March, 21st, 2019 at 2:19 pm
Kluhsman Machine, Inc. has sued NASCAR Supplier United Race Parts, LLC in Statesville, North Carolina alleging infringement of its patent to “flower” lug nut sockets used in motorsport wheel guns.
February, 7th, 2017
The 11th Amendment to the U.S. Constitution limits the judicial authority of the federal courts to subject a state to an unconsented lawsuit, and precludes certain adjudicative administrative proceedings from adjudicating complaints filed by a private party against a nonconsenting state.
In a case of first impression, the Patent Trial and Appeal Board (PTAB) ruled that University of Florida Research Foundation Incorporated (“UFRF”), as an arm of the State of Florida, was entitled to an 11th Amendment sovereign immunity defense to three inter partes reviews (IPRs) filed by Covidien LP (“Covidien”) against UFRF’s U.S. Patent No. 7,062,251 (“the ‘251 Patent”).
Covidien was a licensee of the ‘251 Patent. UFRF sued Covidien for breach of a license agreement involving the ‘251 Patent. Covidien responded with a counterclaim seeking a declaratory judgment of non-infringement of the ‘251 Patent. Separately, Covidien filed the three IPRs against the ‘251 Patent. UFRF filed a motion to dismiss the IPRs on the basis of its sovereign immunity defense.
In an order entered January 25, 2017, the PTAB provided an analysis of Supreme Court and Federal Circuit precedent relating to the 11th amendment sovereignty immunity defense. In particular, the PTAB discussed the Supreme Court decision in Fed. Mar. Comm’n v South Carolina State Ports Auth., 535 U.S. 743 (2002) (“FMC”), which held that a “Hans presumption” of sovereign immunity may apply where “the Constitution was not intended to raise up any proceedings against the States that were anomalous and unheard of when the Constitution was adopted.” Id. (citing Hans v. Louisiana, 132 U.S. 1, 18 (1890)). To decide whether the “Hans presumption” applied to certain adjudicative administrative proceedings, the Supreme Court in FMC examined the nature of the proceedings to “determine whether they are the type of proceedings from which the Framers would have thought the States possessed immunity when they agreed to enter the Union.” Id. at 756.
The PTAB concluded that the FMC decision applies to IPR proceedings, and that IPR proceedings meet all the requirements evaluated in FMC for a sovereign immunity defense to apply. PTAB dismissed the IPRs filed against UFRF because UFRF had raised its sovereign immunity defense and had not otherwise consented to the IPRs.
Importantly, the PTAB noted that UFRF had not filed any infringement or declaratory judgment case relating to the ‘251 Patent. The PTAB hinted that the filing of such a case might have effected a waiver of UFRF’s sovereign immunity defense, and thus a consent to the IPRs. However, the PTAB did not decide that issue.
A state-owned patent will not be subject to an IPR unless the patentee waives its sovereign immunity defense or otherwise consents to the IPR. The filing of an infringement or declaratory judgement case by the patentee might effect a waiver of its sovereign immunity defense.