SPEAKERS CONTENTS INSERTS
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STATE SOVEREIGN IMMUNITY AND PROTECTION OF INTELLECTUAL PROPERTY
COURTS AND INTELLECTUAL PROPERTY
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
JULY 27, 2000
Serial No. 99
Printed for the use of the Committee on the Judiciary
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For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
JOE SCARBOROUGH, Florida
Page 3 PREV PAGE TOP OF DOCDAVID VITTER, Louisiana
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Subcommittee on Courts and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
Page 4 PREV PAGE TOP OF DOCELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
MARY BONO, California
HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
BLAINE MERRITT, Chief Counsel
VINCE GARLOCK, Counsel
DEBBIE K. ROSE, Counsel
ALEC FRENCH, Minority Counsel
EUNICE GOLDRING, Staff Assistant
C O N T E N T S
July 27, 2000
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Coble, Hon. Howard, a Representative in Congress From the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property
Dickinson, Todd, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, United States Department of Commerce
Lemley, Professor Mark A., Boalt Hall School of Law, University of California at Berkeley
Meltzer, Professor Daniel J., Harvard Law School, Harvard University
Peters, Marybeth, Register of Copyrights, Copyright Office of the United States, Library of Congress
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Dickinson, Todd, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, United States Department of Commerce: Prepared statement
Page 6 PREV PAGE TOP OF DOC Leahy, Hon. Patrick, a U.S. Senator From the State of Vermont: Prepared statement
Lemley, Professor Mark A., Boalt Hall School of Law, University of California at Berkeley: Prepared statement
Meltzer, Professor Daniel J., Harvard Law School, Harvard University: Prepared statement
Peters, Marybeth, Register of Copyrights, Copyright Office of the United States, Library of Congress: Prepared statement
STATE SOVEREIGN IMMUNITY AND PROTECTION OF INTELLECTUAL PROPERTY
THURSDAY, JULY 27, 2000
House of Representatives,
Subcommittee on Courts and
Committee on the Judiciary,
The subcommittee met, pursuant to notice, at 9:04 a.m., in Room B352, Rayburn House Office Building, Hon. Howard Coble [chairman of the subcommittee] presiding.
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Present: Representatives Howard Coble, Howard L. Berman, and F. James Sensenbrenner.
Staff present: Blaine Merritt, chief counsel; Vince Garlock, counsel; Debbie Rose, counsel; Eunice Goldring, staff assistant; Alec French, minority counsel; Sam Garg, minority counsel.
OPENING STATEMENT OF CHAIRMAN COBLE
Mr. COBLE. Good morning, ladies and gentlemen. The subcommittee will come to order.
Today we will discuss State sovereign immunity and the protection of intellectual property. To the great benefit of the United States, the authors of the Constitution understood how the creative arts and sciences would be valuable to the American people, both financially and culturally. The Constitution gives Congress the power to enact laws that give authors and inventors rights in their respective creations for a limited time.
Congress has enacted such laws since 1790, resulting in the development of American intellectual property that is the envy of the world. It is one of the top U.S. exports, generates billions of dollars in revenue, creates jobs, and enriches the lives of the American people and the world. Since the enactment of the first intellectual property laws, it was universally understood that these laws applied to the States which could be subject to suit in Federal court for damages resulting from infringement.
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Historically, Congress assumed its article I powers enabled it to abrogate State sovereign immunity under the 11th amendment. However, after the Supreme Court ruled that the intent to abrogate based on article I must be explicitly evident in the relevant statute, some district courts held that the 1976 Copyright Act did not effectively abrogate State sovereign immunity.
To close this loophole, Congress enacted three laws between 1990 and 1992 to abrogate State sovereign immunity: the Copyright Remedy Clarification Act, the Patent and Plant Variety Protection Remedy Clarification Act, and the Trademark Remedy Clarification Act. In 1993, the Copyright Remedy Clarification Act was challenged. Before the fifth circuit made a final ruling, the Supreme Court handed down several decisions that had a direct impact on the case.
In Seminole Tribe of Florida v. Florida, the Court overruled previous case law and held that Congress could not use its article I powers to abrogate State sovereign immunity. In Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, the Court voided the Patent and Plant Variety Protection Remedy Clarification Act. While the Court held that abrogation was possible under the Enforcement Clause of the 14th amendment, the act was not a proper exercise of that power.
Finally, in College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, the Court voided the Trademark Remedy Clarification Act to the extent it abrogated State immunity with regard to false advertising claims. Based on these rulings, the fifth circuit subsequently held that the Copyright Remedy Clarification Act was unconstitutional.
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The import of these decisions is very serious for intellectual property owners since States now have the ability to infringe copyrights, patents, and trademarks with impunity. These potential infringements add up to millions of dollars of lost revenue to intellectual property owners.
Adding to the unfairness of the situation is the fact that States can and do own copyrights, patents, and trademarks. A State may bring an infringement suit in Federal court against a private individual, but a private individual may not sue that State for the same transgression. This result creates an uneven playing field and otherwise conflicts with the spirit of article I, section 8 of the Constitution.
In conclusion, this hearing is not intended to focus on a definitive solution to this problem, rather, it represents the first step in doing so. The hearing is intended to educate the subcommittee about this important issue, its background, the implications of current case law on the subject, and those efforts to find a solution to the problem of consistently protecting intellectual property rights in a constitutionally permissible manner.
I am now pleased to recognize the ranking member, Mr. Berman from California.
Mr. BERMAN. Well, thank you very much, Mr. Chairman, for holding the hearing, for rescheduling the hearing to 9 o'clock to accommodate the fact that I have a markup in the Immigration Subcommittee that I have to be atand because of that will have to leave here probably around 10:15 or 10:30. We have compiled a very impressive list of witnesses on an important subject.
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The whole constitutional implications of the issues raised by the recent court decisions you discussed requires serious and careful study, and I am glad you gathered such knowledgeable and highly credentialed witnesses to guide us through the complex details.
From 1989 to 1992, the subcommittee had several meetings, hearings, and markups to discuss essentially the same issue. Back then, we were reacting to the Atascadero and Shu decisions which indicated that existing Federal law did not constitute an appropriate abrogation of State sovereign immunity against suits for intellectual property infringements. To achieve an appropriate abrogation, we considered in the past the Copyright Remedy Clarification Act, the Patent Remedy Act, and the Trademark Remedy Clarification Act. We are now, once again, faced with judicial holdings that States are immune from suit for intellectual property infringements due to deficiencies in relevant Federal laws.
In the recent College Savings, Florida Prepaid, and Chavez decisions, the Supreme Court and the fifth circuit found that the TRCA, the PRA, and the CRCA do not represent appropriate abrogations of State sovereign immunity from suit. As a result of these recent decisions, we find ourselves today embarking down the same road we traveled during the 101st and 102nd Congresses. It is a road that we must proceed down with great care.
The Supreme Court and several courts of appeal used some of the legislative record created during the 101st and 102nd Congresses as support for striking down those three laws. For example, in the College Savings case, the Supreme Court quoted then Chairman Kastenmeyer's statement at a hearing, ''We do not have any evidence of massive or widespread violation of patent laws by the States, either with or without this immunity.''
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From this and similar statements, the court concluded that the legislative record of the Patent Remedy Act contained indications that the extent of previous patent infringement by States had not yet risen to emergency levels.
I might just add I find it funny how the court looks at the legislative history in order to turn it against us sometimes, but in the cases where it would lead to an interpretation that the court might not like, they view it with a great deal of disdain.
But based partly on the court's conclusion, the court decided that the PRA was not an appropriate exercise of Congress' power to enforce by appropriate legislation the 14th amendment prohibition against State deprivation of property without due process of law. In other words, because it saw insufficient evidence of States' depriving citizens of their intellectual property, the State concluded that the PRA was substantive, not remedial in nature, and thus not appropriate enforcement legislation under section 5 of the 14th amendment.
The chairman has appropriately designed this hearing to avoid the possibility of creating an adverse legislative record. Our witnesses will explain the legal theories behind the recent court decisions, the policy implications that result from those decisions, and the extent to which States utilize the intellectual property system. However, in order to avoid the pitfalls I mentioned, I do not expect that the hearing today will discuss the extent of State infringements or the inadequacy of State remedies.
I would like to make it clear from the outset that we are not out to get the States for infringement. Rather, it is our goal as well as our responsibility to ensure that our intellectual property system remains fair and balanced, while still being constitutional in the eyes of the Supreme Court. To the extent that the law protects the intellectual property of one class of actors, but does not correspondingly require that class of actors to respect intellectual property rights of others, the law is distinctly unfair and imbalanced.
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Those decisions created such unfairness and imbalance in Federal law. After those decisions, States can infringe the intellectual property rights of others with virtual impunity, while still enforcing their own intellectual property rights against all others. This situation is made doubly unfair by virtue of the fact that States often engage in for-profit enterprise and direct competition with private actors. States run publishing houses, radio stations, restaurants, and hospitals, develop drugs, medical technologies, and commercial software products, and sell a variety of merchandise. To the extent that they do not have to license or otherwise pay for intellectual property rights when running these businesses, States have a competitive advantage over private actors. That is not right, even though my alma mater, University of California, would be among the largest of these owners of intellectual property. Furthermore, to the extent that States can enforce their intellectual property rights against competitors but need not fear infringement suits themselves, States have an additional competitive advantage.
I think we have to go back to the drafting board on this issue and craft a constitutionally permissible statute that requires States to respect the intellectual property rights of private actors. I understand that several promising approaches have already emerged. I am not wedded to any particular approach, but the waiver idea does seem particularly elegant and fair, essentially telling States that you can't have your cake and eat it too.
I hope our witnesses can illuminate the advantages and disadvantages of these approaches from both constitutional and practical perspectives.
Thank you, Mr. Chairman.
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Mr. COBLE. I thank the gentleman.
Our first witness will be the Honorable Todd Dickinson, who is an Under Secretary of Commerce for Intellectual Property and Director for the U.S. Patent and Trademark Office, Department of Commerce. Mr. Dickinson earned his B.S. degree in chemistry from Allegheny College and a J.D. from the University of Pittsburgh.
We have your written statement, Mr. Dickinson, and if could confine your comments to on or about 5 minutes, we would be appreciative.
STATEMENT OF TODD DICKINSON, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, UNITED STATES DEPARTMENT OF COMMERCE
Mr. DICKINSON. Thank you very much, Mr. Chairman, and thanks to you and Mr. Berman and your staff for accommodating me this morning. As you pointed out, I have 300 folks waiting for me over in Crystal City to talk about business method patents. So it is a kind of a busy day for intellectual property.
Mr. COBLE. If the gentleman would yield, Mr. Berman, before you came, I thanked these folks for accommodating their schedule to work with us, and I hope no one has been unduly inconvenienced.
Mr. BERMAN. And if you want to get into business method patents here, we can do that.
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Mr. DICKINSON. I have got a whole day on that today.
I also want to thank my colleague, Register of Copyrights Marybeth Peters, who we work with so closely, for letting me precede her today. She is a widely recognized expert in this fields and extremely knowledgeable, and you are certainly saving the best for later on. But I am pleased to be with you as well to discuss this question of State sovereign immunity and its impact on the enforcement on federally protected intellectual property rights.
The Supreme Court's 11th amendment decisions last year in Florida Prepaid and College Savings Bank pose critically important issues for intellectual property policy. They have produced, to say the very least, a complex and daunting legal landscape.
Our goal from the intellectual property perspective is to ensure that the States and the State instrumentalities are subject to sufficient enforcement mechanisms to deter infringement and adequately protect intellectual property. It may be stating the obvious, but there is no point in passing effective legislation that the Supreme Court will ultimately find infirm under the Constitution. Moreover, there is no point in passing legislation that will pass constitutional muster but won't give effective remedies against intellectual property infringement.
So we have two primary concerns in this regard, although I need to make clear at the outset that my remarks don't necessarily reflect the administration's position. They reflect the USPTO's position.
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First, the post Florida Prepaid situation is clearly inequitable and provides a potential windfall for States at the expense of the America's inventors, large and small. States benefit from an enormous collection of federally granted intellectual property rights, each and every one of which is protected and enforced by Federal courts. Yet while they enjoy all the rights of intellectual property owners and plaintiffs, they are now shielded from significant financial liability as intellectual property users or defendants, creating rather extraordinary potential inequity, some of which Mr. Berman has pointed out, but to cite, for example, the possibility that a State university teaching assistant could download copyrighted textbooks or patented computer software for distribution to their students. We understand that, at a minimum, 2.5 percent of all utility patents issue to State academic institutions, and that doesn't count non-profits, affiliated organizations, State hospitals, and the like.
Second, if left unaddressed, the Florida Prepaid decisions could make it more difficult for the United States to advocate strong intellectual property protection internationally. When we criticize another country for having insufficient enforcement protection against patent, trademark, and copyright infringers, that country may point out that we have no financial penalties at all with the infringers of a State university, a hospital, or a government office. As a result, countries that have intellectual property laws that are weak or inconsistent with the TRIPS agreement could become increasingly resistant to American pressure to improve their laws.
In order to address these problems, the USPTO has been looking for ways to ensure that States and State instrumentalities are subject to sufficient enforcement mechanisms to deter infringement and adequately protect intellectual property.
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Last March, for example, we hosted a conference on the subject in cooperation with the American Intellectual Property Law Association and the Intellectual Property Section of the ABA. The conference included a number of high-powered legal thinkers, including Professors Meltzer and Lemley, whom you will hear from later today.
Based upon the outcome of this conference as well as other discussions among interested parties, we believe some legislative response to the Florida Prepaid cases is appropriate. Accordingly, we have focused attention on three basic options for State accountability in intellectual property cases: first, injunctive relief under Ex parte Young; second, the abrogation of State immunity from damage suits through the power given to Congress by section 5 of the 14th amendment; and, third, a waiver of State immunity in exchange for participation in certain Federal programs. Let me comment briefly on each of these three options.
With respect to Ex parte Young, the USPTO is likely to recommend in our upcoming report on the March conference that Congress formally reaffirm by statute that the doctrine be available for intellectual property suits.
In the area of abrogation, while we would support a thorough review of this option, we are also likely to recommend that Congress not attempt as broad an abrogation as was struck down in the Florida Prepaid cases until further meaningful empirical work has been done on the extent of State violations of intellectual property rights and the nature of remedies available to private intellectual property owners in State courts.
Page 17 PREV PAGE TOP OF DOC With respect to waivers of State immunity, the panelists at our March conference gave considerable attention to participation in certain Federal spending programs could be conditioned on a waiver of sovereign immunity. The administration, however, is not convinced of the desirability of putting such conditions on any key Federal spending programs. Instead, we are likely to recommend that Congress look very carefully at the possibility of eliciting waivers of sovereign immunity in exchange for the State's ability to participate in the Federal intellectual property system. In that regard, Senator Leahy's bill, in particular, offers one model for such a waiver system, a model that deserves careful attention as we move forward in the discussions and debate.
While waiver, abrogation, and Ex parte Young are the big three theories for holding States liable for IP infringement, other options may also be considered. They include looking at the possibility of qui tam suits or adjusting State liability for IP infringements so it better parallels that of the Federal Government.
Mr. Chairman, the USPTO and the administration look forward to working with you and your staffs, as well as your Senate counterparts, as we thoroughly examine all of these options. We are hopeful that together we can resolve the problems raised by Florida Prepaid and ensure that States and State instrumentalities are subject to sufficient enforcement mechanisms to deter infringement and to protect intellectual property rights.
Thank you very much.
[The prepared statement of Mr. Dickinson follows:]
Page 18 PREV PAGE TOP OF DOCPREPARED STATEMENT OF TODD DICKINSON, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, UNITED STATES DEPARTMENT OF COMMERCE
Mr. Chairman, Members of the Subcommittee, it is a pleasure to be here today to discuss state sovereign immunity under the Eleventh Amendment and its impact on the enforcement of federally-protected intellectual property rights.
I want to thank you, Mr. Chairman, and the ranking member of the Subcommittee for organizing today's hearing. I believe that the Supreme Court's decisions last year on state sovereign immunity pose a critically important issue for intellectual property policy. I also want to recognize Senator Hatch's and Senator Leahy's leadership on this issue. In fact, the very first question I faced in my confirmation hearing was from Senator Hatch about the Florida Prepaid decisions. Moreover, Senator Leahy has already introduced legislation to address the effect of these Supreme Court decisionssomething I will talk about further today.
Professors Daniel Meltzer from Harvard and Mark Lemley from UC Berkeley, both of whom have participated in the USPTO's efforts in this area, will be offering testimony shortly. They are so knowledgeable about the legal doctrines involved that any discussion of the constitutional and jurisprudential problems from me would be neither as succinct nor as clear as what these scholars will have to say. Accordingly, I would like to focus my remarks on describing the Administration's efforts in this area, what we see as the major issues, and our hopes for action in the next Congress. Let me be clear that my remarks do not necessarily reflect the Administration's position, however, as the USPTO continues to consult within the Administration on sovereign immunity issues.
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To summarize briefly, our goal from the intellectual property (IP) perspective is to ensure that the States and state instrumentalities are subject to sufficient enforcement mechanisms to deter infringement and adequately protect IP. It may be stating the obvious, but there's no point in passing effective legislation that the Supreme Court will ultimately find infirm under the Constitution. Moreover, there is no point in passing legislation that will pass constitutional muster, but not give effective remedies against intellectual property infringements.
The Florida Prepaid Cases
In 1999, the U.S. Supreme Court issued a series of opinions addressing the right of States to assert sovereign immunity. Two of these cases directly concerned Federal intellectual property statutes. In Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 119 S. Ct. 2199 (1999), a 54 majority of the Court held that States could assert sovereign immunity to shield themselves from suits under the Patent Act. The Court recognized that Congress has the power to abrogate sovereign immunity under section 5 of the Fourteenth Amendment. However, the Court reasoned that Congress' passage of the Patent and Plant Variety Protection Remedy Clarification Act in 1992 did not validly abrogate state sovereign immunity. The Court cited two reasons for this conclusion. First, Congress had failed to sufficiently identify state infringements of patents that constituted conduct transgressing the Fourteenth Amendment's substantive provisions. Second, Congress had failed to tailor its legislative abrogation of state sovereign immunity to remedy or prevent such Constitutional violations.
Page 20 PREV PAGE TOP OF DOC In a companion case, College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 119 S. Ct. 2219 (1999), the Court considered whether states can be sued for unfair competition under §43(a) of the Lanham Act (15 U.S.C. 1125(a)) where the Trademark Remedy Clarification Act (TRCA) had: (1) amended §43(a) by defining ''any person'' to include state and state instrumentalities; and (2) expressly abrogated state sovereign immunity for §43(a) suits. The same 54 majority as in Florida Prepaid held that TRCA had not validly abrogated the state sovereign immunity and concluded that Florida had not voluntarily waived its sovereign immunity through its activities in interstate commerce. While the Court has not directly considered whether States enjoy sovereign immunity against claims of either trademark or copyright infringement, the Florida Prepaid cases have been interpreted by both courts and commentators as leading to that conclusion, and the Attorney General has determined, and informed Congress, that the current legislative record will no longer support a defense of the constitutionality of the abrogation provisions in the current copyright and trademark statutes.(see footnote 1)
The Florida Prepaid and College Savings cases (the Florida Prepaid decisions) followed the Court's earlier ruling in Seminole Tribe v. Florida, 517 U.S. 44 (1996), which established that Congress may authorize suits against states in Federal court only pursuant to its authority under section 5 of the Fourteenth Amendment and not pursuant to any Article I power. These results have produced, to say the least, a complex and daunting legal landscape.
The Administration's Efforts
Page 21 PREV PAGE TOP OF DOC The U.S. Patent and Trademark Office (USPTO) has been looking at the problems arising from the Florida Prepaid decisions since last fall. This includes participating in an informal discussion group on the cases with private industry, the Copyright Office, and both House and Senate staff, among others and hosting an all-day conference on March 31, 2000, in cooperation with American Intellectual Property Law Association (AIPLA) and the Intellectual Property Section of the American Bar Association (ABA). The conference discussed the various legislative options and constitutional issues that face the intellectual property community in the wake of the Florida Prepaid decisions. I'm proud to say that we assembled probably the most high-caliber collection of legal thinkers yet to congregate in one room to discuss these cases.
Our panelists on March 31 included Professors Meltzer and Lemley, who will be addressing the Subcommittee later in this hearing. In addition, the conference's scholars included Erwin Chemerinsky from USC; Rochelle Dreyfuss from NYU; Daniel Farber from the University of Minnesota; Jane Ginsburg from Columbia; Marci Hamilton from Cardozo Law School; Tom Lee from Brigham Young; Peter Menell from Berkeley; and Ernie Young from the University of Texas. People who follow legal academic journals may note an outpouring of law review articles on the Florida Prepaid cases now and in the coming months(see footnote 2)and a large chunk of that scholarship is from law professors who participated in the conference and who are continuing to provide advice to the USPTO on this issue. To ensure that the States' perspective was adequately represented, we also had the Solicitors-General of New York and Kansas as well as the Supreme Court counsel of the National Association of Attorneys-General on our panel.
In addition to the panelists, the conference had approximately 100 attendees. Most intellectual property trade associations(see footnote 3) and many individual companies were represented at the conference, including Dow Chemical, Glaxo Wellcome, McGraw-Hill, Merck, Reed Elseveier, and Time/Warner. There were also attendees from several state institutions (George Mason University, State of South Dakota Regents, University of Maryland, Virginia Polytechnic), as well as from the State of Texas Attorney General's Office and the Wisconsin Department of Justice. Attendees affiliated with the Federal Government came from the Court of Federal Claims, the Senate Judiciary Committee staff, the House Judiciary Committee staff, the Copyright Office, the Federal Trade Commission, the Department of Commerce, the Department of Education, and the National Institutes for Health.
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The USPTO will be issuing a report summarizing the ideas and proposals discussed at the conference and making some initial recommendations on how to address the legal landscape created by the Florida Prepaid decisions. A lot of energy and thought is going into that report. Therefore, let me talk a little bit about what the USPTO's thinking is, why the Administration believes that Congressional action in this area is warranted, and how we currently see the general framework of a solution.
Why the Administration Believes that Congressional Action is Warranted
As a first principle, the Administration is committed to work with Congress to ensure that States and state entities are liable, in some form, for money damages when they infringe federally-protected intellectual property. At the same time, we are committed to respecting the Court's views of federalism and the majority's interpretation of the Eleventh Amendment and other Constitutional sovereign immunity doctrines.
We have two important reasons to believe that States and state entities should be liable for money damages when they infringe federally-protected intellectual property. First, the post-Florida Prepaid situation is inequitable and presents a potential windfall for states. Second, if left unaddressed, the Florida Prepaid decisions could make it more difficult for the United States to advocate strong intellectual property protection internationally.
An Inequitable Situation
Page 23 PREV PAGE TOP OF DOC We view the present, post-Florida Prepaid situation as very inequitable. State and state institutions are active participants in the federal intellectual property system, with extensive patent and trademark holdings. Yet, while they enjoy all the rights of an intellectual property plaintiff, they are shielded from significant financial liability as intellectual property defendants.
We have done some initial research into the extent of state holdings of intellectual property. For example, we know that public colleges and universitiesthat is, state institutionsacquired over 13,000 U.S. patents between 1969 and 1997roughly 60% of the total 22,551 patents issued to all institutions of higher learning during the period. As a rough calculation, state academic institutions received approximately 2.5% of all U.S. utility patents issued to non-federal government, U.S. entities in 1997 and 1998.(see footnote 4) It is important to note that these figures count only issued patents where the assignor at the time of issuance was identifiably a state college, university, or research institution. In addition, these numbers do not count the patents held by state hospitals, state agricultural services, and the like.
Our initial look at trademark registrations suggests that state institutions, particularly universities, have scores of federally-protected trademarkswhich they are more and more aggressively protecting. In short, the States enjoy an enormous collection of federally-granted intellectual property rights, each and every one of which will be enforced by federal courts.
We believe that there is a real inequity that state institutions profit from federally-protected intellectual property and can be plaintiffs in the federal intellectual property system, but can avoid most of the liability of being defendants. This is the same sense of equity that underpinned Judge Shubb's recent decision in the New Star Lasers v. Regents of California litigation, 63 F.Supp. 2d 1240 (E.D. Cal. 1999). In that case, the University of California had settled litigation in Massachusetts over a patent held by the university. Then, when New Star Lasers sought a declaratory action invalidating the UC patent, the University of California argued that it should have sovereign immunity. Judge Shubb's opinion is worth quoting:
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''The Regents wish to take the good without the bad. The court can conceive of no other context in which a litigant may lawfully enjoy all the benefits of a federal property or right, while rejecting its limitations.'' Id. at 1244.
This, then, is the issue. States now enjoy all the prerogatives of being the owners of federally-protected property, but aren't obliged to give the same respect to the property of others.
At the same time, we have to recognize that the federal government bears some responsibility for making the states possessors of large portfolios of intellectual property. Indeed, we bear that responsibility proudly. Since the Bayh-Dole Act was passed in 1980, the federal government has encouraged (and underwritten) acquisition of intellectual property by state institutions. Of course, at the time Bayh-Dole was passed, it was believed that state instrumentalities were amenable to damage suits for violation of intellectual property on the same terms as private actors, so there was no awareness that we were entitling the state entities to be plaintiffs in damage suits for federally-protected intellectual property while permitting them to avoid being defendants.
The Bayh-Dole Act represents a major success story in American technology policy, providing a mechanism for commercializing the results of government-sponsored research through the patent system. Prior to Bayh-Dole, hundreds of valuable inventions from federally-funded research had been shelved, due to lack of industry involvement and an incentive for further investment to bring the inventions to commercial application. Under Bayh-Dole, patent rights resulting from federally-funded research accrue to universities and research centers undertaking the research. The irony is that many of those universities and research centers are State instrumentalities which now enjoy sovereign immunity under the Florida Prepaid cases.
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I mention this because there are proposals to condition the ability of state institutions to obtain federal protection for intellectual property on their waiver of sovereign immunity. I believe that this is a reasonable and equitable approach. However, we must make sure that it does not significantly disrupt our country's extraordinarily successful system of federal funding of research and development, with the subsequent commercialization of research results by the private sector. A legislative solution which elicits state waiver of sovereign immunity in exchange for the right to own federally-protected intellectual property must respect, and be in harmony with, the commercialization goals of the Bayh-Dole legislation.
A second area of concern for the Administration is how the Florida Prepaid decisions affect our ability to promote intellectual property rights globally. Simply put, the Florida Prepaid decisions could make it more difficult for the United States to advocate effective enforcement of intellectual property rights in other countries.
Although the Florida Prepaid analysis is based on Constitutional issues concerning the balance of power in our federal system, we cannot expect foreign officials to be conversant in the subtleties of American constitutional law. Officials in other countries are likely to say, ''what is good for the goose, is good for the gander.'' For example, if the state superintendent of schools in California or Texas or Iowa were to order 100,000 copies of a third grade textbook to be printed without any risk of monetary damages in a suit by the publisher, how can the United States complain when there is rampant photocopying of textbooks of the campus of a public university in a foreign country? If the highway department in Ohio or South Dakota or Florida can use a patented form of bridge construction without any financial liability for infringement, it is more difficult for the United States to complain about patent infringements by another government's highway or health department. When we criticize another country for having financial penalties against patent, trademark, and copyright infringers that are too low, that country may point out that we have no financial penalties at all when the infringer is a state university, hospital, prison, or government office.
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In short, other countries might use the Florida Prepaid decisions to justify aspects of their own intellectual property laws, such as compulsory licensing, which the United States has criticized. Armed with awareness of the Florida Prepaid decisions, countries that have intellectual property laws that are weak and/or inconsistent with the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement could become increasingly resistant to American pressure to improve those laws.(see footnote 5)
At the extreme, some countries may even argue that the post-Florida Prepaid situation puts us in violation of our own TRIPs obligations to provide effective enforcement. In fact, in the World Trade Organization's TRIPs Council, the United States has already been asked formally about the Florida Prepaid decisions, whether ''states and state agencies cannot be sued in federal court for [intellectual property] infringements'' and to ''explain how the United States complies with Article 44(2)'' of TRIPs.(see footnote 6) For these reasons, we think that some legislative response to the Florida Prepaid cases is appropriate.
What is to be Done?
The very nature of the Florida Prepaid decisions has focused attention on three basic routes for state liability in intellectual property cases: injunctive relief under Ex parte Young, abrogation of state immunity from damage suits through the power given to Congress by Section 5 of the Fourteenth Amendment, and waiver of state immunity in exchange for participation in some federal program. The USPTO is now consulting with the Department of Justice and additional agencies and parties on these matters. In the meantime, I would be happy to share the preliminary thoughts of the USPTO on each of these three approaches, and on other possible mechanisms that Congress may wish to consider.
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Ex Parte Young
Ex parte Young relief is still available against state infringements of intellectual property. Nonetheless, based on the views of our conference panelists, we are likely to recommend that Congress' intent that the doctrine be available for intellectual property suits be reaffirmed.
On the topic of abrogation, we are likely to recommend that Congress not attempt as broad abrogation as was struck down in the Florida Prepaid cases until further, meaningful empirical work has been done on: (1) the extent and nature of state violations of intellectual property; and (2) the nature of remedies available to private intellectual property owners in state courts. In this respect, we welcome the request Senate Judiciary Chairman Hatch made to the General Accounting Office to work on both these issues.
At the same time, we are also very interested in the thoughtful and creative proposal Senator Leahy has put forward in S. 1835which provides what might be called ''limited'' abrogationallowing a case-by-case determination by federal district courts as to whether the conditions have been met for abrogation of Eleventh Amendment immunity under Section 5 of the 14th Amendment.
Page 28 PREV PAGE TOP OF DOC In light of the Court's reaffirmation of South Dakota v. Dole, 483 U.S. 203, 107 S. Ct. 2793, 97 L. Ed.2d 171 (1987) and Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275, 79 S. Ct. 785, 3 L. Ed.2d. 804 (1959), much attention has been given to whether Congress can craft legislation that will prompt states to waive their sovereign immunity in intellectual property suits without being unduly coercive. At our March conference, the panelists gave considerable attention as to how participation in some federal spending programs could be conditioned on waiver of sovereign immunity.
The Administration, however, is not convinced of the desirability of putting such conditions on any key federal spending program. Instead, we are likely to recommend that Congress look carefully at the possibility of eliciting waivers of sovereign immunity in exchange for the states' ability to participate in the federal intellectual property system. To avoid Constitutional difficulties, we believe that there must be clear notice to the states of how participation triggers waiver. There may be other complexities and Constitutional questions that need further examination, as well.
Senator Leahy's bill offers one model for such a waiver systema model that deserves careful attention as we move forward in this discussion. Let me also say that we appreciate Senator Leahy's staff including both the USPTO and the Copyright Office in discussing different aspects of his proposal for a waiver system. Many of the people in this room are familiar with a draft revision of S. 1835, which the Senator's staff has been circulating and which includes input from the USPTO and the Copyright Office. We look forward to working with the House members in the same process of developing and refining legislation on these issues, and to the Department of Justice's involvement in providing its views on how best to address the Constitutional questions.
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While waiver, abrogation, and Ex parte Young are the ''big three'' theories for holding states liable for intellectual property infringements, we may also have to consider other options. For example, those options might include looking at the possibility and Constitutionality of qui tam suits. Another possibility is adjusting state liability for intellectual property infringements so that it better parallels that of the federal government.
Mr. Chairman, that is a final point worth emphasizing. The States are now in an enviable position of having their cake and eating it too. We don't think that the State governments and state universities are full of people who are suddenly going to start running on ''pro-piracy'' platforms or engaging in wholesale, intentional piracy. But States instrumentalities are becoming more and more involved in commerceparticularly through the educational and research sectors. The federal government accepts that it may be liable for money damages if it infringes intellectual property rights; indeed, while the federal government is precluded by statute from asserting copyright domestically on works created by its employees, the federal government can be liable for copyright infringement.
Thank you very much.
Mr. COBLE. Thank you, Mr. Dickinson.
Mr. Dickinson, do you believe there is any way to resolve the problems you have outlined aside from an act of Congress or legislation?
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Mr. DICKINSON. Mr. Chairman, I would have to submit I really haven't thought if that is possible, indeed. I think that the Supreme Court has spoken very clearly on this, and they have spoken now on more than one occasion. So I would expect that it will, indeed, take an act of Congress.
Mr. COBLE. In your testimony, you mentioned that the solicitors general from New York and, I think, Kansas participated in the PTO conference. How did they respond to the issue, and have any other State government or university officials communicated with the PTO regarding this issue?
Mr. DICKINSON. The solicitors general from various States were important participants in these conferences because they obviously are officers of the court. They are legal officers who are concerned about enforcing these rights, but they are also officers of their individual States. I would have to characterize their participation as careful listening. They engaged on the issues. I think they are very sensitive to the questions which have been raised, and I would expect that as you go forward with the deliberations, they will be a help to you in crafting an appropriate response.
Mr. COBLE. Have other government or university officials communicated as well with PTO?
Mr. DICKINSON. We have had some communication from other States and State officers. I would have to also say that there are some State officers who have communicated formally and informally about their concern in this regard, particularly State universities.
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Mr. COBLE. Thank you, sir.
The gentleman from California?
Mr. BERMAN. Thank you, Mr. Chairman.
I am just curious about a couple of things. The issue of withholding Federal money, it seems to me when a majority of the House lets the fees that patent applicants pay into the system actually stay with that office, once we achieve that majority, then maybe we can start looking at[Laughter.]
Mr. DICKINSON. We call that preaching to the choir.
Mr. BERMAN. We have a hard time keeping our own money, much less grabbing anybody else's.
You mentioned qui tam suits. I have a particular interest in that legislation. I am just curious howtell me the theory here.
Mr. DICKINSON. As I understand the theory, Congressman, the United States Government would act on behalf of its citizens to enforce the intellectual property rights which it grants, and because the 11th amendment only forbids suits by individuals against States, the United States Government could, in essence, substitute themselves for the individuals and bring an action on their behalf to enforce the rights which the U.S. Government has granted to them.
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Mr. BERMAN. Say that one more time.
Mr. DICKINSON. As I understand itand I am not an expert here, I will have to admit, and some other witnesses may be better at this than I. But as I understand it, the United States Government could substitute or bring an action on behalf of a citizen to enforce the rights which they have granted to that citizen.
Mr. BERMAN. It is the flip side of the qui tam. It is the U.S. Government acting on behalf of an individual in bringing the action.
Mr. DICKINSON. That is the way I understand it. Let me double-check. Have I got that right?
Well, let me clarify that a little bit. The citizen would bring the suit on behalf of the United States to enforce the right which the United States has granted to that citizen. My understanding is that Professor Lemley will likely address that in much more detail later.
Mr. BERMAN. All right. Could you spell out your notion of Congress sort of providing the injunctive remedy and the extent to which one could talk about compensatory damages for contempt of injunctive relief?
Mr. DICKINSON. Well, my understanding of the injunctive relief opportunity is that it flows from the Ex parte Young case that says that the individual can seek equitable relief and seek an injunction against the State for the infringement.
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You raise a good question about what would happen if the injunction is granted and the State continues to violate the injunction, and then are there damages available for that contempt, I guess you would say. I honestly don't know the answer to that.
Mr. BERMAN. Okay. And then my last question: Do the majority of the scholars at your symposiumI understand you didn't have any kind of process for determining consensus. In fact, you didn't want that.
Mr. DICKINSON. That is correct.
Mr. BERMAN. But can you offer an opinion on whether you had some sense of what approach the majority viewpoint seemed to be?
Mr. DICKINSON. My understanding is that most of the discussion focused on the waiver question, which you raised earlier, as I think you characterized it as an elegant solution, potentially elegant solution. I think that was where a lot of the discussion was, indeed, focused.
Mr. BERMAN. Thank you, Mr. Chairman.
Mr. COBLE. I thank the gentleman.
Thank you, Mr. Dickinson.
Page 34 PREV PAGE TOP OF DOC Mr. DICKINSON. Thank you, Mr. Chairman.
Mr. COBLE. Our next witness is our friend from the Copyright Office, Honorable Marybeth Peters, unknown to none of us. She serves as Register of Copyrights for the United States Copyright Office. Ms. Peters has also served as acting general counsel to the Copyright Office and as chief of both the Examining and Information and Reference Divisions. She has served as well as a consultant on copyright law to the World Intellectual Property Organization and authored The General Guide to the Copyright Act of 1976.
Ms. Peters, it is good to have you back with us.
STATEMENT OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, LIBRARY OF CONGRESS
Ms. PETERS. Thank you. Mr. Chairman, Congressman Berman, I thank you for your inviting me to appear before the subcommittee today. It is always a pleasure to testify before you, and I appreciate the opportunity to present the views of the Copyright Office on State sovereign immunity from suits arising from infringement of intellectual property rights.
We can probably all agree that when a State infringes a copyright or another Federal intellectual property right, the State should be held accountable for that infringement, just like anyone else. For most of our history, it has been assumed that States enjoyed no special immunity from suits for infringement of intellectual property rights, but in the past 15 years, those assumptions have been called into question as the Supreme Court has breathed new life into the doctrine of sovereign immunity. My written statement contains a review of that evolution; however, I will leave most of that discussion to the scholars on the next panel.
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As both of you stated, last year in the Florida Prepaid and College Savings cases, the Court held that provisions of the patent law and the Lanham Act permitting suits for damages against States were unconstitutional. Specifically, the Court ruled that Congress exceeded its authority when it abrogated sovereign immunity in this context. These rulings dramatically curtailed congressional discretion by erecting very high barriers to congressional exercise of its 14th amendment authority: requiring Congress to compile a record of widespread infringement by States which provide no alternative remedy. Even then, the abrogation must be tailored to remedy no more than is demonstrated in the legislative history.
The Court also struck down precedent which allowed courts to infer waiver of sovereign immunity based on State participation in Federal programs or systems. However, Congress is left with the option of enticing States to waive their immunity with the carrot of what the Court calls gratuities.
A court of appeals followed suit this year and held that Congress' abrogation in 1990 of State immunity in copyright suits is also unconstitutional. My office certainly participated in that, and today's hearing seems like deja vu because, in 1988, we issued a report on this very same subject.
So today we find ourself in a situation where States can infringe copyrights, patents, and trademarks with impunity, while still enjoying the full protection of the Federal intellectual property laws for their own works. The only remedy that copyright owners now have against the States is injunctive relief under the reasoning of a 1908 case, Ex parte Young, that Commissioner Dickinson referred to. Obviously this provides only limited relief. A copyright owner cannot be compensated for previous acts by a State. It can only stop future acts.
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One thing is clear. States readily and frequently avail themselves of protection under the Copyright Act. Four-year State colleges and universities have registered over 32,000 monographs since 1978. That is an average of 645 registrations for each State. Put differently, on average, a work by a State has been registered at least once every 12 days for the last 22 years. This does not include registrations of periodicals. I said monographs. So it doesn't include scholarly journals, magazines, newsletters, computer programs, things like that. It also doesn't include other educational institutions such as 2-year schools, technical or vocational schools, nor does it include other agencies such as travel and tourism bureaus.
Anticipating the Court's rulings, early last year the Copyright Office began to investigate possible responses. After the court ruled, several Members of Congress, including you, Mr. Chairman, asked that we suggest legislative approaches. In doing so, we were guided by two equally important principles: constitutionality and effectiveness. A proposal that fails either of these criteria is of little value.
My statement contains a review of different alternatives that we considered. I will only discuss the two that we thought were the most promising. The most promising is that Congress could condition States' exercise of Federal intellectual property rights on their waiver of sovereign immunity for infringement suits. There is a symmetry to this approach in that it places States in the same position as other intellectual property owners. It is clear and it is fair, and there is a compelling proportionality and a nexus between the problem and the remedy.
We have heard concerns that the Court may view this approach as coercing a State to waive, thus robbing the waiver of its required voluntary nature. However, I believe that the case law supports this approach, and I know of no authority to the contrary.
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Another approach is that Congress could attempt, once again, to abrogate State immunity. We are less confident about this approach. The court's requirement necessitates either extensive, time-consuming, and burdensome findings by Congress or a provision drafted so narrowly that it might be impractical for individual litigants. Nevertheless, if a successful abrogation provision can be crafted and defended, it could provide the most complete solution.
S. 1835, the Intellectual Property Protection Restoration Act, introduced last year by Senator Leahy, takes these approaches. HeSenator Leahytook a lead on this issue by introducing a most thoughtful piece of legislation in a very complex area of the law, and I certainly compliment him for all his efforts. Like Senator Leahy's bill, the recommendations that I forwarded to Congress earlier this year contain a waiver of protection provision coupled with an abrogation provision.
In conclusion, it is only logical that unless Congress acts, infringements by States are likely to increase, and we know that only Congress has the power to remedy the existing unfairness and imbalance. I strongly urge that Congress do this. The Supreme Court's ruling and States' rights must be respected, but the current state of affairs is unjust and unacceptable.
Congress should act to prevent the successful assertion of State sovereign immunity in intellectual property suits where it has become a tool of injustice.
Page 38 PREV PAGE TOP OF DOC [The prepared statement of Ms. Peters follows:]
PREPARED STATEMENT OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, LIBRARY OF CONGRESS
Mr. Chairman, Congressman Berman, Members of the Subcommittee, thank you for inviting me to appear before the Subcommittee today. It is always a pleasure to testify before this Subcommittee, and I appreciate the opportunity to present my views on the important issues of state sovereign immunity from suits for infringement of intellectual property rights.
We can probably all agree that when a State, or a State agency or an officer or employee of a State acting in an official capacity, infringes a copyright or another federal intellectual property right, the State should be held accountable for that infringement just as any other person or entity would be. For most of our history, it has been assumed that the States enjoyed no special immunity from suits for infringement of intellectual property rights, but in the past fifteen years those assumptions have been called into question as the Supreme Court has breathed new life into the doctrine of sovereign immunity. Last year, the Court held that provisions of the patent law and the Lanham Act permitting suits for damages against States were unconstitutional, and the Court offered little reason to hope that the analogous provision in the Copyright Act could be found constitutional. This year a court of appeals held that the copyright law provision is unconstitutional, and today we find ourselves in a situation where States can infringe copyrights, patents, and trademarks with impunity.
Today I would like to provide you with some background information to explain how we arrived at the current unsatisfactory situation. I will then describe the current state of the law. Finally, I will offer a preview of some of the alternatives Congress may wish to consider if, as I believe it should, it decides to take action in response to the recent decisions of the Court.
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The doctrine of sovereign immunity is an ancient legal principle, dating back to feudal Europe, when power flowed from the King down through the nobility and very little trickled down to the peasantry. It is rooted in the premise that to submit to the jurisdiction of a court implies that one is subservient or inferior to the power of that court. To understand this, one must recall that in feudal times courts were not judicial bodies as we have come to understand them in the United States today, but rather the courts of a King or feudal Lord, often presided over by the King or Lord himself. Thus, even a court of the King, which derived its authority from the King himself, could not exercise any authority over the King unless the King should consent.
Because the American model of government presumes the opposite of feudal structures, that power flows up from the people to the States and to the Federal Government, the application of sovereign immunity is far less intuitive. Indeed, the modern application of this doctrine is controversial precisely because it is fundamental to the relationship of the government to the people and of the Federal Government to the States. It is the latter relationship which we are considering today. The specific question raised by the topic of today's hearing is: are States permitted (and if so, should they be permitted) to run afoul of valid federal laws protecting intellectual property without subjecting themselves to the monetary liability to which all others are vulnerable?
In the United States, state sovereign immunity is articulated by the Eleventh Amendment to the Constitution.(see footnote 7) The Eleventh Amendment was adopted in 1795, but its true meaning remains a subject of much discussion. Last year the Supreme Court breathed new life and vitality into the doctrine of state sovereign immunity. In June of 1999, the Supreme Court handed down a trio of rulings that, taken together, dramatically altered the landscape of the enforceability of federal law with regard to States.(see footnote 8) In order to fully appreciate the context of these rulings, it is necessary to review the prior precedent and developments in the law.
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The United States passed its first Copyright Act in 1790. There is no decision in the ensuing 172 years that invoked sovereign immunity to exempt States from any of the remedies available under the Copyright Act. Then, in 1962, the United States Court of Appeals for the Eighth Circuit dismissed a copyright infringement suit against a state agency on sovereign immunity grounds.(see footnote 9) However, that case did not usher in a new era of sovereign immunity.
Just two years later, the Supreme Court issued its ruling in Parden v. Terminal Railway of Alabama (Parden).(see footnote 10) In that case, employees of a state-owned railroad sued the State of Alabama in federal court under the Federal Employees' Liability Act (FELA). FELA specifically created a cause of action in federal court against ''every common carrier by railroad'' for damages suffered by employees from job-related personal injuries.
In addressing Alabama's sovereign immunity defense, the Court engaged in a three-step analysis. First, the Court discussed whether Congress intended to subject States to suit under FELA. The Court reasoned that the express language of the statute created a cause of action against ''every common carrier,'' and absent express language to the contrary, a statutory exception for States should not be presumed. Thus, the Court determined that Congress did intend to subject States to suit in federal court under FELA.
Second, the Court considered whether Congress had the power to subject a State to suit in federal courts notwithstanding the Eleventh Amendment. The Court found that in giving Congress the power to regulate interstate commerce, the States had surrendered any sovereign immunity that would impede that regulation. Therefore, in acting under its Commerce Clause power, Congress could abrogate state sovereign immunity.
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Finally, the Court queried whether Alabama's operation of a railroad in interstate commerce after its waiver of sovereign immunity implied that the State had consented to suit in federal court under FELA. Finding that it did, the Court held that ''when a State leaves the sphere that is exclusively its own and enters into activities subject to congressional regulation, it subjects itself to that regulation as fully as if it were a private person or corporation.''(see footnote 11)
Because the Copyright Act, in language very similar to FELA, provided for suit against ''anyone''(see footnote 12) who infringed a copyright, the decision in Parden left little doubt that States could be sued for copyright infringement.
Over time the decision in Parden was gradually eroded. More than twenty years after Parden, in Atascadero State Hospital v. Scanlon (Atascadero),(see footnote 13) the Court reversed itself on the legislative requirements necessary to find congressional intent to abrogate state sovereign immunity. In that case, a disabled person sued a state hospital in federal court for alleged employment discrimination. The suit was brought pursuant to the Rehabilitation Act of 1973, a statute which the Court assumed had been enacted under the authority of Section 5 of the Fourteenth Amendment. The statute provided for remedies against ''any recipient of Federal assistance,'' a class that arguably included States.
The Court recognized Congress' power to abrogate a State's immunity in circumstances in which ''the usual constitutional balance between the States and the Federal Government does not obtain.''(see footnote 14) The Court went on to hold that in the instant case, the Eleventh Amendment barred recovery from the States because a ''general authorization for suit in federal court is not the kind of unequivocal language sufficient to abrogate the Eleventh Amendment.''(see footnote 15) Rather, what is required for congressional abrogation of state sovereign immunity is that the federal statute be ''unmistakably clear'' that States are included in the defendant class.
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Under this more stringent test, the language of many statutes that had been assumed to abrogate sovereign immunity, including the Copyright Act, the Patent Act, and the Lanham Act, failed to achieve that purpose. Thus, there was reason to believe that States might be immune to suits for damages under the Copyright Act and the other federal intellectual property laws.
The Supreme Court issued another significant ruling in 1989 in Pennsylvania v. Union Gas Co. (Union Gas).(see footnote 16) That case involved a suit by a private company against the State for third-party liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) to recover certain costs to clean a spill of coal tar into a creek.
The Court considered two questions. First, did CERCLA clearly abrogate state sovereign immunity? The Act provided for the liability of ''persons'' and included within its definition of that term, ''States.'' This provision, along with the presence in the Act of language excepting States from liability in particular circumstances, satisfied the Court that the law was unmistakably clear in its intent to make States liable in all but the excepted instances. Thus, the Court quickly concluded that CERCLA did properly purport to abrogate state sovereign immunity.
The second question the Court considered was whether Congress had authority to enact such an abrogation. CERCLA was enacted pursuant to Congress' Article I, Section 8 authority, specifically, the Commerce Clause. A plurality of the Court found that ''to the extent that the States gave Congress the authority to regulate commerce, they also relinquished their immunity where Congress found it necessary, in exercising this authority, to render them liable.''(see footnote 17)
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This ruling strengthened the hand of copyright owners. However, the uncertainty arising from the Atascadero decision remained.
As a result of that uncertainty, Congress acted. In 1990 Congress enacted the descriptively-named Copyright Remedy Clarification Act (CRCA).(see footnote 18) That law added to Title 17 provisions which state in clear terms that remedies for infringement are available against States, and that States ''shall not be immune, under the Eleventh Amendment of the Constitution . . . or any other doctrine of sovereign immunity, from suit in Federal Court . . . for a violation of the exclusive rights of a copyright owner. . . .''(see footnote 19) These clear statements left little doubt that Congress intended to make States liable for infringement and to abrogate their sovereign immunity. Thus, once again, the apparent uncertainty about the immunity of States from suits for damages for copyright infringement was removed.
A substantial portion of the legislative history of the CRCA, which would later become critical, was a June, 1988 report produced by the Copyright Office entitled ''Copyright Liability of States and the Eleventh Amendment.'' That report surveyed the legal history of the Eleventh Amendment and applied contemporary Supreme Court jurisprudence to copyright infringement suits against States. As part of that application, the report cited several instances of alleged copyright infringement by States that had been brought to the Office's attention. Additionally, a Congressional Research Service survey of waivers of sovereign immunity by States and the extent of those waivers was appended to the Copyright Office report.
Congress followed the CRCA in 1992 with the Trademark Remedy Clarification Act(see footnote 20) (TRCA) and the Patent and Plant Variety Remedy Clarification Act(see footnote 21) (PRCA). These acts were nearly identical to the CRCA. Taken together, the three acts appeared to settle the issue of state liability for infringement of intellectual property.
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The series of positive developments for intellectual property owners ended with the enactment of the TRCA and the PRCA. What followed was a series of highly controversial decisions, almost all by a highly charged 54 vote.
Four years after the TRCA and PRCA were enacted, the Court handed down its ruling in Seminole Tribe of Florida v. Florida (Seminole Tribe).(see footnote 22) That case involved a suit by an Indian tribe under the Indian Gaming Regulatory Act to compel the State of Florida to engage in good faith negotiations with the Tribe. The Act was adopted pursuant to Congress' Article I, Section 8 authority: the Indian Commerce Clause.
The Court considered the same two issues it had considered in Union Gas. The first was whether Congress has ''unequivocally expresse[d] its intent to abrogate [state] immunity.''(see footnote 23) The Act left little room for discussion. It instructed that district courts would have jurisdiction to hear cases arising from the failure of a State to engage in good faith negotiations. Obviously, only States could be defendants in such actions and therefore Congress, in enacting this provision, clearly intended the States' immunity to be abrogated. The Court reached this conclusion quickly.
The second issue was whether Congress had authority to enact such an abrogation. At the outset of its analysis, the Court noted that ''we have found authority to abrogate under only two provisions of the Constitution . . . the Fourteenth Amendment . . . [and] the Interstate Commerce Clause. . . .''(see footnote 24) Because the Act being reviewed was adopted pursuant to Article I authority, the Union Gas decision was strong support for the constitutionality of the Act in this case. However, by a 54 vote the Court reversed itself and overruled Union Gas, finding that ''the background principle of state sovereign immunity embodied in the Eleventh Amendment is not so ephemeral as to dissipate when the subject of the suit is an area, like the regulation of Indian commerce, that is under the exclusive control of the Federal Government.''(see footnote 25) Thus, after Seminole Tribe, Congress had only its authority under Section 5 of the Fourteenth Amendment as a valid source of power to abrogate state sovereign immunity.
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This ruling cast a shadow on the constitutionality of the CRCA, PRCA and TRCA. Those laws were most intuitively exercises of Congress' Article I power. Now, in order to sustain the CRCA, PRCA and TRCA, it was necessary to find sufficient authority in the Fourteenth Amendment, which subjected those laws to a much higher level of scrutiny. In his dissent in Seminole Tribe, Justice Stevens noted the potential for the Court's decision to disrupt numerous fields of federal law because ''it prevents Congress from providing a federal forum for a broad range of actions against States, from those sounding in copyright and patent law, to those concerning bankruptcy, environmental law, and the regulation of our vast national economy.''(see footnote 26)
The Supreme Court turned to the scope of Congress' Fourteenth Amendment authority the following year in City of Boerne v. Flores (City of Boerne).(see footnote 27) In that case, the Supreme Court was faced with the constitutionality of the Religious Freedom Restoration Act (RFRA), which Congress had enacted to overrule a previous Court decision and apply the strict scrutiny test to State and local laws of general applicability that had an incidental effect on the free exercise of religion. RFRA had been enacted pursuant to Congress' power under Section 5 of the Fourteenth Amendment. The case was brought under RFRA by a Roman Catholic Archbishop to contest the denial of a permit to expand a church building by the Historic Landmark Commission of the city of Boerne.
The issue before the Court was whether RFRA was a valid exercise of Congress' Fourteenth Amendment authority. By a vote of 63, the Court found that it was not because it read RFRA as seeking to alter the substantive meaning of the Fourteenth Amendment and the Free Exercise Clause of the First Amendment.
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The design of the Amendment and the text of §5 are inconsistent with the suggestion that Congress has the power to decree the substance of the Fourteenth Amendment's restrictions on the States. Legislation which alters the meaning of the Free Exercise Clause cannot be said to be enforcing the Clause. Congress does not enforce a constitutional right by changing what the right is. It has been given the power ''to enforce,'' not the power to determine what constitutes a constitutional violation.(see footnote 28)
The Court went on to expound upon what standards Congress must adhere in order to remain within the bounds of its Fourteenth Amendment power. The key to this analysis is that ''[t]here must be a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end.''(see footnote 29)
While this was not a sovereign immunity case, it is crucial to sovereign immunity analysis because, after Seminole Tribe, Congress may abrogate state sovereign immunity only pursuant to the Fourteenth Amendment. Thus, this case set the stage for the courts to review the constitutionality of the CRCA and parallel legislation concerning patents and trademarks.
That brings us to the Supreme Court's triad of opinions on June 23, 1999. It is worth noting that all three of these cases were decided by the same 54 vote and all three engendered strong dissenting views. The decision in Alden v. Maine (Alden)(see footnote 30) undergirded the other two decisions. In that case, John Alden and other employees of the State of Maine filed suit in federal court against that state for violation of the overtime provisions of the Fair Labor Standards Act, a federal law. In light of the Supreme Court's decision in Seminole Tribe, the District Court dismissed the action. The dismissal was upheld by the Court of Appeals.
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Petitioners then filed the same action in state court in Maine. The state trial court dismissed the suit on grounds of sovereign immunity and the Maine Supreme Judicial Court affirmed. The United States Supreme Court also affirmed.
The Court's holding in this case went well beyond the routine recognition that a State is a sovereign entity that maintains an immunity to lawsuits by private parties to which it has not consented. The Court's holding is important because of the broad applicability of state sovereign immunity to the State's own courts as well as to the federal courts.
Specifically, the Court reasoned that the Eleventh Amendment was not the origin of state sovereign immunity. Rather,
the States' immunity from suit [in the State's own courts and in federal courts] is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today . . . except as altered by the plan of the Convention or certain constitutional Amendments.(see footnote 31)
In this view, then,
[t]he Eleventh Amendment confirmed rather than established sovereign immunity as a constitutional principle; it follows that the scope of the States' immunity from suit is demarcated not by the text of the Amendment alone but by fundamental postulates implicit in the constitutional design.(see footnote 32)
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The Court's conclusion that Congress can abrogate a state's sovereign immunity only in narrow circumstances owes it origins to this view. ''Although the sovereign immunity of the States derives at least in part from the common-law tradition, the structure and history of the Constitution make clear that the immunity exists today by constitutional design.''(see footnote 33) The Court continued that:
[t]he federal system established by our Constitution preserves the sovereign status of the States in two ways. First, it reserves to them [through the Tenth Amendment] a substantial portion of the Nation's primary sovereignty, together with the dignity and essential attributes inhering in that status. . . . Second, even as to matters within the competence of the National Government, the constitutional design secures the founding generation's rejection of ''the concept of a central government that would act upon and through the States'' in favor of ''a system in which the State and Federal Governments would exercise concurrent authority over the peoplewho were, in Hamilton's words, the only proper objects of government.''(see footnote 34)
A preponderance of the opinion of the Court purports to demonstrate, through numerous references, the historical accuracy of its view of the origins of state sovereignty. Interestingly, the Court did not extend respect for a State's sovereign immunity into the realm of another State's courts.(see footnote 35)
The Court concluded its opinion with an implicit recognition of the potential for states to profit unfairly from its ruling. Thus, the Court noted several limits on its holding. First, states may waive their immunity and Congress may provide incentives for such waiver, as provided in South Dakota v. Dole (483 U.S. 203 (1987).(see footnote 36) Second, the immunity ''bars suits against States, but not lesser entities. The immunity does not extend to suits prosecuted against a municipal corporation or other governmental entity which is not an arm of the State.''(see footnote 37) Additionally, injunctive and declaratory relief are not precluded by state immunity.(see footnote 38) Clearly, this leaves the States with a tremendous opportunity to evade federal law. The Court provided cold comfort in its declaration that ''[w]e are unwilling to assume the States will refuse to honor the Constitution or obey the binding laws of the United States.''(see footnote 39)
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In the second of the June 23 cases, the Court applied the principles of its recent decisions to the TRCA in College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd (College Savings).(see footnote 40) In that case, College Savings Bank sued the State of Florida for false advertising in federal court under section 43(a) of the Lanham Act. In light of the Supreme Court's decision in Seminole Tribe, the District Court granted Florida's motion to dismiss on sovereign immunity grounds. The Third Circuit affirmed. The Supreme Court also affirmed.
The Court considered two avenues through which College Savings' claim could survive state immunity. First, that Congress had abrogated state immunity through enactment of the TRCA. Second, that by participating in the scheme of the Lanham Act, States have waived their immunity by implication.(see footnote 41)
The Court first turned to the question of whether the TRCA abrogated state sovereign immunity. As I have already outlined, current Supreme Court precedent admits only one source of constitutional authority from which Congress may abrogate state immunity: the enforcement power in Section 5 of the Fourteenth Amendment.(see footnote 42)
The Fourteenth Amendment instructs in relevant part that ''No State shall . . . deprive any person of . . . property, without due process of law.''(see footnote 43) Because the Court held that College Savings did not allege deprivation of a property right within the meaning of the Fourteenth Amendment, the avenue of congressional abrogation of state immunity was closed.(see footnote 44) The Court did not hold that trademarks are not property. Just the opposite, in fact:
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The Lanham Act may well contain provisions that protect constitutionally cognizable property interestsnotably, its provisions dealing with infringement of trademarks, which are the ''property'' of the owner because he can exclude others from using them.(see footnote 45)
However, the Court recognized that College Savings was not suing for trademark infringement, but for misrepresentation. The right to be free from misrepresentation is not, the Court held, a property right within the meaning of the Fourteenth Amendment.(see footnote 46)
Next, the Court turned to the question of implied state waiver of immunity. Invoking the precedent of Parden, College Savings sought to show that Florida had impliedly waived its immunity by participating in a scheme that is enforceable in federal court.(see footnote 47) Not only did the Court reject this argument, but it overruled Parden and renounced the doctrine of implied waiver of state immunity.(see footnote 48)
The Court's holding requires that a state's waiver be explicit and voluntary in order to be effective. However, Congress may provide incentives to the state by conditioning use of its discretionary authority such as that found in the Spending Clause and the Compact Clause on state waiver.(see footnote 49) Nonetheless, the Court apparently disapproves of the use of at least some Commerce Clause authority in this manner:
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In the present case, however, what Congress threatens if the State refuses to agree to its condition is not the denial of a gift or gratuity, but a sanction: exclusion of the State from otherwise permissible activity. . . . [W]e think where the constitutionally guaranteed protection of the States' sovereign immunity is involved, the point of coercion is automatically passedand the voluntariness of waiver destroyedwhen what is attached to the refusal to waive is the exclusion of the State from otherwise lawful activity.(see footnote 50)
In a companion case, the third of the three opinions issued on June 23, Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, (Florida Prepaid),(see footnote 51) College Savings Bank sued the State of Florida in federal court, claiming patent infringement. Despite the Supreme Court's ruling in Seminole Tribe, the District Court denied Florida Prepaid's motion to dismiss. The District Court held that Congress had abrogated the State's immunity in this case by virtue of the PRCA.(see footnote 52) The Federal Circuit affirmed. The Supreme Court reversed.
The question presented was whether Congress' attempt to abrogate state sovereign immunity was valid. The Court considered this question under the two-part test articulated in Seminole Tribe:
first, whether Congress has ''unequivocally expresse[d] its intent to abrogate the immunity,'' . . . and second, whether Congress has acted ''pursuant to a valid exercise of power.''(see footnote 53)
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The first part of the test was met easily, as the statute was very clear on the point. The second part of the test, however, was not met to the Court's satisfaction.
As noted above, current Supreme Court precedent admits only one source of constitutional authority from which Congress may abrogate state immunity: the enforcement power in Section 5 of the Fourteenth Amendment. It was on this basis that College Savings Bank sought to have the statute upheld. The Court acknowledged that patents are property within the meaning of the Fourteenth Amendment.(see footnote 54) Thus, the Fourteenth Amendment's provision that ''No State shall . . . deprive any person of . . . property, without due process of law'' was potentially applicable to patent infringement. However, the Court held that the legislative enactment at issue in this case did not fall within Congress' Fourteenth Amendment power for several reasons.
First, as the Court held in City of Boerne, Congress ''must identify conduct transgressing the Fourteenth Amendment's substantive provisions, and must tailor its legislative scheme to remedying or preventing such conduct.''(see footnote 55) The Court found that Congress failed to meet this burden because it did not identify a pattern of patent infringement by states.(see footnote 56)
Second, the Court recognized that patent infringement by a state is not a violation of the Fourteenth Amendment if the state provides a remedy, that is, due process.(see footnote 57) Because the statute was drafted to apply to all states, without regard to state-provided remedies, the Court held that it went beyond the power conveyed by the Fourteenth Amendment.(see footnote 58)
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Third, the Court noted that ''a state actor's negligent act that causes unintended injury to a person's property does not 'deprive' that person of property within the meaning of the Due Process Clause.''(see footnote 59) Because a claim for patent infringement requires no showing of intent in order for the plaintiff to prevail, the Court held that the legislative enactment at issue in this case was again overbroad.(see footnote 60)
This decision applied the general rule articulated in City of Boerne, and the high barriers erected by that application spelled almost certain doom for the CRCA, which is closely analogous to the PRCA that the Court struck down in Florida Prepaid. However, a glimmer of hope for CRCA's survival was provided by Justice Stevens' dissent. In acknowledging that the legislative history of the PRCA did not meet the Court's newly articulated standards, Justice Stevens noted that:
The legislative history of [the CRCA] includes many examples of copyright infringement by States . . . Perhaps most importantly, the House requested that the Register of Copyrights prepare a study, which he [sic] described in his transmittal letter as, ''a factual inquiry about enforcement of copyright against state governments . . . This report contains comments from industry groups, statistics, and legal analysis relating to copyright violations, actual and potential, by States.''(see footnote 61)
Although the Supreme Court has not ruled directly on the constitutionality of the CRCA, the Fifth Circuit applied the Supreme Court's recent rulings early this year in Chavez v. Arte Publico Press (Chavez).(see footnote 62) That case involved a suit by an author claiming copyright infringement of her book by the University of Houston, a state university.
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The court followed the analysis in Florida Prepaid, first inquiring whether Congress identified a pattern of infringement by States. While noting that the legislative history in support of the CRCA, which included the report of the Copyright Office, was somewhat more substantial than that of the PRCA, the court found that the record was still inadequate to support the legislative enactment. Second, the court noted that in adopting the CRCA, Congress ''barely considered the availability of state remedies for infringement.''(see footnote 63) That the legislative history did not meet requirements the Court articulated a decade after the law was enacted is not surprising. Thus, the Fifth Circuit refused to enforce the CRCA.
The same result was reached in another Fifth Circuit case, Rodriguez v. Texas Comm'n on the Arts,(see footnote 64) in a brief opinion that presumably is based upon the same rationale as that circuit's decision in Chavez. Given the current Supreme Court precedent, it is difficult to find fault with the ruling in Chavez, and we believe that the CRCA most likely is now bad law.
II. THE CURRENT SITUATION
Copyright owners have but one arrow left in their quiver to prevent or deter infringement of their intellectual property rights by States. That arrow is injunctive relief against particular employees of the State. Although the doctrine of state sovereign immunity has been dramatically strengthened in recent years, the Court has thus far retained the injunctive relief available under the reasoning of a 1908 case, Ex parte Young.(see footnote 65) The reasoning behind this rule is that when a state official acts in violation of valid federal law, that official is by definition acting outside the scope of his official duties because a State clearly cannot lawfully authorize one of its employees to act in violation of valid federal law. And, an employee of a State is cloaked with the State's immunity only when acting within the scope of his duties. Therefore, an employee of a State who acts in violation of a valid federal law is not immune and may be enjoined from that activity.
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The Ex parte Young doctrine provides only limited relief, however, because it provides no compensation for the damages already inflicted upon a copyright owner due to past infringement by a State. Moreover, given the Court's movement in recent years, one might question whether this doctrine will remain in force.
The practical question that is begged by the legal analysis is: are the States taking advantage of their immunity to infringe copyrights? Given the legal structure that the Supreme Court has erected, one might very well expect the answer to be in the affirmative. And it may very well be so. Unfortunately, the extent of State infringements is largely unknown at this time, only a year after the decisions in Florida Prepaid, College Savings and Alden. Information on infringements by States has not traditionally been collected, nor is it conveniently available from a single or few sources. Merely reviewing dismissed court cases would overlook a potentially large number of cases never brought because potential plaintiffs see such a suit as futile in the face of the Court's rulings. The question may only be answered, if at all, by a comprehensive study, and even then there is a substantial possibility that numerous complaints that were never brought to court are virtually impossible to find. In effect, it may be logistically impossible to satisfy the Court's demands for legislative findings to support abrogation of state sovereign immunity. What appears certain is that so long as States remain immune from suits for damages from infringements of copyrights and other intellectual property rights, States are likely to be tempted to infringe and the number of actual infringements by States is likely to increase.
Another subject for which a study would be necessary to ascertain the scope of the problem is the availability of alternative state remedies that would satisfy due process. This information is significantly easier to obtain than alleged infringements because, of course, state law is readily available to innumerable researchers throughout the country. It is our presumption that such measures are largely unavailable. We believe this for several reasons. First, based on the CRS report appended to the 1988 Copyright Office study ''Copyright Liability of States and the Eleventh Amendment,'' few States appeared to have waived their immunity for copyright infringement suits in federal court. Moreover, copyright infringement suits may be heard only in federal court, so even if a State has waived immunity in its own courts, they would not offer a proper forum in which the infringement claim could be brought. Finally, State remedies are largely preempted by the Copyright Act. Nonetheless it remains an open question whether the Court would find that a substitute state remedy, such as an action for the uncompensated taking of private property or an action in tort, would not run afoul of preemption and also would satisfy the Fourteenth Amendment's requirement of due process.
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We do have some sense of the extent to which States make use of the Copyright Office's registration function. The Copyright Office reviewed the registrations issued to four-year state colleges and universities for monographs(see footnote 66) since 1978. Over 32,000 such registrations were found. That is an average of 645 registrations for each State. Put differently, on average the Copyright Office has issued a registration for a work by a State (not including State entities other than four-year colleges and universities, and not including serials) once every twelve calendar days for the last twenty-two years. Clearly, States are availing themselves of the copyright protection provided by federal law.
III. POSSIBLE SOLUTIONS
Although the purpose of this oversight hearing is to explore the nature of the problem rather than to consider legislation to remedy the problem, it is important that this Subcommittee understand what alternatives Congress will have when, as I hope it will do, it decides to redress the imbalance created by the recent decisions of the Supreme Court in this area. Let me make it clear that I believe Congress should act. I recognize that the legislative calendar makes such action highly unlikely this year, and I also understand that many parties crucially interested in this issue believe that further study is required before an effective legislative response can be identified. An effective solution may be difficult to reach in light of the constraints placed upon Congress by the current majority on the Supreme Court.
But legislation should be considered in the next Congress, and I hope that this hearing serves as a valuable first step in that process. Although the Supreme Court has created formidable constitutional impediments to abrogation of States' sovereign immunity, neither the Court nor, I believe, anybody else has asserted that States should not be held accountable when they infringe copyrights, patents or trademarks. As I have already mentioned, States take advantage of the copyright laws by owning valuable copyrights, as reflected in their registration practice. I believe the same is true with respect to patents and trademarks. Why should States be able to enjoy the benefits of federal intellectual property protection if they are not subject to the same burdens that govern other participants in the federal intellectual property system? And even if a State were to decide not to take advantage of copyright, patent and trademark law, should not a State be held responsible for the harm it causes to a copyright owneror to a patent or trademark ownerwhen it becomes an infringer?
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Several months before the Court handed down its opinions in Florida Prepaid, College Savings and Alden, the Copyright Office (anticipating unfavorable outcomes) began to investigate the options for legislative responses to holdings invalidating the abrogation of sovereign immunity. After the Court ruled, several Members of Congress, including the Chairman of this Subcommittee, asked that we suggest legislative approaches to this problem. In doing so we were guided by two equally important principles: constitutionality and effectiveness. A proposal that fails either of these criteria is of little value.
One option that was considered was to amend 28 U.S.C. §1338(a) to permit suits against States in state courts. The Supreme Court's decision in Alden, that state immunity in state courts is equal to state immunity in federal courts, virtually eliminates the effectiveness of this option. States still have the ability to block the courthouse door to copyright owners. Permitting suit in state courts would be an improvement only to the extent States have waived their immunity in their own courts.(see footnote 67) It is not known how many (if any) States fall into that category. Further, those that do could simply revoke that waiver and defeat this maneuver.
There are also certain drawbacks to this approach, even if it were effective. The current exclusive federal jurisdiction to hear copyright cases under 28 U.S.C. §1338 reflects a congressional determination that the copyright system would function more effectively if relatively uniform decisions could be achieved. If state courts are permitted to hear copyright cases, the potential would exist for at least 50 different interpretations of the same federal statutory provision. Although the final decision rendered in the state court system would be reviewable by the U.S. Supreme Court, the Court would only be able to take a very small fraction of the cases in order to resolve conflicting interpretations.
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Additionally, state court judges at all levels have virtually no experience with the copyright law. Even if state courts were given jurisdiction to hear copyright cases against the States, the volume of cases could be expected to be fairly low, affording state court judges little opportunity to gain experience.(see footnote 68)
Another option we considered is to condition States' receipt of certain federal funds on a waiver of immunity for infringement suits. The leading case for determining the validity of such an enactment is South Dakota v. Dole.(see footnote 69) That case set forth a four-part test:
The exercise of the spending power must be in pursuit of the general welfare;
The condition must be unambiguous, enabling the States to exercise their choice knowingly;
The conditioned spending must be related to the Federal project or program; and
The condition must not be barred by other constitutional provisions.
The first two conditions are satisfied easily. The third is not easily satisfied. Unlike driving and highway funds, copyrights do not easily relate to federal spending.(see footnote 70) Some have suggested tying waiver of immunity to federal spending on higher education, but this would be politically unpopular, and I would not support legislative action that would penalize our colleges and universities by withholding needed funds simply because state legislatures are unwilling to waive their sovereign immunity. We have not found any case law regarding spending-conditioned waiver of state sovereign immunity, but the Court's decisions in both Alden and College Savings explicitly refer to the spending power as a legitimate means of inducing voluntary State waiver. However, if the Court finds the amount of money conditioned to be so great as to become coercive, it may strike down the condition. There is little or no guidance on what qualifies as coercive in the case law. One legislative drawback of this option is that it might require re-enactment in appropriations legislation every year.
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A third option is to empower a federal agency to bring actions against States for violating copyright rights of private parties. State sovereign immunity does not extend to suits brought by the United States. Thus, federal agencies could, at least theoretically, be used to circumvent that immunity.
There are numerous problems with this approach. First, any agency charged with enforcing copyrights against States would probably require significant resources to conduct such actions. During a period when Congress places great emphasis on fiscal discipline, it seems unlikely that such an agency would be adequately staffed and funded.
Second, under the doctrine of Ex Parte Young, a private litigant can bring an action against a state officer to obtain prospective injunctive relief against continuing violations of federal law.(see footnote 71) In the copyright context that means that an individual can stop a continuing infringement by a State, but has no remedy for the State's past infringements. Unless a structure can be devised whereby the federal agency can obtain damages for past infringements and turn them over to copyright owners, it is difficult to see any advantage to enforcement by a federal agency that cannot already be obtained under Ex Parte Young. Such a structure might have been available in the form of a qui tam suit, where an individual is authorized to pursue a right of action of the Federal Government. However, the use of qui tam suits to circumvent state sovereign immunity is of questionable constitutionality, and the Supreme Court recently noted that ''there is 'a serious doubt' on that score.''(see footnote 72)
Page 60 PREV PAGE TOP OF DOC Third, past rulings of the Supreme Court cast doubt on whether an effort to substitute a federal agency for the copyright owner in order to circumvent state sovereign immunity would be upheld. In New Hampshire v. Louisiana,(see footnote 73) the Supreme Court dealt with a situation very close to the one contemplated by this option. In that case, several individuals with creditor claims against the State of Louisiana assigned those rights to the State of New Hampshire. Their hope was that New Hampshire would be able to proceed against Louisiana where individuals were met with the roadblock of sovereign immunity. The Court did not allow the scheme to prevail, holding that ''one State cannot create a controversy with another State . . . by assuming the prosecution of debts ow[ed] by the other State to its citizens.''
Similarly, in North Dakota v. Minnesota,(see footnote 74) North Dakota sued Minnesota for damages to state and private property as a result of flooding caused by Minnesota's rerouting of a river. The Court noted that the farmers whose lands were damaged contributed to a fund to pay for this litigation and that those contributors would share in any damages award. Citing New Hampshire v. Louisiana, the Court dismissed the claims for damage to private property on grounds of sovereign immunity.
Further, citing these cases, the Supreme Court held in Hawaii v. Standard Oil Co.(see footnote 75) that:
[a]n action brought by one State against another violates the Eleventh Amendment if the plaintiff State is actually suing to recover for injuries to designated individuals.(see footnote 76)
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It is uncertain whether the Federal Government could succeed in championing the cases of individuals where States could not. However, these decisions cast serious doubt on the constitutionality of this option.
Fourth, expansion of the role of the Federal Government in a sphere that has heretofore been the sole concern of private litigants runs counter to recent trends in government. It would be difficult to defend the use of taxpayer money to litigate on behalf of multi-million dollar corporations. Of course, if the Supreme Court has left no other option for the effective enforcement of intellectual property rights, the justification might be easier to find.
A fourth option is for Congress to abrogate state sovereign immunity by appropriately-tailored legislation under Section 5 of the Fourteenth Amendment. As noted above, the Supreme Court's decision in Florida Prepaid severely limits the application of this option. In order to adopt a strong abrogation provision that would still be within the limitations of Florida Prepaid, the legislation would have to be tailored to meet three criteria.
First, Congress must establish a strong record of infringement by States. If, as would be desirable, the legislation were to include patent and trademark, a record of infringement by States of those rights must be established as well. As noted above, this record is not currently available. Second, the abrogation must be drafted so that it applies only to States that do not provide a remedy or some form of due process to an aggrieved copyright owner. Such remedies need not be equivalent to the standards of Title 17. This option therefore carries with it a risk of undermining national uniformity of copyright protection. It is unclear whether the abrogation must be flexible so as to apply only to States that provide no remedy at the time a particular suit is brought (or for the entire duration of a suit), or whether the availability of remedies at the time of enactment permanently defines the scope of the abrogation. Third, the abrogation may only extend to non-negligent infringement by a State. Additionally, an abrogation provision drafted so as to maximize its chances of surviving judicial scrutiny by requiring individual plaintiffs to demonstrate a deprivation of property without due process, thus obviating the need for extensive legislative findings, might be impractical for individual litigants and thus ineffective.
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A fifth option is to condition States' exercise of federal intellectual property rights, including copyright, patent and trademark rights, on a waiver of sovereign immunity for infringement suits. In College Savings, the Court overturned Parden and completely eliminated the implied waiver doctrine. This option, therefore, would have to be structured to induce States affirmatively to waive their sovereign immunity, most likely by state statute. This could be accomplished by rendering state works ineligible for protection in the absence of an express waiver by the State of its immunity in copyright infringement cases. The incentive for States to waive their immunity could be made even stronger by tying the issues of copyright, patent, and trademark infringement together. There is a symmetry to this approach. It is clear and salable, with a compelling proportionality and nexus between the problem and the remedy.
There is language in the majority opinion in College Savings that could be read as a dicta commentary suggesting that if Congress conditions State's access to protections under a law enacted pursuant to the Commerce Clause on waiver of state immunity, such waiver is not voluntary and thus not valid. However, the better reading of the relevant language is that implied waiver is inherently involuntary but that where Congress clearly gives the State a choice, so long as the choice is not coercive, a State's choice to explicitly waive its immunity is effective.
There is little case law on express waiver, and what little there is focuses on whether or not an express waiver occurred, rather than on the State's motivation in waiving immunity. In other contexts of waivers of constitutional rights or immunities, the Court has looked to the circumstances surrounding the waiver and, on occasion, found the waiver to be ineffective where it was essentially coerced. This option arguably contains an element of coercion because it conditions States' enforcement of intellectual property rights on a waiver of immunity.
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Some may view this approach as overly coercive, although the Copyright Office has not yet heard a legal argument that persuasively supports that view. There are two strong counter-arguments: First, this approach is no more coercive than the unilateral abrogation of State immunity in current law. While that law is probably unenforceable in light of the Court's rulings, it was nonetheless adopted with the support of many current Members of Congress. Unlike abrogation, States would be given a real choice between waiving immunity or accepting the consequences. As discussed below, many States may take the latter course. Second, there is a strong nexus between the consequences of not waiving immunity and the problem that a waiver is intended to solve. In the absence of waiver, copyright owners are deprived of their rights. This approach merely imposes the same result on non-waiving States. The issue is one of fundamental fairness.
It is far from a foregone conclusion that States will uniformly waive their immunity under this approach. Many States may conclude that immunity from copyright infringement suits serves their interests better than the ability to enforce their own copyrights, and that the same is true with respect to patents and trademarks. Linking all federal intellectual property rights (including copyright, patent, and trademark) together would strengthen the incentive for States to waive their immunity.
After reviewing the above options, the Copyright Office came to two conclusions. First, an approach that would effectively abrogate state sovereign immunity from suits for infringement of federal intellectual property rights would be the most desirable approach. A straightforward return to the status quo as it was before the Supreme Court ruled on the constitutionality of the PRCA and the TRCA would resolve the issue in a fair and equitable way. Unfortunately, that is the one approach that the rulings of the Court have clearly foreclosed. The variation on this approach that would attempt to abrogate sovereign immunity by navigating the minefield of conditions laid down by the Court is problematic. We do not yet know whether Congress could build a record of findings that would satisfy the Court that abrogation is justified. Even if it did, the limitation to cases of non-negligent infringement could lead to denial of relief in a significant number of cases of infringement. We are skeptical whether this approach would satisfy both requirements of constitutionality and effectiveness.
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At the beginning of this year, we sent you a draft of legislation that we believe would be both constitutional and effective. It follows the fifth approach that I outlined above. The centerpiece of the proposal is a provision that would prospectively strip a State's intellectual property of protection unless that State waived its sovereign immunity for intellectual property suits in federal court. This provision would effectuate itself by operation of law. For the reasons discussed above, we believe that this approach is the best opportunity for a solution that is both constitutional and effective.
Senator Leahy introduced S. 1835, the Intellectual Property Protection Restoration Act, on October 29, 1999. The overall approaches of the two proposals are similar. The fact that Senator Leahy and the Copyright Office independently arrived at similar approaches after considering a number of alternatives lends support to our belief that it is the best of a number of imperfect alternatives.
We have discussed our proposal with other interested parties and, in response to their comments, have modified it in some respects. This is not the occasion to address the details of our proposal or Senator Leahy's, but we hope that the next Congress will be in a position to consider and enact effective and constitutional legislation that will undo the damage caused by the Court's recent decisions.
Some appear to advocate that Congress not seek to enact a solution right away, but rather wait and see how the situation develops. This approach has the benefit of providing ample time for studies that may be necessary if Congress ultimately chooses to attempt to abrogate state sovereign immunity. However, this approach also delays justice to aggrieved copyright owners, and if Congress ultimately does not choose to enact an abrogation provision, the delay will have been largely unnecessary.
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It is only logical that in the current legal environment, without an alteration of the status quo, infringements by States are likely to increase. Only Congress has the power to remedy the existing imbalance, and it is the recommendation of the Copyright Office that it do so. The Supreme Court's rulings and State's rights must surely be respected, but the current state of affairs is unjust and unacceptable. Congress should use the tools it has to prevent the successful assertion of state sovereign immunity where it has become a tool of injustice.
Mr. COBLE. Thank you, Ms. Peters.
Ms. Peters, in what way is copyright protection uniquely situated with regard to State sovereign immunity?
Mr. PETERS. Well, I thinkI guess you are saying how is it different from patents and trademarks, and I think it is quite different. One thing has to do with the scope of protection that is given a copyright and the fact that there is a doctrine of fair use, whereby many State institutions, educational institutions, and libraries are using material and arguing that their use is fair use.
Under the abrogation theory with regard to State sovereign immunity, the standard that you have to meet for liability by States when you craft legislation is that it can only cover non-negligent acts. The question is, since a defendant may be arguing fair use, but there may be a finding that it is not fair use, would that type of activity be considered non-negligent and would it be covered in any kind of legislation that you are drafting. The problem is that here the States would actually intend to use the property. So there is an intentional use, but they can argue that they felt that they had an absolute right to use it under fair use, they were just wrong. So I think that is a huge uncertainty that you have in copyrights that you don't have in patents and trademarks.
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The second one is that I suspect that patents and trademarks are probably more valuable to States than copyrights, economically, and if you take the waiver approach, and you allow for the waiver of just copyrights, in order to have copyright liability, the State only has to waive with regard to copyright. In other words, if you don't require the States to combine it with patents and trademarks, which I think are of greater economic value, I think that copyright owners would really have a problem, because the economic value that they get out of copyrights generally are going to be less than what they get out of patents and trademarks.
The third piece is if you use the scheme where States waive at the time they go to a Federal Government agency to apply for or register their intellectual property rights. That is really a problem in the copyright area. Unlike patents where you have to go to the Patent Office or trademarks where you have to go to Trademark Office, copyright protection is totally automatic and registration is voluntary. So that type of approach certainly doesn't work very well for copyrights.
Mr. COBLE. You mentioned the statistics for copyright registrations for 4-year State colleges and universities. Does your office plan to do further research into copyright registrations of 2-year colleges, other State agencies, and State governments?
Ms. PETERS. Frankly, no. We used a list of 4-year colleges and universities that the Patent and Trademark Office used. It is very difficult to determine which claimants are, in fact, State agencies. Unless the name of the State is in the name of the claimant, you really never know, and we have millions and millions of registrations. So it was even a burdensome task to go after the 4-year's. So we actually at this momentyou can ask us to do that, but at this moment, we hadn't any plans to go and do that.
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Mr. COBLE. No. I wasn't going to ask. I was just going ask if you planned to. I will not direct you to do that. Thank you, Ms. Peters.
Mr. BERMAN. If we were going to deny States the ability to enforce because they didn't go along with a waiver of some kind, how would that affectwould that only apply to new copyrights? How would it affect licensing agreements?
Ms. PETERS. The proposal is for new intellectual property. It would be prospective, not retrospective.
Mr. BERMAN. The waiver approach that you like, how do youhow does that approach avoid running afoul of the court's coercion and relatedness tests? Can we avoid those problems and still have a sufficient incentive to waive?
Ms. PETERS. I guess my guess is that yes, we can, that it is not too coercive. In fact, the condition is very much tied to what they're trying to seek benefits of. When you seek to benefit from a statute, you also should be subject to the liability of that statute, especially when Congress is providing those benefits as a gratuity. Each State has the ability to determine whether or not it gets more value from being a player in the intellectual property system or being an outlaw. So I would hope and believe that it would not be viewed as coercive.
Page 68 PREV PAGE TOP OF DOC Mr. BERMAN. And, actually, in a way, a waiver approach is in some ways less coercive than a withholding-of-funds approach might be.
Ms. PETERS. Yes. That is in the testimony of one of your next witnesses and I agree.
Mr. BERMAN. My final question: You talk in your testimony about in our government structure the power flows from the people to the States to the Federal Government, the individual citizen is the ultimate sovereign, and that our form of government is a radical departure from the monarchies that preceded it. The court takes these traditional notions of sovereign immunity from the monarchies, even though it is not in the base Constitution, uses the 11th amendment, which focuses on citizens of other States and seems to apply this immunity doctrine overall.
Have the people who wanted to establish liability by the States sort of challenged that kind of thinking directly in their cases? Has this argument been made? In other words, here we are the radical departure, and then, ironically, we bring in the doctrine of the systems from which we radically departed to shut people out in these and other cases, and there is just something sort of ironic about that.
Ms. PETERS. It is an intriguing question, and to my knowledge, that hasn't been brought up, and actually it is, you know, beyond an area that I have expertise in. What I did last night is I went back and I reread the study that the Copyright Office did in 1988, and the whole beginning of that studyin fact, a large part of ithas to do with the whole history of the sovereign immunity doctrine, so I commend it to you. Maybe the reason why we haven't seen it being argued that much in the cases seems to be that they there is huge debate over sovereign immunity, and we have seen it interpreted differently at different times in history.
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But no matter how you read it, it does seem that there has always been some concept of sovereign immunity, and no matter what, the Supreme Court's interpretation is binding, and they have basically interpreted in a way that is a problem. So I don't know, ultimately, if you were a scholar and you wanted to go back and do that kind of research, what you might do, but based on what I read, I think it is a very complex area, and I think that is a very hard argument to make.
Mr. COBLE. Thank you, Ms. Peters. We will be in touch, as always.
Ms. PETERS. Okay. Thank you.
Mr. COBLE. You know, before I introduce the second panel, I think this subcommittee is unique in that we probably attract more distinguished witnesses, we are the beneficiary of more distinguished witnesses, I suspect, than any other subcommittee on this Hill.
Mr. BERMAN. You are not suggesting an inverse relationship between the witnesses and the[Laughter.]
Mr. COBLE. Well, no comment.
But it is good to have you all with us and I was going to say today is no exception. Our first witness is Mark Lemley, a professor of law at the Boalt Hall School of Law at the University of California at Berkeley.
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Your alma mater, Howard?
Mr. BERMAN. No. UCLA.
Mr. COBLE. I stand corrected.
Professor Lemley is also a director of the Berkeley Center for Law and Technology. He teaches intellectual property law, computer law, patent law, antitrust, electronic commerce, and regulation of the Internet. Professor Lemley received his J.D. from the Boalt Hall School of Law at the University of California at Berkeley and his A.B. from Stanford University.
Our second witness on this panel is Daniel J. Meltzer, who is the Storey Professor of Law at Harvard Law School. He teaches courses on Federal courts, constitutional law, and criminal law. From 1979 to 1981, he was an associate with Williams & Connolly in Washington. In 1976, he clerked for Justice Stewart of the United States Supreme Court. Professor Meltzer received his J.D. and has B.A. from Harvard University.
We have written statements from both of these witnesses, and I ask unanimous consent to submit them into the record in their entirety.
Gentlemen, it is good to have you with us, and if you could, we would appreciate your confining your oral testimony to around 5 minutes. We have your written testimony, which has been read and will be reread.
Page 71 PREV PAGE TOP OF DOC Why don't we start with you, Mr. Lemley?
Mr. BERMAN. Mr. Chairman, can I just interject one point?
Mr. COBLE. Yes, sir.
Mr. BERMAN. I was just thinking about your comment about law schools, and UCLA did have Mel Nimmer, who is a very distinguished copyright authority. I, of course, said I would never have any use for copyright law and stayed away from those courses. [Laughter.]
Mr. COBLE. If we could have only looked into the future.
STATEMENT OF PROFESSOR MARK A. LEMLEY, BOALT HALL SCHOOL OF LAW, UNIVERSITY OF CALIFORNIA AT BERKELEY
Mr. LEMLEY. Thank you, Mr. Chairman.
Let me start out by saying that I am an employee of the State of California, and so I want to make it even more clear than usual that not only am I not here representing the University of California, but I rather doubt that they will like what I have to say.
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I want to start by suggesting that, as the other witnesses have testified, it seems to me quite clear that there is a need for congressional action of some sort here, that whatever the merits of the sovereign immunity doctrine where it protects States acting in their capacity as sovereigns, its application in the intellectual property context is, I think, manifestly unfair because it protects States from the rules of the market even when those States participate in the market. That is, the States in this intellectual property context are acting as market participants, not as sovereigns, and they ought to be subject to the same rules as everybody else.
So what I want to focus my attention on are possible things that Congress could do and some of both the constitutional and the practical issues that those proposals raise. There are three basic types of proposals that I will discuss. The first set involves efforts to abrogate sovereign immunity, either by demonstrating a pattern of States depriving private parties of property without due process of law under the 14th amendment or, closely related, by demonstrating that States are taking property without providing just compensation.
The second, in response to Representative Berman's earlier question, I will briefly talk about the qui tam proposals. And, finally, I will talk a little bit about conditional waiver. I think there are pros and cons to each approach.
I am not terribly sanguine about efforts to abrogate sovereign immunity on the basis of due process or takings for a couple of reasons. First, I should note that that effort, abrogation, will require Congress to make very detailed factual findings about the extent of State infringement of intellectual property. I submit that whatever approach you take, the effort of making those factual findings, is probably appropriate. It will strengthen the legislation against possible constitutional challenge to have good, detailed evidence of exactly how involved States are in the intellectual property system, how much infringement they engage in. But it seems clear from the court's holdings that it is not enough to show that States are engaged in infringement. There has to be a pattern of unlawful activity that risesin the court's wordsto an emergency.
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Further, that pattern has got to be not just one of infringement; it has got to be one of depriving States of property and doing so either without due process of law or without just compensation; and, therefore, a State could defeat abrogation by demonstrating that it offered some remedies in State court for a violation of intellectual property rights, even if those remedies were not complete and didn't offer access to Federal court.
So I guess my biggest fear with abrogation is that even if it works, even if it passes the high constitutional threshold that the court seems to have set for it, it leaves loopholes in intellectual property law. It may apply only to willful or reckless infringement by the States as opposed to unknowing infringement. It may preclude certain forms of relief, permitting only just compensation and not attorneys' fees or other enhanced remedies, and so I want to suggest that we look elsewhere.
A second proposal that was raised at the PTO hearing involves qui tam actions. As I understand that proposal, it would work something along the following lines: Congress would legislate a federally enforced right to sue States for infringement of intellectual property. The United States Government would have a right to sue a State for infringement of a patent, say, and the United States Government would then delegate that right to the real party in interest or give a real party in interestpresumably the inventor of the patentthe right to enforce on the U.S. Government's behalf that patent right against a State.
There are some potential benefits of this. It seems to give the same sort of rights that intellectual property owners had before the Florida Prepaid decisions. My worry with the qui tam approach is that it may not be constitutional at all. The Supreme Court, in the term that just ended, had before it a case addressing the question of whether qui tam legislation in general interfered with State sovereign immunity. It ducked the question by concluding that the Congress had not intended to subject States to liability at all under the qui tam statute, but it may well be that when a qui tam statute that clearly does apply to the States is returned to the Supreme Court, the court will apply its sovereign immunity holdings to strike down all qui tam legislation, including any proposed legislation here.
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Mr. BERMAN. All qui tam against States?
Mr. LEMLEY. Against States, yes, sir.
And that leads me to waiver, which I think is probably the best alternative. There are a number of different ways one could structure a waiver approach. One, Senator Leahy's proposal would structure it so that participation in the intellectual property system by States was permissible only if those States in turn waived their immunity from suit in the intellectual property scheme.
An alternative that has been suggested but that may not be feasible as a practical matter is to condition financing certain State activities, perhaps funding for research from the National Institutes of Health, for example, or other academic research funding, on waiver of State sovereign immunity. Whether that is politically salable, I don't know.
And a final proposal that I want to raise would condition State rights under the Bayh-Dole act on the waiver of sovereign immunity. The Bayh-Dole act, as I am sure you know, is the 1980 statute which gives universities, including State universities, rights to apply for and license patents even in inventions that are funded partially by Federal research grants. One possible waiver approach is to condition that right, the right to use Federal money and still get an intellectual property right, on waiver of immunity from suit under intellectual property laws.
There is some question as to the constitutionality of waiver provisions of this sort outside of the spending context. I don't know that it has ever been tested in the Supreme Court. Waiver based on withholding of funds has passed muster in the past under the Supreme Court decision of South Dakota v. Dole, and that, therefore, seems the likeliest to survive constitutional scrutiny.
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I think there are ways that this panel can tailor waiver proposals so they they have a greater chance of passing constitutional muster. One is by making the waiver as related as possible to the thing that you want the States to give up. Intellectual property rights, or Bayh-Dole rights, in particular, are closely related to the State participation in the intellectual property system. And the second proposal, which I think Professor Meltzer will discuss in more detail, is that we require an act of the State legislature or the Governor to expressly waive rights, rather than simply automatically conditioning or creating a waiver every time a State applies for the patent, so that there's a clear act of the State government making a policy choice to waive their immunity.
And, in conclusion, I guess I would suggest there are advantages and disadvantages to each approach. If it can be done constitutionallyand I think it can be structured constitutionallythe waiver approach seems to me the most likely and the most desirable.
[The prepared statement of Mr. Lemley follows:]
PREPARED STATEMENT OF PROFESSOR MARK A. LEMLEY, BOALT HALL SCHOOL OF LAW, UNIVERSITY OF CALIFORNIA AT BERKELEY
The twin 1999 Supreme Court decisions in Florida Prepaid holding that states are immune from liability for infringing on intellectual property rights have created great consternation in the intellectual property bar. Intellectual property lawyers correctly see it as manifestly unfair that states are exempt from the normal rules everyone else must follow. The Court's stated rationalethat states as sovereign entities shouldn't have to play by the same rulesrings false in the intellectual property context. When states participate in the intellectual property system, whether by patenting and licensing their own inventions or by stealing the intellectual property of others, they are not performing a governmental function. They are participating in a market, and they should be subject to the rules of that market.
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While the Supreme Court's sovereign decisions make it more difficult for Congress to abrogate state sovereign immunity in this area, they do not make it impossible. There are three possible courses of action:
Congress could abrogate state sovereign immunity by demonstrating a pattern of states depriving private parties of ''property'' without due process of law.
Congress could abrogate state sovereign immunity by demonstrating that states were ''taking'' ''property'' without providing just compensation.
Congress could condition state participation in the federal intellectual property system on a waiver of that state's sovereign immunity.
There are pros and cons to each approach. The first two approaches will require Congress to make detailed factual findings about the extent of state infringement of intellectual property. Only if there is a pattern of unconstitutional activity by the states do the Court's decisions justify abrogation. Further, the pattern will have to involve more than just evidence of infringement: Congress must also demonstrate that infringement deprives intellectual property owners of property, and that it does so either without due process of law or without a mechanism for just compensation. The abrogation approach, even if adopted, leaves loopholes in intellectual property protection. Due process is implicated only if a state acts intentionally or recklessly in infringing an intellectual property right; other acts of infringement may go unremedied. A state is free to take intellectual property rights under the 14th Amendment so long as it provides ''just compensation,'' a rule that would preclude many types of relief under the federal intellectual property laws. States could also provide due process or just compensation proceedings in state courts, interfering with the uniform federal enforcement of intellectual property rights that exists today. Further, the Court made it clear in Florida Prepaid that some federal intellectual property rights (notably the prohibition against false advertising) are not ''property'' for 14th Amendment purposes, and therefore abrogation won't work as to those rights.
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Because of these limitations, I support a conditional waiver of state sovereign immunity. Under this proposal, advanced by Senator Leahy among others, a state that wished to take advantage of the benefits of the federal intellectual property system by applying for a patent or registering a copyright or trademark would have to waive its immunity from suit in federal court in patent, copyright, and trademark cases. Conditional waiver is a better deal for intellectual property owners because it provides them with the full panoply of rights and remedies. It is also better preserves the dignity of the states, because they can make a policy decision whether or not to participate in the federal intellectual property system.
The constitutionality of such a conditional waiver has never been tested. A similar waiver based on federal withholding of funds passed constitutional muster in South Dakota v. Dole. Congress can increase the chances of this law passing scrutiny by:
Tailoring the waiver closely to the use of the intellectual property system by states. For example, Congress might consider invoking the waiver only when a state actually uses its intellectual property rights in licensing or litigation, rather than when it obtains those rights in the first instance.
Requiring the state legislature, rather than an administrative official, to approve the waiver.
Mr. COBLE. Thank you, Professor.
Page 78 PREV PAGE TOP OF DOC Professor Lemley used 9 minutes, and we will not keelhaul you for that, Professor. But, Professor Meltzer, you will be recognized for 9 minutes as well.
STATEMENT OF PROFESSOR DANIEL J. MELTZER, HARVARD LAW SCHOOL, HARVARD UNIVERSITY
Mr. MELTZER. Well, he did such a good job that I am not sure that I will need 9 minutes.
Thank you very much, Mr. Chairman. Let me try to offer a few points of agreement and a couple different points of emphasis with Professor Lemley's very fine summary of the available options.
I would like to preface what I have to say just by noting that I agree with Professor Lemley that there is a need for congressional legislation, and it is very difficult in the face of the shifting contours of constitutional federalism to be certain or confident about the constitutionality of any of these particular approaches.
The Supreme Court has exhibited a willingness in its recent federalism decision to overrule past precedents, and I think there is reason to believe that they might view any congressional actions that appear to be an effort to make an end-run around State sovereign immunity with skepticism; so that there are proposals that seem to me very likely constitutional, if one took a snapshot of law as it exists today, but whose constitutionality, if the measure were to reach the Supreme Court with its currently constituted majority, would have to be judged to be considerably more uncertain.
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With that background, let me focus, as Professor Lemley did, on three or four different kinds of approaches. The first is the waiver approach, and here I find myself, perhaps as a Washington outsider, more enthusiastic than Under Secretary Dickinson or Register Peters about conditioning Federal spending on that spending not being used to infringe intellectual property rights. I would note that there is precedent for Congress having done this in both title 6 of the Civil Rights Act of 1964 and in section 504 of the Rehabilitation Act, both of which are general provisions governing all Federal programs and activities and which do not need annual reenactment as part of appropriations legislation. Although, as I say, one can't be certain, my own judgment would be that it would be constitutional for Congress, similarly, to pass a general provision providing that no Federal grants should be used in any program or activity for infringing intellectual property rights and requiring a waiver of immunity as part of that condition.
If that is constitutional, its efficacy depends on how many State agencies, in fact, receive Federal grants. Obviously, it is quite pervasive, but I do not know how many State agencies there might be that do not receive Federal grants of any kind and, therefore, would be not covered by this sort of conditional approach.
The alternative waiver approach, conditioning the grant of new intellectual property rights on a State's agreement to waive immunity, seems to me promising, but there is somewhat of a tension between trying to narrow it sufficiently to make it constitutional and trying to broaden it sufficiently to make it efficacious. If a State biology department applied for a patent, it is not clear to me that Congress could constitutionally condition the award of the patent on a waiver of immunity from patent infringement not only by the State biology department, but by the entire State university or, indeed, by the entire State. And so even if the State university were covered by a waiver, Congress might lack the power to condition the award of the patent on, for example, the State highway department waiving its immunity from patent infringement suits on an entirely unrelated matter.
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The Dole case, to which Professor Lemley referred has language about the need for a condition to be related to the purpose of the Federal grant, and there is not very much case law on just how tight that relatedness requirement is, but the requirement certainly raises a question. There is a similar question as to scope with regard to whether one could demand a waiver of immunity, not only from patent liability but also from copyright or trademark liability, in exchange for conferral of a patent right, and that is of particular importance if, as the Register of Copyrights suggested, States may not be actively seeking copyrights, but may be engaging in more widespread copyright violation. If that is the fact, a State might simply decide it wasn't worth its while to seek new copyrights if the price of doing so were to have to waive its immunity from copyright infringement actions.
My own view is that both of these schemes are constitutional, but because of the pervasiveness of Federal spending, it seems to me that a general waiver tied to Federal spending might in the end be more efficacious.
With regard to the abrogation option, I think Congress could constitutionally enact a far more limited provision that would authorize suits against States that intentionally infringe intellectual property rights where there is no adequate State remedy. In doing so, Congress would have limited the scope of the legislation to situations that are themselves core constitutional violations, and it is not clear to me that when the legislation is that limited, there necessarily needs to be a legislative record of widespread constitutional violations by the States.
Certainly, it would be preferable if such a record could be assembled, but it is possible to read the Supreme Court's decisions as requiring a record of State violations only when Congress tries to extend legislation beyond the scope of conduct that is itself independently unconstitutional.
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I think that is an uncertainty on that point in the recent federalism cases. It is a point that I have discussed and disagreed with colleagues about, and I can't offer you a confident assessment about it.
The difficulty with this approach, in any event, whatever the legislative record to support it, is that it is so limited. The Register of Copyrights mentioned the problem of fair use and whether action might not be intentional within the Supreme Court's understanding of that term because the user thought it was a fair use under the copyright laws. If that is viewed as unintentional conduct, then there would be a very large hole in the remedy for that kind of protection, for seemingly innocent violations can inflict serious harm on intellectual property right holders.
Moreover, insofar as States do enact State law remedies, to be litigated in State courts, that are deemed to be constitutionally adequate, the resulting system could fall far short of the range of protections available under the Federal intellectual property laws and would require much litigation in State courts which are generally unfamiliar with Federal intellectual property rights, which typically are litigated in Federal court actions.
As for the qui tam action, it really is a variation on the proposition that suits by the United States against the States are not themselves barred by the principle of State sovereign immunity. There would be no constitutional barrier to Congress setting up a Federal agency that was authorized to bring suit to collect damages for infringement and in turn to distribute the proceeds to the intellectual property right holders.
Page 82 PREV PAGE TOP OF DOC The problem, obviously, there is whether Congress is prepared to create a new Federal agency or to provide in an existing agency with additional authority and the necessary resources to carry that out. The qui tam suit tries to bring itself under the mantle of suits by the United States by authorizing litigation commenced by private parties but on behalf of the United States. And as Professor Lemley says, it is very uncertain whether the Supreme Court would adjudge that arrangement to be one that counts as a suit by the U.S., or instead as a suit by a private party and therefore barred by State sovereign immunity. My own view is very pessimistic about the prospects of the qui tam action surviving constitutional review.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Meltzer follows:]
PREPARED STATEMENT OF PROFESSOR DANIEL J. MELTZER,(see footnote 77) Harvard Law School, Harvard University
Mr. Chairman, and members of the Committee: I appreciate the opportunity to appear before you today at this oversight hearing.
I have a prepared statement and would request that it be inserted in the record.
The Supreme Court's enthusiastic embrace of the doctrine of state sovereign immunity crossed paths with the law of intellectual property in 1999 in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank.(see footnote 78) In that case, the Court held unconstitutional a congressional enactment that had purported to make states, like other actors, liable for damages when they are sued by private parties for an infringement of patent rights. Congressional efforts to subject the states to private damage actions for copyright or trademark infringement(see footnote 79) must, under the reasoning of Florida Prepaid, be deemed to be equally invalid.(see footnote 80)
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Where do these rulings leave the system for enforcing intellectual property rights against the states? What remedial gaps exist, and what opportunities are open to Congress should it wish to close those gaps?
I. THE REMEDIES THAT REMAIN
Imagine that, today, various faculty members and administrators in different departments of a state university are engaged in widespread illegal duplication of copyrighted materials. What remedies are available to the copyright holders?
First, the Supreme Court's cases leave intact injunctive remedies against state action that infringes intellectual property (IP) rights. A certain form must be observedthe suit for an injunction must be filed against a state official, rather than against the state or an agency of the state. But so long as that form is observed, and injunctive relief is otherwise appropriate (as, for example, in the case of ongoing violations), a prospective injunction may be obtained. Thus, if and when the copyright holders discover that their rights are being violated, bring suit, and obtain an injunctive order, the illegal practice will presumably halt.(see footnote 81)
The constitutional difficulties arise when the holder of an intellectual property right seeks to recover damages for infringement that has already taken place. Suppose that the infringement had been going on for many years before any injunctive order was obtained. What the Florida Prepaid case held was that, at least under existing statutes, the plaintiff may not sue the state for damagesno matter how flagrant the violation, and no matter how clearly and insistently Congress has sought to authorize such relief.
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This holding would not mean that, in our example, no avenue exists by which the copyright holders may obtain compensation for the harm suffered. But the only recourse available under existing law is to sue the responsible state officials for damages to be paid out of their personal resources.(see footnote 82) Such awards are not barred by the principle of sovereign immunity, since, unlike damage awards against the state treasury, they are thought not to affect the state directly. Needless to say, however, limiting damage actions to suits against officials raises a whole set of problems: plaintiffs may have difficulty identifying and suing all of the responsible individuals; adjudicating multiple claims against multiple individuals and proving their individual responsibility for the acts in question may be burdensome; the officials may possess a qualified immunity from damages, permitting compensation only when their conduct violated clearly established law;(see footnote 83) juries may be reluctant to award damages against state officials who, at least in some cases, may be viewed as trying to perform important duties under difficult conditions; collecting on multiple judgments may be burdensome or, as a practical matter, impossible, particularly when individuals are impecunious if not judgment proof. It is true that many states indemnify such individuals, but it is also true that indemnification is neither universal, unlimited in scope, nor free from possible friction in operation.(see footnote 84) In the end, recovering damages against officials is a far less satisfactory option than recovering against the state itself.
The cases are rather unilluminating on the point. Chavez v. Arte Publico Press, 59 F.3d 539, 547 (5th Cir. 1995), vacated on other grounds, 517 U.S. 1184 (1996), assumed without much discussion that defendant officials have a qualified immunity from copyright actions, and Lane v. First National Bank of Boston, 687 F. Supp. 11, 1517 (D. Mass. 1988), aff'd on other grounds, 871 F.2d 166 (1st Cir. 1989), declared that immunity is available, though on the facts the court found it inapplicable. Neither decision even considered the argument against immunity noted above. Looking the other way is Richard Anderson Photography v. Brown, 852 F.2d 114, 12223 (4th Cir. 1988), which refused to recognize a claim of official immunity. In that case, however, the official's claim was based on state law, which clearly cannot limit federal remedial imperatives; the critical question would seem to be whether federal law itself recognizes such an immunity, a question the Fourth Circuit did not discuss. See also Kersavage v. University of Tenn., 731 F. Supp. 1327, 133032 (E.D. Tenn. 1989) (following Richard Anderson in refusing to recognize official immunity, though also suggesting in the alternative that the law of copyright is clearly established so that immunity would not apply in any event).
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For further discussion of the operation of indemnification, see text at notes 4353, infra.
Thus, imagine that it is well-known at our hypothetical state university that many professors and administrators are illegally reproducing materials. If the university did face damages liability for the acts of its staff, it might itself implement policies to bring such violations to a halt and to prevent new ones. But the incentive to take such action, given the state of current law, is considerably weaker: unless and until an injunction is issued, the university as an entity faces no risk of liability.
In pointing to existing remedial gaps, I do not mean to suggest that states and their officials will necessarily take advantage of them. State officials do not generally act like Justice Holmes' bad men, motivated only by the fear of legal sanctions. ''[R]outine rule-following, respect for the law, and desire to avoid the burdens of litigation often will induce compliance with federal duties.''(see footnote 85) In some instances, however, these factors may operate only weakly; Professor Menell notes that university research laboratories, for example, may exhibit a competitiveness that makes them likely to press at if not beyond the legal margins;(see footnote 86) in such cases, the threat of entity liability could be an important enforcement tool in the public as in the private sector. Among the situations where entity liability may be of particular importance are those in which the scope of federal duties is uncertain or the cost of compliance is very high; in such cases, the prospect of liability for non-compliance may induce greater care in considering whether federal law truly permits the conduct in question.(see footnote 87) But it is precisely that techniqueimposition of entity liability on state governmentsthat the Florida Prepaid case held to be unconstitutional.
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For present purposes, what is important is that the Supreme Court's sovereign immunity rules do not address the problem that concerns Jeffries. One who agrees with Jeffries' analysis would want a fault requirement, whether the nominal defendant was a state, a local government, or an individual officer. The Supreme Court's sovereign immunity decisions, by contrast, leave open the possibility that individual officers (in their personal capacity) or local governments might be liable even when not ''at fault'' while precluding the imposition of retrospective liability upon state governments even when their ''fault'' for having violated federal law is undisputed. See also Larry Kramer & Alan O. Sykes, Municipal Liability Under §1983: A Legal and Economic Analysis, 1987 SUP. CT. REV. 249, 272, 28387.
II. POSSIBLE CONGRESSIONAL APPROACHES
If Congress wished to strengthen the remedies against infringement of intellectual property (IP) rights by state governments, how might it do so?
A. Enact a Narrow Cause of Action under Section 5 of the 14th Amendment
One route that Congress might take is one that would partially, but only partially, fill the remedial gap that I have just identified. To explain this approach, some greater attention must be paid to the reasoning of the Supreme Court's 1999 decision in the Florida Prepaid case.
The statute that the Court there invalidatedthe ''Patent and Plant Variety Protection Remedy Clarification Act,'' or, for short, the Patent Remedy Actwas enacted in 1992.(see footnote 88) That Act had purported to abrogate the states' sovereign immunity from suit for patent infringement, and thus to authorize federal court jurisdiction over private damage actions against the states for patent infringement. But four years later, in 1996, the Supreme Court, in the Seminole Tribe decision,(see footnote 89) had made clear its view that Congress lacks power to overcome state sovereign immunity when legislating under its Article I powersits power, for example, to create a system of patent or copyright protection or to regulate commerce. However, the Court in Seminole Tribe did not disturb a line of authority holding that Congress, when it legislates under section 5 of the Fourteenth Amendment, does have power to overcome state sovereign immunity.(see footnote 90) Thus, when in 1999 the Court confronted, in the Florida Prepaid case, the question whether the Patent Remedy Act was constitutional, the answer to that question turned on whether that Act could be viewed as a measure that provided a remedy for deprivations of property without due process, and thus constituted a valid exercise of legislative authority under section 5.
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To answer that question under the approach it had followed in City of Boerne v. Flores,(see footnote 91) the Court in Florida Prepaid began by considering the scope of the constitutional violations that the Patent Remedy Act could be understood to redress, and then asked whether the Act could be viewed as a congruent and proportional remedy for those violations. The majority answered that question in the negative, advancing two reasons why a state that infringes a private patent may not have deprived the patent holder of property without due process, and why the Patent Remedy Act therefore went beyond the scope of congressional power to pass legislation to enforce the Fourteenth Amendment.
First, the Court doubted that all patent infringements constitute deprivations within the meaning of the due process clause. Writing for the Court, the Chief Justice contrasted the Supreme Court's ruling in Daniels v. Williams(see footnote 92)which held that merely negligent action of state officials does not give rise to a deprivation within the meaning of the Due Process Clausewith the Patent Remedy Act, which authorizes infringement actions against the states even where the infringement was entirely inadvertent.(see footnote 93) The first defect, then, was that the Patent Remedy Act lacks a scienter requirement that the Due Process Clause has been held to contain.
The Court's second reason for finding the Patent Remedy Act to be overbroadto create sanctions for state action that does not necessarily violate the Due Process Clauseis more technical and complicated. Relying on the doctrine of Parratt v. Taylor(see footnote 94) and Zinermon v. Burch,(see footnote 95) the Court held that a state's patent infringement, even if a deprivation, would not necessarily constitute a deprivation without due process. The Parratt and Zinermon decisions ruled that, at least in some circumstances, if a deprivation of liberty or property is random and unauthorized, the only process due is a meaningful post-deprivation remedy (for example, a tort action against the state). Thus, even if a state official has deprived a patent holder of property (by intentionally infringing the patent), there is no procedural due process violation unless the state fails to provide such a post-deprivation remedy. In view of this doctrine, the Court ruled in Florida Prepaid that the Patent Remedy Act, by authorizing a federal patent infringement remedy without regard to the existence of an adequate state post-deprivation remedy, extends to circumstances in which the state's infringement of a patent does not constitute a violation of the Fourteenth Amendment.
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Much could be said about both of these aspects of the Court's reasoning.(see footnote 96) For present purposes, the critical point is that the decision would seem to permit Congress to legislate under section 5 of the Fourteenth Amendment by enacting a more narrowly-drawn statute. Congress could provide a cause of action against states that intentionally deprive individuals of patents or other intellectual property rights in situations in which the state does not provide an adequate post-deprivation remedy. Under such a statute, when a state, through its agents, has intentionally infringed intellectual property rights, the injured party could either (a) sue the state or state officials(see footnote 97) in state court under the state's ''adequate'' post-deprivation remedy, or (b) where no such remedy exists, establish a constitutional violation and thus bring a federal court action against the state itself under the narrow statute I suggest.(see footnote 98)
Ultra Vires Takings, 97 Mich. L. Rev. 245 (1998). Insofar as state officials infringe IP rights without state authorization, their conduct would not give rise to a right to just compensation and thus, under the approach of Florida Prepaid, the Patent Remedy Act would be constitutionally suspect as sweeping more broadly than does the Constitution.
Relatedly, even where a taking is not ultra vires, a claim for just compensation ordinarily is not ripe until the claimant has sought compensation under state law. See Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 19497 (1985). Insofar as states do offer compensation for takings of intellectual property rights, then under the analysis of Florida Prepaid the Patent Remedy Act would, for a second reason, reach beyond the scope of the Just Compensation Clause.
Page 89 PREV PAGE TOP OF DOC Such an approach raises two obvious questions. First, how much would be lost to intellectual property holders under such a regime? This first question has two sub-parts. Sub-part one involves the restriction of federal remedies for damages against the state to cases of intentional violation. I do not know the terrain of intellectual property rights and governmental infringement thereof well enough to hazard a guess about what proportion of all infringements are ''intentional,''(see footnote 99) or whether such a restriction would lead to an increase in unintentional infringements. Moreover, the meaning of ''intentional'' may not be clear: if state officials know that they are photocopying copyrighted work but believe, erroneously, that the photocopying constitutes fair use, is that action intentional (because they surely intend the conduct and know that they have no permission from the copyright holder) or unintentional (because they do not know that the conduct is illegal)? I find the former, broader view of intentional far more persuasive. Indeed, in the Daniels case itself, the court seemed to be requiring only that the defendant, a prison official, have intended to cause harm by having left a pillow on a staircase; the Court did not appear to suggest that the Due Process Clause would also require a showing that the official knew that intentionally causing harm was a deprivation of liberty within the meaning of the Fourteenth Amendment.(see footnote 100) But the Supreme Court's decisions do not clearly answer the question of just what ''intentional'' means in this context.(see footnote 101)
The Court's decisions could thus be read to suggest that an official's failure to realize that conduct was unlawful does not mean that the conduct is not intentional within the meaning of the Due Process Clause. On the other hand, the tax refund cases might be distinguished on the ground that the freedom of a state to collect taxes first and litigate later can be viewed as somewhat exceptional. Ordinarily, when a state seeks to impose a duty on an individual, the individual is entitled in an enforcement proceeding to contest the constitutionality of that duty before being obligated to obey; if a state insists that taxpayers pay first and litigate later, the state may be under special due process obligations that are not generalizable. Cf. Alden v. Maine, 119 S. Ct. 2240, 2259 (1999). See generally Richard H. Fallon, Jr. & Daniel J. Meltzer, New Law, Non-Retroactivity, and Constitutional Remedies, 104 HARV. L. REV. 1731, 182433 (1991); Carlos Manuel Vázquez, Sovereign Immunity, Due Process, and the Alden Trilogy, 109 YALE L.J. 1927, 194850 (2000).
Page 90 PREV PAGE TOP OF DOCA few lower court decisions have addressed the question of what constitutes intentional conduct under that Due Process Clause in analogous circumstances. One district court found that state officials acted intentionally when they removed a child from her father's home in the mistaken belief that the mother had been awarded custody, stating, ''Daniels and Davidson do not bar actions where state actors fail to exercise due care in ascertaining the lawfulness of their conduct and then intentionally deprive another of a constitutional right based upon the negligently formulated belief that such action was justified.'' Smith v. Eley, 675 F. Supp. 1301, 1305 (D. Utah. 1987). See also Coffman v. Trickey, 884 F.2d 1057, 1062 (8th Cir. 1989) (''Daniels and Davidson are not to be cited for the . . . proposition that the defendant must have the specific intent to violate the plaintiff's legal rights.''). Looking the other way is Souza v. County of Hawaii, 694 F. Supp. 738, 747 (D. Haw. 1988) (officials who forced plaintiffs to cease business operations that the officials mistakenly believed violated a condition of plaintiffs' business permit engaged in negligent rather than deliberate action and thus did not violate the Due Process Clause).
Sub-part two of the question focuses on the likelihood that the owner of an IP right would, under the proposed statute, end up in state court, and on how adequate state court remedies would be in practice. It would require careful inquiry to determine the extent to which the states todaydespite a regime of federal law that has been understood both to preempt state protection for intellectual property rights(see footnote 102) and to preclude the exercise of state court jurisdiction for suits arising under the patent and copyright laws(see footnote 103)have causes of action that would provide damages for the deprivation of intellectual property rights.(see footnote 104) (Of course, were Congress to enact a statute along the lines suggested, some states might create a new remedy so as to move themselves outside the reach of the suggested cause of action.) Moreover, it is far from clear just how robust a remedy must be for it to count as ''adequate'' or ''meaningful'' within the meaning of the Parratt/Zinermon line of cases. We do know that adequacy is a constitutional standard, and the Constitution does not require redress that is as generous as that provided by the existing federal intellectual property regimes.(see footnote 105) Courts have tended to treat state remedies as adequate if they provide the opportunity for a hearing by a tribunal with authority to provide redress.(see footnote 106) More specifically, remedies can be adequate even if, unlike the federal intellectual property laws, they provide no punitive damages(see footnote 107) or attorney's fees.(see footnote 108) Moreover, a state remedy is evidently not inadequate merely because it confers some immunities on the defendants, at least if the immunities are no broader than the immunities recognized in constitutional tort actions under 42 U.S.C. §1983.(see footnote 109) The harder question, to which there is not a clear answer, is whether state remedies are inadequate if they recognize immunities that are significantly broader than those available in §1983 actions. Some courts have upheld state remedies as adequate even when immunity doctrines seem to bar any prospect of monetary recovery from either the government or its officials;(see footnote 110) other courts disagree.(see footnote 111) Were the Supreme Court to take the former view, one can imagine that states might react to the federal statutes I have outlined by enacting limited post-deprivation remedies so as to confine litigation to their courts under a more restrictive remedial regime.
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It might fall within the scope of Congress' constitutional power to authorize removal of such state law causes of action to federal court, on the theory that there is a federal ingredientthe existence, meaning, and scope of a federal intellectual property rightin the state law cause of action. See generally Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738 (1824); HART &However, a state could resist removal in such cases on the ground that (a) the Eleventh Amendment bars suit against an unconsenting state, and (b) a state may lawfully waive immunity from suit in state court while preserving its immunity from suit in federal court, see Smith v. Reeves, 178 U.S. 436, 441 (1900).
The second question raised by the suggested approach relates to the appropriate allocation of authority between the federal and state courts: what would be the likely results of this approach for the system of federal intellectual property litigation? Copyright and patent (but not trademark) regulation are among the relatively few areas in which federal subject matter jurisdiction is exclusive,(see footnote 112) suggesting a strong interest in federal expertise and uniformity. And jurisdiction in patent cases in particular is virtually unique in consolidating all appeals of cases arising under the patent laws in a single court of appealsthe United States Court of Appeals for the Federal Circuit.(see footnote 113) By contrast, were states to enact post-deprivation remedies that passed constitutional muster, presumably issues of patent and copyright lawfor example, whether an intellectual property right was valid, and whether the allegedly infringing use was illegalwould have to be decided in the state courts, with only the tiniest likelihood of federal review by the United States Supreme Court.(see footnote 114) To be sure, state courts do now occasionally decide issues of patent of copyright law; when those issues arise as defenses, or as counterclaims, they fall outside the grant of exclusive federal court jurisdiction. But these situations run counter to the general aspiration for federal uniformity and expertise; one would not welcome an expansion of the circumstances in which state courts must decide issues of federal intellectual property law.
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A more radical approach would be to route appeals from the state trial courts to the Court of Appeals for the Federal Circuit. See Menell, supra, note 8. There would not appear to be an Eleventh Amendment objection to such an approach, as appeals from the state courts (when the state has consented to state court suit) to the Supreme Court have not been thought to raise an Eleventh Amendment issue. See HART ¬e 6, at 30708, 1049 & n. 7. However, the constitutionality of federal appellate review of state law issues decided by a state court, merely because those issues are part of the same case in which there is a reviewable issue of federal law, has never been clearly established and has been thought, at a minimum, to be extremely awkward. See generally id. at 51921. For example, the suggested approach would prevent state appellate courts from reviewing the many questions of state procedural and substantive law that would arise in such lawsuits, and from providing the kind of supervision of trial court practice that appellate courts typically provide. By the same token, it would either prevent any appellate review of such issues or impose on the judges of the Federal Circuit responsibility for such review as to the laws of many different states.
A cleaner possibility might be to create a new mechanism by which litigants in state court could seek certification of issues of federal law directly to the Court of Appeals for the Federal Circuit. This would be the converse of existing certification practice, under which federal courts may certify a question of state law to the state courts. The situations are not symmetrical, however, because the Court of Appeals for the Federal Circuit is not the highest federal court, and current practice, at least, provides that while a state court must treat as authoritative decisions of the United States Supreme Court on questions of federal law, decisions of federal courts of appeals lack that same authoritative quality. In my view, however, that practice does not have constitutional dimension, and Congress could provide that a state court must honor the Federal Circuit's answer to a certified question of federal patent lawat least until it is overturned by the Supreme Court.
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One additional uncertainty must be addressed. The analysis so far has assumed the constitutionality of a statute that did nothing more than provide remedies for state conduct that is in fact unconstitutional. Whether that assumption is correct depends upon one's reading of Florida Prepaid and other recent Supreme Court decisions ruling that various federal statutes cannot be upheld as exercises of legislative power under section 5 of the Fourteenth Amendment.(see footnote 115) In the course of so ruling, those decisions have pointed to the absence of evidence of widespread constitutional violations by the states as one reason for the statutes' invalidity.
I do not believe that these decisions should be read as holding that congressional action under section 5 that regulates unconstitutional conduct itself is valid only if there is a showing that such conduct is prevalent. For in each of the cases striking down a federal statute regulating the states, the enactment extended well beyond conduct that itself violated the Fourteenth Amendment. Where that is so, these recent decisions clearly require a strong showing of legislative need to reach beyond the regulation of core constitutional violations. Thus, while recognizing that in some instances section 5 does permit Congress to regulate conduct that is not itself unconstitutional, as a means of preventing or remedying constitutional violations, the Court has insisted that '' '[t]here must be a congruence and proportionality between the [constitutional] injury to be prevented or remedied and the means adopted to that end. Lacking such a connection, legislation may become substantive in operation and effect.' ''(see footnote 116) And in the course of determining whether that test of congruence and proportionality has been satisfied, the Court has inquired whether there was a pattern of constitutional violations by the state that would be redressed by the statute in question.(see footnote 117)
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By contrast, the approach just discussed would tailor the statute so that it, unlike the statutes recently invalidated by the Court, extended only to instances of constitutional violations. Such a measure is more easily viewed as ''remedial,'' and in my view the validity of a statute limited to regulating unconstitutional conduct itself should not require an additional showing of widespread violations by the states. Rather, I believe that examination of the record of state violations is significant only when a statute reaches well beyond the scope of constitutional violations.
This reading of the Supreme Court's jurisprudence under section 5 appears consistent with the reasoning of the Court's most recent decision in this line. In Kimel v. Florida Board of Regents,(see footnote 118) the Court held unconstitutional Congress' effort to subject the states to liability under the Age Discrimination in Employment Act. In Kimel, after first opining that age discrimination rarely if ever is itself a violation of the Fourteenth Amendment, the Court added:
That the ADEA prohibits very little conduct likely to be held unconstitutional, while significant, does not alone provide the answer to our §5 inquiry. Difficult and intractable problems often require powerful remedies, and we have never held that §5 precludes Congress from enacting reasonably prophylactic legislation. Our task is to determine whether the ADEA is in fact just such an appropriate remedy or, instead, merely an attempt to substantively redefine the States' legal obligations with respect to age discrimination. One means by which we have made such a determination in the past is by examining the legislative record containing the reasons for Congress' action. . . .
Page 95 PREV PAGE TOP OF DOC Our examination of the ADEA's legislative record confirms that Congress' 1974 extension of the Act to the States was an unwarranted response to a perhaps inconsequential problem. Congress never identified any pattern of age discrimination by the States, much less any discrimination whatsoever that rose to the level of constitutional violation.(see footnote 119)
While I think the reading of the Court's section 5 jurisprudence is sound, there is no doubt that the opinions are capable of other readings. It surely would be advisable in any event for Congress to assemble the fullest record it can of instances in which state governments have violated federal IP laws and, beyond that, of instances in which those violations appear also to constitute violations of the Due Process Clause.
B. Rely on A Cause of Action Against State Officials
A second possibilityone that would require at most a minor amendment to existing intellectual property lawswould be to relegate intellectual property holders seeking past damages to suits against state officials. Without more, the resulting regime would be inadequate for plaintiffs, intolerable for state governments, and unfair to state officials.(see footnote 120) But such a regime would pressure states to provide counsel for officials who are sued and to indemnify officials against whom judgments are rendered. Were indemnification universal and comprehensive, the resulting system would approximate direct governmental liability.(see footnote 121) Indeed, some have viewed the existing regime for civil rights litigation under 42 U.S.C. §1983 as following this approach in practice, for §1983 does not authorize damage actions against the state as such(see footnote 122) but does permit suits against state officials in their personal capacities, and many states provide officials with defense counsel and indemnification.
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The lower courts have held that a state's voluntary decision to provide indemnification to a state official defendant does not transform an otherwise permissible suit into a constitutionally prohibited suit against an unconsenting state. See, e.g., Demery v. Kupperman, 735 F.2d 1139, 114649 (9th Cir. 1984); Jackson v. Georgia Dep't of Transp., 16 F.3d 1573, 157778 (11th Cir. 1994), and cases cited; cf. Regents of the University of California v. Doe, 519 U.S. 425, 431 (1997) (in rejecting the view that a state lacks Eleventh Amendment immunity when the federal government has agreed to indemnify it, stating that ''it is the entity's potential legal liability, rather than its ability or inability to require a third party to reimburse it . . . that is relevant'' to determining whether state sovereign immunity attaches).
Yet it is too easy, in my view, to equate officer liability accompanied by indemnification with direct governmental liability.(see footnote 123) To begin with, as noted earlier, there is some authority (at least under the copyright laws) that individual officials enjoy a qualified immunity from damages.(see footnote 124) Even were Congress to amend the laws to make clear that qualified immunity was not to be conferred on state officials,(see footnote 125) the resulting regime, as noted earlier, would require sometimes difficult and burdensome determinations of which official(s) should be held personally liable for illegal action. For that and a range of other reasons, juries may hesitate to award adequate damages against individual officers serving the public under often difficult conditions.(see footnote 126)
Moreover, indemnification, though generally thought to be widespread, is not universal: for example, some employees or agencies may (advertently or otherwise) be excluded; indemnification may be permissive rather than mandatory (though admittedly a routine practice of permissive indemnification may blunt any distinction); some states impose monetary limits on indemnification; and many indemnification provisions exclude conduct that is criminal, egregious, willful, or the like.(see footnote 127) Given these kinds of gaps, to shift damages liability from state governments to state officials would at a minimum have significant transition costs. And even with complete indemnification, officials nonetheless might well fear the entry of significant judgments against them personally.(see footnote 128)
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Finally, even universal indemnification may not be equivalent to governmental liability. In cases that involve very large damages, the judgment may exceed the individual officer's net worth. It is unclear that every state with an indemnification policy would simply write a a check for the judgment amount directly to the plaintiff. Though some state indemnification laws would appear to authorize that result, other states seem to provide that a government's obligation to indemnify does not mature at the time that a judgment is entered against the officer but only when the officer-indemnitee has sustained a loss by actual payment of the judgment.(see footnote 129)
Many states have departed from the model of private indemnity, and where indemnification attaches, permit plaintiffs to collect of the judgment directly from the government, see, e.g., Richichi v. City of Chicago, 199 N.E.2d 652, 657 658 (Ill. App. 1964), or payment from the government at the instance of the individual officer, see City of Memphis v. Roberts, 528 N.W.2d 201, 20506 (Tenn. 1975), without first requiring the intermediate step of execution against or payment by the defendant official. Some cases departing from the traditional approach to indemnity turn on statutory language that provides, for example, not for indemnification but rather for payment by the state of a judgment against an official defendant. See, e.g., Dixon v. Holden, 923 S.W.2d 370, 37778 (Mo. Ct. App. 1996).
Other states, however, adhering to the traditional approach, limit the right to seek indemnity to the defendant official, see, e.g., Johnson v. Miera, 433 N.W.2d 926 (Minn. 1989) (a judgment creditor has no right of action against the state when the judgment debtor has not requested indemnification, reasoning that the purpose of the indemnification statute is to benefit the state employee), and provide indemnity only when that official has suffered damage as a result of the judgment, see Hamlin v. Transcon. Lines, 697 P.2d 606, 614 (Wyo. 1985) (the state indemnification regime did not create a right of action against the state in favor of ''plaintiffs who have obtained verdicts for injury or wrongful death from negligent governmental employees''; it merely ''requires the governmental entity to save the tortfeasor employee harmless when he can show that . . . he has suffered damage'').
Page 98 PREV PAGE TOP OF DOCWhere the traditional approach is followed, it could in theory lead to a seemingly pointless cycle in which, in the example given above, the plaintiff is able initially to collect only $25,000 of a $1 million judgment; the official in turn obtains indemnification in the amount of $25,000; the plaintiff, in turn, again collects $25,000 from the replenished coffers of the defendant; and so forth. This cycle could be repeated 40 times. See Vázquez, supra note 7, at 88182 n. 92. I doubt that that occurs in practice, and in any event, the prospect of avoiding such a cycle may be a good argument for courts to interpret their indemnification statutes as departing from the traditional approach, see, e.g., Richichi v. City of Chicago, 199 N.E.2d at 658or for governments, if authorized though not required to do so, simply to cover the full amount of the plaintiff's judgment.
Enough has been said, however, to demonstrate that the uncertainty associated with indemnification in states that adhere to some version of the traditional approach is a further source of friction that makes it difficult to assume that a scheme of liability of officials coupled with indemnification can always be viewed as functionally little different from governmental liability.
To be sure, if federal law were amended to rely exclusively on official liability and clearly to deny officials any qualified immunity, states would be under considerable pressure to expand the scope of their indemnification provisions. That kind of federal pressure, however, even if it were to provide an adequate substitute for governmental liability, hardly constitutes a blow for harmonious federalism.(see footnote 130)
In Hutto v. Finney, 437 U.S. 678, 691 & n. 17 (1978), an action against state officials, the Court affirmed an order awarding the plaintiffs certain attorney's fees, to be paid out of the state treasuryan order that the Court treated as analogous to compensatory contempt. In rejecting the argument that the order violated the Eleventh Amendment because it required payment by the state rather than by the officials, the Court declared that to have made the officials liable for the fee award ''would be a remarkable way to treat individuals who have relied on the Attorney General to represent their interests throughout this litigation''despite the possibility, mentioned in the Hutto dissent, see id. at 716 (Rehnquist, J., dissenting), that state law permitted indemnification.
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C. Suit by the United States
There is a third possible mechanism by which Congress might seek to close the remedial gap: Congress could authorize suit by the United States on behalf of the victims of state violations of federal IP laws, with the proceeds of such actions to be paid over to the victims. It is well established that states have no immunity from suit by the United States.(see footnote 131) It appears equally well established that Congress may authorize the United States to bring suit to enforce federal law, whether or not the United States claims a proprietary interest in the outcome.(see footnote 132) It thus appears that Congress may authorize not only suit by the United States but also the payment of any fine or other money judgment collected to the injured partiesin this case, to intellectual property holders. This approach has been followed under the Fair Labor Standards Act;(see footnote 133) there, the Department of Labor is authorized to sue employers for damages and in turn to pay the recoveries over to the employees whose rights were violated.(see footnote 134)
To be sure, there has never been a square holding from the Supreme Court upholding this last technique, as against constitutional challenge, in a suit against a state, and one cannot be sure just where the current Court's assertiveness in protecting its vision of constitutional federalism might next lead. Still, although in this fast-moving area one's judgments must be somewhat tentative, I believe that Congress could, if it wished, authorize a federal agencywhether the patent and trademark office, the Department of Justice, or some new institutionto sue a state for infringement of intellectual property rights, with any monetary judgment to be paid over to the intellectual property holder.
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This would, of course, be a significant shift in enforcement technique. And one might well doubt (absent the idiosyncracies of Eleventh Amendment doctrine) that the fact that a violator of federal law is a state agency necessarily provides a reason for public enforcement. If a university has infringed a patent, it is hard to see why the appropriate enforcement strategy should differ if the violator is the University of Massachusetts (a state school) rather than Boston University (a private one). Indeed, Congress may reasonably doubt that federal governmental resources are wisely used to pursue litigation against state agencies when a private rightholder's interest is great but the public interest may be small. Moreover, such a technique, to be effective, would require that the new agency be adequately funded and that the funding continue year after year. Despite these disadvantages, when the Supreme Court has precluded private damage actions against the state by intellectual property holders themselves, this approach remains a second-best solution that appears to be constitutionally permissible.
D. Waiver Schemes
A final possible set of approaches involves federal legislation conditioning the dispensation of a federal benefit on a state's waiver of immunity. The Supreme Court has recognized broad power under the spending clause for Congress to impose conditions upon its award of one kind of federal benefitfederal funds. In South Dakota v. Dole,(see footnote 135) the Court held that Congress could condition the availability of a portion of federal highway funds on a state's raising the drinking age to 21.(see footnote 136) That was a striking holding for a number of reasons. First, viewing the 21st Amendment as at least potentially a guarantee of state autonomy, the Court assumed that Congress could not directly and unconditionally legislate to raise the drinking age. Yet the Court held that Congress, through its use of the conditional spending power, could do indirectly that which, arguendo, it could not constitutionally do directly. Second, the condition that it imposed on federal spending was one that required the states to enact legislation in order to qualify for the federal funds. In view of the Court's subsequent decision that Congress may not unconditionally command states to enact legislation,(see footnote 137) and because the enactment of legislation is often considered the core of governmental authority, even conditional pressure to enact legislation might have been viewed as problematic. In these respects, Dole is a broad decision.
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The Dole opinion, though upholding the program in question, suggested in its discussion that the spending power is limited.(see footnote 138) The Court indicated that for a conditional spending measure to be constitutional, (i) the spending must be in pursuit of the general welfare,(see footnote 139) (ii) the condition imposed on the acceptance of the funds must be expressed unambiguously,(see footnote 140) and (iii) the condition must not be independently unconstitutionalthat is, Congress may not induce the states to engage in activities (for example, racial discrimination) that would be unconstitutional if undertaken by the states entirely on their own.(see footnote 141) Ordinarily, a well-drafted statute will not run afoul of these limitations.
Dole suggests two other limits that may pose greater difficulties. First, Dole notes prior decisions recognizing that inducement may be so coercive as to pass the point at which pressure turns into compulsion.(see footnote 142) The Court stressed that on the facts before it, the state would lose only a small percentage of its highway funds5%if it did not raise the drinking age, and thus the decision whether to do so remained a state prerogative in fact as well as in theory.(see footnote 143) Second, Dole suggests a relatedness requirementthat there must be a sufficiently tight relationship between the condition and the purpose of the spending.(see footnote 144)
The Supreme Court's 1999 College Savings Bank decision(see footnote 145) had some discussion that bears on these last two limitations. There, the Court ruled that Congress lacked power to subject the state of Florida to suit under the Lanham Act for false and misleading advertising. In so holding, the Court rejected the argument that the state had waived its immunity by engaging in activity with the knowledge that federal legislation purported to regulate a state voluntarily engaging in that activity. In rejecting that waiver argument, the Court distinguished two decisions suggesting that Congress may exact a waiver from the statesone of which was Dole.(see footnote 146) The basis for distinction was that in spending cases like Dole, Congress was dispensing a gratuity, and in distributing gratuities to a state, Congress may condition them on the state's waiver of immunity. In College Savings Bank, by contrast, what Congress threatened if the state refused to agree to the federal condition was not a gratuity but a sanctionexclusion of the state from otherwise permissible activity. When that is so, the point of impermissible coercion is automatically passed.
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Under the Compact Clause, U.S. Const., Art. I, §10, cl. 3, States cannot form an interstate compact without first obtaining the express consent of Congress; the granting of such consent is a gratuity. So also, Congress has no obligation to use its Spending Clause power to disburse funds to the States; such funds are gifts. In the present case, however, what Congress threatens if the State refuses to agree to its condition is not the denial of a gift or gratuity, but a sanction: exclusion of the State from otherwise permissible activity. Justice Breyer's dissent acknowledges the intuitive difference between the two, but asserts that it disappears when the gift that is threatened to be withheld is substantial enough. Post, at 2236. Perhaps so, which is why, in cases involving conditions attached to federal funding, we have acknowledged that ''the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion.' '' Dole, supra, at 211, quoting from Steward Machine Co. v. Davis, 301 U.S. 548, 590 (1937). In any event, we think where the constitutionally guaranteed protection of the States' sovereign immunity is involved, the point of coercion is automatically passedand the voluntariness of waiver destroyedwhen what is attached to the refusal to waive is the exclusion of the State from otherwise lawful activity.
With that background, Congress might consider either of two techniques to induce states to waive their immunity from private suit under the IP laws.
1. Conditional Spending
It would appear that Congress could provide that any state agency that receives federal fundingwhether for highway construction, education, job training or university researchmust agree, as a condition of receiving that funding, to waive immunity from suit under federal intellectual property laws. Congress could say, that is, that it does not want federal funds being used to infringe intellectual property rights and that to promote that objective, it conditions its grant of funding on the agency's waiver of immunity. Indeed, the connection on these facts between the use of the funds and the condition seems to me a tighter one than the connection that was upheld in Dole.
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Still, one cannot be sure that such a scheme is constitutionally home free. For one must confront the question whether the price of non-compliance with the conditionloss of federal fundsis so burdensome as to constitute prohibited ''coercion.'' The Court has yet to strike down a program of conditional spending on that basis. And as Justice Cardozo noted in Steward Machine v. Davis(see footnote 147) some 63 years ago and as commentators have elaborated in more detail,(see footnote 148) efforts to distinguish coercion from temptation are likely doomed to failure. The difficulties of giving content to this concept in the abstract are matched by the lack of guidance from the case law. I know of no standing federal decision since Dole that has invalidated a law on this ground.(see footnote 149) But as noted in the margin, there is some ferment in some courts of appeals. And the Supreme Court, were it to seek to limit the Dole decision, could rely on the fact that there the state faced a loss of only 5% of the highway funds in question (despite any convincing reason why the loss of 5% of a $100 million grant should be viewed as less coercive than the loss of 100% of a $5 million grant).(see footnote 150) As the law now stands, I do not think the coercion limitation poses an obstacle to this approach, but the law in this area may well not be standing still.
In one Fourth Circuit case that later went to the en banc court, Judge Luttig expressed the view in dissent that the Federal Government's efforts to impose conditions under a different federal spending program were unconstitutional. Virginia Dep't of Educ. v. Riley, 86 F.3d 1337, 1348 (4th Cir. 1996) (Luttig, J., dissenting), vacated and rev'd en banc, 106 F.3d 559 (1997). There, the federal government had withheld from the Commonwealth of Virginia 100% of an annual special education grant of $60 million on the ground that Virginia had violated the conditions governing the grant by failing to provide private educational services to 126 of the 128,000 handicapped students for whom the special education funds were earmarked. (The 126 had been expelled from school.) Judge Luttig noted that on a pro rata basis, the 126 students would have received only $58,000 of the $60 million, and that while withholding the $58,000 for non-compliance would be lawful encouragement, withholding all $60 million ''begins to resemble impermissible coercion.'' Id. at 1355 (citing Dole, 483 U.S. at 211). He contrasted the condition in this case with the one at issue in Dole, under which the state was threatened with a loss of only 5% of federal highway funds for non-compliance with the spending condition. See id. at 1356.
Page 104 PREV PAGE TOP OF DOCJudge Luttig's dissent from the panel decision expressed more than one basis for invalidating the condition; he also argued, for example, that it had not been expressed with the requisite degree of clarity. (He also suggested distaste for the substance of the condition. See id. at 135757.) The en banc court did find the withdrawal of funds invalid, relying on Judge Luttig's dissent, but only six of the thirteen judges joined Judge Luttig's opinion in whole; thus, a majority of the court did not subscribe to the impermissible coercion argument. The en banc court's primary basis for invalidating the conditional spending programa ground that commanded the assent of ten of the judgeswas that Congress had not been sufficiently clear in conditioning the funding on compliance with the federal rules in question.
Assuming that the coercion limitation does not pose an obstacle, the effectiveness of such an approach depends upon the interaction of two factors. The first factor is the scope of a waiver that can be attached to any particular federal spending programan aspect of the ''relatedness'' requirement. A state might argue that Congress may not condition funding for a particular program on a state agency's waiver of immunity from suit as to ''unrelated'' programs that are operated by that same agency but that receive no federal funding. On this question of relatedness, Dole said only that ''our cases have suggested (without significant elaboration) that conditions on federal grants might be illegitimate if they are unrelated 'to the federal interest in particular national projects or programs.' ''(see footnote 151) However, in practice the Court's application in Dole of any relatedness criterion was quite relaxed;(see footnote 152) moreover, many doubt the normative significance of the criterion in any event;(see footnote 153) and there is little case law from the lower courts indicating when a relatedness requirement might have bite.(see footnote 154) I find persuasive the following argument that Congress may condition funds on a waiver by the entire state agency receiving the funding: Congress does not want federal funds contributing to the infringement of IP rights, and since federal funding for one program frees up money for other programs that the agency operates, Congress has a legitimate interest in conditioning its funding on a waiver by the agency as to all of its operations. And Congress has already in effect acted on the basis of this argument in attaching other conditions to the expenditure of federal funds, providing that conditions prohibiting various forms of discrimination govern not just the particular program receiving federal funding but the entire agency within which that program is located.(see footnote 155)
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However, the case was an unusual one in that the spending clause argument was invoked not to uphold the validity of a condition imposed on a recipient of federal funds, but rather in an effort to uphold direct regulation (via a criminal sanction at that) of a third party who did not seek or receive the funding in question. See also United States v. DeLaurentis, 83 F. Supp. 2d 455 (D. N.J. 2000) (following a similar approach with regard to the same federal bribery statute).
In more conventional situations, involving challenges by states as recipients of federal grants, claims that conditions on the grants are unrelated to the purpose of the grant have generally been rejected, even where the connection is not particularly tight. See, e.g., Kansas v. United States, 2000 WL 710489 (10th Cir. June 1, 2000) (upholding, as a condition on grants under the Temporary Assistance to Needy Families program, which gives federal block grants to states to provide cash assistance and other supportive services to low-income families, a condition requiring states to take a variety of steps relating to enforcement of child support ordersincluding establishing registries of all child support orders and new hires in the states, adopting the Uniform Interstate Family Support Act, enacting laws facilitating genetic testing and paternity establishment, authorizing state child support agencies to take expedited enforcement action against non-paying noncustodial parents, and mandating that states impose various sanctions on parents who fail to pay child support).
To be sure, a similar argument could extend to the state as a whole: federal funding for highways frees up state general revenues for education. Without suggesting that that argument is cleanly distinguishable from the one in text, I believe Congress would be unwise, given the strength of the Court's commitment to limiting national authority over the states, to push this approach that far. See also text at notes 8389 infra.
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The second factor affecting the effectiveness of such an approach raises a factual rather than a legal question: how many state programs or agencies in fact receive federal funding? I assume that most agencies in most states do receive federal funds and could therefore, under this approach, be put to the choice of waiving immunity or forgoing federal funding. That question, however, requires more detailed study.
Quite apart from legal objectives, there may be practical questions concerning this approach along a different dimension. Different agencies of the states receive funds under a very large number of authorization provisions. Though no expert in internal congressional procedure, I can think of two ways that imposition of the condition might be accomplished, either one of which might require navigating some difficult jurisdictional shoals in Congress. Congress could write the condition into every piece of legislation now on the books that authorizes federal funding of state programs (and every future such measure). That would, of course, be a major effort that, under current arrangements, would require the participation of a very large number of separate committees of the House and Senate. Alternatively, if the rival claims to jurisdiction of various committees could be resolved, Congress could pass a single statute requiring that states waive their immunity from suit with respect to any program or activity that obtains federal funding. Global conditions on all federal spending are not unprecedented; two important civil rights statutes make non-discrimination a condition applicable to receipt by states (and others) of any federal funding.(see footnote 156)
If the jurisdictional problems within the Congress can be surmounted, this second, global approach to waiver strikes me as the better one for Congress to follow. Dole, to be sure, could be limited by subsequent Supreme Court decisions, but based on the law as it now stands, this approach seems to me constitutionally sound and likely to lead to reasonably plenary remediation against the states.
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2. Conditional Extension of Intellectual Property Rights
a. The Basic Approach: A different approach would condition not federal funding, but rather the conferral on the states of new intellectual property rights, on a state's waiver of immunity from suit under IP regimes. The argument supporting this technique would go as follows: (a) Congress need not create intellectual property rights; (b) thus, from the states' standpoint, the property rights they enjoy under federal IP schemes are gratuities; (c) in dispensing those gratuities, Congress may condition them on a state's waiving immunity; (d) and, therefore, Congress may provide that a state cannot obtain new IP rights unless it agrees to waive immunity from suit under federal IP schemes.
It is, candidly, difficult to assess the constitutionality of such an approach. While I have considerable sympathy for it, it also raises a set of difficult questions:
(i) Are intellectual property rights really a gratuity? As is typically the case, the answer to that question depends on the baseline against which one measures. Looking only at the Constitution, which by itself does not confer intellectual property rights, one could say that whatever Congress has chosen to confer since 1789 must be a gratuity. But two centuries after the Founding, there are regimes of federal IP rights for which states have long been eligible to apply, and against that baseline of state eligibility, new legislation that threatens to make those rights unavailable to states in the future could be viewed not as a gratuity but as a prohibited sanction. I do not favor the second view, but cannot rule it out.(see footnote 157)
Page 108 PREV PAGE TOP OF DOC (ii) Even if IP rights are a gratuity, one might object that legislation like that just sketched would unconstitutionally condition eligibility for that gratuity on waiver of a state's constitutional immunity from suit. That argument, of course, was made and rejected in Dole. And as a general matter, just when the doctrine of unconstitutional conditions will be applied is hardly crystal clear.(see footnote 158) But it would have been entirely logical for the Court to have held in Doleas Justice Brennan argued in his dissentthat states have a constitutional right (so the Court assumed) under the Twenty-First amendment to regulate the drinking age free of congressional interference, and that Congress may not condition federal funding on a state's yielding that constitutional right. The Court might have so ruled, but it did not.
Nonetheless, the Court's growing commitment to state sovereign immunity creates uncertainty whether Dole, though it was a 72 decision, may be regarded as a fixed landmark. Moreover, even without overruling Dole, the Court might decide that the spending power differs in nature from, for example, Congress' legislative authority under the Inventions Clause. Spending, the Court could say, by its nature cannot be effectively exercised without the imposition of conditions on what federal funds are spent for; moreover, Congress equally has an interest in what funds are not spent forthat is, in prohibiting their use for purposes deemed by Congress to be contrary to the general welfare. Those points might be thought to distinguish conditional grants from conditional conferral of IP rights.(see footnote 159)
(iii) States could raise the objection that the condition imposed on the grant was not related to the gratuity being awarded. For reasons similar to those discussed with regard to conditional spending, I do not find this objection persuasive, at least as to a statute that limits its reach to waivers of immunity by the particular state agency that applies for IP rights. Suppose, however, that Congress provided that in order to obtain any new patents, the entire state must waive immunity from patent infringement lawsuitsso that in order, for example, for the biology department of a state university to obtain a new patent, the state would first have to provide a general waiver of immunity from suit under the patent lawswhich would then permit suit against the state highway department for infringement of a patent relating to the use of concrete. Is requiring a waiver that extends to the entire state government sufficiently related to the national objective of the patent programthe equitable and efficient enforcement of the patent laws?
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One purpose of such legislation would be to create a level playing field, and to require states to accept the burdens as well as the benefits of the patent system. Support for the proposition that a waiver based on that purpose is valid may be found in federal decisions. In Gardner v. New Jersey,(see footnote 160) the Supreme Court held that a state that ''invokes the aid of the bankruptcy court by offering a proof of claim and demanding its allowance must abide the consequences of that procedure''(see footnote 161)in that case, to be deemed to have waived any immunity from adjudication by the federal bankruptcy court of objections to the state's claims. And the Court specifically noted that it was the affirmative act of filing a claim that waived immunity, adding that it would be unfair to subject claims by states to lesser scrutiny than claims by other creditors.(see footnote 162)
For similar reasons, when a state government files suit in federal court, it is generally deemed to have consented to suit on counterclaims; as the Court of Appeals for the Fourth Circuit recently stated, ''it would violate the fundamental fairness of judicial process to allow a state to proceed in federal court and at the same time strip the defendant of valid defenses because they might be construed to be affirmative claims against the state.''(see footnote 163) At the same time, most lower courts have not extended this waiver doctrine to counterclaims against a state that are not transactionally related, or that seek not merely setoff or recoupment but rather an affirmative recovery.(see footnote 164) The Supreme Court has not yet squarely ruled on the scope of any waiver effected by a state's availing itself of federal jurisdiction. But if the limits recognized by the lower court decisions prevail, then perhaps a state's availing itself of federal intellectual property rights relating to biological discoveries is not a valid basis for exacting a general waiver of immunity from suit on unrelated matters.
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One should also note that the College Savings Bank decision, which held that Congress may not overcome state immunity from suit by a private party under the false advertising provisions of the Lanham Act, contains some language that could be viewed as casting doubt on the force of the level playing field justification. In College Savings Bank, in rejecting the argument that a state, when it acts in a proprietary capacity, can be subjected to federal regulation of the market on the same basis as other market participants, the Supreme Court declared: ''In the sovereign immunity context, . . . '[e]venhandedness between individuals and States is not to be expected.' ''(see footnote 165) To be sure, that statement was made in the course of rejecting the argument that Congress could unconditionally impose evenhandedness, whereas the waiver scheme would aspire to evenhandedness only if a state first sought future patents; indeed, the College Savings Bank decision expressly re-affirmed the Gardner decision.(see footnote 166) Nonetheless, College Savings Bank raises a question about how receptive the Supreme Court would be to a very broad conception of leveling the playing field as a justification for future legislation.
If, however, Congress could validly enact the scheme just described, could Congress go one step further, requiring that in order to obtain a patent, a state agency must waive immunity from suit under not only the patent but also the copyright and trademark laws? I can understand why this kind of linkage may be important practically, for in many cases states may care most about obtaining one set of IP rights (for example, patents for research applications) while the likelihood of infringement by the states may be the greatest as to a different set of rights (for example, copyrights). Still, even without clear markers for application of the relatedness criterion, the broader waiver seems to me to run a serious risk of invalidation. (Indeed, if Congress can go that that far, why could not it go further, conditioning the award of federal dollars, or federal patents, on waiver by the state of immunity from suit under all federal statutes?)
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(iv) A distinct but related question about the waiver scheme is whether the condition imposed on the award of new IP rights is so burdensome as to constitute prohibited coercion. I noted earlier the absence of legal markers outlining the scope of any such limitation. However, it seems doubtful to me that a threat to withhold new patent rights unless a state agency waives its immunity from patent infringement actions is more coercive than is withholding large amounts of federal funds.(see footnote 167) The only basis for viewing the withholding of IP rights as more coercive would be that the federal government has a monopoly on creating IP rights but not on generating funds for state spending. The argument is not persuasive, though, if, as I suspect, the economic value to the states of federal spending dwarfs that of any IP rights the states may acquire; in that case, it would be far more coercive to threaten to withdraw the former than the latter.
(v) A waiver scheme could run into an objection that it is constitutionally unsound because it is directed only at the states, rather than being a general regulation equally applicable to state and private actors. Some recent Supreme Court decisions could be read to support the proposition that a law enacted under Article I that regulates only the states and not private actors may, without more, be unconstitutional.(see footnote 168) No Supreme Court decision so holds, however. Moreover, one can ask whether a law requiring waiver of immunity does regulate only the states, or instead is part of an overall scheme of IP regulation that demands something of all actorsthat they take whatever action is necessary to ensure that they are fully subject to suit for damages. Finally, even if a requirement of general applicability exists, it would be hard to apply it in this context; a statute requiring that private actors, like states, waive sovereign immunity, when the private actors possess no such immunity, would simply make no sense.
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(vi) A last point, more general in nature, must be raised. Commentators have suggested that the Supreme Court's federalism and sovereign immunity decisions exhibit both a disregard if not contempt for Congress and a willingness to strike down legislative approaches that the Court perceives to be an end run around sovereign immunity.(see footnote 169) Insofar as those impulses animate the Court's recent decisions, one must be more pessimistic about the prospects that a statute along the lines noted above would survive the scrutiny of the Court's current majority. In this connection, it may be worth noting that the federal government has been unwilling to subject itself to the full range of liability for patent infringement faced by private actors. The government is not liable for treble damages for willful infringement, and the availability of statutory damages is more limited than it is against other defendants.(see footnote 170) That fact, though not necessarily of constitutional significance, might contribute to skepticism among members of the Court about efforts to use federal power to subject states to the full range of remedies for violations of IP laws.
b. Alternative Waiver Techniques: Were Congress to require a state to waive its immunity in order to qualify for new IP rights, it might follow two different approaches. What I will call the ''state legislation approach'' would require a state to enact a statute waiving its immunity in federal IP cases as a condition of obtaining any new federal IP rights; absent such an enactment, no new rights would be awarded.(see footnote 171) An alternative, which I will call ''the affirmative declaration approach,'' would instead require every application for a federal IP right affirmatively to indicate whether it is being sought on behalf of a state entity and, if it is, to include a certification (perhaps by the Attorney General or his designee) that the state will not assert immunity if sued for infringement under that statutory scheme.
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The affirmative declaration approach has some obvious attractionsperhaps most importantly, it may be far easier in practice for Attorneys General or their designees to check a box on a form than it is to get legislation enacted. However, there is a serious legal question about whether the affirmative declaration approach would be effective. Longstanding authority declares that a waiver of immunity by a state official is valid only if that official is authorized under state law to waive immunity on behalf on the state. Thus, in Ford Motor Co. v. Department of Treasury of Indiana,(see footnote 172) Ford had sued the state in federal court for a tax refund. The Supreme Court noted in its opinion that the state conceded that ''if it is within the power of the administrative and executive officers of Indiana to waive the state's immunity, they have done so in this proceeding.''(see footnote 173) But the Court added that the question of who has power to sue is governed by state law, and looking to Indiana law, the Court determined that though the Attorney General was authorized to litigate, he was not authorized to waive Indiana's immunity from suit.(see footnote 174) The underlying presumption seems to be that ordinarily waiver must be effected either by the legislature or by a person whom the legislature has authorized to waive.
The history of the Ford Motor approach, however, is uneven, for some cases have recognized the validity of a waiver by a state official without inquiring whether that official was authorized by state law to waive the state's immunity. For example, a number of lower federal courts have routinely found that states have waived their sovereign immunity by accepting federal funds whose award is unambiguously conditioned on waiverwithout bothering to inquire whether the particular state official responsible for obtaining the funds was authorized under state law to waive immunity.(see footnote 175) On the other hand, a long line of cases in a different context does look to state law: in determining whether a state Attorney General's decision to remove a state court action to federal court constitutes a waiver of 11th Amendment immunity from federal court suit, these decisions have inquired whether state law authorized the Attorney General to waive immunity.(see footnote 176)
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I know of only one federal court of appeals decision that looked at whether the person or entity applying for federal funds was authorized to waive immunity, although on the facts the court found such authority. See Innes v. Kansas State Univ. (In re Innes), 184 F.3d 1275, 1284 (10th Cir. 1999). However, one district court, applying similar a analysis, found no valid waiver after determining that although the chief executive officer of the State Board of Regents signed a contract obligating the State to comply with the provisions of federal lawincluding a requirement that the state litigate certain issues in federal bankruptcy courtthe officer lacked authority under state law to waive the state's immunity. See Snyder v. Nebraska (In re Snyder), 228 B.R. 712, 718 (D. Neb. 1998).
A recent opinion by Justice Kennedy did suggest that the validity of a state official's waiver might, at least in some circumstances, be judged by a federal standard rather than under state law. In Wisconsin Department of Corrections v. Schacht, 524 U.S. 381 (1998), his concurring opinion discussed an issue not raised in the case or necessary to its dispositionwhether a state that gives its express consent to removal of a case from state to federal court necessarily waives its Eleventh Amendment immunity from federal court suit. Recognizing that many lower courts had viewed the Ford Motor decision as permitting a finding of waiver only when the state's attorney was authorized by state law to waive, and acknowledging that the Court's recent decisions had disfavored constructive waivers, Justice Kennedy nonetheless suggested that perhaps the act of removal should be deemed to be a waiver regardless of state law. See id. at 39398 (Kennedy, J., concurring). However, he did not commit himself, nor did any of his colleagues join his opinion.
Moreover, his opinion, insofar as it advocates adoption of a federal standard to govern waiver, can be read as limited to the standard governing removal, rather than suggesting more broadly that waiver of immunity is always governed by a federal standard. Among other things, Justice Kennedy stressed the injustice of permitting the state to remove and then, should it lose, to raise the issue of immunity on appeal. See id. at 39495. The injustice of a state's acquiring an intellectual property right without being fully liable for violating the rights of others may not strike Justice Kennedy or his colleagues as being so obvious.
Page 115 PREV PAGE TOP OF DOCI personally am attracted to the argument that federal officials should be able to rely on representations by state officials that they are authorized to take particular action, including waiving immunity, and that unless it is plain that an official lacks such authority, an act that a federal statute unambiguously deems to be a waiver should have that effect. Under that approach, the task of policing officials to be sure that they are authorized to waive would fall to the states for which they work rather than to federal officials or federal courts.
All things considered, then, the state legislation approach seems safer to me.(see footnote 177) For if the reasoning of Ford Motor still controls,(see footnote 178) an affirmative declaration by the state Attorney General will not necessarily constitute a valid waiver; should litigation ensue, a court will have to look behind the affirmative declaration to inquire whether state law authorized the Attorney General, or other official making the affirmative declaration, to waive the state's immunity.(see footnote 179)
Moreover, the notion that the state legislation approach is more intrusive seems mistaken analytically. If the affirmative declaration approach requires that a state official must previously have been authorized by state statute to waive on behalf of the state, then that approach in the end also requires enactment of legislation.
Moreover, the notion that the state legislation approach is more intrusive seems mistaken analytically. If the affirmative declaration approach requires that a state official must previously have been authorized by state statute to waive on behalf of the state, then that approach in the end also requires enactment of legislation.
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I have tried to outline a range of possible approaches that Congress might take if it wishes to close the gap in remediation for state violations of IP rights that the Supreme Court's decisions have leftas well as the salient questions that would arise under each approach. As presently advised, I believe that the best alternative is the conditional spending approachassuming, as I do, that most state agencies receive federal funding and thus would be required to waive immunity if they were to continue to obtain such funding. The alternatives of authorizing a more limited cause of action against the states under section 5 of the Fourteenth Amendment, and of seeking to condition the grant of new IP rights on a waiver of immunity, also seem promising to me. Both of these other techniques, however, seem to me to raise more serious constitutional doubts, and the limited cause of action is just thatlimited in its scope.
Mr. COBLE. Thank you, Professor.
We have a 15-minute vote and a 5-minute vote on the floor? You all rest easy until we come back. We should be back in 15 to 20 minutes.
We will recess.
Mr. COBLE. We will resume, folks. I apologize to each of you, particularly our two witnesses. You never know how this train station is going to run, and we may have to do this piecemeal. We may have to go back for another vote, but I didn't want to keep you all waiting too long. Thank you both, gentlemen.
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Professor Lemley, as I understand it, the Supreme Court still allows or permits suits for damages against individual State employees. If the respective State indemnifies its employees, is this not a back-door solution?
Mr. LEMLEY. It is possible. My understanding of the constitutional rules is the same as yours, that you can, in fact, sue an individual for damages. It may be that the State will indemnify that individual. I think there are sort of other potential problems with such an approach. Sometimes it is not possible to identify the individual who is responsible for infringement. That individual may have left the employ of the State, and there may be circumstances in which it is undesirable for other reasons to subject the individual as opposed to the State for liability, but it is possible in those circumstances that at least some intellectual property owners might get at least some recovery by suing individuals and relying on the State to indemnify them.
Mr. COBLE. Professor Meltzer, it is your belief that the best solution, is the conditional spending approach and that the coercion defense does not pose an obstacle. Is there any scenario under which legislation taking the conditional spending approach would be coercive?
Mr. MELTZER. Well, Mr. Chairman, that is a very hard question to answer, because we have virtually no case law that tells us what the courts consider to be coercion. There are a couple of recent lower-court cases, which I noted in my written testimony, in which panels of the courts of appeals or dissenting members have viewed large fund cutoffs as being coercive. It is a very hard line to draw conceptually between what is an appropriate inducement and what is an inappropriate coercion.
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The Dole case made something of the fact that the fund cutoff there was only 5 percent of the highway funds that were being granted and conditioned. One could imagine a court taking the view that a 100 percent cutoff is not valid, although for me it is very hard to see why 5 percent of $100 million grant is less coercive than 100 percent of a $5 million grant.
So I think the law here is just extremely unclear, but I believe that the cases that have so far upheld fund cutoffs have not necessarily been limited to small percentages of the granted funds.
Mr. COBLE. And I will stipulate, Professor, that question is one that is easier asked than answered, but I knew that going in.
Professor Lemley, if the Congress adopted a waiver approach, is it possible that some States would not waive their immunity and that the waiver rules would vary significantly among the States that do? How would that affect an intellectual property owner's ability to get relief for State infringements?
Mr. LEMLEY. Well, it is possibility.
Mr. COBLE. Or am I creating a problem that is not there with that question?
Mr. LEMLEY. No, Mr. Chairman. I think it is a risk. There is a balancing act that I think Congress has to engage in here between, on the one hand, being so coercive with the waiver that a State has no effective choice, which, I think as Mr. Meltzer suggests, could render it constitutionally suspect, and, on the other hand, giving a choice that is sufficiently favorable to a State that a number of States might actually decide not to waive their immunity and instead to take the benefits of immunity.
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It is certainly my hope that, if the waiver proposal is designed appropriately, States will see it as in their interest to waive immunity, and my sense from talking to some representatives of universities is that there hasn't been a strong policy objection to the idea of waiver of sovereign immunity. So my hope is that States will waive, but there is certainly the possibility that some States would not, and, therefore, that intellectual property owners' rights would be incomplete.
Mr. COBLE. Professor Meltzer, in your testimony, you address the issue of what kind of factual record Congress may need to meet the Court's section 5 requirements where Congress seeks to regulate unconstitutional conduct. Explain, if you will, why you believe that a detailed showing by Congress of such unconstitutional conduct may not be constitutionally necessary.
Mr. MELTZER. Mr. Chairman, the Supreme Court's recent decisions dealing with Congress' power under section 5 have addressed legislation that, in the court's view, reached beyond the scope of conduct that was independently unconstitutional. So, for example, under the age discrimination laws, the court took the view, as it has consistently, that most age discrimination is not a violation of equal protection or due process, and, therefore, when Congress regulates age discrimination by the States, for the most part it is regulating conduct that does not independently violate the Constitution.
In that context, where Congress has reached beyond what the Constitution independently prohibits, the court plainly has made it a condition of the constitutionality of such enactments that there be a strong legislative record of widespread constitutional violations by the States. However, if an abrogation provision in this context were narrowly drawn so that it reached only conduct that was itself independently unconstitutional, it seems to me a very plausible and, I think preferred, reading of the Supreme Court's cases that no record of widespread violations is required.
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To pick an example from a wholly different area, imagine that Congress passed a statute that made it a crime to engage in lynching. Now, lynching doesn't happen very commonly. It would seem to me odd to say Congress lacks that power under section 5 of the 14th amendment because there is no contemporary record of widespread lynching. But I would think, since lynching is itself a core violation of due process, that Congress could prohibit it without that kind of record. But as I indicated in my written testimony, I don't believe that the Supreme Court's opinions are crystal clear on this issue, and in any event, as Professor Lemley suggested, I think that Congress would be well advised, whatever it does, to make as good a record as it can of the extent of infringements and constitutional violations.
Mr. COBLE. Thank you, Professor.
Gentlemen, I thank you for your attendance this morning. I thank you, ladies and gentlemen, and I reiterate my apologies for the schedule over which I have no control. So hold me harmless. But, I think it has been a good hearing. We will revisit this subsequently, I am sure, and the subcommittee very much appreciates your contributions.
Without objection, the written statements of the professors will be made a part of the record.
[The prepared statement of Senator Leahy follows:]
PREPARED STATEMENT OF HON. PATRICK LEAHY, A U.S. SENATOR FROM THE STATE OF VERMONT
Page 121 PREV PAGE TOP OF DOC I want to commend the Chairman and Ranking Member for holding this hearing on state sovereign immunity and its effects on our federal system of intellectual property protection. Given the Supreme Court's decisions last summer in the Florida Prepaid and College Savings Bank cases, this is a timely and important subject, and one that I know is of great concern to the intellectual property community. The Supreme Court held in those cases that states and their institutions cannot be held liable for patent infringement and other violations of the federal intellectual property laws, even though they can and do enjoy the full protection of those laws for themselves.
Intellectual property is the currency of the new global economy. As we go forward in the 21st century, we should not allow that currency to be devalued by abstruse 18th century legal formalities. For that reason, I believe that legislation is imperative to minimize the ill effects of the Supreme Court's attack on our ability to protect our national economic assets.
On October 29, 1999, after months of consultation with the Patent and Trademark Office, the Copyright Office, private industry, and constitutional law scholars, I introduced a bill, S.1835, that would restore federal protection for intellectual property as against the states. Since then, I have continued to work closely with all interested parties to improve and refine this legislation. The draft revision of S.1835 would condition a state's ability to obtain new intellectual property rights on its waiver of sovereign immunity in future intellectual property suits. It would also improve the limited remedies that are available to enforce a non-waiving state's obligations under federal law and the United States Constitution. I hope this subcommittee will consider my proposal as it grapples with the difficult issues raised by the Court's new jurisprudence.
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I regret that the Senate Judiciary Committee has not addressed this important issue or considered S.1835, despite my repeated requests to our Chairman, Senator Hatch. We held a hearing this month on another intellectual property issue, even though that issue is the subject of intense, ongoing litigation, but we have yet to give any attention to year-old Supreme Court decisions that opened a troubling loophole in our federal intellectual property laws. We should delay no further.
Mr. Chairman, innovation and creativity have been the fuel of our national economic boom over the past decade. The United States now leads the world in computing, communications and biotechnologies, and American authors and brand names are recognized across the globe.
Our national prosperity is, first and foremost, a tribute to American ingenuity. But it is also a tribute to the wisdom of our Founding Fathers, who made the promotion of what they called ''Science and the Useful Arts'' a national project, which they constitutionally assigned to Congress. And it is no less of a tribute to the successive Congresses and Administrations of both parties who have striven to provide real incentives and rewards for innovation and creativity by providing strong and even-handed protection to intellectual property rights. Congress passed the first federal patent law in 1790, and the U.S. Government issued its first patent the same yearto Samuel Hopkins of my home State of Vermont. The first federal copyright law was also enacted in 1790, and the first federal trademark laws date back to the 1870s.
The Supreme Court has long recognized that intellectual property rights bear the hallmark of true constitutional property rightsthe right of exclusion against the worldand are therefore protection against appropriation both by individuals and by government. Consistent with this understanding of intellectual property, Congress has long ensured that the rights secured by the federal intellectual property laws were enforceable against the federal government by waiving the government's immunity in suits alleging infringements of those rights.
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No doubt Congress would have legislated similarly with respect to infringements by state entities and bureaucrats had there been any doubt that they were already fully subject to federal intellectual property laws. But there was no doubt. States had long enjoyed the benefits of the intellectual property laws on an equal footing with private parties. By the same token, and in accordance with the fundamental principles of equity on which our intellectual property laws are founded, the states bore the burdens of the intellectual property laws, being liable for infringements just like private parties. States were free to join intellectual property markets as participants, or to hold back from commerce and limit themselves to a narrower governmental role. The intellectual property right of exclusion meant what it said and was enforced even-handedly for public and private entities alike.
This harmonious state of affairs ended in 1985, with the Supreme Court's announcement of the so-called ''clear statement'' rule in Atascadero State Hospital v. Scanlon. The Court in Atascadero held that Congress must express its intention to abrogate the states' eleventh amendment immunity ''in unmistakable language in the statute itself.'' A few years later, in Pennsylvania v. Union Gas Co., the Supreme Court assured us that if the intent to abrogate were expressed clearly enough, it would be honored.
Following Atascadero, some courts held that states and state entities and officials could escape liability for patent, copyright and trademark infringement because the patent, copyright and trademark laws lacked the clear statement of congressional intent that was now necessary to abrogate state sovereign immunity.
Page 124 PREV PAGE TOP OF DOC To close this new loophole in the law, Congress promptly did precisely what the Supreme Court had told us was necessary. In 1990 and 1992, Congress passed three lawsthe Patent and Plant Variety Protection Remedy Clarification Act, the Copyright Remedy Clarification Act, and the Trademark Remedy Clarification Acts. The sole purpose of these Clarification Acts was to make it absolutely, unambiguously, 100 percent clear that Congress intended the patent, copyright and trademark laws to apply to everyone, including the states, and that Congress did not intend the states to be immune from liability for money damages. Each of the three Clarification Acts passed unanimously.
In 1996, however, by a five-to-four-vote, the Supreme Court in Seminole Tribe of Florida v. Florida reversed its earlier decision in Union Gas and held that Congress lacked authority under article I of the Constitution to abrogate the states' eleventh amendment immunity from suit in federal court.
Then, on June 23, 1999, by the same bare majority, the Supreme Court in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank told us that it did not really mean what it said in Atascadero and invalidated the Patent and Plant Variety Protection Remedy Clarification Act. In a companion case decided on the same day, the same five Justices held that the Trademark Remedy Clarification Act also failed to abrogate state sovereign immunity.
The Florida Prepaid and College Savings Bank decisions have been the subject of bipartisan criticism. In a floor statement on July 1, 1999, I highlighted the anti-democratic implications of the approach of the activist majority of the Supreme Court, who have left constitutional text behind, ripped up precedent, and treated Congress with less respect than that due to an administrative agency in their haste to impose their natural law notions of sovereignty as a barrier to democratic regulation. I also noted that ''the Court's decisions will have far-reaching consequences about how . . . intellectual property rights may be protected against even egregious infringements and violations by the States.''
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One of my Republican colleagues on the Judiciary Committee, Senator Specter, expressed similar concerns in a floor statement on August 5, 1999. He noted that the Court decisions ''leave us with an absurd and untenable state of affairs,'' where ''States will enjoy an enormous advantage over their private sector competitors.''
Charles Fried, a professor at Harvard Law School and former Solicitor General during the Reagan Administration, has called the Court's decisions in Florida Prepaid and College Savings Bank ''truly bizarre.'' He observed last June in an opinion editorial in the New York Times:
[The Court's decisions] did not question that states are subject to the patent and trademark laws of the United States. It's just that when a state violates those lawsas when it uses a patented invention without permission and without paying for itthe patent holder cannot sue the state for infringement. So a state hospital can manufacture medicines patented by others and sell or use them, and state schools and universities can pirate textbooks and software, and the victims cannot sue for infringement.
Not surprisingly, alarm has also been expressed in the business community about the potential of the Court's recent decisions to harm intellectual property owners in a wide variety of ways. A commentary in Business Week on August 2, 1999, gave these examples:
''Watch out if you publish software that someone at a state university wants to copy for free . . . Watch out if you own a patent on a medical procedure that some doctor in a state medical school wants to use. Watch out if you've invested heavily in a great trademark, like Nike's Swoosh, and a bureaucrat decides his state program would be wildly promoted if it used the same mark.''
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I believe that these concerns are very real. As Congress realized when it waived federal sovereign immunity in this area, it would be naive to imagine that reliance on the commercial decency of the government and its myriad agencies and officials would provide the security needed to promote investment in research and development and to facilitate negotiation in the exclusive licensing arrangements that are often necessary to bring valuable products and creations to market. Indeed, the good intentions of government may be beside the point, if businesses are unwilling to enter into agreements because one side cannot be bound by the law.
In recent months, intellectual property scholars and practitioners across the country have come together to explore ways for Congress to restore protection for federal intellectual property rights as against the states. The Patent and Trademark Office hosted a particularly enlightening conference in March, in cooperation with the American Intellectual Property Law Association and the Intellectual Property Section of the American Bar Association. I commend the PTO for taking the initiative on this important issue, and I look forward to receiving its final report and recommendations.
In the meantime, I hope we can all agree on the need for congressional action on this issue. We need to assure American inventors and investors, and our foreign trading partners, that as state involvement in intellectual property becomes ever greater in the new information economy, U.S. intellectual property rights are backed by guaranteed legal remedies.
This is important as a matter of economics: Our national economy depends on real and effective intellectual property rights. It is also important as a matter of justice: In conceding that the states are constitutionally bound to respect federal intellectual property rights but invalidating the remedies Congress has created to enforce those rights, the Court has jeopardized one of the basic principles that distinguishes our Constitution from the Constitution of the old Soviet Unionthe principle that where there is a right, there must also be a remedy. And it is also important as a matter of foreign relations: American trading interests have been well served by our strong and consistent advocacy of effective intellectual property protections in treaty negotiations and other international fora, and those efforts could be jeopardized by the loophole in U.S. intellectual property enforcement the Supreme Court has created.
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Like most of the constitutional experts who have examined the issue, I have no doubt that several constitutional mechanisms remain open to Congress to restore substantial protection for patents, copyrights and trademarks. The Supreme Court's hyper-technical constitutional interpretations require us to jump through some technical hoops of our own, but that the exercise is now not merely worthwhile, but essential to safeguard both U.S. prosperity and the continued authority of Congress.
My bill, the Intellectual Property Protection Restoration Act (''IPPRA''), is based on a simple premisethat there is no inherent, ''natural law'' entitlement to federal intellectual property rights. In discussing the policies underlying the intellectual property laws, the Supreme Court has emphasized that intellectual property is not a right but a privilege, and that it is conditioned by a public purpose. For example, the Court wrote in Mercoid Corp. v. Mid-Continent Invest Co., a 1944 case, that ''[t]he grant of a patent is the grant of a special privilege 'to promote the Progress of Science and useful Arts,' '' and that ''[i]t is the public interest which is dominant in the patent system.'' Similarly, in discussing the copyright laws in Fogerty v. Fantasy, Inc, the Court underscored that ''the monopoly privileges that Congress has authorized, while intended to motivate the creative activity of authors and inventors by the provision of a special reward, are limited in nature and must ultimately serve the public good.''
The Constitution empowers but does not require Congress to make intellectual property rights available, and Congress should do so on in a manner that encourages and protects innovation in the public and private sector alike.
Page 128 PREV PAGE TOP OF DOC States and their institutions, especially state universities, benefit hugely from the federal intellectual property laws. All 50 states own or have obtained patentssome hold many hundreds of patents. States also hold other intellectual property rights secured by federal law, and the trend is toward increased participation by the states in commerce involving intellectual property rights.
Principles of state sovereignty tell us that states are entitled to a free and informed choice of whether or not to participate in the federal intellectual property schemes, subject only to their constitutional obligations. Equity and common sense tell us that one who chooses to enjoy the benefits of a lawwhether it be a federal research grant or the multimillion-dollar benefits of federal intellectual property protectionsshould also bear its burdens. Sound economics and traditional notions of federalism tell us that it is appropriate for the federal government to assist and encourage the sovereign states in their sponsorship of whatever innovation and creation they freely choose to sponsor by giving them intellectual property protection and, on occasion, funding, so long as the states hold up their end of the bargain by honoring the exclusive rights of other intellectual property owners.
The IPPRA builds on these principles. In order to promote cooperative federalism in the intellectual property arena, it provides a simple mechanism for states to affirm their willingness to participate in our national intellectual property project and so ''opt in'' as full and equal participants.
Under the draft revision of the bill, a state would opt in to the federal intellectual property system when it applies for protection under a federal intellectual property law, by affirmatively waiving its sovereign immunity from any subsequent suit against the state arising under such a law. A state may withdraw its waiver of immunity at any time, by ensuring that any intellectual property it obtained by virtue of the waiver is dedicated to the public. In other words, the state's sovereignty is respected by giving it the choice either to take the benefit and the burden of the federal intellectual property laws, or to take neither. What the IPPRA would prevent states from doing, however, is having their cake and eating it, i.e., demanding federal protection for their intellectual property while reserving the right to infringe the intellectual property of others.
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This scheme is plainly authorized by the letter of the Constitution. Article I empowers Congress to ''promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.'' Incident to this power, Congress may attach conditions on the receipt of exclusive intellectual property rights. Indeed, we have always attached certain conditions, such as the requirement of public disclosure of an invention at the Patent and Trademark Office in order to obtain a patent.
My proposal is also consistent with the spirit of federalism, as interpreted by the Supreme Court, because it gives the states a free, informed and meaningful choice to waive or not to waive immunity at any time. The condition imposed on receipt of federal benefits by the IPPRAsubmitting to suit under laws that are already binding on the statesis not onerous, nor does it co-opt any state resources to the service of federal policy. It simply levels the intellectual property playing field.
Congress may attach conditions on states' receipt of federal intellectual property protection under its Article I intellectual property power just as Congress may attach conditions on states' receipt of federal funds under its Article I spending power. Either way, the power to attach conditions to the federal benefit is an integral part of the greater power to deny the benefit altogether. Either way, states have a choiceto forgo the federal benefit and exercise their sovereign power however they wish subject to the Constitution, or to take the benefit and exercise their sovereign power in the manner requested by Congress.
A federal appeals court applied similar reasoning last month in MCI Telecommunications Corp. v. Public Service Commission of Utah. Noting that Congress was under no obligation to allow states to participate in the regulatory scheme established by the 1996 Telecommunications Act, the Tenth Circuit concluded that we had validly conditioned a state commission's decision to exercise regulatory authority under the Act on its waiving sovereign immunity.
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This seems like plain common sense to me. It would be a truly bizarre reading of the Constitution to say that it is up to Congress whether or not to let states participate in telecom regulation or in the intellectual property regime, but that if we choose to let them participate, we cannot hold them accountable for their actions.
Given the choice between opting in to the intellectual property laws and forgoing intellectual property protection under the federal laws, most states are likely to choose to former. The benefits secured by those laws far outweigh the burdens. Most states already respect intellectual property rights and will seldom find themselves in infringement suits. To deny the states the choice that the IPPRA offers them would amount to penalizing states that play by the federal intellectual property rules for the free-riding violations of the minority of states that refuse to commit to do so. As is normally the case in a federal system, cooperation between the states and the federal government is likely to be beneficial to all concerned.
However, some states and some state entities and officials have infringed patents and violated other intellectual property rights in the past, and the massive growth of both intellectual property and state participation in intellectual property that we are seeing in the new economy give ample cause for concern that such violations will continue. Now that the Supreme Court has seemingly given states and state entities carte blanche to violate intellectual property rights free from any adverse financial consequences so long as they stand on their newly augmented sovereign immunity, the prospect of states violating federal law and then asserting immunity is too serious to ignore.
The IPPRA therefore also provides for the limited set of remedies that the Supreme Court's new jurisprudence leaves available to Congress to enforce a non-waiving state's obligations under federal law and the United States Constitution. The key point here is that, while the Court struck down our prior effort to enforce the intellectual property laws themselves by authorizing actions for damages against the states, it nonetheless acknowledged Congress' power to authorize actions for injunctions and actions to enforce constitutional rights related to intellectual property.
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First, for the avoidance of doubt, the IPPRA ensures the full availability of prospective equitable relief to prevent states from violating or exceeding their rights under federal intellectual property laws. As the Supreme Court expressly acknowledged in its Seminole Tribe decision in 1996, such relief is available, notwithstanding any assertion of state sovereign immunity, under what is generally known as the doctrine of Ex parte Young.
Second, to address the harm done to the rights of intellectual property owners before they can secure an injunction, the IPPRA also provides a damages remedy against non-consenting states, to the full extent of Congress' power to enforce the constitutional rights of intellectual property owners. Under the Supreme Court's recent decisions, this remedy is necessarily limited to the redress of constitutional violations, not violations of the federal intellectual property laws themselves. However, as I have already noted, the Supreme Court has reaffirmed on many occasions that the intellectual property owner's right of exclusion is a property right fully protected from governmental violation under the Fifth Amendment's Takings Clause and under the Fourteenth Amendment's Due Process Clause.
The constitutional remedy provided by the IPPRA closely resembles the remedy that Congress provided decades ago for deprivations of federal rights by persons acting under color of state law. The bill does not expand the property rights secured by the federal intellectual property lawsthese laws are already binding on the statesnor does the bill interfere with any governmental authority to regulate businesses that own such rights. It simply restores the ability of private persons to enforce such rights against the states.
Page 132 PREV PAGE TOP OF DOC I view this bill as an exercise in cooperative federalism. Clear, certain and uniform national rules protecting federal intellectual property rights benefit everyone: Consumers, businesses, the federal government and the states. The IPPRA preserves states' rights, and gives the states a free choice. At the same time, it ensures effective protection for individual constitutional rights, closing the loophole created by recent Supreme Court decisions of federal rights unsupported by effective remedies. We unanimously passed more sweeping legislation in the early 1990s, but were thwarted by Supreme Court technicalities. The IPPRA is designed to restore the benefits we sought to provide intellectual property owners while meeting the Supreme Court's technical requirements.
There are, to be sure, other approaches that Congress could take to address the problems created by the Court's decisions. The subcommittee will be hearing about some other possible approaches from the distinguished experts who will be testifying today. I urge you to consider all the alternatives carefully. In consultation with experts in intellectual property law and constitutional law, I reviewed several alternatives before settling on the IPPRA's approach. In the end, I concluded that the approach that I have outlined in this statement is the best way to achieve a solution that meets any constitutional concerns, fosters state-federal cooperation, and encourages American innovation and creativity by providing certain and effective intellectual property protection. I look forward to hearing your reactions and working with you to achieve these goals.
Mr. COBLE. This concludes the oversight hearing on State sovereign immunity and protection of intellectual property. The record will remain open for 1 week. Thank you all again, and the subcommittee stands adjourned.
Page 133 PREV PAGE TOP OF DOC [Whereupon, at 11:14 a.m., the subcommittee was adjourned.]
(Footnote 1 return)
The Fifth Circuit has already considered the issue of immunity from copyright infringement suits in Chavez v. Arte Publico Press and Rodriguez v. Texas Commission on the Arts. In Chavez, a copyright owner sued the University of Houston Press for copyright and trademark violations. After a Fifth Circuit panel initially concluded that the University of Houston had impliedly waived its sovereign immunity, Chavez v. Arte Publico Press, 59 F.3d 539, 548 (5th Cir. 1995), the University of Houston petitioned for certiorari. The Supreme Court remanded the case for reconsideration in light of its decision in Seminole Tribe. See University of Houston v. Chavez, 517 U.S. 1184 (1996). On remand, the Circuit panel majority concluded that Congress could not condition a state's activities that are regulable by Federal law upon their ''implied consent'' to be sued in Federal court, 157 F.3d 282, 287 (5th Cir. 1998), and that Congress could not use the Fourteenth Amendment to enforce the copyright and trademark laws, 157 F.3d at 287, 290. The Florida Prepaid decisions prompted the Circuit to return the case once again to the original panel for further consideration. The United states withdrew its intervention in Chavez in light of the Attorney General's conclusion that the constitutionality of the statutory abrogation could no longer be defended. Earlier this year, that court decided that the University of Houston enjoyed sovereign immunity against suit in Federal court for copyright violations. Chavez v. Arte Publico press, No. 932881, 2000 U.S. App. LEXIS 2490 (5th Cir. Feb. 18, 2000)
(Footnote 2 return)
See e.g. Marci A. Hamilton and David Schoenbrod, The Reaffirmation of Proportionality Analysis Under Section 5 of the Fourteenth Amendment, 21 Cardozo L. Rev. 469, 472 (1999); Daniel J. Meltzer, State Sovereign Immunity: Five Authors in Search of a Theory, 75 Notre Dame L. Rev. 1011 (2000) (hereinafter Meltzer, Five Authors); Peter S. Menell, Economic Implications of State Sovereign Immunity from Infringement of Federal Intellectual Property Rights, 33 Loyola of Los Angeles L. Rev. XX (forthcoming 2000); Eugene Volokh, Sovereign Immunity and Intellectual Property, 73 So. Cal. L. Rev. XX (forthcoming September 2000); Ernest A Young, State Sovereign Immunity and the Future of Federalism, 1999 Sup Ct. Rev. 1.
(Footnote 3 return)
Including the American Society of Composers, Authors, and Publishers [ASCAP]; Broadcast Music, Inc. [BMI]; the Business Software Alliance [BSA]; International Business Machines, Inc. [IBM]; The McGraw-Hill Companies; the Motion Picture Association of America [MPAA]; the National Music Publishers' Association; the Recording Industry Association of America [RIAA]; Reed Elsevier, Inc.; Software and Information Industry Association [SIAA]; the West Group; and Time-Warner, Inc.
(Footnote 4 return)
These numbers are from Office for Patent and Trademark Information, U.S. Patent and Trademark Office, Technology Assessment and Forecast Report: U.S. Colleges and UniversitiesUtility Patent Grants 19691997 (September 1998) and Technology Assessment and Forecast Report: U.S. Colleges and UniversitiesUtility Patent Grants 19691998 (September 1999).
(Footnote 5 return)
Gardner, supra note XX at 102.
(Footnote 6 return)
World Trade Organization Trade Policy Review, document WT/TPR/56/Add,1, 9 March 2000. The United States formally responded to this query by stating, ''As you know, this is a recent decision by our Supreme Court. Therefore, we are still analyzing it fully. However, we believe that adequate remedies, as required by the TRIPS Agreement, are available in the United States.''
(Footnote 7 return)
''The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.'' U.S. Const., amend. XI.
(Footnote 8 return)
College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 119 S. Ct. 2219 (1999); Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, 119 S. Ct. 2199 (1999); Alden v. Maine, 119 S. Ct. 2240 (1999).
(Footnote 9 return)
Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962).
(Footnote 10 return)
377 U.S. 184 (1964).
(Footnote 11 return)
Id. at 196.
(Footnote 12 return)
17 U.S.C. §501(a).
(Footnote 13 return)
473 U.S. 234 (1985).
(Footnote 14 return)
Id. at 242.
(Footnote 15 return)
Id. at 246.
(Footnote 16 return)
491 U.S. 1 (1989).
(Footnote 17 return)
Id. at 1920.
(Footnote 18 return)
Pub. L. No. 101553.
(Footnote 19 return)
17 U.S.C. §511.
(Footnote 20 return)
15 U.S.C. §1122, 1125(a)(2).
(Footnote 21 return)
35 U.S.C. §271(h), 296.
(Footnote 22 return)
517 U.S. 44 (1996).
(Footnote 23 return)
Id. at 55 (quoting Green v. Mansour, 474 U.S. 64, 68 (1985)).
(Footnote 24 return)
Id. at 59 citing Fitzpatrick v. Bitzer, 427 U.S. 445, 455 (1976); Pennsylvania v. Union Gas, 491 U.S. 1, 1920 (1989).
(Footnote 25 return)
Seminole Tribe, 517 U.S. at 72.
(Footnote 26 return)
Id. at 77 (Stevens, J., dissenting).
(Footnote 27 return)
521 U.S. 507 (1997).
(Footnote 28 return)
Id. at 519.
(Footnote 29 return)
Id. at 520.
(Footnote 30 return)
119 S. Ct. 2240 (1999).
(Footnote 31 return)
Id. at 224647.
(Footnote 32 return)
Id. at 2254.
(Footnote 33 return)
Id. at 2256 (emphasis added).
(Footnote 34 return)
Id. at 2247 (quoting Prinz v. United States, 521 U.S. 898, 91920 (1997)(quoting The Federalist No. 15 at 109)).
(Footnote 35 return)
Id. at 225859 (''[T]he Constitution did not reflect an agreement between the States to respect the sovereign immunity of one another. . . .'').
(Footnote 36 return)
Id. at 2267.
(Footnote 37 return)
(Footnote 38 return)
(Footnote 39 return)
Id. at 2266.
(Footnote 40 return)
119 S. Ct. 2219 (1999).
(Footnote 41 return)
Id. at 2222.
(Footnote 42 return)
Id. at 2223.
(Footnote 43 return)
U.S. Const., amend. XIV.
(Footnote 44 return)
College Savings, 119 S. Ct. at 222425.
(Footnote 45 return)
Id. at 2224.
(Footnote 46 return)
Id. at 222425.
(Footnote 47 return)
Id. at 2226.
(Footnote 48 return)
Id. at 2228.
(Footnote 49 return)
Id. at 2231.
(Footnote 50 return)
(Footnote 51 return)
119 S. Ct. 2199 (1999).
(Footnote 52 return)
35 U.S.C. §271(h), 296(a).
(Footnote 53 return)
Florida Prepaid, 119 S. Ct. at 2205.
(Footnote 54 return)
Id. at 2206.
(Footnote 55 return)
Id. at 2207.
(Footnote 56 return)
(Footnote 57 return)
Id. at 2208.
(Footnote 58 return)
(Footnote 59 return)
Id. at 2209 (citing Daniels v. Williams, 474 U.S. 327, 328 (1986)).
(Footnote 60 return)
Id. at 2210.
(Footnote 61 return)
Id. at 2215 n.9 (Stevens, J., dissenting).
(Footnote 62 return)
204 F.3d 601 (5th Cir. 2000).
(Footnote 63 return)
Id. at 606.
(Footnote 64 return)
199 F.3d 279 (5th Cir. 2000).
(Footnote 65 return)
209 U.S. 123 (1908).
(Footnote 66 return)
Monographs are individual works such as a book, poem, or song. Not included in the survey were serial registrations such as magazines. Based on a brief investigation into the number of serials registered by certain state universities, the Copyright Office has reason to believe that such registrations may approach or even equal the number of monograph registrations that were found.
(Footnote 67 return)
This assumes that States will generally not waive their immunity in federal courts without some incentive. Of course, where a State has waived its immunity from suits to enforce intellectual property rights in federal courts, no remedy is needed.
(Footnote 68 return)
Similar concerns underlie the exclusive federal jurisdiction for patent infringement cases.
(Footnote 69 return)
483 U.S. 203 (1987).
(Footnote 70 return)
The same is most likely true with respect to patents and trademarks.
(Footnote 71 return)
In Seminole Tribe, the Court held that the plaintiff could not use Ex parte Young to enforce the federal statute at issue. The statute contained detailed remedial provisions and the Court found that permitting the plaintiff to proceed under Ex parte Young would, in effect, create a judicial remedy that Congress did not intend. Although this does not appear directly applicable in the copyright context (the Copyright Act authorizes injunctions against infringers), it could signal that the Court will take a more restrictive view of Ex parte Young in future cases.
(Footnote 72 return)
Vermont Agency of Nat. Resources v. Ex Rel. Stevens, 120 S. Ct. 1858, 1870 (2000).
(Footnote 73 return)
108 U.S. 76 (1883).
(Footnote 74 return)
263 U.S. 365 (1923).
(Footnote 75 return)
405 U.S. 251 (1972).
(Footnote 76 return)
Id. at 258 n. 12 (citations omitted).
(Footnote 77 return)
Story Professor of Law, Harvard Law School. I am grateful to Joshua Berman, Gil Seinfeld, Rebecca Gelfond, and Ann Lipton, 2000 graduates of the Harvard Law School, for their extremely helpful research that contributed to the preparation of this testimony. I am also grateful to those individuals, and to David Shapiro, for helpful comments.
(Footnote 78 return)
119 S. Ct. 2199 (1999).
(Footnote 79 return)
As to copyrights, see 17 U.S.C. §501(a), 511 (added by Pub. L. No. 101553 (Nov. 15, 1990)); as to trademarks, see 15 U.S.C. §1122 (added by Pub. L. No. 102542, §3(b) (Oct. 27, 1992)).
(Footnote 80 return)
See, e.g., Rodriguez v. Texas Comm'n on the Arts, 199 F.3d 279, 28081 (5th Cir. 2000) (copyright).
(Footnote 81 return)
If infringement continues in violation of the injunction, it appears that the plaintiff may then be able to obtain compensation from the state itselfin the form of a compensatory contempt awardfor harm suffered after the injunction was issued. See Hutto v. Finney, 437 U.S. 678, 69093 (1978). Hutto specifically upheld an award against the state, although the initial injunction was issued against state officials. See note 53, infra. At least in cases in which multiple orders have not secured compliance, courts have issued monetary contempt awards to be paid by the state, relying upon Hutto. See, e.g., Alexander v. Hill, 707 F.2d 780 (4th Cir. 1983); Fortin v. Commissioner of Massachusetts Dep't of Pub. Welfare, 692 F.2d 790 (1st Cir. 1982). A number of decisions have involved awards against a state that, after having been subjected to an automatic stay by a bankruptcy court, nonetheless persists, in violation of the stay, in its efforts to collect from the debtor. See, e.g., In re Colon, 114 B.R. 890, 89800 (Bankr. E.D. Pa. 1990); In re Ellis, 66 B.R. 821, 822 n. 4 (Bankr. N.D. Ill. 1986); but see In re Gustafson, 934 F.2d 216, 218 (9th Cir. 1991) (without citing Hutto, holding that the Eleventh Amendment bars an award of attorney's fees against the state).
(Footnote 82 return)
For a decision upholding the personal liability of a state official for damages for copyright infringement, see Richard Anderson Photography v. Brown, 852 F.2d 114, 122 (4th Cir. 1998).
(Footnote 83 return)
The point is not entirely certain. Federal law immunity doctrines have been defined primarily in connection with constitutional tort actions against state or federal officials and additionally, in the case of suits under state tort law, in actions against federal officials. See generally Richard H. Fallon, Jr., Daniel J. Meltzer & David L. Shapiro, Hart & Wechsler's The Federal Courts and the Federal System 116476 (4th ed. 1996) (hereafter ''Hart & Wechsler''). In suits under federal statutory regimes regulating intellectual property rights, the argument against recognizing immunity is that the statutes establish a single remedial scheme, equally applicable to individual defendants who work for public and private organizations, and that if individuals who work for a private corporation possess no such immunity, neither should public officials. The argument for recognizing immunity is that all of the policy arguments that justify recognition of immunity for public officials sued in constitutional tort actions apply equally in what are essentially statutory tort actions under the intellectual property laws.
(Footnote 84 return)
See Daniel J. Meltzer, State Sovereign Immunity: Five Authors in Search of a Theory, 75 Notre Dame L. Rev. 1011, 101821 (2000). For discussions viewing indemnification as somewhat more promising, see John C. Jeffries, Jr., In Praise of the Eleventh Amendment and Section 1983, 84 Va. L. Rev. 47, 5051 (1998); Carlos Manuel Vázquez, Eleventh Amendment Schizophrenia, 75 Notre Dame L. Rev. 859, 87986 (2000).
(Footnote 85 return)
See Meltzer, supra note 7, at 1017. For a more elaborate discussion, reaching a similar conclusion, see Peter Menell, Economic Implications of State Sovereign Immunity from Infringement of Federal Intellectual Property Rights, (forthcoming in Loyola L.A. L. Rev.).
(Footnote 86 return)
See Menell, supra note 8.
(Footnote 87 return)
In stressing the useful potential of governmental liability in such settings, one should not overlook the objection to governmental damage liability that Professor Jeffries has voiced in the context of §1983 actions. He would restrict such liability to situations in which state actors are at fault, which he would determine by applying a test analogous to existing qualified immunity doctrine in §1983 actions. See Jeffries, supra note 7, at 5054. It is not clear whether Jeffries would extend his analysis to violations of statutory duties like those under the federal intellectual property laws. However, his analysis is policy-driven; he does not suggest that the Constitution demands his preferred regime. See id. at 51.
(Footnote 88 return)
Pub. L. No. 102560, 106 Stat. 4230 (1992), codified at 35 U.S.C. §271(h), 296 (1994).
(Footnote 89 return)
Seminole Tribe of Florida v. Florida, 517 U.S. 44, 5773 (1996).
(Footnote 90 return)
See id. at 6566; Fitzpatrick v. Bitzer, 427 U.S. 445 (1976). To exercise that power effectively, Congress must manifest with adequate clarity its intention to abrogate immunity, see Seminole Tribe, 517 U.S. at 5556. There was no doubt that the Patent Remedy Act had been drafted with the requisite clarity. See Florida Prepaid, 119 S. Ct. at 2205.
(Footnote 91 return)
521 U.S. 507 (1997); see id. at 51629.
(Footnote 92 return)
474 U.S. 327, 328 (1986).
(Footnote 93 return)
See Florida Prepaid, 119 S. Ct. at 2209 (citing 5 D. Chisum, Patents §16.02(2), at 1631 (rev. ed. 1998) (''It is, of course, elementary that an infringement may be entirely inadvertent and unintentional and without knowledge of the patent.'')).
(Footnote 94 return)
451 U.S. 527 (1981).
(Footnote 95 return)
494 U.S. 113 (1990).
(Footnote 96 return)
See, e.g., Meltzer, supra note 7, at 105962.
(Footnote 97 return)
The Court has suggested that a state law post-deprivation remedy against state officials rather than the state can be adequate. See Hudson v. Palmer, 468 U.S. 517, 520 n. 1 (1984).
(Footnote 98 return)
An effort to draft a narrow statute that purports to remedy possible violations of the Just Compensation Clause, rather than of the Due Process Clause, would encounter similar problems. First, it appears to be well accepted under the Just Compensation Clause that government action that is ultra vires is not a taking. See generally Matthew D. Zinn, Note,
(Footnote 99 return)
The federal courts of appeals appear to treat recklessness or deliberate indifference no differently from intentionthat is, as establishing that the official caused a deprivation within the meaning of the Due Process Clause. See, e.g., Wood v. Ostrander, 879 F.2d 583, 587 (9th Cir. 1989); Torres Ramirez v. Bermudez Garcia, 898 F.2d 224, 227 (1st Cir. 1990); Bass v. Jackson, 790 F.2d 260, 26263 (2d Cir. 1986).
(Footnote 100 return)
Moreover, the holding in Daniels was part of a broader effort by the Court to avoid turning routine state law torts into federal violations whenever the tortfeasor happens to be a state official and thus the official's action might be viewed as depriving the victim of liberty or property without due process of law. That concern, whatever its weight on the facts of Daniels, has far less force in the intellectual property area, in which federal law has long been the primary, and sometimes even the exclusive, source of legal rights and duties.
(Footnote 101 return)
The Supreme Court has ruled that due process requires a state to provide a refund remedy for taxes paid under a law that is unconstitutional, even when the constitutional rule that invalidates the tax is novelat least where that rule had previously been applied to the parties in the case in which it was announced. See, e.g., Harper v. Virginia Dep't of Taxation, 509 U.S. 86 (1993). In this way, the Court has ''cast doubt on the permissibility of denying relief, as a matter of remedial discretion, for violation of a 'novel' constitutional rule,'' Hart & Wechsler, supra note 6, at 853, while struggling to distinguish qualified immunity cases, which appear to call for just that sort of denial, see Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 753 (1995).
(Footnote 102 return)
See, e.g., Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989).
(Footnote 103 return)
See 28 U.S.C. §1338(a) (1994).
(Footnote 104 return)
For a helpful start on that question, see Menell, supra note 8.
(Footnote 105 return)
E.g., Parratt v. Taylor, 451 U.S. 527, 54344 (1981); Loftin v. Thomas, 681 F.2d 364, 365 (5th Cir. 1982).
(Footnote 106 return)
See Williams v. St. Louis County, 812 F.2d 1079, 1082 (8th Cir. 1987).
(Footnote 107 return)
See Parratt v. Taylor, 451 U.S. at 54344.
(Footnote 108 return)
See, e.g., Weimer v. Amen, 870 F.2d 1400, 1405 (8th Cir. 1989).
(Footnote 109 return)
See, e.g., Irshad v. Span, 543 F. Supp. 922, 92829 (E.D. Va. 1982); Richard H. Fallon, Jr., Some Confusions About Due Process, Judicial Review, and Constitutional Remedies, 93 Colum. L. Rev. 309, 356 (1993).
(Footnote 110 return)
See, e.g., Rittenhouse v. Dekalb County, 764 F.2d 1451, 1459 (11th Cir. 1985); Groves v. Cox, 559 F. Supp. 772, 77576 (E.D. Va. 1983).
(Footnote 111 return)
See, e.g., Roy v. City of Augusta, 712 F.2d 1517, 1523 n. 6 (1st Cir. 1983).
(Footnote 112 return)
See 28 U.S.C §1338(a) (1994).
(Footnote 113 return)
See 28 U.S.C. §1295(a)(1) (1994).
(Footnote 114 return)
One could imagine an effort to route appeals from the highest courts of each state to the Court of Appeals for the Federal Circuit. See Menell, supra note 8. Although the issue has never been authoritatively resolved, there is authority for the proposition that Congress may give an inferior federal court appellate jurisdiction over the decision of the highest court of a stateat least where the United States Supreme Court may thereafter review the decision of the inferior federal court. See generally James E. Pfander, An Intermediate Solution to State Sovereign Immunity: Federal Appellate Court Review of State Courts Judgments after Seminole Tribe, 46 U.C.L.A. L. Rev. 161, 21322 (1998); Preble Stolz, Federal Question Review of State Court Decisions of Federal Court Decisions: The Need for Additional Appellate Capacity, 64 Calif. L. Rev. 943, 94548 (1976).
(Footnote 115 return)
See Kimel v. Florida Board of Regents, 120 S. Ct. 631 (2000); City of Boerne v. Flores, 521 U.S. 507 (1997); Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 119 S. Ct. 2199 (1999).
(Footnote 116 return)
Florida Prepaid, 119 S. Ct. at 2206 (quoting City of Boerne, 521 U.S. at 51920).
(Footnote 117 return)
See id. at 220607.
(Footnote 118 return)
120 S. Ct. 631 (2000).
(Footnote 119 return)
Id. at 64849 (citing Florida Prepaid, 119 S. Ct. at 220711, and City of Boerne, 521 U.S. at 53031).
(Footnote 120 return)
See generally Peter H. Schuck, Suing Government (1981).
(Footnote 121 return)
See Fallon & Meltzer, supra note 24, at 1823; Jeffries, supra note 7, at 6266. Indeed, Kramer and Sykes have argued that if one makes certain heroic assumptions, individual and entity liability are indistinguishable. See Kramer & Sykes, supra note 10, at 272.
(Footnote 122 return)
See Will v. Michigan Dep't of State Police, 491 U.S. 58 (1989).
(Footnote 123 return)
For an argument that views the two regimes as being closer to parity than I would, but that acknowledges the limitations of simpler assertions of parity as well as many of the pertinent uncertainties, see Jeffries, supra note 7, at 4950, 6266. See also Carlos Manuel Vázquez, What Is Eleventh Amendment Immunity?, 106 Yale L.J. 1683, 1775 (1997).
(Footnote 124 return)
See note 6, supra.
(Footnote 125 return)
Professor Vázquez has argued that the Supreme Court may be moving in the direction of constitutionalizing official immunity. See Vázquez, supra note 7, at 90008. Were that so, Congress could not, of course, abolish it, but I remain to be convinced by his prediction.
(Footnote 126 return)
See, e.g., Jeffries, supra note 7, at 5051.
(Footnote 127 return)
See generally Meltzer, supra note 7, at 101920.
(Footnote 128 return)
See Daniel J. Meltzer, The Seminole Decision and State Sovereign Immunity, 1996 Sup. Ct. Rev. 1, 5051.
(Footnote 129 return)
In private law, indemnity, as distinguished from insurance, typically requires that the indemnitee have suffered some harmas by paying or suffering execution of an adverse judgmentbefore the indemnitor's obligation matures. If the traditional approach were followed in governmental liability situations, it would mean, for example, that a plaintiff who secures a $1,000,000 judgment against an official defendant whose net worth was $25,000 could not simply collect the $1,000,000 directly from the state that employs the official.
(Footnote 130 return)
See Meltzer, supra note 51, at 48.
(Footnote 131 return)
See United States v. Mississippi, 380 U.S. 128, 140 (1965).
(Footnote 132 return)
See United States v. Raines, 362 U.S. 17, 27 (1960) (holding that Congress may authorize the United States to sue to enforce constitutional provisions); see also United States v. California, 297 U.S. 175, 180 (1936) (discussing the United States' authority to sue a state, under the Federal Safety Appliance Act, to collect a civil penalty).
(Footnote 133 return)
See 29 U.S.C. §201ff (1994).
(Footnote 134 return)
See 29 U.S.C. §216(c); see also, e.g., Reich v. Waldbaum, 52 F.3d 35, 36 (2d Cir. 1995); Mitchell v. Riley, 296 F.2d 614, 616 (5th Cir. 1961).
(Footnote 135 return)
483 U.S. 203 (1987).
(Footnote 136 return)
See id. at 206.
(Footnote 137 return)
See New York v. United States, 505 U.S. 144 (1992).
(Footnote 138 return)
See 483 U.S. at 207 (citing Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1, 17 & n. 13 (1981)).
(Footnote 139 return)
See Dole, 483 U.S. at 207 (citations omitted).
(Footnote 140 return)
See 483 U.S. at 207 (citing Halderman, 451 U.S. at 17).
(Footnote 141 return)
See 483 U.S. at 208 (citations omitted).
(Footnote 142 return)
See id. at 211.
(Footnote 143 return)
(Footnote 144 return)
See id. at 20708; see also New York v. United States, 505 U.S. 144, 167 (1992) (citing Dole, 483 U.S. at 20708 & n. 3).
(Footnote 145 return)
119 S. Ct. 2219 (1999).
(Footnote 146 return)
The second decision was Petty v. Tennessee-Missouri Bridge Commission, 359 U.S. 275 (1959), which the Court in College Savings Bank described as holding ''that a bi-state commission which had been created pursuant to an interstate compact (and which we assumed partook of state sovereign immunity) had consented to suit by reason of a suability provision attached to the congressional approval of the compact.'' College Savings Bank, 119 S. Ct. at 2231. The Court added:
(Footnote 147 return)
301 U.S. 548 (1937).
(Footnote 148 return)
See, e.g., Kathleen M. Sullivan, Unconstitutional Conditions, 102 Harv. L. Rev. 1413, 142856 (1989).
(Footnote 149 return)
I say ''standing'' in view of the decision in Bradley v. Arkansas Department of Education, 189 F.3d 745 (8th Cir. 1999), vacated in part and rehearing en banc granted in part sub nom. Jim C. v. Arkansas Dept. of Educ., 197 F.3d 958 (8th Cir. 1999). There, a panel of the Eighth Circuit held that §504 of the Rehabilitation Act, which mandates that a state that receives any federal funding must waive its Eleventh Amendment immunity to all claims arising under §504 in any and all state programs, is so broad as to be coercive. See id. That decision was vacated by the Eighth Circuit en banc, which is rehearing that part of the panel's decision, and at least one circuit has expressed its disagreement with the panel, see Stanley v. Litscher, No. 993764, 2000 WL 626739, *3 (7th Cir. May 16, 2000).
(Footnote 150 return)
See Meltzer, supra note 51, at 54 n. 249.
(Footnote 151 return)
South Dakota v. Dole, 483 U.S. 203, 20708 (1987) (quoting Massachusetts v. United States, 435 U.S. 444, 461 (1978) (plurality opinion).
(Footnote 152 return)
See, e.g., Thomas R. McCoy & Barry Friedman, Conditional Spending: Federalism's Trojan Horse, 1988 Sup. Ct. Rev. 85, 123; see also New York v. United States, 505 U.S. 144, 167 (1992) (quoting Dole, 483 U.S. at 20708 & n. 3) (stating in dictum that a condition must ''bear some relationship to the purpose of the federal spending'').
(Footnote 153 return)
See McCoy & Friedman, supra note 75, at 123; Sullivan, supra note 71, at 143637.
(Footnote 154 return)
A rare decision striking down a federal enactment on this ground is United States v. McCormack, 31 F. Supp. 2d. 176 (D. Mass. 1998), which held unconstitutional an effort to bring a federal prosecution against a defendant charged with having bribed a local police officer. The police department had received federal funds, but the bribery pertained to the investigation of state crimes not related to the integrity of federal funding or to the programs that funding was designed to support. In holding the criminal provision unconstitutional as applied, the district court did refer to Dole's relatedness requirement, finding that it was not satisfied. Id. at 18789.
(Footnote 155 return)
After the Supreme Court held, in Grove City College v Bell, 465 U.S. 555 (1984), that only the particular college program that benefited from federal funds was required to comply with federal conditions prohibiting discrimination, Congress overrode the decision. See Civil Rights Restoration Act of 1987, Pub. L. No. 100259, 102 Stat. 28 (providing a ''program or activity'' that receives federal fundsand that thus is subject to the accompanying anti-discrimination conditionsis defined to include ''a department, agency, special purpose district, or other instrumentality of a State,'' or ''the entity of such State . . . that distributes such [federal funding].''
(Footnote 156 return)
Both §504 of the Rehabilitation Act of 1973, 29 U.S.C. §794, and Title VI of the Civil Rights Act of 1964, 42 U.S.C. §2000d, contain global prohibitions on discrimination (§504 on the basis of disability, and Title VI on the basis of race, color or national origin) under ''any program or activity receiving federal financial assistance.'' On the scope of those prohibitions, see note 78, supra.
(Footnote 157 return)
An additional complication is that as to some intellectual property rightsnotably copyrightsfederal grants may have displaced pre-existing common law rights. See, e.g., Edward C. Walterscheid, To Promote the Progress of Science and Useful Arts: The Background and Origins of the Intellectual Property Clause of the United States Constitution, 2 J. Intell. Prop. L. 1, 1023 (1994). However, I would not think that a government that traditionally had recognized a particular form of property right is required to maintain that legal regime in perpetuity.
(Footnote 158 return)
See, e.g., Sullivan, supra note 71, at 141617; Cass R. Sunstein, Why the Unconstitutional Conditions Doctrine is an Anachronism (with Particular Reference to Religion, Speech, and Abortion), 70 B.U. L. Rev. 593, 594 (1990).
(Footnote 159 return)
In other contexts, the Court has drawn a constitutional distinction between federal grantsthat is, gratuities under the spending powerand gratuities under other clauses. Thus, for example, in determining whether a taxpayer has standing to challenge federal action as a violation of the Establishment Clause, the Supreme Court distinguished federal grants under Article I's Spending Clausewhich taxpayers have standing to challengefrom federal transfers, under Article IV, §3's Property Clause, of valuable property for no consideration, which taxpayers lack standing to challenge. See Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 47980 (1982) (distinguishing Flast v. Cohen, 392 U.S. 83 (1968)). This dubious distinction demonstrates that the Court is prepared to draw such distinctions when it wishes. (By the same token, the congressional power to approve interstate compacts, see note 69, supra, clearly could be viewed as somewhat sui generis.)
(Footnote 160 return)
329 U.S. 565 (1947).
(Footnote 161 return)
Id. at 473.
(Footnote 162 return)
See id. at 57374.
(Footnote 163 return)
Schlossberg v. Maryland (In re Creative Goldsmiths), 119 F.3d 1140, 1148 (4th Cir. 1997).
(Footnote 164 return)
See Hart & Wechsler, supra note 6, at 1098 n. 3.
(Footnote 165 return)
College Savings Bank, 119 S. Ct. at 2231 (quoting Welch v. Texas Dep't of Highways & Pub. Transp., 483 U.S. 468, 477 (1987)).
(Footnote 166 return)
See id. at 2228 n. 3 (''[Gardner], which held that a bankruptcy court can entertain a trustee's objections to a claim filed by a State, stands for the unremarkable proposition that a State waives its sovereign immunity by voluntarily invoking the jurisdiction of the federal courts.'').
(Footnote 167 return)
A less coercive, though less effective, alternative, would be to try to put any non-waiving state, as a holder of intellectual property rights, in the same position as private parties suing states. On this view, the states would be authorized, at least with regard to new intellectual property rights, only to sue natural persons to prevent ongoing violations or for damages, but could not sue organizations for damages on a respondeat superior theory.
(Footnote 168 return)
The Supreme Court appears not to have addressed that issue directly. In Condon v. Reno, 155 F.3d 453 (4th Cir. 1998), rev'd, 120 S. Ct. 666 (2000), the Fourth Circuit read prior Supreme Court decisions as supporting the conclusion that congressional legislation under Article I that regulates the states is valid only if it also regulates private partiesand proceeded to invalidate the Driver's Privacy Protection Act in part because, in the court of appeals' view, that Act regulated only the states. See id. at 46163. Before the Supreme Court, the question whether Congress' authority under Article I to regulate the states extends only to laws that also apply to private parties was much debated. In reversing the Fourth Circuit, however, the Supreme Court did not resolve the question, finding instead that the statute applied to private parties as well as to the states. See Reno v. Condon, 120 S. Ct. 666, 66970 (2000).
(Footnote 169 return)
See, e.g., Vicki C. Jackson, Principle and Compromise in Constitutional Adjudication: The Eleventh Amendment and State Sovereign Immunity, 75 Notre Dame L. Rev. 953, 95859 n. 22 (2000); Meltzer supra note 7, at 104748.
(Footnote 170 return)
See 28 U.S.C. §1498 (1994 & Supp. 1997).
(Footnote 171 return)
It may be that in a small number of states waiver can be effected only through constitutional amendment. Compare, e.g., Beasley v. Alabama State University, 3 F. Supp. 2d 1304, 132225 (M.D. Ala. 1998) (holding that although ordinarily under the state constitution neither the Alabama state legislature nor state officials have power to waive immunity from suit, the acceptance of federal funds on the condition that the state waive immunity is a valid waiver governed by federal law) with, e.g., University of W. Va. Board of Trustees v. Graf, 516 S.E.2d 741, 744 (W. Va. 1998) (per curiam) (holding, though not in the context of a state's acceptance of a conditional federal grant, that under the state constitution the legislature lacks power to waive state sovereign immunity).
(Footnote 172 return)
323 U.S. 459 (1945).
(Footnote 173 return)
Id. at 467.
(Footnote 174 return)
See id. at 46769.
(Footnote 175 return)
See, e.g., Sandoval v. Hagan, 197 F.3d 484, 500 (11th Cir. 1999); Bradley v. Arkansas Dep't of Educ., 189 F.3d 745, 753 (8th Cir. 1999), vacated and rehearing en banc granted sub nom. Jim C. v. Arkansas Dep't of Educ., 197 F.3d 958; Litman v. George Mason Univ., 186 F.3d 544, 55355 (4th Cir. 1999); Clark v. California, 123 F.3d 1267, 1271 (9th Cir. 1997).
(Footnote 176 return)
A number of decisions inquire about the state Attorney General's authority and, finding it lacking, rule that no waiver of immunity occurred. See, e.g., Estate of Porter v. Illinois, 36 F.3d 684, 691 (7th Cir. 1994); Silver v. Baggiano, 804 F.2d 1211, 121415 (11th Cir. 1986); Gwinn Area Community Schools v. Michigan, 741 F.2d 840, 84647 (6th Cir. 1984). Other decisions make the same inquiry but have found authority to waive immunity to exist. See, e.g., Sutton v. Utah State School for the Deaf and Blind, 173 F.3d 1226, 123436 (10th Cir. 1999); Newfield House, Inc. v. Massachusetts Dep't of Pub. Welfare, 651 F.2d 32, 36 n.3 (1st Cir. 1981).
(Footnote 177 return)
I do not think the state legislation model more troublesome because that which it requiresthe enactment of legislationis more intrusive. First, as already noted, South Dakota v. Dole upheld conditional spending where the condition imposed required states to pass legislation in order to obtain federal funding. And while New York v. United States did invalidate a statute that presented the state with two alternativescommandeering or taking titleboth of which the Supreme Court deemed to be unconstitutional, the New York decision specifically distinguished Dole. The New York Court said that its holding ''is not to say that Congress lacks the ability to encourage a State to regulate in a particular way, or that Congress may not hold out incentives to the States as a method of influencing a State's policy choices. Our cases have identified a variety of methods, short of outright coercion, by which Congress may urge a State to adopt a legislative program consistent with federal interests.'' 505 U.S. 144, 166 (1992). The New York Court added that ''[w]here the recipient of federal funds is a State, as is not unusual today, the conditions attached to the funds by Congress may influence a State's legislative choices.'' See id. at 167 (citing Dole as an example). Similarly, last Term, in Reno v. Condon, 120 S. Ct 666 (2000), the Court unanimously reaffirmed the statement in South Carolina v. Baker, 485 U.S. 505 (1988), that the fact ''[t]hat a State wishing to engage in certain activity must take administrative and sometimes legislative action to comply with federal standards regulating that activity is a commonplace that presents no constitutional defect.'' 120 S. Ct. at 672 (quoting Baker, 485 U.S. at 506).
(Footnote 178 return)
Significantly, the Supreme Court is not averse to making the suability under federal law of state or local governmental entities depend upon the distribution of governmental authority under state law. See, e.g., City of St. Louis v. Praprotnik, 485 U.S. 112, 12425 (1988) (holding that whether a municipal official's decision provides the basis for establishing municipal liability under 42 U.S.C. §1983 depends upon whether state law gives him policymaking authority); McMillian v. Monroe County, Alabama, 520 U.S. 781, 78693 (1997) (in a federal action under §1983, the question whether the actions of a county sheriff should be attributed to the county (thus permitting suit) or the state (in which case suit would be unavailable) depends on state law).
(Footnote 179 return)
Indeed, if the waiver demanded is very broadfor example, by providing that one state official, by applying for a new IP right, waives the state's immunity from liability under all schemes of IP regulationthe Supreme Court might be particularly hesitant to uphold a waiver of immunity without ensuring that the official was duly authorized. For there may be disagreements among departments of a state government on the question whether securing new IP rights is more valuable than preserving immunity from suit for violating the rights of others, and the Court might well think it preferable that such disagreements be resolved in the state legislature.