Written by Peter Law and Kerry S. Taylor, Ph.D.

On May 23, 2017, the PTAB granted the University of Maryland’s (UM) motion to terminate inter partes review based on UM’s sovereign immunity in Neochord, Inc. v. Univ. of Maryland, Baltimore and Harpoon Medical, Inc., IPR2016-00208. UM requested permission to file the motion to terminate the IPR on January 30, 2017, only 5 days after the PTAB terminated another IPR proceeding based on Florida Research Foundation’s sovereign immunity. Covidien LP v. Univ. of Florida Research Found. Inc., IPR2016-01274, IPR2016-01275, IPR2016-01276, Paper 21 (Jan. 25, 2017). Interestingly, UM’s request also came one day before the oral hearing.

A week after the oral hearing, the PTAB granted UM permission to file the motion to terminate the IPR. UM’s motion argued that it was “entitled to assert sovereign immunity as a defense because it is an ‘arm of the State of Maryland.’” Neochord responded, arguing that the Board in Covidien had erred in finding that sovereign immunity is a defense in IPR, that UM had waived its sovereign immunity through participating in the IPR and through licensing, and that the PTAB could proceed without UM.

The PTAB agreed with NeoChord that it was not bound by the Covidien decision, and this panel undertook a review of the same case law that the Board in Covidien reviewed. The PTAB also considered NeoChord’s arguments that Congress abrogated sovereign immunity in 35 U.S.C. § 271(h) and that an IPR is akin to an in rem proceeding, like bankruptcy, where sovereign immunity does not apply. After analyzing the case law and NeoChord’s arguments of abrogation, the PTAB came to the same conclusion as in Covidien—sovereign immunity is available as a defense in an IPR.

The PTAB next considered whether UM had waived its sovereign immunity defense by participating in the IPR. UM agreed that it had not considered raising the defense of sovereign immunity during the institution and trial phases of the IPR proceeding, because, before Covidien, UM did not know sovereign immunity was available as a defense in an IPR proceeding. Even though UM had not raised sovereign immunity earlier in the proceedings, the PTAB relied on Florida Dep’t of State v. Treasure Salvors, Inc., 458 U.S. 670, 383 n . 18 (1982) in holding that UM had not waived this defense, because, “the Eleventh Amendment defense is in the nature of a jurisdictional bar that may be raised at any time.” Further, the PTAB held that a State does not waive sovereign immunity by being a defendant in an IPR proceeding, but may waive immunity where the State takes affirmative steps to invoke federal jurisdiction, such as filing a patent suit or seeking removal to federal court.

The PTAB was similarly unconvinced that UM had waived sovereign immunity through its license with Harpoon Medical, as the license expressly reserves a defense of sovereign immunity. The PTAB also found that the IPR could not proceed without UM, because UM retained rights under the license to Harpoon Medical.

Although one PTAB panel is not necessarily bound by the decisions of another PTAB panel, with multiple panels dismissing petitions or terminating proceedings on the basis of sovereign immunity, we may see more PTAB panels willing to dismiss or terminate IPR proceedings on the grounds of sovereign immunity. As further evidence of a developing trend, on May 4, 2017 the PTAB granted the University of Minnesota leave to file a motion to dismiss IPR2017-01068 on sovereign immunity grounds.