California Attorney Lawyers

Industry advocates rejoiced Monday when the Supreme Court kept alive a case that challenges the right of state agencies such as the University of California to enforce their own patent rights while remaining immune to patent infringement suits by private companies.

The high court stopped short of granting review in the case, but asked the Bush administration’s legal representative to the court for advice. After considering the government’s input, the Supreme Court could deny review or take up the case.

Business groups are hoping the Supreme Court will address what they see as an unfair advantage enjoyed by universities and other state entities in the arena of intellectual property. State agencies operate under a constitutional shield that protects them from being sued in federal court, which means that patent holders usually can’t seek penalties against them for the unauthorized use of original inventions such as software or biomedical techniques.

Yet state universities increasingly make use of the federal courts to defend their growing inventories of patented discoveries, the Chamber of Commerce argued in a friend-of-the-court brief urging the Supreme Court to review the issue. “The states can’t have it both ways,” said Robin Conrad, an attorney representing the Chamber of Commerce.

The plaintiff in the case, Biomedical Patent Management Corp., is asking the high court for a sweeping decision that would strip California’s immunity to patent infringement suits on grounds that the University of California routinely submits to federal court jurisdiction when it pursues damages and settlements from the private sector for alleged violations of its own patent rights. UC’s use of the patent system amounts to a waiver of the state’s immunity, the company maintains.

That argument was rejected by a San Francisco trial court judge and a federal appellate court, which cited prior Supreme Court rulings upholding the immunity of states from federal suit. That “sovereign immunity” of the states is based on the 11th Amendment of the U.S. Constitution, which limits the authority of the federal government over the states.

Andrew Dhuey, an attorney for the plaintiff, said the opinions cited by the lower courts do not bar the decision his client seeks from the high court. Dhuey said the Supreme Court’s request for advice from the U.S. solicitor general on the case is “a very positive development.”

“To be in the situation we’re in has drastically shortened the odds” that the high court will take up the case, Dhuey said.

Supervising Deputy Attorney General Karin Schwartz, who represents the state in the case, said the high court’s action may only mean that a few justices wanted additional information. The Supreme Court could deny review even if the solicitor general recommends it, she said.

Schwartz said Biomedical Patent Management is trying to pull the UC system into its much narrower dispute with the state Department of Health Care Services, which she said doesn’t have patents and is rarely involved in patent litigation. The conflict began in 1997 when the state health department intervened in a lawsuit over the patent rights to a screening test for birth defects. Biomedical Patent Management, which claimed rights to the test, argued that the state health department, by intervening in the original suit, had forfeited its immunity to federal court action in that and subsequent lawsuits over the same issues.