The Federal Circuit handed down its decision in Regents of the University of Minnesota v. LSI Corp. on Friday, and perhaps not surprisingly (in view of its decision last summer in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.), held that State sovereign immunity does not preclude institution of inter partes review proceedings before the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office. The panel decision was extensive and the Court relied heavily on its St. Regis decision's reasoning, but in doing so, likely increased the chances (to near certainty) of Supreme Court review sometime next year.
To recap, the Regents of the University of Minnesota, an "arm of the state," sued separately LSI Corp. (a semiconductor chipmaker) and customers of Ericsson Inc. (a telecommunications company that intervened on its customers' behalf) for infringement of U.S. Patent Nos. 5,859,601 ('601 patent; LSI)) and 7,251,768 ('768 patent), 7,292,647 (RE45,230 patent), 8,588,317 ('317 patent), 8,718,185 ('185 patent), and 8,774,309 ('309 patent; Ericsson), and each defendant separately filed inter partes review (IPR) petitions against each asserted patent. Before the Board instituted the IPRs, the University of Minnesota filed a motion to dismiss on State sovereign immunity grounds. The PTAB, in an expanded panel, ruled that while State sovereign immunity applied, Minnesota had waived the immunity by filing suit. This was a parsimonious, limited decision that, if merely affirmed by the Federal Circuit, likely would not have roiled patent jurisprudence waters, would have smacked of fairness (and provided a simple dichotomy between immune and non-immune situations), would have immunized States from political pestering from gadflies, and would have avoided what is almost certain to be Supreme Court scrutiny.
Alas, like the proverbial moth drawn inexorably to the flame that will consume it (or, if recent patent jurisprudence is a guide, at least singe it a little) this panel (in a decision by Judge Dyk joined by Judges Wallach and Hughes) opined that State sovereign immunity did not immunize Minnesota from IPR proceedings for the same reasons that tribal sovereign immunity did not preclude IPR proceedings involving the St. Regis Mohawk Indian Tribe in last summer's decision. The opinion notes that the Supreme Court did not grant certiorari in that case, perhaps believing the Court would similarly decline to consider the question in this case. This outcome is not very likely, in view of the significant differences between the subordinate sovereignty that Indian Tribes enjoy compared to the constitutional enshrinement of State sovereign immunity in the Eleventh Amendment.
The opinion sets forth the history of Congress's enactments relating to reconsideration of granted patents, from ex parte reexamination enacted in 1980, to inter partes reexamination in 1999, and finally to the palette of post-grant proceedings (post-grant review, inter partes review, and covered business methods review) enacted into law as part of the Leahy-Smith America Invents Act in 2011. The opinion recites the need for such proceedings, based on the increasing number of patent applications filed (from 100,000 in 1980 to 650,000 in 2018) and the relatively low amount of time examiners have to perform their review, concluding that "in light of the USPTO's constrained resources and the absence of material outside input during the initial examination, it is inevitable that there are patents granted in error." (The issue isn't that some patents are granted in error, of course; the mantra since about 2000 is that there are too many such patents, and in this portion of the opinion, the Court's sentiments could be substituted for those of groups like the Electronic Frontier Foundation.) There is little need for this disquisition, of course: whether or not robust post-grant review proceedings are warranted is under the purview of Congress, and its decision is clear under the AIA. (And despite a 650% increase in the number of applications filed per year, Congress in the 31 years between 1980 and 2011 only addressed the issue, and ineffectively so according to the Court, until enacting the AIA.) The opinion also detours from the question before it to remind the reader that in England the Privy Counsel could reconsider the validity of granted patents. While true, English patent law is only marginally relevant to American patent law, and our law did without an executive branch reconsideration statute between 1790 and 1980, further...
