Patent holders may have found a new way to level the playing field when it comes to suing state universities for patent infringement.
Until now, public universities have reveled in the sovereign immunity they enjoy under the Eleventh Amendment. As state entities, they’re shielded from federal court suits by private citizens—a particularly useful protection in the IP context, since so many research universities have robust patent portfolios. At the same time, they’re free to bring patent infringement suits in federal court, so they’ve been able make the most of their own IP.
Those halcyon days may be over, though. Last Friday, the University of California agreed to waive its immunity and answer patent infringement claims brought by NeuroGrafix, a medical imaging company. Why, you may ask, did the UC regents give up their precious sovereign immunity? Because NeuroGrafix, in a very creative application of the law of eminent domain, sued the regents in state court last October. It accused the university of seizing NeuroGrafix’s intellectual property without the due process or just compensation required by the Fifth Amendment.
“You treat the intellectual property as if it were a piece of land, like they took it for a highway without paying,” said NeuroGrafix CEO Aaron Filler, an inventor of nerve imaging technology. He said that as an inventor and owner of a small technology company, it’s difficult to compete with a state-run business that “operates as a pirate entity outside the law.”
Last Friday’s deal calls for NeuroGrafix to drop its state court suit and proceed with its patent claims in federal court, where NeuroGrafix has brought related infringement claims against Siemens Medical Solutions and Siemens Aktiengesellschaft.
NeuroGrafix is represented by Justin Strassburg of Strassburg, Gilmore & Wei in the state suit.
A spokesperson for the University of California’s General Counsel and the university’s counsel Carolyn Chang of Fenwick & West declined to comment.
After the U.S. Supreme Court defended state sovereign immunity from patent infringement claims in the 1999 case Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, legal scholars floated the idea that a patent owner could bring an inverse condemnation claim in state court as an alternative. But few patent holders seem to have tried the strategy. Filler said his lawyers unearthed only one other inverse condemnation case for alleged patent infringement. The Texas Supreme Court dismissed that case in 2007, finding the state’s use of the patent was not a “taking” but a right under a contract with the patent holder. (Reporting by Terry Baynes)