148 F.3d 1343 (Fed. Cir. 1998), 97-1246, College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd.

Docket Nº97-1246.
Citation148 F.3d 1343
Party Name47 U.S.P.Q.2d 1161 COLLEGE SAVINGS BANK, Plaintiff-Appellee, and United States, Plaintiff-Appellee, v. FLORIDA PREPAID POSTSECONDARY EDUCATION EXPENSE BOARD, Defendant-Appellant.
Case DateJune 30, 1998
CourtUnited States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1343

148 F.3d 1343 (Fed. Cir. 1998)

47 U.S.P.Q.2d 1161

COLLEGE SAVINGS BANK, Plaintiff-Appellee,

and

United States, Plaintiff-Appellee,

v.

FLORIDA PREPAID POSTSECONDARY EDUCATION EXPENSE BOARD,

Defendant-Appellant.

No. 97-1246.

United States Court of Appeals, Federal Circuit

June 30, 1998

Page 1344

Kevin J. Culligan, Fish & Neave, New York City, argued for plaintiff-appellee College Savings Bank. Of counsel on the brief were Steven C. Cherny and Robert W. Morris. Also of counsel was Arnold B. Calmann,

Page 1345

Saiber, Schlesinger, Satz & Goldstein, Newark, New Jersey.

Michael S. Raab, Civil Division, Appellate Staff, U.S. Department of Justice, Washington, DC, argued for plaintiff-appellee United States. With him on the brief were Frank W. Hunger, Assistant Attorney General, and Mark B. Stern. Of counsel was Michael E. Robinson.

Anne S. Mason, Mason & Associates, Clearwater, Florida, argued for defendant-appellant. With her on the brief was Joseph C. Mason, Jr. Of counsel was Louis F. Hubener, Assistant Attorney General, Office of the Attorney General, The Capitol, Tallahassee, Florida.

Edward V. Filardi, White & Case, New York City, for amicus curiae New York Intellectual Property Law Association. Of counsel on the brief was Charles P. Baker, Fitzpatrick, Cella, Harper & Scinto, New York City.

Joseph R. Re, Knobbe, Martens, Olson, & Bear, Newport Beach, California, for amicus curiae American Intellectual Property Law Association. With him on the brief was Michael K. Friedland.

Gerald P. Dodson, Arnold, White & Durkee, Menlo Park, California, for amicus curiae Regents of the University of California. With him on the brief were Emily A. Evans, and Richard L. Stanley, Houston, Texas. Of counsel on the brief was P. Martin Simpson, Jr., University of California, Office of Technology Transfer, Alameda, California.

Toni Hunter, Chief, General Litigation Division, Capitol Station, Austin, Texas, for amicus curiae the Commonwealth of Pennsylvania, Commonwealth of Virginia, State of Kansas, State of Louisiana, State of Nevada, State of Oklahoma, and State of Texas.

Before CLEVENGER, RADER, and BRYSON, Circuit Judges.

CLEVENGER, Circuit Judge.

This case requires us to determine whether the Eleventh Amendment bars a federal suit for patent infringement against a nonconsenting state. The district court held that it did not and denied Florida Prepaid Postsecondary Education Expense Board's (Florida Prepaid's) motion to dismiss for lack of subject matter jurisdiction. Because Congress clearly expressed its intent to abrogate state sovereign immunity for patent infringement suits brought in federal courts, and because Congress abrogated state immunity pursuant to a valid exercise of power, we affirm the district court's decision denying Florida Prepaid's motion to dismiss. Consequently, we do not reach College Savings Bank's (College Savings') arguments that Florida Prepaid waived its sovereign immunity either by participating in the patent system or by failing to raise the sovereign immunity defense earlier in the litigation.

I

Procedural Posture

College Savings is a New Jersey chartered savings bank located in Princeton, New Jersey. Since 1987, College Savings has sold a certificate of deposit contract known as the CollegeSure TM CD. The purpose of the CollegeSure TM CD is to help individuals save money for the cost of college education expenses. College Savings guarantees returns sufficient to fund the uncertain future cost of education. The CollegeSure TM CD is administered using an apparatus and methods disclosed in College Savings' U.S. Patent No. 4,722,055. Florida Prepaid, a body corporate of the State of Florida, administers a similar investment program aimed at aiding individuals in funding the cost of Florida public colleges and universities. 1 See Fla. Stat. § 240.551(1), (3). College Savings claims that, in the course of administering its investment program, Florida Prepaid has directly and indirectly infringed College Savings' patent.

Page 1346

On November 7, 1994, College Savings brought an infringement action against Florida Prepaid in the United States District Court for the District of New Jersey pursuant to the Patent and Plant Variety Protection Remedy Clarification Act (Patent Remedy Act), § 2, 35 U.S.C. §§ 271(h), 296 (1994), which explicitly provides that states may be sued for patent infringement in the federal courts. Pendente lite, the Supreme Court handed down its decision in Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), which overruled Pennsylvania v. Union Gas Co., 491 U.S. 1, 109 S.Ct. 2273, 105 L.Ed.2d 1 (1989), and held that Congress could not abrogate the sovereign immunity of the states when acting pursuant to its plenary power to regulate commerce under Article I of the Constitution. See Seminole Tribe, 517 U.S. at 72-73, 116 S.Ct. 1114. In light of the Court's ruling in Seminole Tribe, Florida Prepaid moved to dismiss College Savings' claim as barred by the Eleventh Amendment. Florida Prepaid argued that the Patent Remedy Act was an unconstitutional attempt by Congress to use its Article I powers under the Patent Clause, U.S. Const. art. I, § 8, cl. 8, to abrogate state sovereign immunity and to enlarge the federal courts' Article III jurisdiction, which Seminole Tribe proscribed. College Savings objected, contending that, in enacting the Patent Remedy Act, Congress was acting pursuant to its enforcement power under section 5 of the Fourteenth Amendment, see Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976). The use of this power was not only unaffected but was also expressly sanctioned by the Supreme Court's opinion in Seminole Tribe, claimed College Savings. See 517 U.S. at 71-72 n. 15, 116 S.Ct. 1114 ("[M]any of those cases arose in the context of a statute passed under the Fourteenth Amendment, where Congress' authority to abrogate is undisputed."). The United States intervened as of right under 28 U.S.C. § 2403(a) (1994) to defend the constitutionality of the Patent Remedy Act.

The district court denied Florida Prepaid's motion to dismiss, because it concluded that Congress had unambiguously abrogated the states' sovereign immunity in the Patent Remedy Act and had acted pursuant to a valid exercise of power under the Fourteenth Amendment. Florida Prepaid took this appeal over which we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (1994). See Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 147, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993) (holding that, pursuant to the collateral order doctrine and 28 U.S.C. § 1291, a state may appeal from a district court order denying it Eleventh Amendment immunity); see also Swint v. Chambers County Comm'n, 514 U.S. 35, 41-42, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995) ("The collateral order doctrine is best understood not as an exception to the final decision rule ... but as a practical construction of it.") (quoting Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994)) (internal quotation marks omitted).

II

The Eleventh Amendment

We follow the regional circuit's standard of review regarding issues not pertaining to patent law. See, e.g., Molins PLC v. Quigg, 837 F.2d 1064, 1066, 5 USPQ2d 1526, 1527 (Fed.Cir.1988). Under the law of the Third Circuit, the regional circuit encompassing New Jersey, our review of a dismissal on sovereign immunity grounds is plenary. See Blanciak v. Allegheny Ludlum Corp., 77 F.3d 690, 699 (3d Cir.1996).

The Eleventh Amendment provides: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. The Eleventh Amendment confirms that "each State is a sovereign entity in our federal system" and that " 'it is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent.' " Seminole Tribe, 517 U.S. at 54, 116 S.Ct. 1114 (quoting The Federalist No. 81, at 487 (Alexander Hamilton) (Clinton Rossiter ed., 1961)). This immunity is not absolute, however, as Congress, in limited circumstances,

Page 1347

is empowered to abrogate it. See Fitzpatrick, 427 U.S. at 456, 96 S.Ct. 2666.

Determining whether Congress has abrogated the states' constitutionally secured immunity from suit in federal court is a two-step inquiry. The first step is to discern whether Congress has unequivocally expressed its intent to abrogate immunity. See Seminole Tribe, 517 U.S. at 55, 116 S.Ct. 1114. The second step is to examine whether, in purporting to abrogate immunity, Congress overstepped its constitutional authority. See id. We dispense swiftly with the first step of the inquiry before turning our attention to the second, more arduous step.

III

Intent to Abrogate

Given the importance to our constitutional structure of the Eleventh Amendment's grant of sovereign immunity, a court will not assume that Congress has intended to use its awesome power to abrogate this immunity absent "unmistakably clear" statutory language to that effect. Dellmuth v. Muth, 491 U.S. 223, 227-28, 230, 109 S.Ct. 2397, 105 L.Ed.2d 181 (1989) ("[E]vidence of congressional intent [to abrogate state sovereign immunity] must be both unequivocal and textual."); see Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 242-43, 105 S.Ct. 3142, 87 L.Ed.2d 171 (1985). There is no dispute that the Patent Remedy Act is replete with language sufficient to satisfy this requirement. See 35 U.S.C. §§ 271(h), 296 (1994). Before passage of the Patent Remedy Act, Title 35 stated only that "whoever" without authority made, used, or sold a patented invention infringed the patent. See 35 U.S.C. § 271(a) (1988). After the Supreme...

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14 practice notes
  • The Alden Trilogy: praise and protest.
    • United States
    • Harvard Journal of Law & Public Policy Vol. 23 Nbr. 2, March 2000
    • March 22, 2000
    ...400, 425-26 (D. N.J. 1996). (161.) See id. at 427-28. (162.) See College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 148 F.3d 1343, 1349-50 (3d Cir. 1998) (patent claim); College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd. 131 F.3d 353, 360-61 (3d Cir. 199......
  • Harmonization through condemnation: is New London the key to world patent harmony?
    • United States
    • Vanderbilt Journal of Transnational Law Vol. 40 Nbr. 2, March - March 2007
    • March 1, 2007
    ...in its opinion identified only eight patent-infringement suits prosecuted against the States in the 110 years between 1880 and 1990. See 148 F.3d at 1353-1354. Testimony before the House Subcommittee in favor of the bill acknowledged that "states are willing and able to respect patent ......
  • Public Construction Contracting
    • United States
    • Construction Law, Second Edition
    • January 1, 2019
    ...Act, and we sustained the abrogation of immunity for patent infringement claims on June 30, 1998, in our College Savings Bank decision, 148 F.3d 1343 (Fed.Cir.1998), shortly after the counterclaim was iled. The State of Florida could not have reasonably expected to prevail on its sovereign ......
  • The plenary power of states to infringe intellectual property under the cloak of sovereign immunity.
    • United States
    • The Journal of High Technology Law Vol. 6 Nbr. 2, July 2006
    • July 1, 2006
    ...dismiss the claim as barred by the Eleventh Amendment" should be affirmed. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Bd., 148 F.3d 1343, 1355 (Fed. Cir. 1998). The Third Circuit concluded that the Trademark Remedy Clarification Act [TRCA] exceeded the "clear limitations ......
  • Request a trial to view additional results
10 cases
  • 13 F.Supp.2d 843 (E.D.Wis. 1998), 97-C-654, Froebel v. Meyer
    • United States
    • Federal Cases United States District Courts 7th Circuit Eastern District of Wisconsin
    • July 30, 1998
    ...Act unjustified by Fourteenth Amendment); but see College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 148 F.3d 1343, 1347-52 (Fed.Cir. 1998) (finding Patent Remedy Act validly abrogated sovereign immunity under the Fourteenth As courts have discovered, Congress does not......
  • 527 U.S. 627 (1999), 98-531, Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank
    • United States
    • Federal Cases United States Supreme Court
    • June 23, 1999
    ...proper Article I concerns, but that Article does not give Congress the power to enact such legislation after Seminole Tribe. Pp. 641-648. 148 F.3d 1343, reversed and Rehnquist, C. J., delivered the opinion of the Court, in which O'Connor, Scalia, Kennedy, and Thomas, JJ., joined. Stevens, J......
  • FL PREPAID POSTSECONDARY v COLLEGE SAVINGS BANK, 062399 USSC98531
    • United States
    • Federal Cases United States Supreme Court
    • June 23, 1999
    ...COURT OF THE UNITED STATES 148 F.3d 1343, reversed and remanded. 119 S.Ct. 2199 No. 98 531 FLORIDA PREPAID POSTSECONDARY EDUCATION EXPENSE BOARD, PETITIONER v. COLLEGE SAVINGS BANK and UNITED STATES ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL ......
  • 162 F.3d 195 (2nd Cir. 1998), 97-6141, United States ex rel. Stevens v. State of Vt. Agency of Natural Resources
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Second Circuit
    • December 7, 1998
    ...517 U.S. 44, 55, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 148 F.3d 1343, 1347 (Fed.Cir.1998). First, Congress must unequivocally express its intent to abrogate the immunity, a requirement which arises from "the Ele......
  • Request a trial to view additional results
4 books & journal articles
  • The Alden Trilogy: praise and protest.
    • United States
    • Harvard Journal of Law & Public Policy Vol. 23 Nbr. 2, March 2000
    • March 22, 2000
    ...400, 425-26 (D. N.J. 1996). (161.) See id. at 427-28. (162.) See College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 148 F.3d 1343, 1349-50 (3d Cir. 1998) (patent claim); College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd. 131 F.3d 353, 360-61 (3d Cir. 199......
  • Harmonization through condemnation: is New London the key to world patent harmony?
    • United States
    • Vanderbilt Journal of Transnational Law Vol. 40 Nbr. 2, March - March 2007
    • March 1, 2007
    ...in its opinion identified only eight patent-infringement suits prosecuted against the States in the 110 years between 1880 and 1990. See 148 F.3d at 1353-1354. Testimony before the House Subcommittee in favor of the bill acknowledged that "states are willing and able to respect patent ......
  • The plenary power of states to infringe intellectual property under the cloak of sovereign immunity.
    • United States
    • The Journal of High Technology Law Vol. 6 Nbr. 2, July 2006
    • July 1, 2006
    ...dismiss the claim as barred by the Eleventh Amendment" should be affirmed. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Bd., 148 F.3d 1343, 1355 (Fed. Cir. 1998). The Third Circuit concluded that the Trademark Remedy Clarification Act [TRCA] exceeded the "clear limitations ......
  • Public Construction Contracting
    • United States
    • Construction Law, Second Edition
    • January 1, 2019
    ...Act, and we sustained the abrogation of immunity for patent infringement claims on June 30, 1998, in our College Savings Bank decision, 148 F.3d 1343 (Fed.Cir.1998), shortly after the counterclaim was iled. The State of Florida could not have reasonably expected to prevail on its sovereign ......