An Offensive Weapon?: An Empirical Analysis of the 'Sword' of State Sovereign Immunity in State-Owned Patents

Abstract

In 1999, the Supreme Court invoked state sovereign immunity to strike down provisions in the patent and trademark laws purporting to hold states liable for the infringement of these intellectual properties. These decisions ignited a series of criticisms, including allegations that sovereign immunity gives states an unfair advantage in the exercise of state-owned patent rights. In particular, critics alleged two unfair advantages to state patentees. First, they alleged that states would favorably manipulate litigation. Second, they alleged that states would use their immunity from challenge to obtain broad patents or force private parties into licensing arrangements.

An empirical study focusing on a sample of private and public universities, however, indicates that these allegations may not be completely true. State universities, as patentees, do not appear to be more successful litigants than their private counterparts. Similarly, state universities do not appear to be aggressively collecting weak patents. Nonetheless, there is empirical evidence indicating that state universities are increasingly aggressive licensors of their patents.

Critics of state sovereign immunity suggest that such aggressive licensing practices force private parties to choose between ruinous damages suits and expensive license agreements, thereby raising the overall cost of innovation. In order to resolve this problem, both market and legal solutions have been suggested. A survey of these solutions reveals that a new legislative rule requiring states to opt in to the federal patent system by waiving their immunity to declaratory judgment actions is most likely to adequately resolve the problems created by aggressive state patent licensing.

Keywords: patent, state sovereign immunity, sovereign immunity, bpmc, empirical, Florida Prepaid, College Savings, universities, college, trademark, patent licenses, declaratory judgment