A question of sovereign immunity, which has come before the Federal Circuit in many guises of late (Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.; Regents of the University of Minnesota v. LSI Corp.), arose again in Board of Regents of the University of Texas System v. Boston Scientific Corp. earlier this month.  And as has happened thus far in this spate of these cases, the Court did not recognize the immunity as advanced by the State, in this case asserted over the question of proper venue.

The case arose when the University of Texas sued Boston Scientific for infringing U.S. Patent Nos. 6,596,296 and 7,033,603 directed to implantable drug-releasing biodegradable fibers.  These fibers are useful, inter alia, for producing implantable stents impregnated with therapeutic agents.  The University of Texas (UT) filed suit in the Western District of Texas, and Boston Scientific successfully moved to transfer the lawsuit to the District of Delaware.  It was undisputed that Boston Scientific is a Delaware corporation having its principle place of business in Massachusetts.  Moreover, the corporation "does not own or lease any property or maintain a business address in the Western District of Texas," and its 46 employees all worked from home.  Under settled Supreme Court (TC Heartland LLC v. Kraft Foods Group Brands LLC) and Federal Circuit law (In re Cray Inc.), venue was clearly improper in Texas.  The University argued that, to the contrary, as a sovereign (because it was an "arm of the State") it could not be haled into court in a different state by a citizen of another state:

Venue is proper in the Western District of Texas because UT is an arm of the State of Texas, has the same sovereign immunity as the State of Texas, it would offend the dignity of the State to require it to pursue persons who have harmed the State out- side the territory of Texas, and the State of Texas cannot be compelled to respond to any counter-claims, whether compulsory or not, outside its territory due to the Eleventh Amendment.

The Texas District Court transferred the case to Delaware, and the Delaware District Court, disagreeing with the University's position denied the University's motion to transfer the case back to the Western District of Texas.  Texas appealed the transfer order.

The Federal Circuit affirmed, in a decision by Judge Stoll, joined by Chief Judge Prost and Judge Reyna.  The Court first opined on whether it had jurisdiction to consider the University's appeal under 28 U.S.C. § 1295(a)(1), because "[t]ransfer orders are interlocutory and generally cannot be appealed immediately."  With a combination of legal and practical reasoning, the Court found jurisdiction was proper, concluding that "this case falls within the small class of orders excepted from the final judgment rule by the collateral order doctrine," citing Amgen Inc. v. Hospira, Inc., 866 F.3d 1355, 1358–59 (Fed. Cir. 2017).  The Court said that it could accept for review a decision that "finally determine[s] claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated," citing Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 142 (1993), in which the Supreme Court held that an order denying a claim of sovereign immunity falls within the scope of the collateral order doctrine (although in Puerto Rico, the sovereign was a defendant whereas here Texas is a plaintiff).  All of these requirements were fulfilled in this case, according to the opinion:  the transfer order was conclusive, the issue (sovereign immunity) was "important," and the order is "effectively unreviewable on appeal from a final judgment."

The panel then turned to the University's arguments on the merits:  first, that "U.S. Constitution's Original Jurisdiction Clause ensures that a State cannot be forced to sue in a court located in another State"; second, that "the Eleventh Amendment confirms that a State is entitled to control where it litigates against a private party"; and third "that it did not consent to jurisdiction or waive its sovereignty rights in Delaware, and that the patent venue statute does not abrogate those rights."  There was no dispute, between the parties or the courts, that the University of Texas is an arm of the state and entitled to the same sovereign rights as the State of Texas itself.  Nevertheless, the panel disagreed with the University's assertion that "a State has the right to sue a private party in any forum as long as personal jurisdiction requirements are met" when the State is a plaintiff.  Moreover, the panel held that "nothing in the U.S. Constitution's Original Jurisdiction Clause or in UT's other asserted authorities . . . supports the proposition that a State has the right to bypass federal venue rules when it engages in patent litigation as a plaintiff."  The Eleventh Amendment applies to suits brought against a state, not by a state according to the opinion, the panel citing Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1565 (Fed. Cir. 1997), and supported in its reasoning by United States v. Peters, 9 U.S. (5 Cranch) 115 (1809) (Marshall, C.J.); Gunter v. Atl. Coast Line R.R. Co., 200 U.S. 273, 284 (1906); and Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613, 619 (2002).  The Court also rejected the University's argument that "State sovereign immunity—a complementary attribute of state sovereignty—confirms that only the state can dictate where it litigates its property rights" because none of the cases the University cited in support were instances where the State was a plaintiff.

With regard to the University's original jurisdiction argument, the panel noted that the Constitution provided original but not exclusive jurisdiction to the Supreme Court in cases where a State is a party, codified under 28 U.S.C. § 1251(b)(3).  The panel appreciated that the University was asserting not only that "(a) it has a Constitution-rooted right to avoid out-of-state venues, but also that (b) it has an affirmative right to sue in a federal district court that Congress has deemed unavailable."  The Court disagreed with the University's reading of cases it asserted in support of these propositions -- Ames v. Kansas, 111 U.S. 449 (1884); Georgia v. Pennsylvania Railroad Co., 324 U.S. 439 (1945); and Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493 (1971) -- saying that they were not read in context.  In particular, the panel held that Ames decided that "lower federal courts can exercise jurisdiction over suits filed by a State against a non-State," i.e., that States can sue in lower Federal courts in addition to the Supreme Court (not that sovereign immunity gives a State the right to sue or be sued in its own state fora).

Finally, the panel rejected the University's argument that its right to sue in the forum of its choice was one of the "inherent powers of a state sovereign."  The basis of this determination was that when a State voluntarily invokes federal jurisdiction (as here, in a patent case), then "[i]t logically follows that the State must then abide by federal rules and procedures—including venue rules—like any other plaintiff" and "it would be 'anomalous or inconsistent' for [the University] to both invoke federal question jurisdiction and then to assert sovereignty to defeat federal jurisdiction."  And the panel further found the University's arguments that it had not waived immunity to be haled before the Delaware court does not apply when the State is a plaintiff.

Board of Regents of the University of Texas System v. Boston Scientific Corp. (Fed. Cir. 2019)
Panel: Chief Judge Prost and Circuit Judges Reyna and Stoll
Opinion by Circuit Judge Stoll