PTAB / Sovereign Immunity

Sovereign immunity requires dismissal of University of Minnesota, but IPR proceeding will continue as to co-owner Toyota

Published July 17, 2017

Several Board decisions have issued this year finding public universities exempt from IPR proceedings because of the sovereign immunity clause of the 11th Amendment to the U.S. Constitution. See, e.g., Covidien v. University of Florida Research Foundation. In a recent decision, another university was dismissed from a pending IPR. This time, however, the IPR proceeding will continue.

In Reactive Surfaces LTD. v. Toyota, a petition was filed challenging claims of a patent co-owned by Toyota and the University of Minnesota. In moving to dismiss the IPR proceeding, the University argued that sovereign immunity requires the termination of the IPR proceeding in its entirety because the merits of the proceeding cannot be adjudicated in the University’s absence. The Board disagreed, noting that the rules specifically contemplate at least the following instances in which an IPR can continue in the absence of a patent owner:

  • No Patent Owner Response: First, the Board may institute trial and proceed to a final written decision even in the absence of any preliminary response or response by the patent owner. 37 C.F.R. §§ 42.108(c) (requiring the Board to take a preliminary response into account in deciding whether to institute trial only “where such a response is filed”), 42.120(a) (permitting, but not requiring, a patent owner to file a response).
  • Board Decision Despite Settlement: Second, if the parties to an inter partes review settle their dispute, the Board may continue to “independently determine any question of jurisdiction, patentability, or Office practice.” Id. § 42.74(a); see 35 U.S.C. § 317(a) (permitting the Board to “proceed to a final written decision” following settlement by the parties to an inter partes review).
  • Specific Rules Excluding Inventor/Co-Owner: Third, “[a]n owner of a part interest in the subject patent may move to act to the exclusion of an inventor or a co-owner” upon a showing that the excluded co-owner is unable or refuses “to prosecute the proceeding” or upon a showing that there is another reason “why it is in the interests of justice to permit the owner of a part interest to act in the trial.” 37 C.F.R. § 42.9(b).

The Board also noted that the University’s interests would continue to be adequately represented since Toyota held identical interests in the patent and they were represented by the same legal counsel in the IPR proceeding.

Immunity from IPR proceedings is a significant procedural advantage enjoyed by public universities. As a result of this decision, it would not be surprising if some companies consider changes to their joint venture agreements with public universities. In some cases at least, it may be better to be a licensee of technology jointly developed with a university rather than a co-owner. See, e.g., Neochord, Inc. v. University of Maryland, Baltimore and Harpoon Medical, Inc. (Second named party, Harpoon Medical, Inc., was an exclusive licensee—not a co-owner—and the IPR proceedings were terminated in their entirety.)

Posted on 07/17/2017 by Deakin Lauer