Patent Docs: Sovereign immunity not absolute for states under the Eleventh Amendment

A question of sovereign immunity, which has come before the courts in many guises of late (Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.; Regents of the University of Minnesota v. LSI Corp.), arose again in Board of Regents of the University of Texas System v. Boston Scientific Corp. earlier this month.  And as has happened thus far in this spate of these cases, the Court did not recognize the immunity as advanced by the State, in this case asserted over the question of proper venue.

 

The case arose when the University of Texas (UT) sued Boston Scientific for infringing U.S. Patent Nos. 6,596,296 and 7,033,603 directed to implantable drug-releasing biodegradable fibers.  UT filed suit in the Western District of Texas, and Boston Scientific successfully moved to transfer the lawsuit to the District of Delaware.  It was undisputed that Boston Scientific satisfied the legal requirements for this transfer, and that it was consistent with Supreme Court (TC Heartland LLC v. Kraft Foods Group Brands LLC) and Federal Circuit law (In re Cray Inc.). But here the University raised another concern not addressed in prior cases: that as a sovereign (because it was an "arm of the State") it could not be haled into court in a different state by a citizen of another state under the Eleventh Amendment. This argument was unavailing and the case was transferred to Delaware. Texas appealed the transfer order.

 

The Court of Appeals for the Federal Circuit affirmed, but first concluded that the question was properly before it; generally such transfer orders cannot be appealed until after judgment or dismissal of the case. With a combination of legal and practical reasoning, the Court found jurisdiction was proper, because the transfer order was conclusive, the issue (sovereign immunity) was "important," and the order is "effectively unreviewable on appeal from a final judgment."

 

The panel then turned to the University's arguments on the merits:  first, that "U.S. Constitution's Original Jurisdiction Clause ensures that a State cannot be forced to sue or consent to be sued in a court located in another State"; second, that "the Eleventh Amendment confirms that a State is entitled to control where it litigates against a private party"; and third "that it did not consent to jurisdiction or waive its sovereignty rights in Delaware, and that the patent venue statute does not abrogate those rights."  There was no dispute, between the parties or the courts, that the University of Texas is an arm of the state and entitled to the same sovereign rights as the State of Texas itself.  Nevertheless, the panel disagreed with the University's assertion that "a State has the right to sue a private party in any forum as long as personal jurisdiction requirements are met" when the State is a plaintiff.  Moreover, the panel held that "nothing in the U.S. Constitution's Original Jurisdiction Clause or in UT's other asserted authorities . . . supports the proposition that a State has the right to bypass federal venue rules when it engages in patent litigation as a plaintiff."  The Eleventh Amendment applies to suits brought against a state, not by a state according to the opinion. The Court also rejected the University's argument that "State sovereign immunity—a complementary attribute of state sovereignty—confirms that only the state can dictate where it litigates its property rights" because none of the cases the University cited in support were instances where the State was a plaintiff.

 

With regard to the University's original jurisdiction argument, the panel noted that the Constitution provided original but not exclusive jurisdiction to the Supreme Court in cases where a State is a party.  The panel appreciated that the University was asserting not only that "(a) it has a Constitution-rooted right to avoid out-of-state venues, but also that (b) it has an affirmative right to sue in a federal district court that Congress has deemed unavailable."  The Court disagreed with the University's reading of cases it asserted in support of these propositions, concluding that the cited case law meant that States can sue in lower Federal courts in addition to the Supreme Court and not that sovereign immunity gives a State the right to sue or be sued in its own state fora.

 

Finally, the panel rejected the University's argument that its right to sue in the forum of its choice was one of the "inherent powers of a state sovereign."  The basis of this determination was that when a State voluntarily invokes federal jurisdiction (as here, in a patent case), then "[i]t logically follows that the State must then abide by federal rules and procedures—including venue rules—like any other plaintiff" and "it would be 'anomalous or inconsistent' for [the University] to both invoke federal question jurisdiction and then to assert sovereignty to defeat federal jurisdiction.”

 

Thus, at least in patent cases States and their universities are subject to the same panoply of procedural and substantive law as any other plaintiff.