Tech Transfer eNews Blog

Court ruling undermines sovereign immunity, puts university patents at risk

By Jesse Schwartz
Published: August 21st, 2019

State universities are now in a weaker position when protecting patents from inter partes review (IPR) petitions, after the Federal Circuit court ruled that sovereign immunity does not apply in patent challenges. The ruling could require some universities to reassess their patent enforcement strategies and brace for significantly higher costs from increased IPRs.

The case in question involves the University of Minnesota (UMN), which has argued that its patents could not be subject to IPR proceedings because, as an arm of the state, its patents were protected by sovereign immunity. The court said no in a rather forceful way, ripping this defense strategy from state universities across the country.

Some observers say this decision is another step in the road toward an anti-patent bias in the U.S. courts, but the legitimacy of that criticism depends on your perspective, says Edward H. Rice, JD, principal with the Miller Canfield law firm in Chicago.

“I can understand where patent owners are feeling under increasing pressure because of the IPR and other patent office procedures but also Supreme Court and district court rulings that, for instance, make it easier to collect attorney fees in unsuccessful cases,” Rice says. “That provides some disincentive and makes you think twice about bringing a case if you might have to pay the other side’s fees.”

The courts have been responding to legitimate concerns about patent trolls and frivolous patent infringement lawsuits, Rice says, but the UMN case and other recent rulings may signal that they have gone too far and are undermining the value of patents. “I think there may be some overreaction, with anti-patent sentiment swinging the pendulum too far against the patent owner,” Rice says. “It may swing back in the other direction some day, but I think there is some validity to the notion that rulings and laws in the past five to 10 years have swung more often than not against the patent owner.”

In the closely watched case, the Federal Circuit ruled that sovereign immunity does not apply to several IPR petitions filed against UMN-owned patents. (The ruling is available online here.) The court’s reasoning was based in part on a 2018 decision in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., which addressed whether tribal sovereign immunity would shield tribe-owned patents from IPR proceedings.

The court in that case determined that “tribal sovereign immunity cannot be asserted in IPRs.” The Saint Regis tribe petitioned the U.S. Supreme Court for review, but the court denied the petition for certiorari in April 2019.

The challenge was clouded somewhat by the fact that drug company Allergan, in an attempt to shield its patents from IPR, had paid a fee to the tribe and transferred title to its patents, essentially using sovereign immunity as a patent protection tool for a for-profit company. However, the Federal Circuit court in the UMN case determined that “the differences between tribal and state sovereign immunity do not warrant a departure from the reasoning in Saint Regis.” The court went on to say that with regard to the Saint Regis decision, “this reasoning applies equally to states as it does to tribes…. As we held in Saint Regis, IPR is properly viewed as an agency’s reconsideration of a previous patent grant that is aided by information supplied by a third party, and state sovereign immunity does not bar these proceedings.”

A detailed article analyzing the impact of the Federal Circuit ruling on patent protection and licensing appears in the August issue of Technology Transfer Tactics. For subscription information, CLICK HERE.

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