The APA Waives Federal Sovereign Immunity to Declaratory Judgment Challenges against Federally Owned Patents

CalGrapesDelano v. California Table Grape Commission and US Dep't of Agriculture (USDA) (Fed. Cir. 2011)

[This summary has been temporally edited while I think about this decision a bit more - DC]

The USDA is title holder of the three patents being litigated here.  Each patent relates to a separate variety of grape: Sweet Scarlet (U.S. Patent No. PP15,891), Scarlet Royal (U.S. Patent No. PP16,229), and Autumn King (U.S. Patent No. PP16,284).  The California Table Grape Commission is a branch of the California state government that operates with the mission of promoting the California table grape industry and is funded by a tax on grape production.  The USDA granted the Grape Commission an exclusive license to practice and sublicense the varieties. The Grape Commission then began selling plants, but only to nurseries that contractually agreed to (1) pay ongoing royalties and (2) not propagate the plants.

In 2007, a collection of nursery-licensees filed a declaratory judgment lawsuit challenging the validity of the patents and arguing that the Grape Commission's licensing activities were illegal under antitrust law.

The DJ plaintiffs quickly ran into trouble based on federal sovereign immunity claims: The USDA claimed sovereign immunity from suit in the district court.  The district court dismissed the lawsuit after concluded that the USDA was immune and (as patent holder) was also an indispensable party.

On appeal, the Federal Circuit agreed that the USDA was an indispensable party but held that the agency's sovereign immunity to a DJ invalidity and unenforceability action was waived by the Administrative Procedures Act.

Patent-Holder as Necessary Party: Normally, a patent holder is a necessary and indispensable party to a declaratory judgment lawsuit arguing that patents are invalid or unenforceable.  There is, however, a narrow exception that occurs when the patent holder has transferred “all substantial rights” to an exclusive licensee.  Here, the appellate court found that the USDA retained substantial rights because the exclusive license did not give the Grape Commission unilateral rights to enforce the patents and the USDA retained a right to practice the invention.

US Government is Not Immune from a Declaratory Judgment Patent Invalidity Lawsuit in Federal Court: As a general background rule, US government agencies are immune from suit unless that immunity has been waived. Here, the plaintiffs found such a waiver in Section 10(a) of the Administrative Procedures Act as codified in 5 U.S.C. § 702 (“Right of Review”).  That section indicates that “a person suffering legal wrong because of agency action … is entitled to judicial review thereof.”  The statute particularly authorizes a lawsuit to remedy the wrong in Federal Courts — so long as the remedy being sought is something “other than money damages.”  As interpreted by the Federal Circuit, this provision (as amended in 1976) “consists of a broad waiver of sovereign immunity for actions seeking relief other than money damages against federal agencies, officers, or employees.” 

Here, because the DJ plaintiffs are only seeking non-monetary equitable relief — a holding that the PVPA patents are invalid and unenforceable – their claim is wholly within the APA Section 10(a) waiver and wholly outside the jurisdiction of the Court of Federal Claims.

On remand, the government will now be forced to defend the validity of its patent.

Note –  Based upon assignment records, a US Government entity holds title to about 0.4% of patents issued 2005–2011.

12 thoughts on “The APA Waives Federal Sovereign Immunity to Declaratory Judgment Challenges against Federally Owned Patents

  1. Plant patents and plant variety protection are two different types of IP. I assume these are plant patents issued by the USPTO, as the article refers to them as patents, although you can also get a regular utility patent for a genetically engineered plant. PVP is something you apply to the USDA for, which boggles the mind in this case, as the USDA would also be the applicant! There are, of course, three entirely different sets of requirements to get a utility patent, a plant patent or plant variety protection. Looking further down I see I am not the only one to point this out (and you are not the only one to make this error).

  2. No, Section 702 of the APA only applies to federal agencies.

    I wonder how often the government is throwing around its patent enough to trigger DJ jurisdiction?

  3. Does the broad waiver also apply to the immunity of non-federal entities (e.g. States and State Universities, such as the California University System and its massive portfolio)?

  4. Nope. The Plant Act only applies to asexually reporducing plants. PVP in the U.S. is handled by the USDA and is derived from the international treaty called UPOV. Sexually reproducing plants can also be covered, in the U.S., by “regular” PCT type patents after the case of Pioneer v JEM Ag Supply (2001).

    The Plant Act is used for tubers, some flowers, etc. but not row crops.

  5. I thought “plant patents” were issued by the PTO under the 1930 Plant Patent Act for asexually reproduced plants (excluding tubers), not the 1970 Plant Variety Protection Act, which results in certificates of plant variety protection for sexually reproduced plants or tubers, issued by the USDA. This case seems to involve patents (issued by the PTO, found on the PTO website, and describing asexually reproduced grapes), not certificates (issued by the USDA for grape seed), so shouldn’t it be under the Plant Patent Act, not the PVPA?

    Seems like both the Fed. Cir. and patently-o got it wrong.

  6. There is only one bit of patent news possibly more nerdy than this PVPA case and that’s the Samsung v. Apple case relating to the iPad design patent:

    link to fosspatents.blogspot.com

    Attached hereto as Exhibit D is a true and correct copy of a still image taken from Stanley Kubrick’s 1968 film “2001: A Space Odyssey.” In a clip from that film lasting about one minute, two astronauts are eating and at the same time using personal tablet computers. The clip can be downloaded online at link to youtube.com. As with the design claimed by the D’889 Patent, the tablet disclosed in the clip has an overall rectangular shape with a dominant display screen, narrow borders, a predominately flat front surface, a flat back surface (which is evident because the tablets are lying flat on the table’s surface), and a thin form factor.

    Looks like a winner to me.

  7. This makes a lot of sense. I’m pleased to hear this as the Government really coerces a lot of people holding similar patents. It seems justice has favoured the mice and not the cat in this instance.

  8. There are separate statutory provisions that cover suing the federal government for infringement. So the government has already addressed the issue for “normal” patent suits against the government and is not totally immune.

    Here, the government wanted to avoid defending a validity challenge over a patent it owns (or at least partially owns). Because this is not an infringement action against the government, the government’s normal sovereign immunity would apply, unless it waived that immunity somehow. The court here found a waiver in the APA, limited to actions for other than money.

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