University of Utah prevails at CAFC in a case of opposing state universities

University of Utah v. MAX-PLANCK-GESELLSCHAFT ZUR
FORDERUNG DER WISSENSCHAFTEN E.V., MAXPLANCK-
INNOVATION GMBH, WHITEHEAD
INSTITUTE FOR BIOMEDICAL RESEARCH,
MASSACHUSETTS INSTITUTE OF TECHNOLOGY,
AND ALNYLAM PHARMACEUTICALS, INC.

Of background, the initial action involved an attempt by the
University of Utah to correct inventorship on the “Tuschl Patents”.
Because the action was against the University of Massachusetts,
a legal question involved jurisdiction in an action between two state entities. The CAFC sided with the University of Utah:


UMass argued that, because the dispute was between
two States, the Supreme Court had exclusive original
jurisdiction. In response, UUtah amended its complaint,
substituting four UMass officials (the “Named Officials”)
in place of UMass. The Named Officials then moved to
dismiss the case, arguing that UUtah’s claims were
barred by sovereign immunity and that UUtah had failed
to join UMass, which they claimed was an indispensable
party. The district court denied the motion, and the
defendants appealed.

This case requires us to examine the issues of sovereign
immunity and federal jurisdiction that arise when
state universities are involved on both sides of an inventorship
dispute. For the reasons that follow, we affirm.


Of the people involved:

Dr. Brenda Bass is a professor of biochemistry at
UUtah. Her research is focused on RNA biochemistry. In
particular, Dr. Bass studies RNA interference (“RNAi”), a
phenomenon in which RNA plays a role in silencing the
expression of individual genes. Her employment agreement
assigns to UUtah the rights to all inventions and
discoveries she makes as a result of her employment or
research, including the rights to any patents arising from
her work.

Dr. Thomas Tuschl, a researcher employed by UMass,
is also active in RNAi research. In the course of their
work, Drs. Tuschl and Bass attended professional conferences
at which they both presented papers on RNA and
RNAi issues. Both researchers were familiar with each
other’s work. Dr. Tuschl eventually applied for and was
granted the Tuschl Patents, which Dr. Bass claims “disclosed
and claimed [her] conception.” Dr. Bass is not a
named inventor on either of the Tuschl Patents.

The underlying dispute is about inventorship:

UUtah, as assignee of Dr. Bass’s rights, believes that
Dr. Bass is the sole or a joint inventor of the Tuschl
Patents. UUtah asked Assignees to cooperate in petitioning
the United States Patent and Trademark Office
(“USPTO”) to correct the inventorship of the Tuschl
Patents by adding Dr. Bass as an inventor. Defendants,
who do not believe that Dr. Bass is an inventor of the
Tuschl patents, declined that request. As a result, UUtah
initiated this suit in district court, requesting the correction
of the inventorship of the Tuschl Patents under 35
U.S.C. § 256 and asserting various state law claims
against the non-State defendants.

Of the sovereign immunity issue

State universities frequently obtain assignments on
patents invented by their faculties and staff, just as
private corporations often obtain assignments on patents
invented by their employees. Unlike a private corporate
assignee or an individual inventor, a state university
typically enjoys sovereign immunity. As a result, a state
university generally may not be sued for infringement,
nor may it be forced to defend against an action for declaratory
judgment of invalidity or non-infringement. See
A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d 1213, 1220
(Fed. Cir. 2010). But States do not enjoy sovereign immunity
from suits brought by other States. Texas v. New
Mexico, 482 U.S. 124, 130 (1984). Similarly, States are
free to sue citizens of other States without raising sovereign
immunity issues.

One issue in the case:

The district court, relying on Cahill, concluded that a
State is generally free to “choose between naming a State
as the defendant and suing in the Supreme Court or
naming another proper defendant and suing in a district
court.” Cahill, 217 F.3d at 98. Defendants nevertheless
contend that this case falls within the exclusive original
jurisdiction of the Supreme Court. Defendants assert that
because UUtah seeks the property of UMass, UMass is
the real party in interest, and that UUtah may not “plead
around” the Supreme Court’s exclusive original jurisdiction
over disputes between States.
Thus, we must determine if UMass is a real party in
interest for purposes of the Supreme Court’s exclusive
jurisdiction under § 1251(a). The First Circuit has not yet
addressed this issue. As noted, the district court based its
decision on Cahill, a Second Circuit case that squarely
addressed whether § 1251(a) deprives the district courts
of jurisdiction over actions brought by one State against
officials of another.


The CAFC noted:

We hold that a State has no core sovereign interest in
inventorship. The inventors of a patent are “the individual
or, if a joint invention, the individuals collectively who
invented or discovered the subject matter of the invention.”
35 U.S.C. § 100(f). It is axiomatic that inventors
are the individuals that conceive of the invention:
Conception is the touchstone of inventorship,
the completion of the mental part of invention. It
is the formation in the mind of the inventor, of a
definite and permanent idea of the complete and
operative invention, as it is hereafter to be applied
in practice. Conception is complete only when the
idea is so clearly defined in the inventor’s mind
that only ordinary skill would be necessary to reduce
the invention to practice, without extensive
research or experimentation. [Conception] is a
mental act . . . .
Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223,
1227-28 (Fed. Cir. 1994)

To perform this mental act, inventors
must be natural persons and cannot be corporations or
sovereigns. And because States cannot be inventors, it
follows that inventorship is not a core sovereign interest
of the States.


Of the dissent

UMass and the dissent confuse the issue by repeatedly
framing the dispute as one of ownership, not inventorship.
Although “[q]uestions of patent ownership are
distinct from questions of inventorship,” they are closely
related: “[E]ach co-inventor presumptively owns a pro
rata undivided interest in the entire patent, no matter
what their respective contributions.” Ethicon, Inc. v. U.S.
Surgical Corp., 135 F.3d 1456, 1465 (Fed. Cir. 1998)
(footnote omitted). But State ownership of patent rights
is not akin to State ownership of water rights, natural
and important concerns of federalism” and rise to the
level of core sovereign interests. Cahill, 217 F.3d at 99.
Accordingly, even if UMass and the dissent were correct
that ownership was at issue in this case, that fact alone
would not require us to consider UMass a real party in
interest under the Cahill majority approach.

Of sovereign immunity:

While the Supreme Court has interpreted
this amendment as encompassing a broad principle of
sovereign immunity Edelman v. Jordan, 415 U.S. 651,
662-63 (1974), sovereign immunity “applies only to suits
by citizens against a State.” Texas, 482 U.S. at 130;
Cahill, 217 F.3d at 101; but see Virginia Office for Prot. &
Advocacy v. Stewart, 131 S. Ct. 1632, 1638 (2011). Because
this case does not involve a suit by citizens against
a State, there is no sovereign immunity issue here.

Chou v. U Chicago appears in footnote 5:

The dissent notes that parties with an “economic
stake” in a patent’s validity are proper defendants in a §
256 suit. Dissent at 3, 7; citing Chou v. University of
Chicago, 254 F.3d 1347, 1359-60 (Fed. Cir. 2001).

Of the need to join UMass:

But they do not create a per se
rule that patent owners are automatically indispensable
parties—there is no patent-specific exception to Rule
19(b). As this court recognized in Alfred E. Mann, when a
necessary patent owner is not joined, even when Rule
19(a) is satisfied, the court must still perform the inquiry
under Rule 19(b) to determine whether that owner is
indispensable. 604 F.3d at 1363; see also Dainippon, 142
F.3d at 1272 (“[E]ven if [a patentee] is a necessary party
under Rule 19(a) because it would be prejudiced by a
holding of invalidity of its patent, this prejudice does not
automatically make CFMT indispensable.” (footnote
omitted)).

(...)

The facts of the instant case support a conclusion of
no indispensability even more strongly than in Dainippon.
On the first factor, the district court concluded
that UMass’s interests were adequately represented by
Defendants—including all of the Tuschl Patent owners
except UMass—each of whom stands to lose if inventorship
changes. In contrast, no owners were joined in
Dainippon. Also as in Dainippon, Defendants are jointly
represented by legal counsel in protecting the Tuschl
Patents. In light of these facts, the district court saw no
prejudice, and therefore concluded that the second factor
had little weight. Additionally, the district court’s finding
on this prong is strongly supported by the settlement
agreement which UMass entered into and handed sole
and exclusive control of this suit over to Alnylam, which is
a party to this suit.