Sen. Patrick Leahy (D-Vt.) and Sen. Sam Brownback (R-Kans.) on March 19 reintroduced legislation (S. 2031) that would restore to intellectual property owners the right to sue states for infringement damages. Renewal of the proposal comes on the heels of a recent congressional hearing on the IP sovereign immunity "loophole."

Supreme Court 'Activism' Prompts Reform.

The Leahy/Brownback measure is identical to the pending S. 1611, introduced by Leahy last November (63 PTCJ 24, 35, 11/9/01) and its identical House counterpart, H.R. 3204. An aide to Leahy told PTCJ that the bill was reintroduced with a new bill number purely to acknowledge the addition of Sen. Brownback as a co-sponsor.

Like the already pending measures, the new bill would condition a state's own ability to recover damages in intellectual property suits on its waiver of immunity from private suits against it.

Although none of these bills has seen any action in the 107th Congress, Sen. Leahy revived the debate about IP sovereign immunity at a Feb. 27 hearing by the Senate Judiciary Committee (63 PTCJ 368, 3/1/02).

Congress passed legislation in 1990 and 1992 to abrogate state immunity from infringement actions, but the right to sue the states was severely curtailed in 1999 by two Supreme Court decisions. The court reaffirmed Eleventh Amendment immunity for patent cases in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 119 S.Ct. 2199, 51 USPQ2d 1081(1999) (58 PTCJ 226, 6/24/99), and did so for Lanham Act cases in College Savings Bank v. Florida Prepaid Postsecondary Education Board,119 S.Ct. 2219, 51 USPQ2d 1065 (1999) (58 PTCJ 226, 238, 6/24/99). These decisions were held to require a similar holding for copyright infringement suits in Chavez v. Arte Publico Press, 204 F.3d 601, 53 USPQ2d 2009 (5th Cir. 2000) (59 PTCJ 637, 3/10/00).

Leahy said at the Feb. 27 hearing that the Florida Prepaid decisions open up "a huge loophole" in our federal intellectual property laws. "If we truly believe in fairness, we cannot tolerate a situation in which some participants in the intellectual property system get legal protection but need not adhere to the law themselves," he maintained.

Those two rulings, and a series of similar sovereign immunity decisions over the decade, also raise broader concerns about the roles of Congress and the Supreme Court, according to Leahy. "This activist court has been whittling away at the legitimate constitutional authority of the federal government," he charged.

Protection Conditioned on Waiver.

The "Intellectual Property Protection Restoration Act (IPPRA) of 2002" amends the pertinent provisions in the federal patent, copyright, trademark, and plant variety protection statutes to place states on an equal footing with private parties with respect to suits for damages. Thus, under Section 3 of the joint bills, a state would be entitled to no damages for infringement of its own intellectual property rights under those provisions unless, by Jan. 1, 2004, it has waived its 11th Amendment immunity from damages suits against it involving privately owned intellectual property.

"States that choose not to waive their immunity within two years after enactment of the IPPRA would continue to enjoy many of the benefits of the federal intellectual property system," Brownback explained in introductory remarks. "However, like private parties that sue non-waiving states for infringement, nonwaiving states that sue private parties for infringement could not recover any money damages that would otherwise be available under federal law," he added.

Relief Against State Employees.

Section 4 of the legislation also makes clear that, in suits against an officer or employee of a state, remedies under the federal intellectual property statutes "shall be available against the officer or employee in the same manner and to the same extent as such remedies are available in an action against a private individual under like circumstances."

Those remedies "may include monetary damages assessed against the officer or employee, declaratory and injunctive relief, costs, attorney fees, and destruction of the infringing article," according to the bill.

According to a section-by-section summary of the bill, the prospective equitable relief against state officials proposed under the legislation is available under Ex parte Young, 209 U.S. 123 (1908). That case held that an individual may sue a state official for prospective relief even if the state itself is immune from suit.

State Liability for Constitutional Violations.

Section 5 of the legislation, entitled "Liability of States for Constitutional Violations Involving Intellectual Property," establishes the right to compensation for intellectual property violations that rise to the level of constitutional violations, specifically, due process and "takings" violations under the Fifth and 14th Amendments. Compensation for those violations would be based on the statutory remedies available under the appropriate intellectual property statute, but would not include treble damages.

Hearing Testimony, GAO Report

According to Leahy and Brownback, a September 2001 report by the General Accounting Office confirmed that IP owners have few proven alternatives to a suit for damages in federal court for infringement claims against the states (62 PTCJ 553, 10/19/01).

Patent and Trademark Office and Copyright Office chiefs at the Feb. 27 committee hearing agreed with Leahy that legislative action is needed to correct problems caused by the Florida Prepaiddecisions.

Although PTO Director James Rogan was not prepared to endorse a particular bill, he said the current inequity "skews" the system because the penalties in place do not apply to the states. Register of Copyrights Marybeth Peters agreed that congressional response to Florida Prepaid is appropriate.

Most of the private witnesses at the hearing also voiced support for a legislative fix to the Florida Prepaid rulings, citing real world examples of the impact of the Supreme Court's decisions. However, one state official questioned the constitutionality of the legislation.

Influences abroad also warrant legislative action to rectify the imbalance caused by the Florida Prepaid cases, several witnesses contended. The Copyright Office's Peters noted that one country engaged in bilateral negotiations with the United States has already cited the Florida Prepaid decisions as an example of possible non-compliance with intellectual property treaty obligations.

S. 3204, together with Leahy and Brownback's introductory remarks and a section-by-section summary of the bill (Cong. Rec. 3/19/02, p. S2078), appears in the text section.