September 3, 2013
On August 19, 2013, in University of Utah v. Max-Planck-Gesellschaft et al., the Court of Appeals for the Federal Circuit held that a dispute brought by the University of Utah (“UUtah”) over inventorship of patents owned by the University of Massachusetts (“UMass”) was not subject to the exclusive jurisdiction of the U.S. Supreme Court, and was not barred by sovereign immunity under the Eleventh Amendment to the U.S. Constitution. This decision is of interest to public universities and other state agencies that hold patents or that are sued for patent infringement.
The dispute arose after researchers from UUtah and from UMass each attended professional conferences in which they presented similar papers in the biochemical field. The U.S. Patent and Trademark Office (USPTO) granted the UMass researcher two patents. The UUtah researcher, who was not named as an inventor, argued that the UMass patents disclosed and claimed her invention, thereby making her at least a joint inventor on the patents and possibly a sole inventor. UUtah brought suit to correct inventorship of the patents.
The patents were jointly assigned to UUtah and others. UUtah originally named all of the assignees of the patents as defendants. UMass argued that, as a lawsuit between two universities, each of whom was a state entity or “an arm of the State of Massachusetts,” the lawsuit was a dispute between two U.S. states. The U.S. Constitution provides that disputes between states must be brought in the U.S. Supreme Court, and UMass moved to dismiss the lawsuit in the district court on this basis.
In response, UUtah amended its complaint to substitute four UMass officials in place of UMass. The defendants then moved to dismiss on the bases that UUtah’s claims were barred by sovereign immunity and that UUtah had failed to join UMass, an assignee of the patent, which the defendants claimed was an indispensable party. The district court denied the motion to dismiss, and the UMass officials appealed. Notably, although the denial of the motion to dismiss was not a final appealable order, the denial of the motion to dismiss was appealable under the “collateral order” doctrine under the Supreme Court case Cohen v. Beneficial Indus. Loan Corp.
On appeal, the Federal Circuit affirmed. First, applying Supreme Court law, the court found that UMass was not a real party in interest because the defendants had not identified a “core sovereign interest” of the state of Massachusetts. Specifically, the court held “[w]e hold that a State has no core sovereign interest in inventorship.” The court explained that inventors must be natural persons, and because states cannot be inventors, it follows that inventorship is not a core sovereign interest of any individual states.
Further, the court held that UMass was not the “real, substantial party in interest” in the lawsuit. The court reasoned that the district court was fully capable of granting the relief UUtah requested in the absence of UMass as a defendant. Also, the court reasoned that a decree to correct inventorship would not deplete the state treasury, compel UMass to act, or instruct UMass how to conform to state law.
The UMass officials further argued that they were entitled to sovereign immunity under the Eleventh Amendment to the U.S. Constitution. The Eleventh Amendment provides that states may not be sued in federal court by “Citizens of another State, or by Citizens or Subjects of any Foreign State,” absent certain exceptions. The court held that the present dispute did not involve a suit by citizens against a state, and that therefore the defendants did not enjoy Eleventh Amendment immunity.
Finally, the court rejected defendants’ argument that UUtah’s complaint should have been dismissed for failure to join UMass, which defendants contended was an “indispensable party” and hence required to be joined in the case. The court explained that there is no per se rule that patent owners are automatically indispensable parties, and that UMass’s interest were adequately represented by the named defendants. The court also noted that an order correcting inventorship would be binding on the USPTO and would provide UUtah the relief it requested, even if UMass was not joined in the suit and bound by the judgment. But the court observed that certain of these factors might change after remand.
In dissent, Judge Moore argued that the majority was incorrect to hold that a patent-ownership dispute between two state universities is not a controversy between states. She further argued that whether UMass is a real party in interest depends on the effect that a judgment on ownership would have on Massachusetts. For example, she argued that if the lawsuit ultimately proved successful, UUtah would be declared sole or co-owner of the patents, leaving UMass with either no interest in them or without the ability to assert its rights in the patents against UUtah. Judge Moore also argued that the majority deviated from the longstanding requirement that all patent owners be joined. She further asserted that UMass did not have identical interest to that of any of the named defendants, and therefore was an indispensable party.
The University of Utah decision is noteworthy for its discussion of jurisdictional issues surrounding disputes between “arms of the State,” such as state universities and other state actors.
For more information, please contact Fitch Even partner Joseph F. Marinelli, the author of this alert.
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