In a non-precedential opinion, the Federal Circuit recently reaffirmed that state universities cannot use sovereign immunity to avoid patent challenges at the PTAB stating that, “sovereign immunity does not apply to IPR proceedings when the patent owner is a state.” Regents of the University of Minnesota v. LSI Corp., 926 F.3d 1327, 1342 (Fed. Cir. 2019).
Here, the University of Texas owns the patents at issue, and Gensetix, Inc. is the exclusive licensee of the patents at issue. The patents are for dendritic cell cancer vaccines. According to the record, a named inventor of the patents at issue assigned the patents to UT, his employer at the time. The named inventor then started working at Baylor and continued to use the intellectual property without a license. Gensetix filed a district court suit in 2017. Baylor College of Medicine then filled petitions seeking IPRs, and in response, UT filled motions to dismiss these petitions stating that sovereign immunity applies to UT in IPR proceedings.
The Federal Circuit panel held that sovereign immunity does not apply to UT. In the University of Minnesota case, the Federal Circuit stated that IPRs are similar to enforcement proceedings brought by a federal agency where sovereign immunity usually does not apply. UT argued here that the Federal Circuit panel in University of Minnesota reached the wrong decision based on Supreme court precedent, which states that IPRs are adversarial proceedings. UT further argued that the panel in University of Minnesota applied the wrong standards and reached an incorrect decision because the panel improperly focused on the purpose of the proceeding, rather than the nature of the proceeding. On the opposite side, Baylor argued that the University of Minnesota decision has not yet been challenged, and therefore controlled the appeal. The panel here sided with Baylor, stating that it was bound by the University of Minnesota decision. The Federal Circuit held that sovereign immunity does not apply to UT or to any patent owner in an IPR proceeding when the patent owner is the state.
Takeaway: The Federal Circuit reaffirmed that state university patent owners cannot invoke sovereign immunity to avoid patent challenges at the Patent and Trial Appeal Board.