TAKEAWAY: Sovereign immunity does not extend to 35 U.S.C. §101 challenges in infringement suits brought by states.

In a decision of February 26, 2019, regarding a patent infringement suit brought by the University of Florida Research Foundation, Inc. (UFRF) against General Electric (GE), the Federal Circuit rejected UFRF’s claim that state sovereign immunity provided immunity to GE’s § 101 challenge. The court agreed that GE could assert the defense that UFRF’s patent was invalid under § 101.

First, the Federal Circuit held that UFRF waived sovereign immunity when it sued GE for patent infringement. The Federal Circuit further explained, “[t]hat waiver extends ‘not only to the cause of action but also to any relevant defenses and counterclaims.’” Slip op at 3 (citing Vas-Cath, Inc. v. Curators of Univ. of Mo., 473 F.3d 1376, 1381 (Fed Cir. 2007)).

Next, the Federal Circuit concluded that a § 101 challenge could serve as a defense to patent infringement. UFRF had cited Supreme Court case SCA Hytiene Products Aktiebolag v. First Quality Baby Products, LLC (2017) as limiting the defenses to patent infringement available under 35 U.S.C. § 282. The Federal Circuit noted that SCA Hygiene dealt with the equitable defense of laches and did not reach § 101. The court further stated that “[e]ven if § 282 did not extend to a § 101 eligibility challenge, such a challenge would still be a defense to a claim of infringement. We and the Supreme Court have long treated § 101 eligibility as a condition[] of patentability alongside §§102 and 103,” and “[w]e see no reason to depart from this practice now.” Slip op at 4-5.

The Federal Circuit then applied the two-step framework under Alice Corp. Party Ltd. v. CLS Bank International, 573 U.S. 208 (2014) to find UFRF’s patent invalid. The court thus affirmed grant of GE’s motion to dismiss the patent infringement suit.

The Federal Circuit’s decision confirms that a state entity waives its immunity when it voluntarily brings suit for patent infringement. Under such circumstances, sovereign immunity cannot shield a state from the defense of patent invalidity under § 101.

This case is University of Florida Research Foundation Inc. v. General Electric Co., case number 2018-1284, in the U.S. Court of Appeals for the Federal Circuit.