CAFC Holds State Sovereignty Does Not Trump Venue Rules

Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Board of Regents of the U. of Texas Sys. and Tissuegen, Inc. v. Boston Sci. Corp., No. 2018-1700 (Sept. 5, 2019). The ruling affirmed the transfer of a patent infringement suit filed by the University of Texas from the Western District of Texas to the District of Delaware. 

The notable issue addressed by the Federal Circuit was the position of the University of Texas that “venue is proper in the Western District of Texas because a State, as a sovereign entity, has the right to sue a nonresident in its forum of choice as long as personal jurisdiction is satisfied.”  “According to UT, the federal patent venue statute cannot abrogate a State’s right to choose the forum when asserting infringement of its federal patent rights.” The Federal Circuit disagreed.

As an initial matter, the Court concluded it had jurisdiction to hear this interlocutory appeal under the collateral order doctrine. That doctrine allows an appeals court to hear interlocutory appeals over a small number of issues that are collateral to the main issues in a litigation but too important to delay appellate review until the entire case is adjudicated. The Court determined that doctrine can be applied to allow for immediate appeal of an order denying a claim of sovereign immunity. 

Regarding the merits of the appeal, the Court held “that the state sovereignty principles asserted by UT do not grant it the right to bring a patent infringement suit in an improper venue.” The Court explained that “State sovereign immunity does not apply where a State acts solely as a plaintiff, as UT does here.” This fact distinguished cases cited by UT where sovereign immunity had been applied to a State as a defendant in a lawsuit. The Court opined that “sovereign immunity cannot be asserted to challenge a venue transfer in a patent infringement case where a State acts solely as a plaintiff.” The Court explained that “the inherent powers of Texas as a sovereign [do not] allow UT to disregard the rules governing venue in patent infringement suits once it chose to file such a suit in federal court.” As such, the district court’s transfer of the case to the District of Delaware was proper.

 

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