Covidien LP had a license to U.S. Patent 7,062,251, owned by the University of Florida Research Foundation (UFRF, Patent Owner).  UFRF alleged breach of contract by Covidien, and sued Covidien in Florida state court for breach of license.  Covidien counterclaimed for a declaratory judgment that it does not infringe the ’251 patent, and removed the action to federal court.

In June of 2016, Covidien (Petitioner) filed three petitions seeking inter partes review (IPR) of the ’251 patent.  After the IPRs were filed, UFRF sought to dismiss the federal court action on the ground it was entitled to Eleventh Amendment immunity from Covidien’s declaratory judgment counterclaim.  The District Court agreed with UFRF and remanded the action back to state court.  Covidien’s appeal of this decision is pending in the Federal Circuit (Appeal No. 16-2422).

UFRF requested a conference call with the Board to ask for permission to file a motion to dismiss the IPR petitions on the basis of sovereign immunity.  The Board authorized UFRF to file its Motion to Dismiss, Covidien to file its opposition, and for UFRF to file a reply.

The Board went through a lengthy analysis of administrative precedent relating to sovereign immunity and comparisons of IPR practice with litigation.  On January 25, 2017, the Board dismissed the three IPRs finding “Eleventh Amendment immunity bars the institution of an inter partes review against an unconsenting state that has not waived sovereign immunity.”

The Board went through another lengthy analysis to determine that the UFRF is an arm of the State of Florida.

The Board concluded sovereign immunity applies:

For the foregoing reasons, we conclude that Eleventh Amendment immunity applies to inter partes review proceedings, and that UFRF, having shown it is an arm of the State of Florida, is entitled to assert its sovereign immunity as a defense to the institution of an inter partes review of the ’251 patent. Accordingly, the Petitions in IPR2016-01274, -01275, and -01276 are dismissed.

The Board went through great lengths and 39 pages to analyze and document UFRF’s sovereign immunity claim.  One has to wonder if the District Court decision remanding the case to state court weighed heavily on the Board’s decision to find sovereign immunity and dismiss the IPRs.  It will be interesting to see whether the appeal of the District Court remand is maintained and if this Board decision is appealed.  But at least for now, it appears that a state-owned patent will not be subject to IPR unless it has waived sovereign immunity.