State Immunity from Intellectual Property Infringement Actions
 
December 19, 2001
 

A recent General Accounting Office report addresses whether a state government entity is subject to lawsuits in federal court for the infringement of intellectual property rights. This is a question of interest not only to contractors working for state governments but also to any owner of intellectual property.

Senator Orrin Hatch asked the GAO to prepare its report in light of a 1999 Supreme Court decision that struck down a federal law that would have eliminated a state’s right to claim immunity under the Eleventh Amendment to the Constitution when sued in federal court for patent infringement. In Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, the Court said that Congress had not shown a pattern of state infringement or an absence of state remedies justifying the need for such a law.

The GAO estimated that 58 lawsuits have been active in a state or federal court since 1985 in which a state has been accused of the unauthorized use of intellectual property. Forty-seven of those cases were heard in federal courts, which have exclusive jurisdiction over patent and copyright infringement actions. In addition, a GAO survey of state institutions of higher learning revealed that of the 99 institutions responding, 35 said they had not dealt with any infringement accusations since 1985 while 42 others said that they had dealt with five or fewer.

Whether these numbers are large enough to indicate a significant problem is a question whose answer will depend upon the interest of the particular respondent. However, if a state infringement does occur, the GAO determined that intellectual property owners appear to have few proven alternatives or remedies if they cannot sue the state for damages in federal court. States do not seem likely to waive their Eleventh Amendment immunity to such suits voluntarily and in fact may be prohibited from doing so by state law. An intellectual property owner may be able to enjoin a state official in federal court to stop an ongoing infringement but would not be able to recover damages against the state.

The GAO report further points out that infringement actions against a state in state court may be problematic. Federal law gives exclusive jurisdiction over patent and copyright infringement actions to federal courts. It is unclear what the nature of a lawsuit would be if an intellectual property owner were forced to file suit in state court. Moreover, a state may be immune from suit in its own courts unless it has specifically waived its immunity.

The GAO report concludes that it is too early to tell what impact the Supreme Court’s Florida Prepaid decision will have on intellectual property rights, particularly the rights protected by federal law. Intellectual property owners and users are divided on what action, if any, is needed. Some, including most states, believe that there is no problem and nothing needs to be done. Others believe that a legislative fix is needed to correct what they perceive to be an inequitable situation.

For more information, contact Frank Peterson at 1-888-688-8500 or via e-mail at fpeterso@hklaw.com.