Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V.

• Citation: 734 F.3d 1315
• Decision Date: 12 November 2013
• Docket Number: 2012–1541,2012–1661.,Nos. 2012–1540,s. 2012–1540
• Parties: UNIVERSITY OF UTAH, Plaintiff–Appellee, v. MAX–PLANCK–GESELLSCHAFT ZUR FORDERUNG DER WISSENSCHAFTEN E.V., Max–Planck–Innovation GmbH, Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, and Alnylam Pharmaceuticals, Inc., Defendants–Appellants, and Robert L. Caret, James R. Julian, Jr., David J. Gray, and James P. McNamara, Defendants–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

734 F.3d 1315

UNIVERSITY OF UTAH, Plaintiff–Appellee,
v.
MAX–PLANCK–GESELLSCHAFT ZUR FORDERUNG DER WISSENSCHAFTEN E.V., Max–Planck–Innovation GmbH, Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, and Alnylam Pharmaceuticals, Inc., Defendants–Appellants,
and
Robert L. Caret, James R. Julian, Jr., David J. Gray, and James P. McNamara, Defendants–Appellants.

Nos. 2012–1540, 2012–1541, 2012–1661.

United States Court of Appeals,
Federal Circuit.

Aug. 19, 2013.
Rehearing En Banc Denied Nov. 12, 2013.

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Mark S. Carlson, Hagens Berman Sobol Shapiro, LLP, of Seattle, WA, argued for plaintiff-appellee. With him on the brief was Steve W. Berman.

David I. Gindler, Irell & Manella, LLP, of Los Angeles, CA, argued for all defendants-appellants. With him on the brief were Morgan Chu, and Alan J. Heinrich. Of counsel on the brief were Sandra L. Haberny, of Newport Beach, CA; and Thomas F. Maffei and Scott McConchie, Griesinger, Tighe & Maffei, L.L.P., of Boston, MA.

Before MOORE, REYNA, and WALLACH, Circuit Judges.

Opinion for the court filed by Circuit Judge REYNA.
Dissenting opinion filed by Circuit Judge MOORE.

REYNA, Circuit Judge.

The University of Utah (“UUtah”) brought this lawsuit to correct inventorship of U.S. Patent Nos. 7,056,704 and 7,078,196 (the “Tuschl Patents”). Originally, UUtah named as defendants the assignees (“Assignees”) of the Tuschl Patents: Max–Planck–Gesellschaft zur Forderung der Wissenschaften e.V., Max–Planck–Innovation GmbH, Whitehead Institute for Biomedical Research, Massachusetts Institute

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of Technology, and Alnylam Pharmaceuticals, Inc., (collectively, the “non-State Defendants”) and the University of Massachusetts (“UMass”).

UMass argued that, because the dispute was between two States, the Supreme Court had exclusive original jurisdiction. In response, UUtah amended its complaint, substituting four UMass officials (the “Named Officials”) in place of UMass. The Named Officials then moved to dismiss the case, arguing that UUtah's claims were barred by sovereign immunity and that UUtah had failed to join UMass, which they claimed was an indispensable party. The district court denied the motion, and the defendants appealed.

This case requires us to examine the issues of sovereign immunity and federal jurisdiction that arise when state universities are involved on both sides of an inventorship dispute. For the reasons that follow, we affirm.

Background

The following facts come from UUtah's complaint which, for the purpose of evaluating the motion to dismiss, we take as true.

Dr. Brenda Bass is a professor of biochemistry at UUtah. Her research is focused on RNA biochemistry. In particular, Dr. Bass studies RNA interference (“RNAi”), a phenomenon in which RNA plays a role in silencing the expression of individual genes. Her employment agreement assigns to UUtah the rights to all inventions and discoveries she makes as a result of her employment or research, including the rights to any patents arising from her work.

Dr. Thomas Tuschl, a researcher employed by UMass, is also active in RNAi research. In the course of their work, Drs. Tuschl and Bass attended professional conferences at which they both presented papers on RNA and RNAi issues. Both researchers were familiar with each other's work. Dr. Tuschl eventually applied for and was granted the Tuschl Patents, which Dr. Bass claims “disclosed and claimed [her] conception.” Dr. Bass is not a named inventor on either of the Tuschl Patents.

UUtah, as assignee of Dr. Bass's rights, believes that Dr. Bass is the sole or a joint inventor of the Tuschl Patents. UUtah asked Assignees to cooperate in petitioning the United States Patent and Trademark Office (“USPTO”) to correct the inventorship of the Tuschl Patents by adding Dr. Bass as an inventor. Defendants, who do not believe that Dr. Bass is an inventor of the Tuschl patents, declined that request. As a result, UUtah initiated this suit in district court, requesting the correction of the inventorship of the Tuschl Patents under 35 U.S.C. § 256 and asserting various state law claims against the non-State defendants.

The original and first amended complaints named as defendants each of the Assignees, including UMass. UMass moved to dismiss, arguing that because UUtah and UMass were both arms of the State, the dispute between them fell within the exclusive original jurisdiction of the Supreme Court. In response, UUtah amended its complaint, replacing UMass with four UMass officials: Robert L. Caret (President of UMass), James R. Julian (Executive Vice President and Chief Operating Officer of UMass), David J. Gray (Senior Vice President for Administration, Finance, & Technology and University Treasurer of UMass), and James P. McNamara (Executive Director, Office of Technology Management of UMass). UUtah stated that its intent in making this amendment was to avoid the Supreme Court's exclusive jurisdiction.

The Named Officials moved to dismiss, arguing that the case fell within the exclusive

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original jurisdiction of the Supreme Court and that UUtah's claims were barred by sovereign immunity. The district court rejected these arguments, concluding that relief under § 256 is “prospective in nature, and does not involve a retroactive remedy.” Citing Connecticut ex rel. Blumenthal v. Cahill, 217 F.3d 93, 98 (2d Cir.2000), the court ruled that the case did not fall within the exclusive original jurisdiction of the Supreme Court because UUtah had chosen to sue state officials, not the State itself. It also reasoned that correction of inventorship was not a core sovereign interest sufficient to make this a dispute between States. Accordingly, the district court concluded that it “ha[d] jurisdiction over the action against the UMass state officials under the Ex parte Young doctrine.”

The Named Officials also argued that UUtah had failed to name UMass, which they claimed was an indispensable party. The district court rejected this argument as well, ruling that the suit could proceed without UMass. The court reasoned that neither UMass nor Defendants would be prejudiced by a judgment rendered in UMass's absence because UMass's interests would be adequately represented by the existing defendants, including the Named Officials. The court also found that the remedy—an order directing the USPTO to correct inventorship—would provide adequate relief whether or not UMass was joined.

Defendants appeal the denial of the motion to dismiss. This court has jurisdiction under 28 U.S.C. § 1295(a)(1) and the collateral order doctrine. See Puerto Rico Aqueduct & Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 147, 113 S.Ct. 684, 121 L.Ed.2d 605 (1993) (holding that immediate appeal of the denial of a motion for dismissal based on sovereign immunity is permissible under the collateral order doctrine).

Discussion

State universities frequently obtain assignments on patents invented by their faculties and staff, just as private corporations often obtain assignments on patents invented by their employees. Unlike a private corporate assignee or an individual inventor, a state university typically enjoys sovereign immunity. As a result, a state university generally may not be sued for infringement, nor may it be forced to defend against an action for declaratory judgment of invalidity or non-infringement. See A123 Sys., Inc. v. Hydro–Quebec, 626 F.3d 1213, 1220 (Fed.Cir.2010). But States do not enjoy sovereign immunity from suits brought by other States. Texas v. New Mexico, 482 U.S. 124, 130, 107 S.Ct. 2279, 96 L.Ed.2d 105 (1987). Similarly, States are free to sue citizens of other States without raising sovereign immunity issues.

This case requires us to examine the legal complexities that arise when state universities are on both sides of a patent dispute. Defendants present three issues for our consideration. First, they contend that the district court lacked jurisdiction because, under 28 U.S.C. § 1251(a), this case falls within the exclusive original jurisdiction of the Supreme Court. In procedural questions not unique to patent law, we review a dismissal for lack of subject matter jurisdiction according to the law of the regional circuit, which in this case is the First Circuit. See Toxgon Corp. v. BNFL, Inc., 312 F.3d 1379, 1380 (Fed.Cir.2002). The First Circuit reviews a motion to dismiss de novo, “taking as true the well-pleaded facts contained in the complaint and drawing all reasonable inferences therefrom in the plaintiff's favor.” Garrett v. Tandy Corp., 295 F.3d 94 (1st Cir.2002).

Second, Defendants argue that, as an arm of the State of Massachusetts, UMass

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is entitled to Eleventh Amendment immunity. We have held that the question of Eleventh Amendment waiver is a matter of Federal Circuit law. Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111, 1124 (Fed.Cir.2003). “We review the district court's decision on Eleventh Amendment immunity de novo.” A123 Sys., 626 F.3d at 1219.

And, third, Defendants argue that UMass is an indispensable party and that the case should have been dismissed under Fed.R.Civ.P. 19(b). “Whether a party is indispensable under Rule 19(b) is a matter of regional circuit law.” Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 1269 (Fed.Cir.1998). The First Circuit reviews Rule 19 decisions for abuse of discretion. Picciotto v. Continental Cas. Co., 512 F.3d 9, 14 (1st Cir.2008). Having established the applicable standards of review in this appeal, we address each of these issues in turn.

I. Supreme Court Jurisdiction

We begin with Defendants' argument that this case is a dispute between States and, as such, falls within the exclusive original jurisdiction of the Supreme Court. If Defendants are correct, both this court and the district court are without jurisdiction over the dispute, and we must dismiss the case. Because UMass is not a real party in interest under the Supreme Court's caselaw,...