Legislation to Curtail Sovereign Immunity in IPR May Be On the Way

Posted by Stuart Duncan Smith on Nov 13, 2017

A Native American tribe’s recent deal to obtain several pharmaceutical patents and seek dismissal of pending IPRs on the basis of sovereign immunity has piqued the public’s interest in sovereign immunity to IPR. The same tribe also recently asserted several other patents against Microsoft and Amazon, and may assert sovereign immunity from IPR there too. Prompted by the tribe’s actions, a subcommittee of the House Judiciary Committee held a hearing on what Congress can and should do about it. Although much of the hearing focused on what many perceive as the problem of tribal sovereign immunity in IPR—not the use of sovereign immunity to IPR by state universities—many of the proposed reforms would also target state universities. Whether any of these reforms will be enacted remains to be seen, but there are reasons to doubt their constitutionality.

The hearing, held on November 7, 2017, by the Courts, Intellectual Property, and the Internet Subcommittee, was apparently organized in response to outrage among some regarding the assignment of patents to sovereigns for the purpose of asserting immunity from IPR. The announcement of the hearing emphasized that it was an opportunity to hear about the “impact of patents being sold to entities that can claim sovereign immunity,” as was the case with the deal the tribe made. The statements from the House Representatives and many of the witnesses suggested widespread agreement that non-sovereign patent owner should not be able to “rent” immunity from a sovereign to avoid IPR.

However, none of the Representatives or witnesses explained how the assignment of third-party patents to sovereigns for the purpose of claiming immunity has anything to do with state universities. Indeed, one of the witnesses pointed out that he was not aware of any state university accepting assignment of a third-party patent for protecting the patent from IPR. State universities generally obtain patents as a result of the research they do on campus, and the revenue from those patents funds their educational mission. Since the 1980 Bayh-Dole Act, Congress has encouraged state universities to get patents on inventions resulting from their research, because doing so promotes public use of state university-developed inventions.

The witnesses recognized that state universities and Native American tribes also differ in where their sovereign immunity comes from, which in turn impacts Congress’s options to limit the use of sovereign immunity in IPR. While state sovereign immunity is rooted in the Constitution, tribal sovereign immunity is not. Thus, Congress can generally curtail tribal sovereign immunity as it chooses, but its ability to curtail the sovereign immunity of states is limited. The Supreme Court struck down a previous attempt to abrogate state sovereign immunity in the patent context.[1] No witness suggested that Congress could limit states’ sovereign immunity to IPR.

Despite the differences between states and Native American tribes, the hearing explored statutory changes to IPR that would purportedly apply to both. For example, some witnesses suggested that sovereigns could be required to affirmatively waive immunity as a condition of receiving research funding or obtaining a patent. Those witnesses did not acknowledge that the Supreme Court has rejected the idea that Congress could force states to waive their immunity in order to participate in otherwise lawful activity.[2]

The hearing also explored whether statutory changes could be made to permit IPR to go forward without participation of sovereign patent owners that refuse to waive their immunity. The hearing offered few details about how such changes would be implemented, or whether, for example, such a proceeding would resemble ex parte reexamination—a proceeding already available to challengers. Further, the hearing did not address how such a proceeding would address the Supreme Court’s ruling that sovereign immunity bars an agency from adjudicating a private party’s complaint against a sovereign, even where participation by the sovereign is optional.[3]

This hearing suggested that some in Congress are interested in curtailing the use of sovereign immunity in IPR, but whether state universities will be targeted in ways that raise constitutional concerns remains unclear. While state immunity from IPR provides a privilege that private citizens do not enjoy, that is not new, as states enjoy immunity from numerous types of actions.[4] As the Supreme Court has explained, states’ unique constitutional role “sets them apart” for special treatment.[5] Thus, a one-size-fits-all reform to IPR that addresses the concerns of some about tribal sovereign immunity, but also seeks to limit states’ rights, may not be constitutionally possible.

This blog has covered sovereign immunity and IPR extensively, and previous blog posts on the subject can be found below:

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[1] Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627 (1999).

[2] Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 687 (1999).

[3] Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 763-64 (2002).

[4] E.g., Fed. Mar. Comm’n, 535 U.S. 743 (agency adjudications); Alden v. Maine, 527 U.S. 706 (1999) (state courts).

[5] Coll. Sav. Bank, 527 U.S. at 685-86.

Topics: Sovereign immunity

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