Gensetix, Inc. / Univ. Texas v. Baylor College of Medicine
Docket No. 2019-1424
NEWMAN (D/C), O’MALLEY, TARANTO (C)
July 24, 2020
Brief Summary: DC correctly found UT could not be involuntarily joined under Eleventh Amendment but abused its discretion in finding suit could not proceed without UT.
Summary: Gensetix is the University of Texas’s (UT) exclusive licensee of US 8,728,806 and 9,333,248 directed to methods for modifying a patient’s immune system to fight cancer. Gensetix sued Baylor for infringement and named UT as an involuntary plaintiff pursuant to Rule 19(a). The DC determined that UT could not be added as an involuntary plaintiff under the Eleventh Amendment (at UT’s request) and that the suit could not proceed without UT. This opinion explains that “[t]he license agreement provides that, Gensetix, at its own expense, must enforce any patent ‘covered by the license and is entitled to retain recovery from such enforcement’” and that “UT retained a secondary right to sue if Gensetix fails to file suit against a substantial infringer within six months” of knowing of the infringer. Gensetix and UT also agreed to full cooperation in a suit and “that nothing in the agreement shall be deemed a waiver by UT of its sovereign immunity.” UT refused to be joined to the suit and Gensetix added it as an involuntary plaintiff. The inventor is former UT employee William Decker who moved to Baylor and, according to Gensetix, “published content while at Baylor that ‘gives Gensetix reason to believe’ that Decker has practiced methods infringing at least claim 1 of each of the patents-in-suit.” The FC panel concluded that “Rule 19(a)(2) cannot be used to drag an unwilling UT into federal court” because “UT did not voluntarily invoke federal court jurisdiction” (“the key distinction between Regents of UC and the present case” (Regents, FC 1997) and Gensetix “agreed to terms” in the license “expressly stating that UT was not waiving its sovereign immunity, and terms that allow UT to initiate suit on behalf of Gensetix, but not the other way around” (“in the absence of a state voluntarily availing itself of federal court jurisdiction, or an express waiver of sovereign immunity, Rule 19(a) must yield to the state’s assertion of sovereign immunity”). The FC panel therefore affirmed the DC’s “conclusion that UT may not be jointed as an involuntary plaintiff”. However, the FC panel also concluded that the DC abused its discretion in finding that the case cannot proceed without UT. This opinion explains that “Rule 19(b) provides that, where joinder of a required party is not feasible, ‘the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed”, including consideration of four factors (whether: it might prejudice a party, could be lessened, judgment in the required party’s would be adequate, and plaintiff would have an adequate remedy). The FC panel agreed with Gensetix that the DC “abused its discretion by failing to meaningfully analyze each of the Rule 19(b) factors…by collapsing the…inquiry into one dispositive fact: UT’s status as a sovereign” and “dismissed the lack of an adequate remedy for Genestix…as simply ‘an inherent risk’” of contracting “with a sovereign entity.”