Sovereign Immunity May Allow Research Institutions at State Universities to Avoid Patent Validity Challenges at the Patent Office

Abstract

The Patent Trial and Appeal Board determined that a state’s sovereign immunity provided by the Eleventh Amendment barred an inter partes review proceeding from being instituted against a research foundation of a state university that had not waived its sovereign immunity.

Covidien petitioned the Patent Office to review the validity of a patent owned by the University of Florida Research Foundation Inc. under the Patent Office’s inter partes review procedures. The Patent Trial and Appeal Board dismissed the petitions, finding that the Research Foundation, as an arm of the State of Florida, could assert Florida’s sovereign immunity defense.

Background

The University of Florida Research Foundation Inc. filed an action against Covidien LP in a Florida court alleging breach of a license contract between the parties involving a U.S. Patent. Covidien then separately filed three petitions before the Patent Trial and Appeal Board seeking inter partes review of the patent. The Research Foundation, arguing that it was an arm of the State of Florida, filed a motion to dismiss Covidien’s petition on the basis of the Research Foundation’s Eleventh Amendment sovereign immunity rights. 

The Covidien Decision

In evaluating the Research Institute’s claim to sovereign immunity, the Board began its analysis by explaining that the Supreme Court has broadly interpreted the sovereign immunity principle of the Eleventh Amendment to preclude states from being subject to certain adjudicative administrative proceedings. The Board then considered whether the Supreme Court’s ruling in Federal Maritime Commission v. South Carolina State Ports Authority, that state sovereign immunity barred the adjudication of complaints filed by a private party against a nonconsenting state, applied to inter partes review proceedings before the Patent Office. The Board concluded that sovereign immunity barred the institution of an inter partes review against a state that has not waived sovereign immunity, because inter partes review proceedings were sufficiently similar to civil litigation that the Framers of the Constitution would have thought the states possessed immunity from such proceedings.

The Board concluded that the Research Foundation qualified as an arm of the State of Florida that could assert sovereign immunity as a defense to Covidien’s inter partes review petitions because it was a direct-support organization of the University of Florida responsible for the licensing patents and collecting royalties on its behalf and the State of Florida exercised sufficient control over the Research Foundation.

Strategy and Conclusion

This case illustrates how courts determine whether state instrumentalities like research institutions of state universities may avoid patent validity challenges under the inter partes review procedures at the Patent Office due to the Eleventh Amendment defense of state sovereign immunity.

Further Information
The Covidien decision can be found here.