In Biomedical Patent Management Corporation v. State Of California, Department Of Health Services (06-1515) [1], the U.S. Court of Appeals for the Federal Circuit held that a state’s initial waiver of Eleventh Amendment sovereign immunity [2] – when it intervened in an earlier, related action that was dismissed for improper venue — doesn’t mean that it waived sovereign immunity under the Eleventh Amendment in a later case.
Biomedical Patent Management Corp. sued the state’s Department of Health Services [3] claiming the state was infringing U.S. Pat. No. 4,874,693 [4], which claims a method for screening birth defects in pregnant women. BPMC alleges that DHS performs laboratory services, and induces others to perform services, that infringe the ‘693 patent. At the district court, Judge Marilyn Hall Patel dismissed the lawsuit but expressed concern over the fact that California could sue for patent infringement on one hand while using sovereign immunity to keep from being sued for patent infringement itself:
“The court is indeed troubled by the University of California’s ability to reap the benefits of a patent system without being exposed to liability for infringement,” she wrote. “Similarly situated private universities enjoy no such advantage.”
The suits that led up to this whole mess:
- In 1997, Kaiser Foundation Health Plan, a subcontractor of DHS, filed a declaratory judgment action against BPMC in U.S. District Court for the Northern District of California, seeking a declaratory judgment that the DHS screening program does not infringe the ‘693 patent and that the ‘693 patent is invalid. DHS moved to intervene. BPMC asserted a compulsory counterclaim against DHS for infringement of the ‘693 patent, including money damages. BPMC was granted a motion to dismiss the action for improper venue pursuant.
- In 1998, five days later, BPMC filed a new action against DHS for infringement of the ‘693 patent in the United States District Court for the Southern District of California. DHS then asserted the defense of sovereign immunity but did not assert a counterclaim.
- Afterwards, the Supreme Court granted a petition for a writ of certiorari to review this court’s decision in Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd [5]., which held that Congress validly abrogated the sovereign immunity of the States to suit for patent infringement. Because of the potential impact of the Supreme Court’s pending decision in Florida Prepaid, BPMC sought to voluntarily dismiss the 1998 lawsuit.
- In 1999, the Supreme Court issued its decision in Florida Prepaid, reversing the decision of this court and concluding that Congress’ abrogation of State sovereign immunity from patent infringement claims was invalid. As a result of Florida Prepaid, States retained their sovereign immunity to suit for patent infringement.
- In 2006, BMPC filed the present lawsuit against DHS in the United States District Court for the Northern District of California (Yes, the Northern District again!).
- DHS again moved to dismiss this case on the ground that sovereign immunity under the Eleventh Amendment barred BPMC’s claims. The district court granted the motion and dismissed the case.
The Federal Circuit noted that:
It has long been recognized, however, that a State’s sovereign immunity is “a personal privilege which it may waiver at its pleasure.” As the Supreme Court has explained, “[w]hile this immunity from suit is not absolute, we have recognized only two circumstances in which an individual may sue a state.” Those circumstances occur where Congress validly authorizes such a suit “in the exercise of its power to enforce the Fourteenth Amendment,” or where a State has waived its sovereign immunity by consenting to suit. In the present case, only the latter circumstance is at issue. “Generally, we will find a waiver either if the State voluntarily invokes our jurisdiction, or else if the State makes a clear declaration that it intends to submit itself to our jurisdiction.” (citations omitted).
Having found that DHS’s intervention in the 1997 lawsuit constituted a waiver of its sovereign immunity in that suit, the question left in this case is when, if ever, a waiver of immunity in an earlier lawsuit prevents a State from asserting sovereign immunity in a later lawsuit between the same parties.
BPMC argued that DHS’s waiver in the 1997 lawsuit extends or carries over to the instant lawsuit because this action involves the same subject matter and the same parties. This court applies Federal Circuit law, rather than regional circuit law, to the issue of Eleventh Amendment waiver
The district court in this case found that, like a dismissal under Rule 41(a)(1), a dismissal for improper venue “leaves the situation as if the action had never been filed.”
The Federal Circuit held that, where a waiver of immunity occurs in an earlier action that is dismissed, or an entirely separate action, the waiver does not extend to the separate lawsuit:
By distinguishing Lapides, Gunter, Vas-Cath, and Ramsey, on one hand, and City of S. Pasadena and Tegic, on the other, we do not mean to draw a bright-line rule whereby a State’s waiver of sovereign immunity can never extend to a re-filed or separate lawsuit. We note only that the case law relied upon by BPMC does not support its contention that waiver of immunity in one suit should extend to a separate action simply because the action involves the same parties and same subject matter. Indeed, two relevant principles we can extract from these cases are that a State’s waiver of immunity generally does not extend to a separate or re-filed suit, and that, as we reaffirmed in Tegic, even a waiver by litigation conduct must nonetheless be “clear.” These principles, of course, are related, as a waiver that does not “clearly” extend to a separate lawsuit generally would not preclude a State from asserting immunity in that separate action. With those principles in mind, we address BPMC’s arguments that the policy behind the rule governing waiver by litigation conduct — the need to avoid unfairness and inconsistency — should prevent DHS from asserting sovereign immunity in this case.
After considering the general unfairness of the issue, the Federal Circuit held:
In sum, we conclude that any unfairness or inconsistency that would arise from permitting DHS to assert sovereign immunity in the present case is not so substantial as to cause us to diverge from the general principles of waiver that we have laid out in this opinion: that a waiver generally does not extend to a separate lawsuit, and that any waiver, including one effected by litigation conduct, must be “clear.”
Read more on what Mark Lemley calls “a travesty of justice” at the Wall Street Journal’s Blog: http://blogs.wsj.com/law/2007/10/26/lets-take-a-trip-to-patent-land/ [6]