Patent Owner Waives Sovereign Immunity in IPR Proceeding by Filing Infringement Suit

By: Margaux Savee 

An expanded panel of seven patent judges in an IPR proceeding held that the Regents of the University of Minnesota waived its Eleventh Amendment immunity by filing an action in the district court alleging infringement of the same patent challenged in the IPR. LSI Corp. and Avago Technologies U.S. Inc., Case IPR2017-01068 (Dec. 19, 2017).

On August 25, 2016, the Regents of the University of Minnesota filed a suit against LSI Corporation and Avago Technologies U.S. Inc. in the U.S. District Court of Minnesota alleging patent infringement of U.S. Patent No. 5,859,601. Shortly thereafter, on March 10, 2017, LSI Corporation and Avago Technologies U.S. Inc. (“Petitioners”) filed a Petition for IPR on the ‘601 patent. The Regents of the University of Minnesota (“Patent Owner”) subsequently filed a Motion to Dismiss on May 9, 2017, claiming state sovereign immunity under the Eleventh Amendment. Petitioners argued Patent Owner waived any claim to sovereign immunity by voluntarily suing Petitioners for patent infringement in the district court. The Board agreed.

The Federal Circuit has held that Eleventh Amendment immunity is available in interference proceedings before the Board because interference proceedings are similar in procedure to civil litigation. Vas-Cath, Inc. v. Curators of Univ. of Mo., 473 F.3d 1376, 1381-82. And the Board found that IPR proceedings are sufficiently similar to interferences and other adjudicatory proceedings such that the Eleventh Amendment defense is likewise available in IPR proceedings. Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., Case IPR2016-01914 (July 13, 2017); NeoChord, Inc. v. Univ. of Md., Balt., Case IPR2016-00208 (May 23, 2017); Covidien LP v. Univ. of Fla. Research Found. Inc., Case IPR2016-01274 (Jan. 25, 2017).

However, the Board here found that Patent Owner waived its claim to sovereign immunity by filing a patent infringement action against Petitioners in the district court. The Board drew parallels between this case and Regents of Univ. of New Mexico v. Knight, 321 F.3d 1111, 1125-26 (Fed. Cir. 2013), where a district court found that the State waived its Eleventh Amendment immunity as to compulsory counterclaims. That is, the plaintiff must anticipate the defendant will raise compulsory counterclaims or be forever barred from doing so in the future. Similarly, the Board here found that a party served with a patent infringement complaint must request IPR of the asserted patent within one year of service or be forever barred from doing so in the future. Therefore, as a plaintiff must anticipate a defendant will raise compulsory counterclaims in the district courts, a plaintiff must likewise anticipate a defendant may file an IPR of the asserted patent. 

The Board also noted that it would be unfair and inconsistent to allow a State to avail itself of the federal government’s authority by filing a patent infringement suit in the federal court, but then selectively invoke its sovereign immunity to bar a defendant from requesting IPR of the asserted patent from a different branch of the government. And though the Petitioner may be able to assert invalidity as a defense or counterclaim in the district court action, it would be unfair and inconsistent to bar the Petitioner from obtaining the benefits of an IPR.

In a concurring opinion, Judge Harlow agreed that the Patent Owner’s Motion to Dismiss must be denied, but for markedly different reasons, namely, that a State that secures patent rights from the Patent Office may not subsequently invoke sovereign immunity as a shield against reconsideration by the Patent Office in the IPR. Importantly, Judge Harlow held that IPR is a circumscribed in rem proceeding, in which the Patent Office exercises jurisdiction over the patent; IPRs do not seek to resolve the dispute between parties. Indeed, a petitioner need not have Article III standing, and participation by the parties subsequent to the institution is not required.

A similar decision and concurring opinion denying patent owner’s motion to dismiss due to waiver was held in Ericsson Inc. et al. v. Regents of the University of Minnesota, case numbers IPR2017-01186, IPR2017-01197, IPR2017-01200, IPR2017-01213, IPR2017-01214, and IPR2017-01219.