State sovereign immunity does not apply to IPR proceedings, Federal Circuit decides

Regents of the Univ. of Minnesota v. LSI Corp. et al. (Gilead Sci. Inc., intervenor)

Docket Nos. 2018-1560-65 (IPR2017-01068, -01186, -01197, -01200, -01213, -01214, -0129)
June 14, 2019

Brief summary: FC panel concluded “that state sovereign immunity does not apply to IPR proceedings”.

Summary: UMN appealed Board refusal to dismiss multiple IPR petitions “alleged to be improper because states supposedly enjoy sovereign immunity in IPR proceddings.” The IPRs relate to six of UMN’s patents relating to particular types of telecommunications chips. UMN sued LSI And Ericsson for infringement and each separately petitioned for IPR, alleging unpatentability for anticipation and obviousness. After the IPRs were filed, UMN filed a motion to dismiss based on state sovereign immunity. The Board denied UMN’s petition, finding “that state sovereign immunity applied to IPR proceedings but that UMN waived its immunity by filing suit against petitioners in district court” (DC). Gilead intervened as it is “facing the same issue for its own IPR petitions” (FC Appeal No. 2018-1559). The FC panel opinion noted that its 2018 Saint Regis decision “holding that IPR proceedings were not barred by tribal sovereign immunity” was denied certiorari by SCOTUS, and reviewed the historical development of the IPR system (e.g., “ex parte reexaminations did not solve the [USPTO’s] problems” and in 1999 inter partes reexaminations were added “in order to increase third party participation” and replaced by IPRs with the 2011 America Invents Act (AIA)). The FC panel explained that Eleventh Amendment state “sovereign immunity does not apply to suits brought by the [US], including agency proceedings commenced by the [US]” (St. Regis, FC 2018), and that the USPTO “Director, the politically appointed executive branch official, not the private party” (that filed the IPR petition) “who ultimately decides whether to proceed against the sovereign”, the Board “can continue to a final written decision” even without the petitioner or patent owner, and “the IPR procedure is in other respects distinct from ordinary civil litigation” (e.g., FRCP do not apply and a patent owner may amend its claims). As such, the FC panel decided, “state sovereign immunity is not implicated” by IPR (Oil States, US 2018 (“IPR proceedings could be conducted before the agency rather than an Article III court because they concern matters ‘which arise between the Government and persons subject to its authority”)). Thus, the FC panel concluded “that state sovereign immunity does not apply to IPR proceedings”, without addressing “the issue of whether, if sovereign immunity were to apply to IPR proceedings, the state here waived” it “by asserting patent claims in [DC] that were later challenged” in an IPR. The FC panel also noted that “the concerns raised by the parties and the amici that…nothing would prevent a state from lending its sovereign immunity to private parties, as the tribe attempted to do in St. Regis…would undo Congress’ central quality control mechanism in creating post-grant administrative proceedings.”

This entry was posted in Article III disputes, Inter Parties Review (IPR), IPR. Bookmark the permalink.

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