A state has no right to steal, use and profit from the lawfully acknowledged intellectual property of a private citizen or group. To claim otherwise in a free society is unthinkable, monstrous and a clear step toward accepting the economic underpinnings of fascism.
Today the U.S. Supreme Court will decide whether to review a case that involves an attempt by California to assert just such a monstrous privilege. The court should grant the petition for Biomedical Patent Management Corporation v. California Department of Health Services, and thus hear the full case this fall.
Here’s the background: In 1986, the small, privately held Biomedical Patent Management Corp. was awarded federal patent No. 4,874,693 for a noninvasive, prenatal screening procedure for fetal abnormalities such as Down syndrome.
Eleven years later, the Kaiser Foundation Health Plan filed suit in federal court seeking “declaratory” judgment that it was not infringing upon the BPMC patent. Then the California Department of Health Services (DHS) joined Kaiser’s suit because Kaiser was one of its subcontractors. Clever move.
What California really wanted was to use BPMC’s patented procedure without bothering to secure a license from BPMC — and, moreover, to force all other California users of the procedure to pay license fees to the DHS instead of BPMC.
In layman’s terms, California wanted to steal the patent. And profit from it, quite handsomely.
The original case was dismissed because it was filed in the wrong court. BPMC itself then filed suit in the correct venue, in an effort to enforce its patent rights. That’s when California pulled the ultimate switcheroo, claiming that the U.S. Constitution’s 11th Amendment gives the state “sovereign immunity” from federal suits filed against the state by citizens of any other state.
Sovereign immunity is an important doctrine. State governments in a republic represent the people, and the doctrine protects the people from being held accountable (or victimized by “jackpot justice”) under laws to which they themselves have not assented. But decades of case law have shown that states can waive their immunity, and do so in a particular case if they themselves file the suit.
BPMC’s suit, backed by an amicus brief from the U.S. Chamber of Commerce, asserts that California effectively waived immunity in two ways. First, because California joined Kaiser’s original suit, BPMC asserts that the state already has waived immunity in this specific case. (California argues that although the subject matter is the same, the case is different because the original suit was thrown out.)
Second, BPMC and the chamber note that California has gone to federal court at least 21 times to enforce its own patent rights (usually stemming from federally funded research at California colleges).
They argue that such repeated use of federal courts on patent issues amounts to a waiver of immunity, because it is “grossly unfair” for the states to make what a unanimous Supreme Court in 2002 called “selective use of ‘immunity’ to achieve litigation advantages” (Lapides v. [Georgia] Board of Regents).
Or, as the BPMC brief put it, California is engaged in a “scheme to use the federal courts as both a sword and a shield.”
These arguments are quite solid, but they perhaps could have made an even stronger constitutional point about the powers of Congress and the protections for both contracts and property.
Congress enacted the Patent Remedy Act in 1992 to “clarify that states … are subject to suit in federal court by any person for infringement of patents.” Article One of the Constitution specifically gives Congress the power to write patent law (effectively creating contract rights for intellectual property) and forbidsstates from “impairing the obligation of contracts.” The 14th Amendment forbids states from depriving anyone of “property, without due process of law.”
The high court has split about the extent to which Congress’ Article One powers trump states’ rights to sovereign immunity, ruling 5-4 “no” in the 1999 case known in shorthand as Florida Prepaid, but ruling 5-4 “yes” in the 2006 case of Central Virginia Community College.
The justices ought to recognize that “sovereign immunity” is meant as a protection against abuse, not a license for abuse. Shield, yes; sword, no. History, common sense and the aforementioned constitutional provisions so dictate.
As the chamber wrote, “This case presents issues of tremendous importance to all owners of intellectual property.” If the Supreme Court does not rein in California, intellectual property becomes, quite ominously, null and void.
