Source: https://millermartin.com/in-depth/events/supreme-court-confirms-states-are-immune-from-patent-and-copyright-infringement-actions/
Timestamp: 2020-07-10 11:55:11
Document Index: 414455794

Matched Legal Cases: ['§ 296', '§ 511', '§ 8', '§ 8', '§ 1', '§ 5', '§ 1498']

Supreme Court Confirms States Are Immune from Patent and Copyright Infringement Actions
Miller & Martin PLLC Alerts | April 03, 2020
Authors: Pharan Evans | Stephen Kabakoff
Last week, in its decision Allen v. Cooper, No. 18-877, 589 U.S. ___ (2020) (“Allen”), the Supreme Court held that States may rely on the doctrine of sovereign immunity to avoid liability for copyright infringement. This case follows the Court’s similar 20-year-old decision holding that States are immune from patent-infringement suits. Here, we discuss the contours and implications of these decisions and consider how they may affect business and litigation strategies in the event of patent or copyright infringement committed by persons or entities acting on behalf of a State.
States’ Sovereign Immunity from Being Sued for Patent and Copyright Infringement
The Eleventh Amendment of the U.S. Constitution provides the basis for States to assert immunity from being sued. While the language of the Eleventh Amendment is limited to immunity from suits filed by citizens of other States or foreign countries, the Supreme Court more broadly interprets this immunity to protect States from any suits filed without their consent. The only exceptions to the Eleventh Amendment’s reach are laws of Congress that explicitly revoke a State’s immunity and that are permitted under Congress’ constitutional powers.
Congressional Revocation of State Sovereign Immunity for Patent and Copyright Infringement Lawsuits
In the early 1990s, Congress enacted statutes preventing States from using sovereign immunity to avoid claims of patent and copyright infringement. 35 U.S.C. § 296(a); 17 U.S.C. § 511(a). Both statutes provided that a State could be sued for infringement, and the available remedies against the State would be the same as in suits involving only private parties. With its recent decision, the Supreme Court has found these statutes are invalid because Congress did not have the Constitutional authority to enact them. Accordingly, States accused of patent or copyright infringement can avoid such suits based on their sovereign immunity.
The Supreme Court Confirmed States’ Sovereign Immunity with Respect to Patent Infringement Claims
After Congress passed its statute attempting to remove States’ immunity from being sued for patent infringement, College Savings Bank sued the Florida Prepaid Postsecondary Education Expense Board, an entity created by the State of Florida, for infringing a patent covering a financing method for students to save for college. Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U.S. 627 (1999) (“Florida Prepaid”). The State of Florida nonetheless sought to avoid this litigation by asserting its sovereign immunity.
By a 5-4 decision, the Supreme Court found Congress’s attempt to legislate away State sovereign immunity from patent-infringement claims unconstitutional. The Supreme Court’s primary reasoning underlying the decision was that no provision of the U.S. Constitution gave Congress the ability to revoke State sovereign immunity from patent infringement suits, including the “Patent Clause” (Article 1, § 8, clause 3), “Commerce Clause” (Article 1, § 8, clause 8), or “Due Process Clause” (Fourteenth Amendment, § 1) and its “Enforcement Clause” (Fourteenth Amendment, § 5). Regarding Congress’ Article 1 powers, the Court relied on a precedential case that held Congress may not abrogate State sovereign immunity pursuant to its Article 1 powers. While the Fourteenth Amendment may in some cases provide the requisite authority, the Supreme Court found there was no evidence demonstrating a pattern of patent infringement by the States, let alone intentional or reckless infringement, nor any evidence of States denying patent owners of just compensation for infringing their patent rights. And the Court found the statute’s attempt to completely abrogate States’ sovereign immunity in patent cases was “out of proportion” to any harm caused from alleged patent infringement by the States. In other words, had there been evidence of a pattern of willful patent infringement by the States, or States denying patent owners of compensation for such infringement, the Court’s decision may have been different.
The Supreme Court Confirmed States’ Sovereign Immunity with Respect to Copyright Infringement Claims
On March 23, 2020, in a unanimous decision, the Supreme Court reached a similar decision as it did in Florida Prepaid but in the copyright context. It found the statute attempting to remove States’ immunity from copyright-infringement claims was unconstitutional and that the Florida Prepaid decision, discussed above, “all but prewrote our decision today.”
In Allen, a marine salvage company was contracted to recover the discovered shipwreck of the flagship of the pirate Edward Teach, better known as Blackbeard, off the shore of North Carolina. The company retained a local videographer, Frederick Allen, who created videos and photos of the shipwreck, which were later published on the State’s website without his permission. The State of North Carolina sought to avoid his copyright-infringement suit by asserting sovereign immunity.
The Court followed the same reasoning as Florida Prepaid in finding the State of North Carolina was immune from Allen’s copyright-infringement suit. It similarly found Congress did not have the constitutional power to enact the relevant statute based on any of the Patent Clause (also covering copyrights), Commerce Clause, Due Process Clause, or Enforcement Clause. Allen presented additional arguments suggesting that Florida Prepaid had not considered later precedent finding that Article 1 provides constitutional authority to abrogate States’ sovereign immunity in the context of bankruptcy proceedings. The Court, however, dismissed this distinction, characterizing the precedent as a “good-for-one-clause-only holding” due to the “singular nature” of bankruptcy jurisdiction.
Implications of States’ Sovereign Immunity from Patent and Copyright Infringement
The holdings in Florida Prepaid and Allen can have practical effects when private parties accuse State entities of infringing U.S. patents or copyrights. Since a State may assert its sovereign immunity to avoid a patent or copyright infringement suit, what options do private parties have to address the infringement?
First, you should determine if there is a federal government entity involved in the accused infringing acts—either as a direct or indirect infringer—because the federal government has expressly waived its sovereign immunity and consented to suits for patent and copyright infringement in the U.S. Court of Federal Claims. 28 U.S.C. §§ 1498(a),(b). You can also look into whether the accused State entity will agree to a waiver of its sovereign immunity, for example, if it wants to assert counterclaims and therefore consent to jurisdiction in a federal district court.
If you are doing business with a State entity that implicates your intellectual property, include contractual provisions binding the State not to infringe your intellectual property rights or risk breaching the contract. Or, if you have already engaged in business with a State entity that may be infringing a patent or copyright, check whether you have entered into any contracts with that entity including intellectual-property provisions that may support a breach of contract action under state law. The Florida Prepaid and Allen cases do not apply to contractual actions.
In addition, consider whether there are any non-government entities involved in the State’s infringing conduct. For example, if the State entity distributes copies of a copyrighted work without authorization on a social media or other online platform, there may be remedies available either through the platform’s Terms of Service or based on the platform itself being an infringer.
To minimize the chance of a State entity infringing copyrighted software, you may consider creating an open-source version of the software, i.e., subject to an appropriate open source license, to share with the State, whereas another version of the software, subject to a proprietary license, is distributed to non-government entities.
Finally, Florida Prepaid and Allen did not foreclose future challenges to a State’s sovereign immunity to patent and copyright infringement claims. If a State, for example, demonstrates a pattern of widespread patent or copyright infringement, does not offer fair compensation for its infringing acts, and/or willfully infringes intellectual property, the Supreme Court made clear that Congress can pass a constitutionally valid law to abrogate States’ sovereign immunity if it is tailored to redress the infringing conduct. See, e.g., Allen, No. 18-877, at 16.
Every patent and copyright infringement situation is unique. If you have questions about these issues, please contact a member of our Intellectual Property practice group who can help you to evaluate your options.
Pharan Evans