**United States Court of Appeals for the Federal Circuit**

03-1406

XECHEM INTERNATIONAL, INC.,

> Plaintiff-Appellant,

v\.

THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER

and BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM,

> Defendants-Appellees.

[John P. Luther]{.underline}, Law Office of John P. Luther, of Kent,
Washington, argued for plaintiff-appellant.

[David L. Parker]{.underline}, Fulbright & Jaworski L.L.P., of Austin,
Texas, argued for defendants-appellees. With him on the brief were
[Marcy Hogan Greer]{.underline} and [Robert E. Hanson, Jr.]{.underline}.

Appealed from: United States District Court for the Southern District of
Texas

Judge Ewing Werlein, Jr.

# United States Court of Appeals for the Federal Circuit

03-1406

XECHEM INTERNATIONAL, INC.,

Plaintiff-Appellant,

v\.

THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER

and BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM,

Defendants-Appellees.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DECIDED: August 31, 2004

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before NEWMAN, GAJARSA, and LINN, [Circuit Judges]{.underline}.

Opinion for the court filed by [Circuit Judge]{.underline} NEWMAN;
additional views by Judge Newman.

NEWMAN, [Circuit Judge]{.underline}.

Xechem International, Inc., a biopharmaceutical company, brought suit
against the University of Texas M.D. Anderson Cancer Center and the
Board of Regents of the University of Texas System (collectively \"the
University\") in the United States District Court, raising several
federal and state counts arising from a collaborative project between
Xechem and the University. In response to the complaint the University
asserted its Eleventh Amendment and state immunity from suit, and the
United States District Court for the Southern District of Texas granted
the University\'s motion to dismiss on the pleadings, Fed. R. Civ. P.
12(b)(6).[^1] The only issue on appeal is whether the University is
subject to suit in federal court to obtain correction of the
inventorship of United States Patents No. 5,877,205 and 6,107,333, the
patents flowing from the project.

We affirm the dismissal, for Supreme Court precedent controls the
arguments raised by Xechem with respect to waiver or abrogation of the
University\'s Eleventh Amendment immunity.

Standards of Review

The University\'s motion to dismiss was brought under Fed. R. Civ. P.
12(b)(6) (dismissal for failure to state a claim upon which relief can
be granted). When dismissal is on the pleadings, the plaintiff\'s
well-pleaded factual allegations are accepted as true and all reasonable
factual inferences are drawn in its favor. [See]{.underline} [Albright
v. Oliver]{.underline}, 510 U.S. 266, 268 (1994) (on motion to dismiss
on the pleadings, disputed material facts are viewed in the light most
favorable to the complainant).

Dismissal under Rule 12(b)(6) receives plenary appellate review. [Boyle
v. United States]{.underline}, 200 F.3d 1369, 1371 (Fed. Cir. 2000);
[Young v. AGB Corp.]{.underline}, 152 F.3d 1377, 1379 (Fed. Cir. 1998).
Matters of constitutional law and interpretation also receive plenary
review. [Arbon Steel & Serv. Co. v. United States]{.underline}, 315 F.3d
1332, 1334 (Fed. Cir. 2003); [Florida Sugar Mktg. & Terminal Assoc.,
Inc. v. United States]{.underline}, 220 F.3d 1331, 1333 (Fed. Cir.
2000).

BACKGROUND

The basic facts are generally undisputed: Xechem and the University in
1995 entered into a Sponsored Laboratory Study Agreement, with financial
and technical support by Xechem, for the purpose of developing a
pharmaceutical formulation that would enhance the solubility and thereby
the effectiveness of the cancer drug paclitaxel. The persons principally
involved in the project were Dr. Ramesh C. Pandey, president and CEO of
Xechem; Dr. Luben K. Yankov, a scientist employed by Xechem; and Dr.
Borje S. Andersson and Dr. Elias Anaissie, scientists employed by the
University.

The complaint states that a successful formulation was developed, and
that Xechem prepared a patent application naming Dr. Pandey of Xechem
and Dr. Andersson of the University as joint inventors, and in early
1996 sent the draft application to the University. The University
objected to the designation of inventorship, and on June 28, 1996 the
University filed a patent application in the United States Patent and
Trademark Office, naming Dr. Andersson as sole inventor. On November 13,
1996 Dr. Pandey wrote to the University as follows:

> Further to our conversation of today, as you have requested I am now
> forwarding you this letter in which I recognize Dr. Borge S.
> Andersson, as the sole inventor of the above referenced patent
> application.
>
> I look forward to receiving Dr. Andersson\'s comments of the Draft
> Patent Application and to wrap-up the licensing negotiations
> concerning the subject matter of the application.

On August 18, 1997 Xechem and the University entered into a Patent and
Technology License Agreement whereby Xechem received the exclusive
worldwide license to manufacture and market these paclitaxel
formulations, and Xechem agreed to pay certain continuing sums and a
royalty. Xechem also agreed to pay the costs of obtaining the patents in
the United States and foreign countries. The University\'s patent
application issued as the \'205 patent on March 2, 1999, and a
divisional application, also naming Dr. Andersson as sole inventor,
issued as the \'333 patent on August 22, 2000. Both patents were
assigned by Dr. Andersson to the University.

On February 15, 2000 Xechem was notified that the University considered
the License Agreement to have terminated automatically no later then
December 31, 1998, due to Xechem\'s alleged insolvency, and that any use
of this technology by Xechem was deemed to be patent infringement.
Xechem then filed suit in federal court, presenting several counts
sounding in tort and contract and also seeking correction of
inventorship and a declaration of non-infringement. Xechem stated that
Dr. Pandey made a mistake when he acquiesced in the naming of Dr.
Andersson as sole inventor, and asked the court to determine the correct
inventorship. Apparently upon the University\'s claim of sovereign
immunity from state as well as federal action, the state law tort and
contract counts were withdrawn by Xechem. This appeal relates only to
the dismissal, on Eleventh Amendment grounds, of the inventorship
correction claim.

DISCUSSION

The University of Texas is deemed to be an arm of the State of Texas,
[see]{.underline} Tex. Code §441.101(3), and Xechem does not dispute
that the University is properly accorded Eleventh Amendment
immunity.[^2] [See]{.underline} [Regents of the Univ. of New Mexico v.
Knight]{.underline}, 321 F.3d 1111, 1124 (Fed. Cir. 2003) (recognizing
the status of a state university as an arm of the state).

The Supreme Court has addressed Eleventh Amendment immunity as it
pertains to violation of federal patent and trademark laws. In [Florida
Prepaid Postsecondary Education Expense Board v. College Savings
Bank]{.underline}, 527 U.S. 627 (1999) and [College Savings Bank v.
Florida Prepaid Postsecondary Education Expense Board]{.underline}, 527
U.S. 666 (1999) the Court invalidated the legislative abrogation of
state immunity from suit under these laws. In [Florida
Prepaid]{.underline} the Court ruled that the Eleventh Amendment was
violated by the Patent and Plant Variety Protection Remedy Clarification
Act of 1992, Pub. L. 102-560, 106 Stat. 4230 (codified at 35 U.S.C.
§§271(j), 296). In [College Savings]{.underline} the Court reached the
same result with respect to abrogation of immunity by the Trademark
Remedy Clarification Act of 1992, Pub. L. 102-542, 106 Stat. 3567
(codified at 15 U.S.C. §§ 1051, 1114, 1122). The Court held that
Eleventh Amendment immunity may be abrogated \"only where the State
provides no remedy, or only inadequate remedies, to injured patent
owners for its infringement of their patent could a deprivation of
property without due process result,\" thereby invoking the Fourteenth
Amendment. [Florida Prepaid]{.underline}, 527 U.S. at 643. The Court
also referred to lack of a \"pattern of patent infringement by the
States,\" [id.]{.underline} at 640, in suggesting that legislative
remedy had not been shown to be necessary.

The Court stressed the exclusive role of the Fourteenth Amendment[^3] in
abrogation of Eleventh Amendment immunity in [Tennessee v.
Lane]{.underline}, \_\_\_ U.S. \_\_\_, 124 S. Ct. 1978 (2004), where the
Court sustained abrogating legislation against constitutional challenge,
holding that \"Title II \[of the Americans with Disabilities Act\]
unquestionably is valid §5 legislation as it applies to the class of
cases implicating the accessibility of judicial services.\" 124 S. Ct.
at 1993. The Court stated:

> Title II \-- unlike RFRA \[the Religious Freedom Restoration Act of
> 1993, held unconstitutional in [City of Boerne v. Flores]{.underline},
> 521 U.S. 507 (1997)\], the Patent Remedy Act \[held unconstitutional
> in [Florida Prepaid]{.underline}, 527 U.S. at 547-48\], and the other
> statutes we have reviewed for validity under §5 \-- reaches a wide
> array of official conduct in an effort to enforce an equally wide
> array of constitutional guarantees.

124 S. Ct. at 1992. Although sustaining the authority of Congress under
the Fourteenth Amendment to abrogate the states\' immunity, the Court
made clear that the issues resolved in [Florida Prepaid]{.underline}
were not being reopened. In [Tennessee v. Lane]{.underline} the Court
explained that [Florida Prepaid]{.underline} had \"further defined the
contours of [Boerne\'s]{.underline} \'congruence and proportionality\'
test,\" 124 S. Ct. at 1987, and reiterated that suits against states for
patent infringement had not been shown to raise Fourteenth Amendment
issues.

Xechem argues that the Eleventh Amendment does not bar an action to
correct inventorship under 35 U.S.C. §256, because the correction of
inventorship will change the ownership of the patents, thereby raising
property issues cognizable under the due process clause of the
Fourteenth Amendment. Xechem also argues that correction of inventorship
does not require participation or consent of the owner of the patent,
and thus can proceed in federal court despite the University\'s
objection. Xechem further argues that because the University\'s employee
Dr. Andersson applied for and was granted these patents by the United
States Patent and Trademark Office, a federal agency, the University
consented to federal jurisdiction, at least for correction of the
identity of the applicant. Xechem also argues that patents are a gift or
gratuity granted by the federal government, and that the University\'s
acceptance of the patents is a waiver of Eleventh Amendment immunity.
The University responds that Supreme Court precedent has disposed of all
of these theories, and that the complaint was properly dismissed for
failure to state a claim upon which relief can be granted.

A

Xechem argues that the University waived its Eleventh Amendment immunity
when it entered into this collaborative research agreement, and further
waived its immunity by contracting with Xechem in the License Agreement
for purposes of commercial gain. Xechem argues that by entering into
these contractual and commercial arrangements the University waived
objection to federal court jurisdiction to secure constitutionally
protected property rights, and for issues that can be decided only in
federal court under preemptive federal statutes.

The University responds that it did not waive its immunity by entering
into these arrangements, for any waiver must be express and clear and
\"altogether voluntary,\" and cannot be inferred. In [College
Savings]{.underline} the Court explained that waiver of the Eleventh
Amendment right to be immune from the authority of federal courts can
occur in only two circumstances: first, if the state on its own
initiative invokes the jurisdiction of the federal courts; and second,
upon a clear declaration by the state of its intent to submit to federal
jurisdiction. 527 U.S. at 675-76. Responding to the argument that
sovereign immunity should be deemed waived when a state enters into
commercial activity, the Court pointed out that the Eleventh Amendment
does not make that distinction, [id.]{.underline} at 686, and that such
a distinction is inapplicable because \"the constitutional role of the
States sets them apart from other employers and defendants.\"
[Id.]{.underline} at 685-86 (quoting [Welch v. Texas Dep\'t of Highways
& Public Transp.]{.underline}, 483 U.S. 468, 477 (1987)).

Xechem argues that patent law finds its authority in the Constitution,
and that no state court can adequately ensure that the federal interest
in promoting progress of the useful arts is upheld. Xechem also argues
that this case calls for an interpretation of federal law by federal
courts, because inventorship is a matter of exclusive federal
jurisdiction. However, the Court has dealt definitively with the
argument that a state waives its immunity by entering into arrangements
controlled by federal law and reviewable only in federal court. In
[College Savings]{.underline} the Court reaffirmed the principles of
[Seminole Tribe of Florida v. Florida]{.underline}, 517 U.S. 44 (1996)
and [Fitzpatrick v. Bitzer]{.underline}, 427 U.S. 445 (1976), and
overruled [Parden v. Terminal Railway of the Alabama State Docks
Department]{.underline}, 377 U.S. 184 (1964).

In [Seminole Tribe]{.underline} the Court discussed the congressional
power to abrogate state immunity by federal statute, and reaffirmed that
the Commerce Clause is not a source of such power. In
[Parden]{.underline} the Court had relied on the Commerce Clause to hold
that when a state voluntarily enters into federally regulated activity
\-- in [Parden]{.underline}, operating a railroad \-- the state is
deemed to have consented to federal jurisdiction arising from that
activity, in that case an action under the Federal Employers\' Liability
Act. In overruling [Parden]{.underline}\'s constructive waiver, the
Court stressed in [College Savings]{.underline} that a state\'s waiver
of Eleventh Amendment rights cannot be imposed or implied based on a
state\'s entry into commerce, but must be founded on a \"clear
declaration\" by the state of its intent to submit to federal
jurisdiction. [Id.]{.underline} at 675 (quoting [Great Northern Life
Ins. Co. v. Read]{.underline}, 322 U.S. 47, 54 (1944)). Such a
declaration was not made by the University in entering into its various
relationships and contracts with Xechem.

B

Xechem also argues that the University constructively consented to
federal jurisdiction by causing its employee Dr. Andersson to apply for
United States patents. Xechem argues that the University made a clear
and voluntary waiver of immunity when it entered the Patent and
Trademark Office and sought its legal benefits, and that the University
cannot both obtain patents and \"hide behind the Constitution.\" Xechem
states that by filing patent applications with a federal agency,
accompanied by Dr. Andersson\'s averral that he is the original and sole
inventor, the University consented to correction of such erroneous
averral in the only court that, according to Xechem, can order such
correction. [See]{.underline} 35 U.S.C. §256 ¶2:

> §256. Whenever through error a person is named in an issued patent as
> the inventor, or through error an inventor is not named in an issued
> patent and such error arose without any deceptive intention on his
> part, the Director may, on application of all the parties and
> assignees, with proof of the facts and such other requirements as may
> be imposed, issue a certificate correcting such error.
>
> The error of omitting inventors or naming persons who are not
> inventors shall not invalidate the patent in which such error occurred
> if it can be corrected as provided in this section. The court before
> which such matter is called in question may order correction of the
> patent on notice and hearing of all parties concerned and the Director
> shall issue a certificate accordingly.

The University states that this statute does not waive state immunity,
either expressly or by implication. In [College Savings]{.underline} the
Court negated the argument that a state\'s voluntary participation in
activities controlled by federal statute imposes a consent to suit
arising from those activities. The Court stated that \"we think where
the constitutionally guaranteed protection of the States\' sovereign
immunity is involved the point of coercion is automatically passed \--
and the voluntariness of waiver destroyed \-- when what is attached to
the refusal to waive is the exclusion of the State from otherwise lawful
activity.\" 527 U.S. at 689 (overruling [Parden]{.underline}).

Xechem also argues that a state\'s invocation of the authority of the
PTO to grant patents is analogous to the state\'s invocation of federal
authority to enforce its patent rights at state initiative, the latter
clearly serving to waive Eleventh Amendment immunity. [See]{.underline}
[Regents of the University of New Mexico]{.underline}, 321 F.3d at 1125
(recognizing the \"inconsistency and unfairness that could result from
allowing a state that voluntarily avails itself of the federal courts to
simultaneously claim immunity under the Eleventh Amendment\") (citing
[Lapides v. Board of Regents of the Univ. Sys. of Georgia]{.underline},
535 U.S. 613 (2002)). Such analogy does not withstand scrutiny, for
waiver must be clear, explicit, and voluntary, and cannot be imposed on
a state that has not voluntarily entered federal jurisdiction.

Thus the argument must be rejected that a state\'s entry into the patent
system is a constructive waiver of immunity for actions in federal court
against the state under the patent law.

C

Xechem also argues that the grant of a patent is a \"gift or gratuity\"
by the government, whereby acceptance of the grant is a constructive
waiver of immunity, citing [Petty v. Tennessee-Missouri Bridge
Commission]{.underline}, 359 U.S. 275 (1959) and [South Dakota v.
Dole]{.underline}, 483 U.S. 203 (1987). The Court confirmed in
[Petty]{.underline} and again in [Dole]{.underline} that Congress can
condition receipt of federal funds on a commensurate waiver of state
immunity. However, in [College Savings]{.underline} the Court explained
that such conditions on federal disbursements are \"simply not analogous
to [Parden]{.underline}-style conditions attached to a State\'s decision
to engage in otherwise lawful commercial activity.\" 527 U.S. at 678.

The grant of a patent is not a disbursement of governmental largesse. A
gift is \"nothing more than the transfer of property without
consideration.\" [Kehr v. Smith]{.underline}, 87 U.S. 31, 34 (1873). In
contrast, the government grant of a property right, [viz.]{.underline}
the right to exclude for a limited time, is conditioned on the creation
and public disclosure of a new and useful invention. [See]{.underline}
[Pfaff v. Wells Electronics, Inc.]{.underline}, 525 U.S. 55, 63 (1998)
(\"the patent system represents a carefully crafted bargain that
encourages both the creation and the public disclosure of new and useful
advances in technology, in return for an exclusive monopoly for a
limited period of time\").

Patent activity is commercial activity, not governmental beneficence.
The holdings of [Seminole Tribe]{.underline}, and the overruling of
[Parden]{.underline}, have foreclosed the broad ruling that by obtaining
patents the state constructively waived its Eleventh Amendment immunity
as to any federal proceeding involving those patents. Xechem argues, as
it did in the district court, that the reasoning in [New Star Laser,
Inc. v. Regents of the University of California]{.underline}, 63 F.
Supp.2d 1240 (E.D. Cal. 1999) supports a theory of constructive waiver.
The [New Star Laser]{.underline} court stated that although the Patent
Remedy Act of 1992 may have failed as abrogating legislation, it
succeeded as constructive waiver legislation. The Court explicitly
rejected this distinction in [College Savings]{.underline}, stating that
\"constructive waiver is little more than abrogation under another
name.\" 527 U.S. at 684.

D

Xechem also argues that the University is not a necessary party to this
action to correct inventorship, and therefore that it need not consent
to or participate in the hearing, provided only that it received notice
of the hearing. Under 35 U.S.C. §256 ¶2 a court may order correction of
inventorship over the objection of those adversely affected.
[See]{.underline} [Stark v. Advanced Magnetics, Inc.]{.underline}, 119
F.3d 1551, 1553 (Fed. Cir. 1997). Xechem argues that since the
University cannot prevent the §256 action from proceeding, both consent
and immunity are irrelevant. Thus Xechem argues that the Eleventh
Amendment does not bar suit to correct inventorship of a patent that is
assigned to the University. The district court did not discuss whether
the assignee is a necessary party to a §256 ¶2 suit to correct
inventorship. However, state entities are the only party-defendants to
this suit; with no defendant, there is no suit.

The pleadings stated that inventorship can be corrected only in federal
court, but ownership issues are generally the province of state courts.
Although the Federal Circuit has held that inventorship is determined
under federal law, [see]{.underline} [MCV, Inc. v. King-Seeley Thermos
Co.]{.underline}, 870 F.2d 1568, 1570 (Fed. Cir. 1989), state courts can
apply federal law to issues properly before the state court.
[See]{.underline} [Speedco, Inc. v. Estes]{.underline}, 853 F.2d 909,
914 (Fed. Cir. 1988) (citing [Brady v. Southern Ry. Co.]{.underline},
320 U.S. 476, 479 (1943)). Federal preemption of causes arising under
the Patent Act does not include matters of ownership or license. In [Jim
Arnold Corp. v. Hydrotech Sys., Inc.]{.underline}, 109 F.3d 1567, 1577
(Fed. Cir. 1997) this court held that although an assignment and royalty
agreement concerned patent property, that did not remove from the state
courts the various disputes concerning property rights. Similarly, in
[Prize Frize, Inc. v. Matrix (U.S.), Inc.]{.underline}, 167 F.3d 1261
(9th Cir. 1999) the Ninth Circuit held that an alleged deprivation of
patent ownership through various unlawful or unfair actions was not a
claim under federal law; the court cited [Jim Arnold]{.underline} for
the holding that \"\[c\]laims concerning patent ownership do not create
federal jurisdiction.\" 167 F.3d at 1264.

Although the Court recognized in [Florida Prepaid]{.underline} that
possible state court remedies may be \"uncertain\" or \"less
convenient\" or \"might undermine the uniformity of patent law,\" the
Court held that uncertainty and other disadvantages flowing from a
state\'s claim of Eleventh Amendment immunity did not deprive a patentee
of property without due process of law. 527 U.S. at 644-45. The Court
stated that it was necessary to show that the state action \"left \[the
patentee\] without a remedy under state law,\" [id.]{.underline} at 647,
before the due process concerns of the Fourteenth Amendment could be
implicated. Such a showing has not been made.

Conclusion

Xechem\'s pleadings and representations do not meet the requirements of
precedent for waiver or abrogation of a state\'s Eleventh Amendment
immunity. Thus the district court\'s dismissal under Rule 12(b)(6) is

[AFFIRMED]{.underline}.

# United States Court of Appeals for the Federal Circuit

03-1406

XECHEM INTERNATIONAL, INC.,

Plaintiff-Appellant,

v\.

THE UNIVERSITY OF TEXAS M.D. ANDERSON CANCER CENTER

and BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM,

Defendants-Appellees.

NEWMAN, [Circuit Judge]{.underline}, additional views.

I write separately to state my concern lest the caveats and safeguards
recognized by the Supreme Court in its rulings in [Florida
Prepaid]{.underline} and [College Savings]{.underline}[^4] become
submerged in generalizations of absolute state immunity. The Court
observed in [Florida Prepaid]{.underline} that if no state court remedy
were available for patent infringement, such failure of recourse could
raise the due process concerns of the Fourteenth Amendment. Compare
[Tennessee v. Lane]{.underline}, 124 S. Ct. 1978 (2004) (legislative
abrogation sustained on due process grounds for violation of Title II of
the Americans with Disabilities Act of 1990) with [Board of Trustees of
Univ. of Ala. v. Garrett]{.underline}, 531 U.S. 356 (2001) (legislative
abrogation rejected in claims for money damages for violation of Title I
of the ADA). Although Xechem is here seeking judicial, not legislative,
relief, its due process claims on the ground that there is no
alternative remedy have not been fully explored. Nor did Xechem in this
action seek the alternative path marked by [Ex parte Young]{.underline},
209 U.S. 123 (1908). These aspects are not raised in this dismissal on
the pleadings.

Intellectual Property and the Fourteenth Amendment

In [Florida Prepaid]{.underline} the Court, discussing abrogation of
Eleventh Amendment immunity, stated that \"only where the State provides
no remedy, or only inadequate remedies, to injured patent owners for its
infringement of their patent could a deprivation of property without due
process result.\" 527 U.S. at 643, quoting [Hudson v.
Palmer]{.underline}, 468 U.S. 517, 539 (1984) (O\'Connor, J.,
concurring) that \"in challenging a property deprivation, the claimant
must either avail himself of the remedies guaranteed by state law or
prove that the available remedies are inadequate,\" in turn citing
[Parratt v. Taylor]{.underline}, 451 U.S. 527, 537-544 (1981).
Throughout the evolution of Eleventh Amendment jurisprudence the Court
has stressed the rigor of the restraint imposed by the Fourteenth
Amendment on the federal government as well as on the states. Thus the
Court found in [Florida Prepaid]{.underline} that patent infringement by
states did not appear to be a sufficiently prevalent national problem to
warrant §5 abrogation. And in [College Savings]{.underline} the Court
held that unfair competition by a state based on false advertising did
not raise a Fourteenth Amendment property issue; the Court observed that
general business interests are not property rights, and held that while
trademarks are constitutionally protected property, false advertising
has no relation to the right to exclude and does not raise a
constitutional issue. The Court recognized, however, that \"the assets
of a business . . . unquestionably are property, and any state taking of
these assets is unquestionably a \'deprivation\' under the Fourteenth
Amendment.\" [College Savings]{.underline}, 527 U.S. at 675.

Xechem has asserted that in this case inventorship controls ownership
and the right to practice the patented invention \-- fundamentals of
patent property. [See]{.underline} [Consolidated Fruit-Jar Co. v.
Wright]{.underline}, 94 U.S. (4 Otto) 92, 96 (1876) (\"A patent for an
invention is as much property as a patent for land\"). Xechem\'s claim
on its face raises issues of property and due process. The Court
explained in [Florida Prepaid]{.underline} that \"\[i\]n procedural due
process claims, the deprivation by state action of a constitutionally
protected interest . . . is not in itself unconstitutional; what is
unconstitutional is the deprivation of such an interest without due
process of law.\" 527 U.S. at 642-43 (quoting [Zinermon v.
Burch]{.underline}, 494 U.S. 113, 125 (1990)). However, the Court in
[Florida Prepaid]{.underline} required a showing \-- more than an
allegation \-- of the unavailability of adequate remedy in state court.
Although Xechem argues that only federal courts can order a change of
inventorship, precedent has not dealt with whether state courts are
precluded from resolving issues of ownership of patent property when
ownership is based on inventorship.

In [Florida Prepaid]{.underline} the Court noted that patent
infringement by the state might be remedied in state court on the
traditional state law grounds of taking of property or conversion, 527
U.S. at 644 n.9, observing that a factor in the due process provision of
the Fourteenth Amendment is whether any remedy is otherwise available.
However, precedent establishes no ready rule as to when the nature of
the wrong and remedy warrant recourse to the Fourteenth Amendment. On
the record before us, and the premises of Rule 12(b)(6), the question of
alternative remedy was not explored. We are told that various state law
counts were withdrawn from the complaint in the district court; however,
the potential presence of other issues does not avoid this dismissal on
the pleadings. These questions are not resolved by today\'s decision.

The Doctrine of Ex Parte Young

The Court in [Florida Prepaid]{.underline} also mentioned potential
recourse to the doctrine of [Ex parte Young]{.underline}, 209 U.S. 123
(1908), which held that a state employee is not shielded by Eleventh
Amendment immunity if the employee has acted in violation of federal
law. The Court held that although state immunity barred suit in federal
court against Mr. Young in his capacity as attorney general of
Minnesota, he could be sued in his personal capacity and his wrongful
actions enjoined. While cautioning that \"the real interests served by
the Eleventh Amendment are not to be sacrificed to elementary mechanics
of captions and pleading,\" [Idaho v. Coeur d\'Alene Tribe of
Idaho]{.underline}, 521 U.S. 261 (1997), the Court explained the two
general situations in which [Ex parte Young]{.underline} has been
applied:

> Putting aside the acts of state officials which are plainly ultra
> vires under state law itself, there are, in general, two instances
> where [Young]{.underline} has been applied. The first is where there
> is no state forum available to vindicate federal interests, thereby
> placing upon Article III courts the special obligation to ensure the
> supremacy of federal statutory and constitutional law.

[Coeur d\'Alene]{.underline}, 521 U.S. at 270 (citations omitted).

> Even if there is a prompt and effective remedy in a state forum, a
> second instance in which [Young]{.underline} may serve an important
> interest is when the case calls for the interpretation of federal law.
> This reasoning, which is described as the interest in having federal
> rights vindicated in federal courts, can lead to expansive application
> of the [Young]{.underline} exception.

[Id.]{.underline} at 274 (citations omitted). The Court again reviewed
the application of [Ex parte Young]{.underline} against a claim of
Eleventh Amendment immunity in [Verizon Maryland, Inc. v. Public Service
Commission of Maryland]{.underline}, 535 U.S. 635 (2002):

> Whether the Commission waived its immunity is another question we need
> not decide, because . . . even absent waiver, Verizon may proceed
> against the individual commissioners in their official capacities
> pursuant to the doctrine of [Ex parte Young]{.underline}, . . . In
> determining whether the doctrine of [Ex parte Young]{.underline}
> avoids an Eleventh Amendment bar to suit, a court need only conduct a
> \"straightforward inquiry into whether \[the\] complaint alleges an
> ongoing violation of federal law and seeks relief properly
> characterized as prospective.\"

[Id.]{.underline} at 645 (citations omitted).

The applicability of [Ex parte Young]{.underline} to Xechem\'s claim of
incorrect inventorship was not raised on this appeal. Although Xechem
states that Dr. Andersson violated federal law in averring that he is
the sole inventor, neither he nor any other employee or agent of the
state was sued individually in his official capacity. I express no view
as to whether [Young]{.underline} offers a path to relief on the issue
here presented; this aspect is not resolved by this dismissal on the
pleadings.

A Continuing Concern

The circumstances of this case illustrate that when a state is charged
with contravention of federal law in a way that directly affects private
property, and if no remedy is indeed available within the state\'s
tribunals \-- whether by the state\'s invocation of immunity or by
federal preemption of the cause of action \-- there can arise an affront
to the fundamentals of due process. Respect for the principles of
federalism does not automatically immunize the state from due process
considerations. The Court in [Florida Prepaid]{.underline} kept this
door ajar. I write to the same purpose, for there is an increasing
urgency, as the states enter the private competitive arena governed by
the laws of intellectual property, to establish fair relationships and
just recourse.

[^1]: [Xechem Int\'l, Inc. v. University of Texas M.D. Anderson Cancer
    Ctr.]{.underline}, No. H‑02-1013 (S.D. Tex. March 19, 2003).

[^2]: Amendment XI. The Judicial power of the United States shall not be
    construed to extend to any suit in law or equity, commenced or
    prosecuted against one of the United States by Citizens of another
    State, or by Citizens or Subjects of any Foreign State.

[^3]: Amendment XIV. Section 1. . . . nor shall any State deprive any
    person of life, liberty, or property, without due process of law;
    nor deny to any person within its jurisdiction the equal protection
    of the laws.

    Section 5. The Congress shall have power to enforce, by appropriate
    legislation, the provisions of this article.

[^4]: In [Florida Prepaid Postsecondary Education Expense Board v.
    College Savings Bank]{.underline}, 527 U.S. 627 (1999) and [College
    Savings Bank v. Florida Prepaid Postsecondary Education Expense
    Board]{.underline}, 527 U.S. 666 (1999) the Court invalidated the
    1992 legislative abrogation of state immunity from suit under the
    patent and trademark laws.