7/20/2017
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`When it Comes to IPRs are University Patents Bullet Proof? -Lexology
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`When it Comes to IPRs are University Patents Bullet Proof?
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`USA February 2 2017
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`Inc. Foundation of Florida Research LP v University In a recent decision by the Patent and Trial Review Board (PTAB) in Covidien
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`IPR2016-01274, Paper 21 (PTAB Jan. 25, 2017), the PTAB granted a motion to dismiss three inter partes reviews (IPRs) challenging U.S.
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`Patent No. 7,062,251 owned by University of Florida Research Foundation (UFRF), holding that UFRF was entitled to sovereign
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`immunity under the Eleventh Amendment of the U.S. Constitution. This decision is significant for those state universities and their
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`research foundations with patent portfolios who may find themselves on the receiving end of an IPR petition.
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`The Eleventh Amendment shields states from lawsuits in federal courts without their consent:
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`Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or
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`prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign
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`State. (U.S. CONST. AMEND. XI.)
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`In reaching its decision, the PTAB first considered the broad question of whether the protections of the Eleventh Amendment even apply
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`to parties in IPR proceedings. As cited by the PTAB panel, the U.S. Supreme Court has interpreted the protections of the Eleventh
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`See Fed. Mar. Comm 'n v. South Carolina State Ports Auth.,
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`Amendment to extend to certain administrative proceedings.
`535 U.S. 743
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`see also Vas-Cath, Inc. v. Curators of Univ. of Missouri,
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`473 F.3d 1376 (Fed. Cir. 2007). Here, the PTAB found a "considerable
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`resemblance" between IPRs and civil litigation and determined those similarities are, "sufficient to implicate the immunity afforded to the
`Covidien
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`States by the Eleventh Amendment." at 24. The PTAB then concluded that, "Eleventh Amendment immunity bars the institution
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`of an inter parties review against an unconsenting state that has not waived sovereign immunity." Id. at 27.
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`i.e.,
`To determine whether UFRF is entitled to sovereign immunity, whether it is an "arm of the state," the PTAB considered how the state
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`of Florida defines a state agency's character. Even though the question of whether a particular state entity is an "arm of the state" is a
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`federal law question, that question is answerable only after considering the state law that defines the state agency's character. Id. at 28,
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`Regents of the Univ. of California v. Doe, 519 U.S. 425,430 (1997). In concluding that UFRF was indeed an arm of the State of
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`Florida, the PTAB considered the four factors set forth in Manders v. Lee, 338 F.3d 1304, 1309 (11th Cir. 2003)(en bane):
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`1.How state law defines the entity; the PTAB found that UFRF is a direct-support-organization of the University of
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`Florida. Id. at 29-31.
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`2.What degree of control the State maintains over the entity; the PTAB found that the degree of control exercised by
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`both the State of Florida and the University of Florida was sufficient. Id. at 31-35.
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`7/20/2017
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`When it Comes to IPRs are University Patents Bullet Proof? -Lexology
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`3.Where the entity derives its funds; the PTAB noted that UFRF's finances were included in the University of Florida's
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`finances, Id. at 35-37.
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`4.Who is responsible for judgments against the entity; the PTAB noted that the State of Florida generally placed
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`constraints on a direct-support-organization's ability to issue debt. Id. at 37-39.
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`In addition, the PTAB relied heavily on University of Fla. Res. Found., Inc. v. Medtronic PLC, Case No. J:J6CVI83-MW/GRJ, 2016 WL
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`3869877 (N.D.Fla., July 15, 2016), where the District Court also applied Manders and found the four factors weighed in favor of finding
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`UFRF is an arm of the State.
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`Thus, the PTAB concluded that UFRF should be afforded the sovereign immunity protection of the Eleventh Amendment. While certain
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`decisions by the PTAB are generally not appealable, this decision may be appealable under Cuozzo Speed Technologies, LLC v. Lee, 136
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`S.Ct. 2131, 2136 (2016), which held that 35 U.S.C. § 314(d) may not bar consideration of a constitutional question. However, at least for
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`now, this decision is a boon for any state university or related entity, as it establishes a precedent for insulating public universities and
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`related entities from IPR attacks, thus affording such entities a considerable advantage over entities not otherwise considered to be arms of
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`a state, such as private entities.
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`H. Yellin Stanek Rea and Deborah Teresa "Terry" Michael Songer, Crowell & Moring LLP -Mary Anne Schofield,
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