O'MALLEY, Circuit Judge.
This case involves the interplay of state sovereign immunity under the Eleventh Amendment and required joinder of parties under Rule 19 of the Federal Rules of Civil Procedure. Gensetix, Inc. ("Gensetix") exclusively licensed U.S. Patent Nos. 8,728,806 and 9,333,248 from the University of Texas ("UT"), an arm of the state of Texas. Gensetix then sued Baylor College of Medicine, Diakonos Research Ltd., and William K. Decker (collectively, "Baylor") for infringement of the patents-in-suit, naming UT as an involuntary plaintiff pursuant to Rule 19(a). The District Court for the Southern District of Texas determined that the Eleventh Amendment barred joinder of UT as an involuntary plaintiff. Gensetix, Inc. v. Baylor Coll. of Med., 354 F.Supp.3d 759, 766 (S.D. Tex. 2018). The court also concluded that, under Rule 19(b), the suit could not proceed in UT's absence. Id. at 773-74. Accordingly, the court dismissed the suit. This appeal followed. For the reasons stated below, we affirm-in-part, reverse-in-part, and remand.
The patents-in-suit are directed to methods of modifying a patient's immune system to kill cancer cells. Decker, the named inventor of the patents-in-suit, developed his invention during his employment at the University of Texas MD Anderson Cancer Center. Pursuant to the terms of Decker's employment agreement, the patents-in-suit were assigned to UT.
The license agreement provides that, Gensetix, at its own expense, must enforce any patent "covered by the license and is entitled to retain recovery from such enforcement." Gensetix, 354 F. Supp. 3d at 769. UT retained a secondary right to sue if Gensetix fails to file suit against a substantial infringer within six months of knowledge of infringement. Id. The parties agreed to fully cooperate with each other in any infringement suit. And, the parties agreed that nothing in the agreement shall be deemed a waiver by UT of its sovereign immunity. Id. at 772.
In April 2017, Gensetix filed this suit against Baylor, alleging infringement of the patents-in-suit. Gensetix noted that, before filing its complaint, it requested that UT join as a co-plaintiff, but UT declined. Gensetix therefore named UT as an involuntary plaintiff pursuant to Rule 19(a). J.A. 115-16. In its complaint, Gensetix alleged that Decker "continued and continues to use technology that infringes one or more claims of the [p]atents-in-[s]uit... as part of his work at" Baylor. J.A. 119. Gensetix also alleged that in 2013 and 2014, Decker published content while at Baylor that "gives Gensetix reason to believe" that Decker has practiced methods
UT filed a motion to dismiss pursuant to Rule 12(b)(1), seeking to dismiss itself from the lawsuit. UT argued that it is a sovereign state entity under Texas law and that, under the Eleventh Amendment, the district court had no subject matter jurisdiction over UT.
Baylor argued that: (1) UT is a necessary party because it owns the patents-in-suit and transferred less than all substantial patent rights to Gensetix; (2) UT cannot be joined as an involuntary plaintiff because, as an entity of the State of Texas, it is entitled to Eleventh Amendment sovereign immunity; and (3) the Rule 19(b) factors weigh in favor of dismissing the suit, rather than proceeding in UT's absence.
The district court granted UT's motion to dismiss. It held that "[t]he purpose of the Eleventh Amendment is to prevent states from being compelled to litigate." Gensetix, 354 F. Supp. 3d at 766 (internal quotation marks omitted). It found that, while "there [were] currently no claims against UT, requiring joinder would, in effect, force UT to pursue claims against its will." Id. Accordingly, the court held that, because "UT did not waive its immunity, initiate [the] suit, or agree to participate in [the] litigation," the Eleventh Amendment prohibited involuntary joinder. Id.
As to whether the infringement suit could proceed in UT's absence, the court held that UT was a "necessary" party under Rule 19(a) because it retained substantial rights in the patents-in-suit.
On appeal, Gensetix argues that the district court (1) erred in holding that sovereign immunity bars coercive joinder of UT pursuant to Rule 19(a); and (2) abused its discretion in determining that, under Rule 19(b), the infringement suit should be dismissed rather than proceed in UT's absence.
A. Sovereign Immunity Bars Rule 19(a)(2) Joinder
Rule 19(a)(2) requires a court to order a required plaintiff "who refuses to join as a plaintiff" to "be made either a defendant or, in a proper case, an involuntary plaintiff." Fed. R. Civ. P. 19(a)(2). The Eleventh Amendment provides, however, that "[t]he 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. Although the procedural issue of joinder under Rule 19 is not unique to patent law, and we thus review its application under the law of the regional circuit, to the extent the district court assessed the interplay between Rule 19 and the Eleventh Amendment, we review that question using the law of our circuit. Regents of Univ. of N.M. v. Knight, 321 F.3d 1111, 1124 (Fed. Cir. 2003). We therefore apply our law and review the district court's decision on Eleventh Amendment immunity de novo. Id.
On appeal, Gensetix argues that sovereign immunity does not preclude coercive joinder of a sovereign under Rule 19(a)(2). In Gensetix's view, the Eleventh Amendment bars suits brought by private citizens against the state, which is not the case here. Appellant's Br. 41-42 (citing Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1564 (Fed. Cir. 1997) ("Regents of UC")). Gensetix argues that, like Regents of UC, here, there are no claims or counterclaims against UT, thereby making sovereign immunity inapplicable. Id. at 43. Gensetix also contends that both the Supreme Court and our court have consistently held that a patentee who refuses to voluntarily join an infringement action initiated by its exclusive licensee can nonetheless be joined as an involuntary plaintiff. Id. at 39-41 (citing, e.g., Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 473, 46 S.Ct. 166, 70 L.Ed. 357 (1926), and Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1133 (Fed. Cir. 1995)).
UT responds that sovereign immunity protects it from private party litigation and this protection extends to joinder under Rule 19(a). According to UT, sovereign immunity "controls over the joinder process of Rule 19." UT Br. 14. And, relying on the Supreme Court's decision in Pimentel, 553 U.S. at 869, 128 S.Ct. 2180, UT argues that, where there is a "potential for injury to the interests" of the absent sovereign, the suit must be dismissed. Id. at 15.
Like UT, Baylor argues that the Eleventh Amendment forbids the court from ordering UT to subject its property to federal court adjudication. Baylor Br. 16-17. According to Baylor, a state's property rights cannot be limited or defeated where the state neither brought a claim nor agreed to join the suit. And, like UT, Baylor points to the express language of Section 15.4 of the license agreement as indicative of UT's refusal to waive sovereign immunity. Id. at 18-19. We agree that sovereign immunity is to be applied more broadly than the face of its text.
Gensetix's attempt to limit the Eleventh Amendment to its text—i.e., to cases "against" a state—is contrary to Supreme Court guidance. "[T]he sovereign immunity reflected in (rather than created by) the Eleventh Amendment transcends the narrow text of the Amendment itself." Coll. Sav. Bank v. Fla. Prepaid Postsecondary Ed. Expense Bd., 527 U.S. 666, 687 n.5, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999). The Supreme Court has "understood the Eleventh Amendment to stand not so much for what it says, but for the presupposition... which it confirms." Seminole
Gensetix provides no basis for suggesting that these principles are inapplicable in cases where the state is joined as an involuntary plaintiff. Indeed, Gensetix's reliance on our decision in Regents of UC is misplaced. Regents of UC involved a suit initiated by the University of California in the Northern District of California. 119 F.3d at 1559. In opposing transfer to the Southern District of Indiana, the university asserted that it only waived sovereign immunity with respect to California federal courts and that the Eleventh Amendment barred transfer to a different district court. Id. at 1564. The defendant, Eli Lilly, argued that the Eleventh Amendment is inapplicable where a state asserts a claim and the suit involves no counterclaims against the state. Id. We agreed with Eli Lilly, explaining that the Supreme Court has "not construe[d] the Eleventh Amendment to apply to suits in which a state is solely a plaintiff, as UC is here." Id. We further explained that:
Id. at 1564-65.
Gensetix erroneously reads Regents of UC to broadly hold that Eleventh Amendment immunity is inapplicable in all cases where the state is a plaintiff (even if involuntarily) and there are no counterclaims against the state. But Regents of UC did not create a rule whereby parties may drag a sovereign into the federal court system against its will simply because there is no claim "against" the sovereign. Instead, our holding in that case was predicated on the state voluntarily submitting itself to federal court jurisdiction. Indeed, we recently explained that our interpretation of the Eleventh Amendment in Regents of UC was "guided by" the Supreme Court's reasoning that:
We conclude that the key distinction between Regents of UC and the present case—that UT did not voluntarily invoke federal court jurisdiction—is dispositive. Unlike the sovereign in Regents of UC, UT did not attempt to avail itself of federal court jurisdiction, and, in fact, has repeatedly made clear that it does not want to participate in this litigation.
Gensetix fares no better in its attempt to distinguish the other cases relied upon by the district court in reaching the same conclusion. For example, in Thomas v. Bearings Corp., 50 F.3d 502 (8th Cir. 1995), the Eighth Circuit forbade involuntary joinder of a state agency in a lawsuit by city residents against a company that had allegedly contaminated their drinking water. The court held that the "Eleventh Amendment provides immunity from suit, not merely immunity from liability.... It may be circumvented by waiver, abrogation, or a suit against state officials, but federal courts cannot simply deem a state's Eleventh Amendment defense inapplicable." Id. at 506. The Eighth Circuit specifically noted that the Eleventh Amendment precludes involuntary joinder even if it involves later realignment of the state agency as a plaintiff. Id. at 502, 504 n.5. Gensetix argues that, in Thomas, the Eighth Circuit was concerned with subjecting the state agency to premature litigation, "strik[ing] at the very heart of the Eleventh Amendment by undermining the state's asserted autonomy in decision-making." Appellant's Br. 44-45 (citations omitted). In Gensetix's view, here, joining UT as an involuntary plaintiff does not undermine the state's autonomy. But forcing UT to litigate against its will does exactly that.
Gensetix also relies on Independent Wireless, 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357 (1926), and Abbott Laboratories, 47 F.3d 1128 (Fed. Cir. 1995), to argue that "equity and justice" require joinder of UT. See Appellant's Br. 39-40. In Gensetix's view, UT voluntarily granted an exclusive license to Gensetix and this license includes "an implied obligation" to the use of UT's name. Appellant's Br. 40 (citing Indep. Wireless, 269 U.S. at 469, 46 S.Ct. 166). Although Gensetix acknowledges that UT did not waive sovereign immunity, it nonetheless argues that UT willingly entered into the license agreement and must now abide by its terms. We disagree.
When it comes to suits between private parties, Gensetix is correct that a patentee who refuses to voluntarily join an infringement action initiated by its exclusive licensee can ordinarily be joined as an involuntary plaintiff under Rule 19(a). See, e.g., Indep. Wireless, 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357 (1926); Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1237 (Fed. Cir. 2019) (collecting cases). But we refuse to extend
In sum, neither Supreme Court case law, nor the decisions of this circuit or our sister circuits, support Gensetix's arguments that, absent waiver, a sovereign may be joined as an involuntary plaintiff under Rule 19(a). Accordingly, we affirm the district court's conclusion that UT may not be joined as an involuntary plaintiff.
B. The District Court Abused Its Discretion In Concluding That This Case Must Be Dismissed In UT's Absence
We next consider whether the district court properly concluded that this case cannot proceed in UT's absence. A district court's analysis under Rule 19(b) is a matter of regional circuit law. Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung der Wissenschaften E.V., 734 F.3d 1315, 1320 (Fed. Cir. 2013). The Fifth Circuit reviews a district court's decision to dismiss a suit pursuant to the Rule 19(b) inquiry for abuse of discretion. Hood v. City of Memphis, 570 F.3d 625, 628 (5th Cir. 2009). "Determining whether [a suit should be dismissed in the absence of a required party] is a highly-practical, fact-based endeavor, and ... a district court will ordinarily be in a better position to make a Rule 19 decision than a circuit court would be." Id. (internal citations omitted).
Rule 19(b) provides that, where joinder of a required party is not feasible, "the court must determine whether, in equity and good conscience, the action
The district court found that three out of the four Rule 19(b) factors weighed in favor of dismissing the case. As to the first factor—the extent to which a judgment rendered in UT's absence might prejudice UT or the parties to the litigation —relying on our decision in A123 Systems, Inc. v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010), the court found that "UT risks an invalidation of its patent without the opportunity to litigate." Gensetix, 354 F. Supp. 3d at 764. It concluded that it "must give sufficient weight to the prejudice to UT, which is absent from this suit based on a claim of sovereign immunity." Id. (quoting A123, 626 F.3d at 1221). Without any analysis of the second factor, the court also found that it would not be able to lessen or avoid prejudice to UT. Id. (citing A123, 626 F.3d at 1222 n.1). As to the third factor, the court found that a judgment rendered without UT would be inadequate. Id. It noted Baylor's argument that there is a risk of multiple suits against Baylor on the same patents. But, it nonetheless "decline[d] to determine whether UT would be judicially estopped from later filing suit against [Baylor] for the purposes of this Rule 19(b) analysis." Id. Finally, as to the fourth factor—whether Gensetix would have an adequate remedy if the action were dismissed for nonjoinder—the court found it "seemingly" weighed in favor of Gensetix. Regardless, the court "refused to effectuate a rescue" by joining UT, noting that, "[w]hile this result may be harsh, it is an inherent risk for anyone who chooses to contract with a sovereign entity." Id.
The parties argue at length about the facts applicable to each factor, but we need not delve into each argument to assess the appropriateness of the district court's analysis. We conclude that the district court abused its discretion by collapsing the multi-factorial Rule 19(b) inquiry into one dispositive fact: UT's status as a sovereign. For example, in evaluating the prejudice to UT, the district court relied on our decision in A123 and concluded that it must give weight to the fact that the sovereign risked losing rights in its patent without an opportunity to defend itself. Gensetix, 354 F. Supp. 3d at 764. But in A123, we noted that the interests of the licensee and licensor were "overlapping" not "identical," because the licensee had only a field-of-use license. A123, 626 F.3d at 1221. We concluded
Likewise, the court dismissed the lack of an adequate remedy for Gensetix resulting from UT's nonjoinder—i.e., the fourth Rule 19(b) factor—as simply "an inherent risk for anyone who chooses to contract with a sovereign entity." Id. That may be true, but this fact is more relevant to joinder under Rule 19(a) than it is to the Rule 19(b) analysis. Rather than cede control, once again, to UT's claim of sovereign immunity, the district court should have given weight to the fact that Gensetix is without recourse to assert its patent rights because UT cannot be feasibly joined. Accordingly, we conclude that the district court abused its discretion in giving overwhelming weight to UT's sovereign status to the exclusion of all other facts.
Pimentel, on which UT relies, does not compel a different conclusion. Pimentel involved an interpleader action commenced to determine ownership of property allegedly stolen by Ferdinand Marcos, the former President of the Philippines. In concluding that the action should not have proceeded in the Republic of Philippines' absence, the Supreme Court noted that a sovereign's immunity from suit is a "privilege [that] is much diminished if an important and consequential ruling affecting the sovereign's substantial interest is determined, or at least assumed, by a federal court in the sovereign's absence and over its objection." Pimentel, 553 U.S. at 868, 128 S.Ct. 2180 (emphasis added). The Court explained that, "where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign." Id. at 867, 128 S.Ct. 2180 (emphasis added). This seemingly broad language is best understood, however, within the specific facts of Pimentel. First, the case dealt with foreign sovereign immunity, not state sovereign immunity, and the Court placed some weight on the "[c]omity and dignity interests" at play. Id. at 869, 128 S.Ct. 2180. No comity concerns exist here. Second, and more importantly, there was no dispute in Pimentel that the absence of the Philippines in the interpleader suit would result in its interests going unprotected. Id. at 863-64, 128 S.Ct. 2180. By contrast, here, Gensetix is fully able (and willing) to step into UT's shoes and protect the absent sovereign's interests in the validity of the patents-in-suit. Indeed, in the license agreement, UT required that it do so. Finally, in Pimentel, the claim was not extinguished for lack of an alternative forum, unlike here.
In his dissent-in-part, Judge Taranto, respectfully, reads too much into Pimentel. We do not agree that the Court gave "controlling weight to the sovereign interest" in that case. In evaluating the first Rule 19(b) factor, the Court concluded that the district court and the Court of Appeals "gave insufficient weight to the likely prejudice to" the sovereign. Id. at 869, 128 S.Ct. 2180. The Court nonetheless analyzed the remaining Rule 19(b) factors before concluding that the action must be dismissed. Rather than announcing a bright-line rule, the Court clarified that "Rule 19 cannot be applied in a vacuum, and it may require some preliminary assessment of the merits of certain claims." Id. at 868, 128 S.Ct. 2180. It also made clear that in conducting "the Rule 19(b)
Beyond giving controlling weight to UT's status as a sovereign in its analysis of several of the applicable factors, in concluding that a judgment rendered in UT's absence would be inadequate, the district court also refused to properly analyze the third Rule 19(b) factor. In refusing to consider whether UT would be barred from filing suit against Baylor, such that there would be a risk of multiple suits, the court ignored its own express finding that, under the terms of the agreement, UT's right to sue is secondary, and it cannot initiate a lawsuit against Baylor now that Gensetix has done so. Therefore, allowing the litigation to proceed in UT's absence does not pose a substantial risk of multiple suits.
The proper analysis of the Rule 19(b) factors is far more nuanced than the district court's. As to the prejudice to UT, the interests of UT and Gensetix are aligned. Despite UT's sovereign status, given Gensetix's identical interest in the validity of the patents-in-suit, any prejudice to UT is greatly reduced. There is also no risk of multiple suits because, under the express terms of the parties' agreement, UT may not sue Baylor once Gensetix has commenced litigation. And, as an exclusive licensee with less than all substantial rights in the patents-in-suit, Gensetix cannot enforce its patent rights without the court allowing the suit to proceed in UT's absence. Given this clear factual record, we conclude that it was an abuse of discretion to find that the suit may not proceed in UT's absence. Accordingly, we reverse the district court on this point.
We have considered the parties' remaining arguments and find them unpersuasive. For the foregoing reasons, we affirm-in-part, reverse-in-part, and remand for proceedings consistent with this opinion.
Each party to bear its own costs.
NEWMAN, Circuit Judge, concurring in part, dissenting in part, concurring in the judgment.
The panel majority holds that the Board of Regents of the University of Texas System ("the University" or "UT") has Eleventh Amendment immunity that shields it from involuntary joinder in this infringement suit against Baylor College of Medicine and others. Respectfully, I disagree.
I respectfully dissent from the court's holding that the University has Eleventh Amendment immunity from joinder in this litigation. However, this infringement suit may proceed without the University as a party, in conformity with Federal Rule of Civil Procedure 19(b); thus I concur in the court's judgment.
The Eleventh Amendment does not insulate a State from its contractual obligations
Just as the State must pay its bills, it also must comply with its contracts. The purpose of the Eleventh Amendment is to shield a State's sovereign functions of governance from judicial oversight in federal courts. See William A. Fletcher, The Eleventh Amendment: Unfinished Business, 75 Notre Dame L. Rev. 843, 854 (2000). When a State agency enters into commercial transactions, it is subject to the rules of commerce. As Justice Breyer explained in College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 666, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999): "When a State engages in ordinary commercial ventures, it acts like a private person, outside the area of its `core' responsibilities, and in a way unlikely to prove essential to the fulfillment of a basic governmental obligation." Id. at 694, 119 S.Ct. 2219 (Breyer, J., dissenting).
The Eleventh Amendment is not an authorization whereby State agencies may violate their commercial and contractual obligations. Its purpose is not to absolutely "prevent states from being compelled to litigate," as the district court stated. Dist. Ct. Op. at 766 (internal quotation marks omitted). The Supreme Court expressed this view in Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), holding that even if the State is immune from suit on a particular issue, its officials may not be immune. Id. at 167, 28 S.Ct. 441. As a recent illustration, in Pennington Seed, Inc. v. Produce Exchange No. 299, 457 F.3d 1334 (Fed. Cir. 2006), this court explained that although the University of Arkansas may assert Eleventh Amendment immunity from suit for patent infringement, that University's officials can be sued. Id. at 1342.
Here, the University of Texas obtained United States patents on inventions of the University's scientists, and entered into an exclusive License Agreement with Gensetix for development and commercialization.
The University now refuses such cooperation, by refusing to be named as a party to the suit, thereby preventing enforcement of the patents—although the License Agreement requires Gensetix to enforce the patents. The University not only violates its agreement to "cooperate fully," but also deprives its licensee of the agreed upon exclusivity. The University achieves this result by invoking the Eleventh Amendment.
This is not a matter of shielding the State from the "indignity" of judicial process, as in Seminole Tribe of Florida v. Florida, 517 U.S. 44, 58, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). When a State enters into commerce, it accedes to the rules of commerce. See White v. Massachusetts Council of Const. Employers, Inc., 460 U.S. 204, 207, 103 S.Ct. 1042, 75 L.Ed.2d 1 (1983) ("There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market." (quoting Reeves, Inc. v. Stake, 447 U.S. 429, 436-47, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980))).
I do not share the majority's conclusion that the Eleventh Amendment shields the University from compliance with its contractual obligation to "cooperate fully" with its exclusive licensee, Gensetix, in enforcing these patents against infringers.
This infringement suit may proceed under Rule 19(b) without joinder of the University
The district court held that the University, as patent assignee, is a necessary party to this infringement suit brought by its exclusive licensee. If the assignee is indeed a necessary party, in most situations it can be joined as a voluntary or involuntary party. However, if joinder is not available, the question is whether it is an indispensable party. Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 1272 (Fed. Cir. 1998).
The question of whether and when a licensee may sue infringers in its own name was elaborated in Waterman v. Mackenzie, 138 U.S. 252, 11 S.Ct. 334, 34 L.Ed. 923 (1891); the Court stated:
Id. at 255, 11 S.Ct. 334. Following the Court's holding in Waterman, a conveying of the "whole patent, comprising the exclusive right to make, use, and vend the invention throughout the United States" is tantamount to an assignment, and vests in the assignee "a right to sue infringers ... in the name of the assignee alone." Id. However, the district court relied on Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354 (Fed. Cir. 2010) to support holding that the University's default right to sue infringers if Gensetix did not do so, was a right so substantial that it defeated Gensetix's right to sue as exclusive licensee. Dist. Ct. Op. at 769-71.
Here, the issue is resolved not only by Federal Rule 19(b), but also by legal and equitable theories of property rights, such as the constructive trust described in Independent Wireless Telegraph Co. v. Radio Corporation of America, 269 U.S. 459, 468, 46 S.Ct. 166, 70 L.Ed. 357 (1926) (patent owner holds title in trust for exclusive licensee); or determining whether the license is "by way of mortgage and liable to be defeated by non-performance of a condition subsequent," as described in Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 875 (Fed. Cir. 1991) (holding that "the termination provisions in the agreements were entirely consistent with an assignment.").
Applying the principles of precedent to the Gensetix-University License Agreement, the default provision for suing infringers is consistent with the assignment of exclusive patent rights, whereby Gensetix may sue infringers in its own name when, as here, the University declines to join or be joined.
I join the court's ruling that this litigation may proceed without the University as a party, and concur in the application of Federal Rule 19(b).
The University's rights of scientific publication, research, and teaching are not patent rights
In the district court, Baylor had moved for dismissal on the ground that "the only allegations of patent infringement in the Complaint were allegations of research activities." University Br. 5 n.1. The district court did not decide this motion, instead dismissing the action on the Eleventh Amendment ground.
The License Agreement states that the University has the right to "[p]ublish the general scientific findings from research," to use the subject matter for "academically-related purposes" such as "research, teaching, [and] patient care," and to transfer to "academic or research institutions for non-commercial research use." License Agreement at 5 (¶¶ 3.1(a), (b), (c)). The scientific/technologic information in patents is part of the balance in the Constitution's provision "To promote the Progress of Science and useful Arts," Art. I, § 8, cl. 8. As explained by Justice Story in Sawin v. Guild, 21 F. Cas. 554, 555 (C.C.D. Mass. 1813), this balance distinguishes "the making with an intent to use for profit, and not for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification." This principle has supported centuries of innovation.
The License Agreement's acknowledgement of scientific knowledge is not a reservation of patent rights, and was inappropriately held by the district court to comprise substantial retained patent rights and thus to support Eleventh Amendment immunity.
Although I do not agree with the court's holding that the University has Eleventh Amendment immunity from participation
TARANTO, Circuit Judge, concurring in part and dissenting in part.
I join Parts I and II-A of Judge O'Malley's opinion except for footnote 6. Those portions of the opinion conclude that the constitutionally preserved protection of state sovereign immunity bars a coerced joinder of the University of Texas (UT), which is an arm of the State of Texas, as an involuntary plaintiff in this federal action, which Gensetix, Inc., as UT's exclusive licensee, initiated to assert infringement of UT-owned patents. I agree that joinder of UT under Federal Rule of Civil Procedure 19(a), even though UT is a "required" party under that provision, would improperly subject UT "to the coercive process of judicial tribunals at the instance of private parties." Seminole Tribe of Florida v. Florida, 517 U.S. 44, 58, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996); See Franchise Tax Board of California v. Hyatt, ___ U.S. ___, 139 S.Ct. 1485, 1497, 203 L.Ed.2d 768 (2019).
I part company with Judge O'Malley's opinion in its conclusion, in Part II-B, that the district court erred in ruling that the infringement action should not proceed under Rule 19(b) without the presence of required-party UT. For that reason, I dissent from the majority's reversal of the district court's dismissal of the action. The Supreme Court's decision in Republic of Philippines v. Pimentel, 553 U.S. 851, 128 S.Ct. 2180, 171 L.Ed.2d 131 (2008), explains that when a sovereign entity is a required party under Rule 19(a), is protected against joinder by sovereign immunity, and makes a non-frivolous assertion that it will be prejudiced by a suit proceeding in its absence, a district court is generally obligated to dismiss the suit under Rule 19(b). Because UT made such an assertion, I see no abuse of discretion in the district court's dismissal of this action, which I would affirm.
In Pimentel, the Supreme Court considered whether a federal-court action may proceed, under Rule 19(b), without the presence of a sovereign entity that was a "required" party under Rule 19(a) but that could not be joined because of sovereign immunity. 553 U.S. at 863, 128 S.Ct. 2180. The Court recognized that it "ha[d] not considered a case posing the precise question presented," but it noted that there were "some authorities involving the intersection of joinder and the governmental immunity of the United States." Id. at 866, 128 S.Ct. 2180. The "analysis of the joinder issue in those cases"—Mine Safety Appliances Co. v. Forrestal, 326 U.S. 371, 66 S.Ct. 219, 90 L.Ed. 140 (1945) and Minnesota v. United States, 305 U.S. 382, 59 S.Ct. 292, 83 L.Ed. 235 (1939)—"was somewhat perfunctory," the Court wrote, "but the holdings were clear: A case may not proceed when a required-entity sovereign is not amenable to suit." Pimentel, 553 U.S. at 866-67, 128 S.Ct. 2180 (emphasis added).
Based on those holdings, the Court in Pimentel stated its conclusion in the following bright-line-rule terms: "where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign." Id. at 867, 128 S.Ct. 2180 (emphasis added). The Court stated that rule, as it stated its summary of the earlier holdings, in terms of an immunity-protected "sovereign" generally, not only a foreign sovereign or the United States. Moreover, the Court's
Consistent with Pimentel, at least two federal courts of appeals have mandated, or at least approved, giving decisive weight under Rule 19(b) to avoiding impairment of a sovereign interest in the contexts of sovereign immunity of States and Indian tribes. In a case involving state sovereign immunity, the D.C. Circuit concluded, before Pimentel, that "[w]hile Rule 19(b) sets forth four nonexclusive factors ... `there is very little room for balancing of other factors' set out in Rule 19(b) where a necessary party under Rule 19(a) is immune from suit because immunity may be viewed as one of those interests `compelling by themselves.'" Kickapoo Tribe of Indians v. Babbitt, 43 F.3d 1491, 1496 (D.C. Cir. 1995) (quoting Wichita & Affiliated Tribes of Oklahoma v. Hodel, 788 F.2d 765, 777 n.13 (D.C. Cir. 1986)). In a case involving tribal sovereign immunity, the Ninth Circuit observed, before Pimentel, that "some courts have held that sovereign immunity forecloses in favor of tribes the entire balancing process under Rule 19(b)." Am. Greyhound Racing, Inc. v. Hull, 305 F.3d 1015, 1025 (9th Cir. 2002). More recently, the Ninth Circuit reiterated that "there is a `wall of circuit authority' in favor of dismissing actions in which a necessary party cannot be joined due to tribal sovereign immunity—`virtually all the cases to consider the question appear to dismiss under Rule 19, regardless of whether [an alternate] remedy is available, if the absent parties are Indian tribes invested with sovereign immunity.'" Dine Citizens Against Ruining Our Environment v. Bureau of Indian Affairs, 932 F.3d 843, 857 (9th Cir. 2019) (citing White v. University of California, 765 F.3d 1010, 1028 (9th Cir. 2014)).
I see neither authority nor a persuasive basis for excluding state sovereign immunity from the Pimentel rule, which, as noted, the Supreme Court stated in terms covering immunity-protected sovereigns generally. In any event, and what suffices for the present case, I see no authority or good reason for prohibiting a trial court from giving controlling effect to the protection of a state sovereign's non-frivolous interest from impairment by litigation in its absence when the state sovereign is a required party under Rule 19(a).
Whether a suit can proceed without an absent, required party is a "matter of regional circuit law." University of Utah v. Max-Planck-Gesellschaft Zur Forderung der Wissenschaften E.V., 734 F.3d 1315, 1320 (Fed. Cir. 2013). The Fifth Circuit reviews such a determination for an abuse of discretion. See Acevedo v. Allsup's Convenience Stores, Inc., 600 F.3d 516, 520 (5th Cir. 2010) ("Rulings on the joinder of parties are reviewed for abuse of discretion."). A district court "abuses its discretion when it makes `a clear error of judgment in weighing relevant factors or in basing its decision on an error of law or on clearly erroneous factual findings.'" Thermolife International LLC v. GNC Corporation, 922 F.3d 1347, 1356 (Fed. Cir. 2019) (citing Bayer CropScience AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 2017)).
Here, it suffices, to find no abuse of discretion, that UT has made a non-frivolous claim that its interests as patent owner could easily be harmed—by, e.g., narrow-scope rulings or invalidation—if the suit proceeds in its absence. See Brief for University of Texas at 32-33 ("UT would risk an invalidation of its patents without
It is not disputed on appeal that UT retained substantial rights in the asserted patents, as the district court concluded. Gensetix, Inc. v. Baylor College of Medicine, 354 F.Supp.3d 759, 768-71 (S.D. Tex. 2018). The district court noted that "UT retains a broad right to sue and control litigation"; that UT "retained the right to publish general findings, use licensed subject matter for research, teaching, or other academic purposes, and transfer rights to other research institutions for non-commercial research use"; and that Gensetix's rights "are subject to termination provisions." Id. at 770-71. Moreover, the district court observed, "UT and Gensetix share a financial interest in litigation because if Gensetix initiates an infringement suit, both entities are entitled to recovery." Id. at 771. UT thus has a substantial interest in maintaining the value of the patents.
It is far from frivolous to assert that UT's interest could be impaired by an invalidity ruling or a narrow claim construction. The doctrines of claim and issue preclusion might prevent UT from relitigating such adverse rulings made in this suit, given that the UT-Gensetix license agreement designates Gensetix as UT's representative in infringement litigation, J.A. 314-15. See Restatement (Second) of Judgments § 41 (a "person who is not a party to an action but who is represented by a party is bound by and entitled to the benefits of judgment as though he were a party"). In any event, a ruling that the patents' claims are invalid or are narrow in scope would be harmful at least as adverse precedent. In A123 Systems, Inc. v. Hydro-Quebec, another case involving UT, we relied on Pimentel and affirmed the district court's conclusion that "were it to reinstate the action and declare the patents invalid, UT would lose all rights in its patents despite the fact that it had no opportunity to defend its interests in the litigation." 626 F.3d 1213, 1221 (Fed. Cir. 2010). Accordingly, we were obligated to "give sufficient weight to the prejudice to UT." Id. The same is true here.
This conclusion suffices to affirm the district court's dismissal of the present action as not an abuse of discretion. I have no reason to doubt that this result leaves Gensetix without any forum to press the infringement claims it has presented in this action. (Whether Gensetix may sue UT for breach of contract is a separate matter.) But in Pimentel, the Court expressly noted that "[d]ismissal under Rule 19(b) will mean, in some instances, that plaintiffs will be left without a forum for definitive resolution of their claims" and that such a "result is contemplated under the doctrine of foreign sovereign immunity." 553 U.S. at 872, 128 S.Ct. 2180; See also Wichita & Affiliated Tribes, 788 F.2d at 777 (stating that "dismissing an action where there is no alternative forum" is "less troublesome" when dismissal is compelled by sovereign immunity because the loss of forum results not from "some procedural defect such as venue" but from "the fact that society has consciously opted to shield [sovereigns] from suit without... consent"). More generally, the Supreme Court's state sovereign immunity jurisprudence contemplates that patent owners may be left without a remedy when States are involved. See Allen v. Cooper, ___ U.S. ___, 140 S.Ct. 994, 1001, 206 L.Ed.2d 291 (2020).
Because UT made a non-frivolous assertion that it will be harmed if this suit proceeds, I would hold that the district court did not abuse its discretion by dismissing