Tegic Communications v. University of Texas System

Decision Date10 August 2006
Docket NumberNo. 05-1553.,05-1553.
Citation458 F.3d 1335
PartiesTEGIC COMMUNICATIONS CORPORATION, Plaintiff-Appellant, v. BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM, Defendant-Appellee.
CourtU.S. Court of Appeals — Federal Circuit

Kathleen M. Sullivan, Quinn Emanuel Urquhart Oliver & Hedges, LLP, of San Francisco, California, argued for plaintiff-appellant. With her on the brief were Charles K. Verhoeven, Jennifer A. Kash, and Helen E. Dutton.

Michael W. Shore, Shore Chan LLP, of Dallas, Texas, argued for defendant-appellee. On the brief were Kelly P. Corr and Kelsey Joyce, Corr Cronin Michelson Baumgardner & Preece LLP, of Seattle, Washington. Of counsel on the brief were Alfonso Garcia Chan, Shore Chan LLP, of Dallas, Texas, and Kenneth E. Shore, Shore West, PC, of Longview, Texas. Of counsel were Gerald Bill Hrycyszyn, Joseph F. DePumpo, and Jeffrey R. Bragalone, Shore Chan LLP.

Before NEWMAN, Circuit Judge, ARCHER, Senior Circuit Judge, and GAJARSA, Circuit Judge.

NEWMAN, Circuit Judge.

Tegic Communications Corporation appeals the decision of the United States District Court for the Western District of Washington, dismissing a declaratory judgment action against the Board of Regents of the University of Texas System (herein "the University") on the ground that this suit is barred by the Eleventh Amendment to the United States Constitution.1 We affirm the dismissal.

BACKGROUND

The University had filed suit in the Western District of Texas, charging forty-eight cellular-telephone companies with infringement of U.S. Patent No. 4,674,112 ("the '112 patent").2 The '112 patent, entitled "Character Pattern Recognition and Communications Apparatus," is directed to a method of inputting text into a device keyboard, wherein the device software recognizes the text and predicts the word the user intends to type. The University is the owner of the '112 patent, by assignment from the inventors.

Tegic, a corporation of the State of Washington, sells and licenses text-input software, entitled "T9 Text Input," to 39 of the 48 cellular-phone company defendants in the suit brought in Texas by the University. T9 Text Input was created for use in cellular phones and other mobile devices that have fewer keys than a standard computer keyboard. Tegic explains that on a standard phone each key represents three letters, and the user selects a particular letter by hitting the key repeatedly (e.g., where the key represents "A," "B" and "C," the user taps the key twice to select a "B"). T9 Text Input allows the user to tap each key only once, with the software ascertaining each intended word with greater than 95% accuracy.

In view of the suit that the University had filed in Texas against Tegic's customers and licensees, Tegic brought this declaratory suit against the University in the United States District Court for the Western District of Washington. Tegic seeks a declaration that the '112 patent is invalid and unenforceable, and that the T9 software does not infringe, contribute to infringement, or induce infringement of the '112 patent. Tegic states that the University's action in Texas, ostensibly directed against the cellular-phone manufacturers, is actually directed against Tegic as the manufacturer and licensor of the software that in combination with the cellular-phone hardware infringes the '112 patent.

The '112 patent includes both apparatus and method claims. Claim 1 is the broadest apparatus claim:

1. A communications apparatus comprising:

receiving means operably connectable to a telephone or the like for receiving a series of transmitted tones corresponding to an input word and for decoding the tones into a series of codes, each tone being representative of a letter of the word, which letter is one of two or more alphabetic characters corresponding to the tone;

controller means coupled to said receiving means for processing said series of codes and outputting a signal indicative of a particular word which corresponds to said series of codes, said controller means including, recognition means for matching said series of codes with a programmed code sequence indicative of said particular word,

said recognition means including a stored vocabulary comprising a plurality of syllabic elements, each being representative of one or more alphabetic characters, said recognition means being operable for matching said series of codes with one or more syllabic elements and outputting a signal indicative of a particular word represented by said one or more syllabic elements; and

indicating means for receiving said signal and communicating the signal in a form perceptible to the user.

Claim 10 is a representative method claim:

10. A method of communicating, utilizing a signal-generating keyboard where at least some of the keys represent two or more alphabetic characters, comprising the steps of:

inputting a word into said keyboard by depressing a single key for each alphabetic character of said word;

transmitting signals generated by the key depressions;

receiving said transmitted signals and decoding the signals into binary code;

matching said binary code with one or more pre-programmed codes, each pre-programmed code being representative of a syllabic element;

forming a representation of the word from the one or more syllabic elements represented by the matched one or more pre-programmed codes; and

outputting the word representation in a form perceptible to the user.

The University filed with the district court in Washington a covenant not to sue Tegic for past, present, or future acts of infringement, and thereafter filed a motion to dismiss on the ground that the district court lacked subject matter jurisdiction, see Fed.R.Civ.P. 12(b)(1), because there was no case or controversy between the University and Tegic. The University also stated that it, as an arm of the State of Texas, is not subject to the jurisdiction of the federal courts and is protected from Tegic's suit by the immunity granted pursuant to the Eleventh Amendment to the Constitution.3 The University also moved for dismissal for lack of personal jurisdiction in Washington. See Fed.R.Civ.P. 12(b)(2). In the alternative, the University requested transfer of Tegic's action to the Western District of Texas. See 28 U.S.C. § 1404(a) ("for the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it may have been brought"). The University also asked the court to exercise its discretion to decline declaratory judgment jurisdiction, see Wilton v. Seven Falls Co., 515 U.S. 277, 282, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (federal courts have "discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites"). Tegic opposed all of the grounds of dismissal and transfer.

The district court granted the motion to dismiss, on the ground that the University is immune from suit in the federal courts pursuant to the Eleventh Amendment and had not waived its immunity as to Tegic's declaratory judgment action. The district court considered and rejected each of Tegic's arguments: First, the court held that the University had not waived its immunity by filing a covenant not to sue. The court reasoned that the covenant was evidence that the University had not consented to suit, rather than the reverse. Second, the court held that the University had not waived its immunity by obtaining patent rights and taking steps to enforce those rights in federal court, citing College Savings Bank v. Florida Prepaid Postsecondary Education Expense Bd., 527 U.S. 666, 684-86, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999) (a state does not "constructively waive" Eleventh Amendment immunity by obtaining federally created rights, even when it does so solely as a "market participant"). Third, the district court held that the University had not waived its immunity to suit in Washington by filing suit in Texas as to the same patent, reasoning that precedent does not support Tegic's position.

The district court considered whether it should transfer the case to the Western District of Texas in accordance with § 1404(a), rather than dismiss it, but held that the appropriate course was to dismiss the case. The court expressed "serious doubts" as to whether Tegic could have brought this declaratory action in Texas, since Tegic was not a party to the suit filed by the University. The district court also noted Tegic's objection to transfer of the suit. The court reasoned that Tegic's proper recourse, if any, is to seek intervention in the Texas action. The court did not discuss the University's other grounds for dismissal. Tegic appeals.

DISCUSSION

The constitutional issue of Eleventh Amendment immunity is given plenary review. McKesson Corp. v. Div. of Alcohol Beverages & Tobacco, Dep't of Bus. Regulation of Florida., 496 U.S. 18, 29-31, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990); Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304, 347-48, 4 L.Ed. 97 (1816); Regents of the University of New Mexico v. Knight, 321 F.3d 1111, 1123-24 (Fed Cir.2003). The University of Texas System is deemed to be an arm of the State of Texas, see Tex. Gov't Code § 441.101(3), and Tegic does not dispute that the University is accorded Eleventh Amendment immunity. See Xechem Int'l, Inc. v. Univ. of Tex. M.D. Anderson Cancer Ctr., 382 F.3d 1324, 1327-28 (Fed.Cir.2004) (recognizing the status of the University of Texas System as an arm of the state).

The Supreme Court has explained that the Eleventh Amendment enacts a waivable immunity from suit, not "a nonwaivable limit on the federal judiciary's subject-matter jurisdiction." Idaho v. Coeur d'Alene Tribe, 521 U.S. 261, 267, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997). That is, a federal court has subject matter jurisdiction to hear cases involving federal law,...

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