United States: IPR Challenge May Proceed Even In The Absence Of Some Patent Owners

Last Updated: September 8 2017
Article by Lynn L. Janulis, Ph.D.

When a patent is co-owned by a state university and another party, an IPR may proceed against the remaining party even after the state university co-owner has been determined to have sovereign immunity from the proceeding. Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., [Case No. IPR2017-00572, Paper 32 (July 13, 2017)]. This recent decision was the first to address a situation where a university owned a patent jointly with a company. This decision follows two earlier cases, Covidien v. University of Florida , discussed here, and NeoChord, Inc. v. University of Maryland, Baltimore, [Case No. IPR2016-00208, Paper 28 (PTAB, May 23, 2017)], where the Board determined that sovereign immunity under the Eleventh Amendment as an "arm of the state" prevents an IPR from being instituted regarding patents owned by state universities.

Petitioner Reactive Surfaces filed a petition on January 4, 2017 for IPR of U.S. Patent No. 8,252,571. Before a Preliminary Response by the Patent Owner was due, Toyota Motor Corporation and Regents of the University of Minnesota ("the Regents"), co-owners of the '571 patent (collectively, "Patent Owner"), filed a motion to dismiss the Petition on the grounds that the Regents were entitled to sovereign immunity, that the merits of the IPR could not be judged in their absence, and therefore the IPR should be dismissed in their absence. Petitioner opposed, arguing that Patent Owner failed to prove that the Regents are entitled to assert sovereign immunity, that the Eleventh Amendment does not extend to IPRs, and that any sovereign immunity the Regents possess does not inure to Toyota's benefit. Petitioner also argued that sovereign immunity does not apply to IPR proceedings because "[t]he explicit language of [35 U.S.C. § 311] indicates that [an inter partes review] is a challenge to the patent, not the patent owner," making it "a proceeding in rem, not in personam."

The Board reasoned that IPRs have some in rem features but have sufficiently more in personam features. As a result, the Board determined, consistent with Covidien and NeoChord, that sovereign immunity may be asserted in IPRs. Because it also concluded that the Regents were an arm of the State of Minnesota, it granted in part the motion to dismiss by dismissing the Regents from the IPR.

The Board then determined that the IPR could continue in the absence of the Regents. The Board reasoned that the "rules governing inter partes review proceedings provide for continuing in the absence of a patent owner in at least three circumstances."

  1. The Board may institute trial and proceed to a final written decision even in the absence of any preliminary response or response by the patent owner. 37 C.F.R. §§ 42.108(c).
  2. If the parties to an IPR settle their dispute, the Board may continue to "independently determine any question of jurisdiction, patentability, or Office practice." Id. § 42.74(a); see 35 U.S.C. § 317(a).
  3. "An owner of a part interest in the subject patent may move to act to the exclusion of an inventor or a co-owner" upon a showing that the excluded co-owner is unable or refuses "to prosecute the proceeding" or upon a showing that there is another reason "why it is in the interests of justice to permit the owner of a part interest to act in the trial." 37 C.F.R. § 42.9(b).

The Board determined that these rules, although not precisely on point, demonstrate that the absence of one patent owner does not necessarily require the termination of the IPR. The Board stated that "[as] the moving party, Patent Owner has the burden of establishing "that it is entitled to the requested relief," i.e., that this proceeding should be terminated rather than continuing in the absence of the Regents. 37 C.F.R. § 42.20(c). Patent Owner argued that the only way to prevent "injury to the interests of the absent sovereign" is to dismiss the action entirely. Petitioner argued that federal courts have not applied a bright-line rule that requires dismissal of any action after a finding that one defendant has sovereign immunity, and that dismissal would not be appropriate in this case.

The Board agreed with Petitioner. In doing so, the Board discussed Rule 19(b) of the Federal Rules of Civil Procedure and stated that it provides that when the absent sovereign party and a remaining party have identical "interests in the asserted patents," the remaining party adequately represents the interests of the absent sovereign party under Rule 19(b)(1). The Board stated that "adequacy of that representation is even stronger when the parties at issue are patent owners, when all of the patent owners except the absent sovereign are present in the action, and when all of the present patent owners are represented by the same legal counsel."

The Board acknowledged that IPR rules are not directly analogous to rule 19(b), but the Board found that the Federal Circuit's analysis under Rule 19(b)(1) in two cases regarding the identity of interests between present and absent patent owners were instructive in this case, A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213, 1221–22 (Fed. Cir. 2010) and University of Utah v. Max-Planck-Gesellschaft zur Forderung der Wissenschaften e.V., 734 F.3d 1315, 1319 (Fed. Cir. 2013). The Board concluded that Toyota would represent adequately the interests of the Regents, and the IPR therefore could proceed.

Licensees and co-owners of state university-owned patents, as well as their challengers, are now on notice that an IPR challenge may proceed even in the absence of some patent owners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.