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Regents of University of Minnesota v. LSI Corp.

United States Court of Appeals, Federal Circuit

June 14, 2019


          Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. IPR2017-01068, IPR2017-01186, IPR2017-01197, IPR2017-01200, IPR2017-01213, IPR2017-01214, IPR2017-01219.

          Michael A. Albert, Wolf, Greenfield & Sacks, PC, Boston, MA, argued for appellant. Also represented by Stuart Duncan Smith, Richard Giunta, Gerald B. Hrycyszyn, Charles T. Steenburg.

          Kristopher L. Reed, Kilpatrick Townsend & Stockton LLP, Denver, CO, argued for all appellees. Appellees LSI Corporation, Avago Technologies U.S. Inc. also represented by Edward John Mayle, David E. Sipiora.

          Mark S. Davies, Orrick, Herrington & Sutcliffe LLP, Washington, DC, for appellees Ericsson Inc., Telefonaktie-bolaget LM Ericsson. Also represented by Easha Anand, Will Melehani, San Francisco, CA; Edmund Hirschfeld, New York, NY; Debra Janece McComas, Haynes & Boone, LLP, Dallas, TX; J. Andrew Lowes, Richardson, TX.

          Adam Mortara, Bartlit Beck LLP, Chicago, IL, argued for intervenor. Also represented by Nevin M. Gewertz; Meg E. Fasulo, Denver, CO.

          Courtney Dixon, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for amicus curiae United States. Also represented by Mark R. Freeman, Alisa Beth Klein, Mark B. Stern, Joseph H. Hunt.

          Joshua Stephen Johnson, Vinson & Elkins LLP, Washington, DC, for amicus curiae Association of Public and Land-grant Universities. Also represented by John Patrick Elwood.

          Michael W. Shore, Shore Chan DePumpo LLP, Dallas, TX, for amici curiae STC.UNM, The Board of Trustees of Purdue University, The Board of Trustees of Indiana University. Also represented by Alfonso Chan, Russell J. DePalma; Andrew M. Howard, Howard & Spaniol, PLLC, Dallas, TX.

          Thomas Molnar Fisher, Solicitor General, Indiana Office of Attorney General, Indianapolis, IN, for amici cu-riae State of Indiana, State of Texas, State of Hawaii, State of Illinois, State of Massachusetts, State of Michigan, State of Minnesota, State of Mississippi, State of New Jersey, State of Ohio, State of Rhode Island, State of South Carolina, State of Utah, State of Virginia. Also represented by Jason R. LaFond, Office of the Attorney General of Texas, Austin, TX.

          John Thorne, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, DC, for amici curiae Computer & Communications Industry Association, High Tech Inventors Alliance, The Internet Association, L Brands, Inc., Newegg Inc., Red Hat, Inc., SAP America, Inc., SAS Institute Inc., The Software & Information Industry Association, Symmetry LLC, Xilinx. Also represented by Daniel Simon Guarnera, Ariela M. Migdal, Gregory G. Rapawy.

          Joel Thayer, Washington, DC, for amicus curiae ACT The App Association.

          Anna-Rose Mathieson, California Appellate Law Group, San Francisco, CA, for amicus curiae America's Health Insurance Plans.

          Mark A. Lemley, Durie Tangri LLP, San Francisco, CA, for amici curiae Jeremy W. Bock, Michael A. Carrier, Andrew Chin, Brian L. Frye, Shubha Ghosh, Yaniv Heled, Mark A. Lemley, Yvette Joy Liebesman, Brian J. Love, Susan Barbieri Montgomery, Tejas N. Narechania, Tyler T. Ochoa, Arti K. Rai.

          Before Dyk, Wallach, and Hughes, Circuit Judges.

          Opinion for the court by Circuit Judge Dyk, in which Wallach and Hughes, Circuit Judges, join.

          Additional views by Circuit Judges Dyk, Wallach, and Hughes.

          Dyk, Circuit Judge.

         The Regents of the University of Minnesota ("UMN") appeals from decisions by the United States Patent and Trademark Office ("USPTO") Patent Trial and Appeal Board ("Board") declining to dismiss petitions for inter partes review ("IPR"). The petitions were alleged to be improper because states supposedly enjoy sovereign immunity in IPR proceedings. We conclude that state sovereign immunity does not apply to these proceedings, and therefore we affirm.


         The University of Minnesota is an arm of the state of Minnesota and is one of the largest public research institutions in the country. It pursues patent protection for inventions resulting from its research and is the owner of U.S. Patent Nos. 5, 859, 601 ('601 patent), 7, 251, 768 ('768 patent), 7, 292, 647 (RE45, 230 patent), 8, 588, 317 ('317 patent), 8, 718, 185 ('185 patent), and 8, 774, 309 ('309 patent). The patents were assigned to UMN at the outset of prosecution, and they were issued between January 12, 1999, and July 8, 2014. These patents cover two distinct technologies.

         Appellee LSI Corp. designs and supplies semiconductors; it is alleged to infringe UMN's '601 patent, which claims particular types of "read channel" chips. Appellee Ericsson Inc. is a telecommunications company. Its customers' use of Ericsson's products was alleged to infringe UMN's '768, RE45, 230, '317, '185, and '309 patents. These patents claim technology used for 4G LTE networks.

         UMN, alleging infringement of these patents, sued LSI and separately sued Ericsson's customers in district court. Ericsson intervened in the customer suits.

         After the commencement of the suits for patent infringement, LSI and Ericsson separately petitioned for IPR seeking a determination of unpatentability of the challenged claims on grounds of anticipation and obviousness. See LSI Corp. v. Regents of the Univ. of Minn., No. IPR2017-01068, Paper 1 (P.T.A.B. Mar. 10, 2017); Ericsson Inc. v. Regents of the Univ. of Minn., Nos. IPR2017-01186, Paper 1 (P.T.A.B. Mar. 28, 2017); IPR2017-01197, Paper 1 (P.T.A.B. Mar. 29, 2017); IPR2017-01200, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01213, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01214, Paper 1 (P.T.A.B. Mar. 30, 2017); IPR2017-01219, Paper 1 (P.T.A.B. Mar. 30, 2017).

         After the petitions for IPR were filed, and before the USPTO decided whether to institute IPR, UMN filed a motion to dismiss in each proceeding based on state sovereign immunity. The USPTO convened an expanded panel, consisting of three administrative patent judges as well as the Chief Judge, Deputy Chief Judge, and two Vice Chief Judges. In each proceeding, the Board concluded that state sovereign immunity applied to IPR proceedings but that UMN waived its immunity by filing suit against petitioners in district court.[1] A concurrence to each of the Board decisions concluded that sovereign immunity was not implicated in part because "[a]t its core, inter partes review is a circumscribed in rem proceeding, in which the Patent Office exercises jurisdiction over the patent challenged, rather than the parties named." J.A. 13; J.A. 33.

         UMN appealed the Board's decisions, and the cases have been consolidated on appeal. Gilead Sciences, Inc., facing the same issue for its own IPR petitions, sought leave to intervene, which was granted. Regents of the Univ. of Minn. v. LSI Corp., Appeal No. 2018-1559 (Fed. Cir. Apr. 19, 2018), ECF No. 35. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).[2]

         While this appeal was pending, this court decided Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018), holding that IPR proceedings were not barred by tribal sovereign immunity. A petition for certiorari was filed in that case, and the petition was denied, 139 S.Ct. 1547.


         I. Post-Issuance Administrative Proceedings[3]

         Addressing the issue of state sovereign immunity requires a detailed understanding of the history of IPR proceedings and the reasons that Congress created such proceedings.

         The USPTO is an agency within the Department of Commerce and is "responsible for the granting and issuing of patents." 35 U.S.C. §§ 1, 2. Almost every year the number of submitted patent applications has increased, from approximately 100, 000 in 1980 to nearly 650, 000 in 2018. U.S. Patent & Trademark Office, U.S. Patent Statistics, Calendar Years 1963-2015, offices/ac/ido/oeip/taf/us_stat.pdf; U.S. Patent & Trademark Office, FY 2018 Performance & Accountability Report 179 tbl.2 (2018) [hereinafter FY2 2018 P&A Rpt.], USPTOFY18PAR.pdf. This has led to a steady backlog of applications, and the USPTO now issues approximately 300, 000 patents each year. FY 2018 P&A Rpt., at 180 tbl.3; id. at 181 tbl.6. To perform its duty to examine and issue patents, the USPTO relies on a corps of approximately 8, 000 patent examiners who are charged with determining whether an applicant is entitled to a patent for a claimed invention. Id. at 205 tbl.28. Although essential to the examination process, the agency struggles to attract and retain examiners able to perform sufficiently thorough prior art searches and make a patentability determination.[4]

         Given the large number of patent applications, patent examiners only receive roughly 22 hours to review each application, which 70% of examiners have reported as insufficient time. U.S. Gov't Accountability Office, GAO-16-490, Patent Office Should Define Quality, Reassess Incentives, and Improve Clarity 10, 25-26 (2016) [hereinafter Quality, Incentives, & Clarity]. In those 22 hours, examiners must ensure not only that technical formalities are met, but also that the statutory requirements for patentability, such as novelty and non-obviousness, are met. For this determination, the USPTO relies on the examiner's prior art searching, aided by prior art the applicant identifies.

         For many years, until 2000, there was virtually no public input in the initial examination process since patent applications were not published. Beginning in 2000, patent applications have been typically published 18 months after the earliest claimed filing date, see 35 U.S.C. § 122; 37 C.F.R. § 1.211, and Congress has provided for some limited public participation during the initial examination, [5] see 35 U.S.C. §§ 122(c), (e); H.R. Rep. No. 112-98, pt. I, at 48-49 (2011); 37 C.F.R. §§ 1.290-91. Nonetheless, in light of the USPTO's constrained resources and the absence of material outside input during the initial examination, it is inevitable that there are patents granted in error.[6]

         This is not a new phenomenon. In 1980, Congress was concerned that this was "a situation where a limited staff is trying to cope with a constantly increasing workload and is under pressure to make speedy determinations on whether or not to grant patents." S. Rep. No. 96-617, at 8 (1980); see also Patent Reexamination: Hearing on S. 1679 Before the Comm. on the Judiciary, 96th Cong. 3 (1980) (statement of Sen. Bayh) (characterizing the USPTO as "an understaffed and overworked office trying to handle an ever increasing workload"); Industrial Innovation and Patent and Copyright Law Amendments: Hearing on H.R. 6033, H.R. 6934, H.R. 3806, H.R. 2414 Before the Sub-comm. on Courts, Civil Liberties & the Admin. of Justice of the H. Comm. on the Judiciary, 96th Cong. 580-81 (1981) (statement of Sidney A. Diamond, Commissioner of Patents and Trademarks). Congress' solution was to provide for reexamination of the original patent grant.

         In general, until 1980 the only way the original patent grant could be challenged was in patent litigation in district court by a declaratory judgment action or as a defense in a patent infringement action, both of which could be extremely expensive and both of which generally were not available until a claim of infringement was asserted by the patent owner. See Patlex Corp. v. Mossinghoff, 758 F.2d 594, 601-02 (Fed. Cir. 1985); S. Rep. 96-617, at 9-10 (testimony of Sidney A. Diamond, Commissioner of Patents and Trademarks).[7] In this respect, the United States' patent system diverged from its English origins, which had for centuries recognized the executive's ability to reconsider a prior patent grant.[8] In 18th-century England, parties could challenge the validity of a patent by petitioning the government via the Privy Council to revoke the public franchise. Oil States Energy Servs., LLC v. Green's Energy Grp., LLC, 138 S.Ct. 1365, 1376-78 (2018). "The Privy Council was a prominent feature of ...

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