the state’s consent, and in the case of infringement by a state, the claim may be actionable in federal courts only where the state provides no remedy or only inadequate remedies to the patent owner. While Pennington alleged that the Arkansas Claims Commission is the only available forum and it could not issue injunctions, conduct discovery, or issue a monetary award over $10,000, the Court held that Pennington failed to allege how such procedures were so inadequate as to abrogate state sovereign immunity. Moreover, the Court reiterated that only Congress can abrogate Eleventh Amendment sovereign immunity for patent infringement if there is a showing that state remedies are insufficient and violate due process, and Pennington failed to allege or explain how Congress made the specific finding in this case.

Furthermore, the Court recognized that other remedies are available in Arkansas, including legislative consideration of claims and monetary awards greater than $10,000, and a potential state judicial remedy for conversion, which although they may be uncertain or less convenient, or may undermine the uniformity of patent law, are insufficient to show that the patentee’s due process rights have been violated.

Turning to Pennington’s allegations against the University officials, the Federal Circuit acknowledged that under the Ex parte Young doctrine, the continuing prospective violations of a federal patent right by state officials may be enjoined by a federal court. However, the Court noted that this procedure cannot be applied to an action against any random state official and that there must be a connection between the state officer and the enforcement of the act. Specifically, the Court stated that the doctrine requires an actual violation of federal law by the state official.

In this case, the Federal Circuit affirmed the district court’s finding that Pennington failed to allege any causal connection between the University officials and the alleged patent infringement. Instead, Pennington alleged that the University officials were liable because they supervised intellectual property activity and, therefore, had the ability to stop an ongoing violation of federal law. According to the district court and the Federal Circuit, these allegations were insufficient to causally connect the officials to a violation of federal patent law. Distinguishing this case from one where a state official’s refusal to perform a duty is itself a violation of federal law, the Federal Circuit interpreted Pennington’s allegations as improperly seeking the court to enjoin the University officials from neglecting their job duties under state law.

Additionally, regardless of the Ex parte Young claims, the Federal Circuit affirmed the district court’s dismissal of Pennington’s First Amended Complaint for lack of personal jurisdiction in Missouri over the University officials. Although Pennington only needed to make a prima facie case of personal jurisdiction in the absence of an evidentiary hearing on the issue, the Court found no allegation that the University officials had minimum contacts with the State of Missouri. In particular, the Court emphasized that the only place the word “Missouri” was used in the First Amended Complaint was in conjunction with the organization of a corporation no longer a party to the action, and the First Amended Complaint alleged residence in Arkansas, not Missouri.

In his concurrence, Judge Schall explained that he was in full agreement with the Court’s opinion regarding the University’s Eleventh Amendment immunity from suit and the lack of jurisdiction over the four University officials, but he was of the opinion that the Court should not have reached the question of whether the Ex parte Young doctrine applies to the University officials.