Expanded Panel Curtails Sovereign Immunity Defense

An expanded panel of the Board has ruled that sovereign immunity from IPR is waived if the patentee files an infringement action on the patent in district court.

The Eleventh Amendment prevents federal courts from exercising jurisdiction over state entities.  In a handful of cases, patent owners have successfully invoked Eleventh Amendment immunity in an IPR, resulting in the proceeding being dismissed.  See, e.g., Covidien LP v. Univ. of Fla. Research Found., Inc., IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21); NeoChord, Inc. v. Univ. of Md., Balt., IPR2016-00208 (PTAB May 23, 2017) (Paper 28).  The ability to be immune from IPR is so desirable that a number of patent owners have assigned their patents to Native American Tribes in an effort to shield the patents from being subject to the PTAB’s jurisdiction.  However, in Ericsson Inc. v. Regents of the Univ. of Minnesota, IPR2017-01186 (Dec. 19, 2017) (Paper 14), an expanded panel of the Board has ruled that a sovereign entity waives its immunity from IPR once it files a patent infringement action in federal court.

In Ericsson, the petitioner did not dispute that the patent owner was a state entity that could generally claim sovereign immunity under the Eleventh Amendment.  The petitioner argued, however, that Eleventh Amendment immunity was not available as a defense in an IPR proceeding.

The Board rejected the petitioner’s argument. The Board found IPR proceedings to be analogous to interference proceedings, for which the Federal Circuit held Eleventh Amendment immunity as being an available defense.  Accordingly, the Board concluded that a patent owner may assert Eleventh Amendment immunity in an IPR proceeding.

The petitioner further argued that, even if the patent owner could assert immunity in an IPR, the defense had been waived in this particular case because the patent owner had filed suit on the patent in federal court.

The Board agreed. According to the Board, “it is reasonable to view a State that files a patent infringement action as having consented to an inter partes review of the asserted patent.”  Furthermore, the Board reasoned that it would be unfair and inconsistent to allow a state entity to avail itself of the federal government’s authority when filing a patent infringement action in federal court but then invoke the sovereign immunity defense in an IPR proceeding.  Therefore, the Board ruled that the patent owner had waived sovereign immunity upon filing suit on the challenged patent in the district court.

Another interesting part of this decision is the Board’s discussion regarding its procedures for expanding panels.  The Ericsson decision notes that the Chief Judge may expand a panel when the proceeding involves an issue of “exceptional importance.”