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State Sovereign Immunity Does Not Bar IPRs

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The Federal Circuit held in Regents of the University of Minnesota v. LSI Corp. that state sovereign immunity does not preclude inter partes review (IPR) proceedings of patents held by sovereign entities.1 The unanimous precedential opinion, authored by Judge Dyk, reads as a logical extension of the court’s reasoning that tribal immunity does not bar IPR proceedings in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.2 panel also provided another section of unanimous “additional views,” which elucidate further supporting bases for the Court’s conclusion.3  The end result is that under Regents, state universities are now shieldless in AIA reviews, and, in light of the Supreme Court’s recent decision that government entities are not persons that can petition for IPR, state universities may be swordless in that context as well.4

In Regents, the University of Minnesota (UMN) sued LSI Corp. and customers of Ericsson Inc. in federal district court, alleging infringement of six of UMN’s patents.5  Ericsson intervened in the customer suits.  Subsequently, LSI and Ericsson filed a total of seven petitions for IPR.6 UMN filed motions to dismiss those petitions, claiming that they were barred by state sovereign immunity.  The Patent Trial and Appeal Board denied UMN’s motion, concluding that although IPRs are similar to civil trials and sovereign immunity applies, UMN waived its immunity by filing suit in district court.7 UMN appealed.

The Federal Circuit’s opinion begins with a list of reasons why invalid patents are granted by the PTO, and then provides a long description of the history of post-issuance proceedings at the PTO, much of which echoes Judge Dyk’s concurrence in Saint Regis.  This winding tale of the evolution toward IPR lays the groundwork for the panel’s conclusion that IPR is more like an agency enforcement action than a civil suit.8

Next, the court discusses state sovereign immunity, explaining that “States typically enjoy immunity from lawsuits brought by private parties.”9 Although this immunity applies to proceedings brought in Article III forums and “to agency adjudications brought by private parties that are similar to court adjudications,” explains the court, it “does not apply to suits brought by the United States, including agency proceedings commenced by the United States.”10 The panel relies on the Supreme Court’s decision in Federal Maritime Commission v. South Carolina State Ports Authority (“FMC”) for this point.11 In FMC, the Court held “that state sovereign immunity bars [a federal agency] from adjudicating complaints filed by a private party against a nonconsenting State.”12  Key to the Court’s decision in that case were the strong similarities between the Federal Maritime Commission proceedings at issue and civil litigation.13 The Court clarified, however, that state sovereign immunity would not bar an agency from bringing an enforcement action against the state “upon its own initiative or upon information supplied by a private party.”14

In Regents, the Federal Circuit treated its decision as an extension of its conclusion in Saint Regis “that IPR is more like an agency enforcement action than a civil suit brought by a private party.”15  The panel concludes that “fundamentally these proceedings continue to be a ‘second look at an earlier administrative grant of a patent.’”16  In determining that IPR is an agency enforcement action to which state sovereign immunity does not apply, the court focuses on three ways that IPR differs from civil litigation.

First, although an IPR petition must be filed by a third party, whether to institute is within the discretion of the Director of the USPTO.17  Second, the Board can continue IPR proceedings “even if the petitioner or patent owner elects not to participate.”18 Third, the agency procedures in IPR are unlike the procedures used in civil litigation.19 For example, the Federal Rules of Civil Procedure do not apply, and a patent owner may amend its claims during an IPR.20 For these reasons, the court concludes that, although the Government cannot initiate IPR proceedings on its own, under the FMC analysis, IPR “is similar to an agency enforcement action instituted by the USPTO ‘upon information supplied by a private party’ rather than civil litigation, so state sovereign immunity is not implicated.”21The panel also cites the Supreme Court’s decision in Oil States Energy Services LLC v. Greene’s Energy Group, LLC, holding that IPR concerns “public rights” as supporting its conclusion that IPR is “a proceeding between the United States and the patent owner,” and thus IPR is really an agency “proceeding[] brought by the United States,” to which state sovereign immunity does not apply.22

In light of Saint Regis, the court’s conclusion is unsurprising.23 The expression of additional views of the entire panel, however, is atypical and therefore noteworthy.  In this case, the additional views focused on the rationale that an IPR proceeding is one against the patent (in rem), rather than against the patent owner (in personam) and, therefore, sovereign immunity does not apply.  Additional views are dicta and do not represent the opinion of the court.  They are typically used to express the views of a single judge regarding an opinion or the state of the law in a particular area.  When an entire panel, or even two judges for that matter, have additional reasons for supporting the outcome of the majority opinion, those reasons generally make it into the opinion of the court.  One possible motivation for this unusual statement of dicta might be that the panel is simply treating its holding as a logical extension of Saint Regis, which did not mention the in rem rationale.

This same in rem rationale was mentioned in the concurring opinions in each of the IPRs on appeal in Regents.  Each Board decision included a concurring opinion concluding “that sovereign immunity was not implicated in part because ‘[a]t its core, inter partes review is a circumscribed in rem proceeding, in which the Patent Office exercises jurisdiction over the patent challenged, rather than the parties named.’”24 The judges on the Federal Circuit panel essentially agreed, reasoning that IPR is a type of in rem proceeding to which state sovereign immunity does not apply.25  Although state sovereign immunity does apply to some in rem proceedings such as quiet title actions against state-owned real property, it does not apply to others such as bankruptcy proceedings where obtaining jurisdiction over a state or its officers is not required.26 The judges concluded that IPR is more like the latter.27

The end result of Regents is that state universities are unable to use sovereign immunity as a basis for dismissing IPR petitions.  And, because they are government entities, under the Supreme Court’s decision in Return Mail, state universities also may not qualify as a “person” that can seek AIA reviews.28 At first glance, one may question why state universities cannot initiate IPRs themselves but are subject to such review.  However, the Court in Return Mail explained that there was “no oddity” in “affording nongovernmental actors an expedient route [for review] that the Government does not also enjoy.”29 Additionally, since state sovereign immunity still applies to suits filed in district court,30 the two decisions arguably level the two playing fields (i.e., the USPTO and district court) between state universities and nongovernmental patent owners.



1Regents of the Univ. of Minn. v. LSI Corp., 926 F.3d 1327, 1341–42 (Fed. Cir. 2019) (“Regents”).

2Saint Regis Mohawk Tribe v. Mylan Pharms. Inc., 896 F.3d 1322, 1329 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 1547 (2019).

3Regents, 926 F.3d at 1342–46.

4 See Return Mail, Inc. v. U.S. Postal Serv., 139 S. Ct. 1853, 1867 (2019) (holding that the Government “is not a ‘person’ who may petition for post-issuance review under the AIA”).

5UMN asserted U.S. Patent No. 5,859,601 against LSI and U.S. Patent Nos. 7,251,768, 7,292,647, 8,588,317, 8,718,185, and 8,774,309 against Ericsson’s customers. Id. at 1330.

6See LSI Corp. v. Regents of the Univ. of Minn., No. IPR2017-01068, Paper 1 (P.T.A.B. Mar. 10, 2017); Ericsson Inc. v. Regents of the Univ. of Minn., Nos. IPR2017-01186, Paper 1 (P.T.A.B. Mar. 28, 2017); IPR2017-01197, Paper 1 (P.T.A.B. Mar. 29, 2017); IPR2017-01200, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01213, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01214, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01219, Paper 1 (P.T.A.B. Mar. 30, 2017).

7The Board’s order denying UMN’s motion to dismiss is at LSI Corp. v. Regents of the University of Minnesota, No. IPR2017-01068, Paper 19 at 4 (P.T.A.B. Dec. 19, 2017), which is identical in relevant part to the Board’s orders in Ericsson Inc. v. Regents of the University of Minnesota, Nos. IPR2017-01186, Paper 14 at 4; IPR2017-01197, Paper 14 at 4; IPR2017-01200, Paper 16 at 4; IPR2017-01213, Paper 14 at 4; IPR2017-01214, Paper 14 at 4; IPR2017-01219, Paper 15 at 4 (P.T.A.B. Dec. 19, 2017).

8Regents, 926 F.3d at 1339–41.

9Id. at 1337 (citing Alden v. Maine, 527 U.S. 706, 713 (1999)).

10 Id. (citing Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 752, 760 (2002)).

11FMC, 535 U.S. 743 (2002).

12Id. at 760.

13Id.

14Id. at 767–68.

15Regents, 926 F.3d at 1338–39 (quoting Saint Regis, 896 F.3d at 1327).

16Id. (quoting Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016)).

17 Id. at 1339.

18Id.

19Id.

20Id.

21Id. (quoting FMC, 535 U.S. at 768).  See also id. (explaining that “[35 U.S.C. § 311(a)] doesn’t authorize the Director to start proceedings on his own initiative”) (quoting SAS, 138 S. Ct. at 1355).

22Regents, 926 F.3d at 1339–40 (citing Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1373 (2018)).

23Id. at 1341.

24 Id. at 1330–31.

25Id. at 1345–46.

26Id. at 1343–45.

27Id. at 1345–46.

28See Return Mail, 139 S. Ct. at 1867 (holding that the Government “is not a ‘person’ who may petition for post-issuance review under the AIA”).

29Id.

30See Pennington Seed, Inc. v. Produce Exch. No. 299, 457 F.3d 1334, 1339–40 (Fed. Cir. 2006) (explaining that Congress cannot abrogate state sovereign immunity “under its Article I Commerce Clause power in patent cases”) (citing Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627, 647–48 (1999)).

 

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