Center for Advanced Study & Research on Intellectual Property

 

CASRIP Newsletter - Summer 1999, Volume 6, Issue 1

U.S. Supreme Court Enhances States' Immunity from Suits in Patent Infringement Cases

by Orland S. Seballos

The U.S. Supreme Court, in a decision dated June 23, 1999, greatly enhanced the protection state governments have against being sued without their consent. With a 5-4 vote in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank,1 the Court held unconstitutional Congress' abrogation of states' sovereign immunity when it passed the Patent and Plant Variety Protection Remedy Classification Act (Patent Remedy Act).

College Savings Bank devised a system for students to save money for college tuition. It brought a patent infringement suit in the district court against the Florida Prepaid Postsecondary Education Board, a state entity, for copying its system. Prior to the suit, in 1992, Congress amended patent laws and passed the Patent Remedy Act expressly allowing states to be sued in federal court for patent infringement.

Florida Prepaid sought to dismiss the case on the ground that the act was an unconstitutional attempt by Congress to abrogate state immunity. The district court refused to do so, and the Federal Circuit affirmed, holding that Congress clearly expressed its intent to abrogate states' immunity from suits in federal court for patent infringement. According to the Federal Circuit, Congress has the power to pass such legislation under the Fourteenth Amendment.

The Supreme Court, with Chief Justice Rehnquist writing for the majority, reversed and ruled this authorization of suits against states is unconstitutional. That states cannot be sued in federal court for patent infringement without their consent. Although the Fourteenth Amendment empowers Congress to pass laws that would protect against deprivation of property without due process, the legislature cannot waive state sovereign immunity unless it is shown that states have engaged in a historical pattern of infringement and that existing remedies are inadequate.

The Court recognized Congress' power to abrogate state sovereign immunity, but any legislation effecting such abrogation must be "appropriate" under section 5 of the Fourteenth Amendment.2 In deciding whether the Patent Remedy Act was "appropriate," the Court tried to identify the "evil" or "wrong" Congress sought to remedy.3 According to the Court, Congress failed to establish a pattern of infringement by states, and there was little evidence that such conduct by the states was pervasive.

When Congress enacted the Patent Remedy Act, it barely considered the availability of state remedies for patent infringement, the Court said,. Statements presented during the legislative hearings before the law was enacted failed to prove that state remedies were constitutionally inadequate; rather they merely showed that state remedies are less convenient than federal remedies and might undermine uniformity in patent law. The majority opinion recognized the importance of uniformity, but reasoned that this is a factor that properly belongs to the "Article I patent-power calculus, rather than to any determination of whether a state plea of sovereign immunity deprives a patentee of property without due process of law."4 Based on the legislative record, there was no concrete evidence that there was widespread and persistent deprivation of patent owners' right that would authorize Congress to waive the states' immunity from suit in patent infringement cases. Because the Act is "so out of proportion" to a supposed unconstitutional behavior by the states, the Court concluded that the validity of the Act cannot be sustained.5

This case is significant because it approves complete preclusion of all jurisdiction. Under this ruling, state universities and other state instrumentalities can infringe patents but be sued nowhere. Because federal courts have exclusive jurisdiction to hear patent claims, this means that no court can hear patent suits against state governments.

1. 119 S.Ct. 2199 (1999).
2. Id. at 2206.
3. Id. at 2207 [citing City of Boerne v. Flores, 521 U.S. 507 (1997)].
4. Id. at 2209.
5. Id. at 2210.

Last updated 4/27/2012