Sovereign Immunity Not Waived by Intervention in Related Dispute

In Biomedical Patent Management Corporation v. State of California, Dept. of Health Services (October 23, 2007), the Federal Circuit affirmed that DHS’s initial waiver of Eleventh Amendment sovereign immunity as intervenor in an earlier, related action that was dismissed for improper venue did not extend to this case or judicially estop DHS from asserting immunity in this case.

According to Kathleen M. O’Malley, District Judge, United States District Court for the Northern District of Ohio, sitting by designation:

. . . where a waiver of immunity occurs in an earlier action that is dismissed, or an entirely separate action, courts, including our own, have held that the waiver does not extend to the separate lawsuit. See Tegic, 458 F.3d at 1342-43 (discussed below); City of S. Pasadena, 284 F.3d at 1157-58. In City of S. Pasadena, relied upon by the district court in this action and described above, the dismissal without prejudice was found to prevent the "carry over" of an earlier waiver to a new lawsuit. City of S. Pasadena, 284 F.3d at 1157-58. Likewise, in Tegic, this court held that a State university’s participation in one lawsuit did not amount to a waiver of immunity in a separate lawsuit, even one involving the same patent. 458 F.3d at 1342-43.

. . . In sum, we conclude that any unfairness or inconsistency that would arise from permitting DHS to assert sovereign immunity in the present case is not so substantial as to cause us to diverge from the general principles of waiver that we have laid out in this opinion: that a waiver generally does not extend to a separate lawsuit, and that any waiver, including one effected by litigation conduct, must be "clear." Accordingly, we reject BPMC’s first theory as to why DHS should be prevented from asserting sovereign immunity in this case.

. . . [With regard to estoppel], the question here is whether it is fundamentally unfair to allow DHS to assert its immunity in this 2006 lawsuit solely because it chose to intervene in a related action almost ten years earlier; we conclude it is not.

We find that the district court correctly determined that DHS is not judicially estopped from asserting sovereign immunity in the present lawsuit, and did not abuse its discretion by dismissing this action in the face of BPMC’s argument to the contrary.

. . .Finally, BPMC argues that a recent Supreme Court decision, Central Virginia Community Coll. v. Katz, 546 U.S. 356, 126 S.Ct. 990 (2006), implicitly overruled Florida Prepaid such that sovereign immunity is no longer available in patent infringement actions. BPMC raises this issue on appeal, however, only to "preserve[] it for potential Supreme Court review." The holding in Katz was so closely tied to the history of the Bankruptcy Clause and the unique aspects of bankruptcy jurisdiction that it cannot be read to extend to actions for patent infringement. See, e.g., Katz, 546 U.S. at 378, 126 S.Ct. at 1005 ("In ratifying the Bankruptcy Clause, the States acquiesced in a subordination of whatever sovereign immunity they might otherwise have asserted in proceedings necessary to effectuate the in rem jurisdiction of the bankruptcy courts."). Because we find that Katz cannot be read to overrule Florida Prepaid, either expressly or implicitly, we find that the district court correctly rejected this argument.