Federal Circuit Finds Patent Enforcement By A University Against Customers Insufficient to Waive Sovereign Immunity To Allow the Supplier To File An Independent Action Against University

 

In Tegic Communications v. Bd. of Regents of the Univ. of Texas System, 458 F.3d 1335 (Fed. Cir. 2006), Tegic Communications filed a declaratory judgment in the Western District of Washington against the Board of Regents of the University of Texas System (“the University”) due to the University’s enforcement of U.S. Patent No. 4,674,112 in the Western District of Texas against 48 cellular-telephone companies.  Tegic Communications alleged that, since it supplied allegedly infringing software to 39 of 48 these companies, Tegic Communications was under a reasonable apprehension of suit.  Relying on Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 US 627, 51 USPQ2d 1081 (1999), the District Court dismissed the complaint as the University was immune under the Eleventh Amendment from patent infringement claims and had not waived its sovereign immunity for such claims by bringing suit against the 39 companies.   The Federal Circuit affirmed the District Court’s dismissal.

The Federal Circuit held that, while a State can waive its sovereign immunity by filing a patent infringement suit, the waiver does not extend to non-participants in the suit.  Specifically, the mere filing of the patent infringement suit in a Federal court does not act as a full waiver of sovereign immunity through participation in a Federal regulatory process.  The waiver extends only to compulsory counterclaims from the defendants in the action.  Thus, the filing of the patent infringement suit in Western District of Texas represented only a limited voluntary waiver of sovereign immunity in the Western District of Texas, and does not represent a voluntary waiver extending to non-parties in other Districts.   Instead, the Federal Circuit agreed with the District Court that, while Tegic Communications might avail itself of the University’s sovereign immunity waiver by intervening in the Western District of Texas action, the University retained its Eleventh Amendment immunity such that the case in Western District of Washington was properly dismissed.

Federal Circuit Finds Sufficient State Remedies Such That Sovereign Immunity Prevents Suit Against University

In Pennington Seed v. Produce Exchange No. 299, et al., 457 F.3d 1334 (Fed. Cir. 2006), Pennington Seed, Inc. and AgResearch Limited (collectively “Pennington”) filed suit against the University of Arkansas (“the University”) for infringement and conversion of U.S. Patent No. 6,111,170 (“the ’170 patent”) in the Western District of Missouri.  Relying on Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 527 US 627, 51 USPQ2d 1081 (1999), the District Court dismissed the complaint as Arkansas was immune under the Eleventh Amendment from patent infringement claims and had not waived its sovereign immunity for such claims.   Thus, the University, as a state entity, is also immune.  The Federal Circuit affirmed the District Court’s dismissal.

Specifically, the Federal Circuit held that 35 U.S.C. §§271 & 296 did not validly abrogate the States’ Eleventh Amendment immunity for patent infringement as there were insufficient findings in the Congressional Record of a need for the Federal government to waive the State’s sovereign immunity.  Additionally, under Florida Prepaid, the Courts will similarly not abrogate the States’ immunity for patent infringement based upon the Fourteenth Amendment where there is a state remedy available.  The Federal Circuit noted that such alternate state remedies were admitted by Pennington when Pennington stated that theArkansaslegislature can consider claims in excess of $10,000, and as Pennington had alternately claimed damages for infringement under a state theory of conversion.  Thus, the Federal Circuit affirmed the District Court in not using the Fourteenth Amendment to effectively waiveArkansas’ sovereign immunity in regards to patent infringement.

Federal Claims Court Finds Federal Government Immune From Liability for Violations of the DMCA

In Blueport Co., LLP v. United States, 71 Fed. Cl. 768 (Fed. Cl. 2006), Blueport owned a computer program related to generating manpower resource requirements used by the Air Force. The computer program contained an automatic expiration function. Blueport alleged that the Air Force “hacked” into the computer program to alter the automatic expiration function, and that this hacking represented a violation of 17 U.S.C. § 1201(a)(1)(A) of the Digital Millennium Copyright Act (DMCA).  17 U.S.C. § 1201(a)(1)(A) prevents the “circumvent[ing] a technological measure that effectively controls access to a work protected under [Title 17, governing copyright].”   The Court of Federal Claims held that, in order to decide the DMCA issue, there needs to be a clear state for a waiver of sovereign immunity for liability arising under the DMCA. 

As there was no explicit waiver in the DMCA, the Court of Federal Claims reviewed the Tucker Act, 28 U.S.C. §1491, and found that this waiver only applies where the underlying cause of action creates a right to monetary damages against the Federal Government.  As the DMCA did not contain a clear and unambiguous waiver of sovereign immunity and only vaguely imposes liability on “any party,” the Tucker Act does not cure this omission.

Additionally, while 28 U.S.C. §1498(b) provides a waiver of sovereign immunity with regards to copyright infringement, the Court of Federal Claims found that the DMCA provides “a new violation and not merely a new subset of infringement.”  As such, 28 U.S.C. §1498(b) also does not afford relief for circumvention activities under the DMCA.

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