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Explore the latest in patent, trademark, and copyright cases on the Merchant & Gould LLP blog. Stay informed with expert insights on intellectual property law updates.

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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/19-1424.OPINION.7-24-2020_1624539.pdf" target="_blank" rel="noreferrer noopener"><em>Gensetix, Inc. v. Baylor College of Medicine</em></a>, No. 2019-1424 (July 24, 2020). In 2014, the University of Texas (“UT”) granted Gensetix an exclusive license to two patents covering methods of modifying a patient’s immune system to kill cancer cells. The agreement stated Gensetix “must enforce” the licensed patents and “is entitled to retain recovery from such enforcement.” UT retained a secondary right to sue if Gensetix did not, and the parties agreed to cooperate in any infringement suit. The parties further “agreed nothing in the agreement shall be deemed a waiver by UT of its sovereign immunity.”

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In 2017, Gensetix filed a patent infringement suit against Baylor for infringement of the licensed patents, and named UT as an involuntary plaintiff under Rule 19(a). UT moved to dismiss itself on grounds of sovereign immunity, and Baylor sought dismissal of the entire suit arguing UT was a necessary party and the case could not proceed in UT’s absence. The district court granted the motions, and dismissed the suit. Gensetix appealed.

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On appeal, the Federal Circuit first addressed the sovereign immunity issue. Gensetix asserted sovereign immunity only prevents suits against a state, which is not the same as coercive joinder of a state as an involuntary plaintiff. The Court rejected that argument as inconsistent with Supreme Court precedent, which has applied a broader interpretation of the Eleventh Amendment. The Court held that because UT did not attempt to avail itself of federal court jurisdiction, sovereign immunity prevents it from being forced to participate in the suit, and that it is immaterial that there are no claims “<em>against</em>” UT in the action. The Court, therefore, affirmed the district court’s holding that UT cannot be joined as an involuntary plaintiff.

Next, the Court considered the district court’s ruling that the case cannot proceed in UT’s absence. Rule 19(b) allows the district court to determine whether a case should proceed where joinder of a required party is not feasible. The Court held that the district court committed an abuse of discretion in its analysis of the four factors relevant to that determination. In particular, the Court held it was error to collapse “the multi-factorial Rule 19(b) inquiry into one dispositive fact: UT’s status as a sovereign.” Accordingly, the Court reversed the dismissal of the action, and remanded for further proceedings.

CAFC Holds State Sovereign Immunity Prevents Joinder of State as Involuntary Plaintiff; Case Can Proceed Without University