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6 September 2019AmericasSarah Morgan

University can’t invoke state immunity to avoid venue transfer: Fed Circuit

State sovereignty principles don’t give the Board of Regents of the University of Texas (UT) the right to bring a lawsuit in an improper venue, according to the US Court of Appeals for the Federal Circuit.

Yesterday, September 5, the Federal Circuit rejected UT’s appeal against a lower court’s determination that the university had filed a patent infringement suit in an improper venue, and against its subsequent decision to transfer the case.

The university and TissueGen had previously sued Boston Scientific at the US District Court for the Western District of Texas, alleging infringement of US patent numbers 6,596,296 and 7,033,603.

Both patents are directed to implantable drug-releasing biodegradable fibres and, according to the suit, some of Boston Scientific’s stent products infringed the patents.

Co-inventor Kevin Nelson developed the claimed technology at UT and founded TissueGen as a vehicle for commercialising his inventions. TissueGen has commercialised its Elute fiber product, which is intended to replace standard fibres in medical devices like implantable stents.

In its complaint, UT admitted that Boston Scientific was a Delaware corporation. However, the university claimed that the venue was proper because it had sovereign immunity and the court had personal jurisdiction over Boston Scientific.

However, the Texas court granted Boston Scientific’s motion to dismiss the case and transferred it to the District of Delaware, where the company is headquartered.

Subsequently, the university appealed against the decision to transfer but the Federal Circuit sided with the Texas court.

The university argued that as a sovereign entity, it has the right to sue a nonresident in its forum of choice as long as personal jurisdiction is satisfied.

“According to UT, the federal patent venue statute cannot abrogate a state’s right to choose the forum when asserting infringement of its federal patent rights,” said the Federal Circuit, adding that the university also claimed that the Delaware court lacks jurisdiction because UT never consented to a suit there.

Circuit Judge Kara Stoll, on behalf of the court, said: “We disagree with UT on all grounds. We hold that the state sovereignty principles asserted by UT do not grant it the right to bring a patent infringement suit in an improper venue.”

The Federal Circuit dismissed UT’s argument that state sovereign immunity provides that only the state can dictate where it litigates its property rights and noted that the court had previously held that the Eleventh Amendment “applies to suits ‘against’ a state, not suits by a state”.

UT also argued that a state can’t be forced to sue in a court located in another state, claiming that US Supreme Court cases establish that a state has the “right to control the forum with requisite jurisdiction in which it sues a citizen of another state”.

Again, the Federal Circuit dismissed the argument, with Stoll adding that the court disagreed with UT’s “generous reading" of cases.

Finally, UT argued it has the right to sue for patent infringement in its forum of choice based on the inherent powers of a state sovereign.

In response, Stoll said: “We acknowledge that states are sovereign entities that entered the Union with particular sovereign rights intact. We are not convinced, however, that the inherent powers of Texas as a sovereign allow UT to disregard the rules governing venue in patent infringement suits once it chose to file such a suit in federal court.”

After dismissing UT’s remaining arguments, the Federal Circuit affirmed the district court’s transfer order.

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