Historical background Edit

In the 1980s, Congress grew concerned that some states were claiming that the Eleventh Amendment to the U.S. Constitution provided them immunity when sued for intellectual property infringement in federal court. Moreover, the U.S. Supreme Court ruled in 1985 that, to abrogate such immunity, Congress must “mak(e) its intention unmistakably clear in the language of the statute.”[1] In response to these concerns, Congress in the early 1990s passed “clarification” laws for patents,[2] trademarks,[3] and copyrights[4] to provide that states (1) could commit infringement and (2) could be sued for infringement in federal court. The reasoning behind these laws was that the states should be subject to the same rules as other users of intellectual property if they desired to be protected by those rules.

Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank Edit

In 1994, College Savings Bank, a New Jersey corporation, brought a federal suit against the Florida Prepaid Postsecondary Education Expense Board, a state agency, for infringing College Savings’ patent for certain certificates of deposit/annuity contracts. When Florida Prepaid asserted that it was immune to the suit under the Eleventh Amendment, College Savings Bank argued that such a defense was no longer valid because the state’s immunity had been abrogated by the Patent and Plant Variety Remedy Clarification Act. The federal district court and Court of Appeals agreed with College Savings Bank and held the Act to be valid. However, the U.S. Supreme Court disagreed with the lower courts and struck down the act in June 1999 in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank.[5]

Following a line of cases begun in 1996,[6] the Supreme Court reiterated that the Congress did not have the authority to abrogate a state’s Eleventh Amendment immunity under the powers given the legislative branch under Article I of the U.S. Constitution. The Court said that the Congress did have authority under the due process clause of the Fourteenth Amendment to abrogate state immunity, but in this instance it did not show that the states (1) had engaged in a pattern of infringement or (2) did not have suitable remedies of their own. Finding that the legislative history contained no such evidence, the Court ruled that the Congress’ attempt to abrogate Eleventh Amendment immunity in patent infringement cases did not meet the requirements of the Fourteenth Amendment and that, consequently, the Patent Clarification Act was invalid.

Impact of the decision Edit

The Supreme Court’s decision in Florida Prepaid dealt with patent infringement. However, based on a companion case involving unfair competition[7] decided by the Supreme Court on the same day as Florida Prepaid and its action in a copyright infringement case remanded and later decided by the Fifth Circuit Court of Appeals in February 2000,[8] it is generally believed that the Florida Prepaid decision applies to all forms of federally protected intellectual property.

Some members of the intellectual property community have raised concerns over the ramifications of Florida Prepaid. Specifically, they find the current situation to be unfair, because states — which themselves are owners of intellectual property — benefit from the protection of the federal intellectual property laws but do not have to be bound by them. Furthermore, these members say there is no effective remedy for state infringement of patents and copyrights if the states cannot be sued in federal court.

Alternative remedies Edit

Few alternatives appear to remain after Florida Prepaid for intellectual property owners who believe that a state has infringed their property. A state cannot be sued in federal court for damages except in the unlikely event the state waives its Eleventh Amendment immunity. If the state cannot be sued for damages, the only other alternative in federal court would be to obtain an injunction against the infringing state official. This is seen as an incomplete remedy because, while it might stop the person enjoined from continuing the infringement, the state would not be liable for monetary damages.

References Edit

  1. Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 242 (1985)(full-text).
  2. Patent and Plant Variety Protection Remedy Clarification Act (Pub. L. No. 102-560, enacted Oct. 28, 1992).
  3. Trademark Remedy Clarification Act (Pub. L. No. 102-542, enacted Oct. 27, 1992).
  4. Copyright Remedy Clarification Act (Pub. L. No. 101-553, enacted Nov. 15, 1990).
  5. 527 U.S. 627 (1999)(full-text).
  6. Seminole Tribe of Fla. v. Florida, 517 U.S. 44 (1996)(full-text).
  7. College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 666 (1999)(full-text).
  8. University of Houston v. Chavez, 517 U.S. 1184 (1996), remanded in light of Seminole Tribe, rev’d en banc, Chavez v. Arte Publico Press, 204 F.3d 601, 53 U.S.P.Q.2d (BNA) 2009 (5th Cir. 2000)(full-text).

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