State University Immunity to Patent Suit Waived by Federal Law and Jurisdiction Clause in Patent License

In Baum Research and Development Company, Inc., et al. v. University of Massachusetts at Lowell (October 10, 2007), the Federal Circuit held that a University waived its Eleventh Amendment immunity by expressly agreeing to federal jurisdiction in a patent license agreement with the following provision:

III-3. Governing Law. This Agreement will be construed, interpreted and applied
according to the laws of the State of Michigan and all parties agree to proper
venue and hereby submit to jurisdiction in the appropriate State or Federal
Courts of Record sitting in the State of Michigan.

The University argued that even if the contract obligated it to submit to federal jurisdiction, neither the University nor its Associate Director who executed the contract had authority to enter into a contract that waived [the state's] Eleventh Amendment immunity.

According to the opinion by Circuit Judge Newman:

The University does not deny that it had authority to enter into this contract with Baum, but argues that Baum must affirmatively prove that the Massachusetts legislature delegated to the University the authority to include in the contract a waiver of immunity in federal court should dispute arise. We do not discern error in the district court's careful consideration of the issues. There was no assertion by the University that it does not have authority to enter into patent license agreements; the assertion was that Baum must prove the University's authority to include the particular provision III-3. Indeed, in pressing this argument the University does not assert that it acted illegally. Instead, it asserts that Baum has the burden of proving that it acted legally. We discern no support for the thesis that the University's contract authority must be proved, when the University does not deny that authority. At the trial, Director Griffin testified at length as to the origins of this contract, her negotiation of the terms, and its approval by several University lawyers. No issue was raised that she and the University exceeded their authority in negotiating and signing this contract, including provision III-3. Although the University thereafter suggested the issue to the district court, it was devoid of any support.

The district court did not err in its ruling that the contract provision III-3 was a clear and unambiguous consent to the jurisdiction of a Michigan federal court for disagreements arising from this license agreement. That ruling is AFFIRMED.