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Outside an infringement claim: the use of sovereign immunity and an attempt to limit its’ use

November 08, 2017
Post by Patricia A. Sweeney - Of Counsel

The sovereign – that is the government or government owned entities – are immune from lawsuit by the Eleventh Amendment. Thus, the United States government, state government, or a state-owned university are protected from legal action, including a lawsuit for patent infringement. Universities that are state owned thus can proceed with their research without concern of an infringement action, unless an exception applies. Exceptions include (1) where the state has waived its immunity and (2) where Congress is found to have the authority to abrogate sovereign immunity through a statue passed pursuant to section 5 enforcement power of the Fourteenth Amendment.

The first exception requires action on behalf of the state entity. Court cases have indicated that this immunity is not waived when engaging in selling and advertising. College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 US 666 (1999). An example where waiver occurs is when a University brings a legal action regarding a patent or patent infringement. The immunity extends to entities that are arms of the state, and whether it covers an entity will depend upon how state law defines the entity, the degree of control the state maintains over the entity, the source of the entity’s funds and who has financial responsibility for judgments against the entity

The second exception has not occurred to date, where Congress abrogates the immunity. However, it may happen with a bill introduced in Congress recently. Senate bill 1948 introduced this month is “A bill to abrogate the sovereign immunity of Indian tribes as a defense in interparties review of patents.” This situation has arisen after Allergan transferred its patents to its Restasis® dry eye product to the Saint Regis Mohawk Tribe in exchange for an exclusive license back to the company. The tribe is to receive over $15 million in royalties annually, and the drug is reported to be a billion-dollar drug for Allergan. The patents were challenged using the Patent Office interparties review process. The action was dismissed, as Native American tribes are considered sovereign powers, and exempt from lawsuit. If the bill is passed, it will be the first-time sovereign immunity is abrogated by Congress.

 



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