Issue 252 | November 24, 2004
Eleventh Amendment Immunity Waiver Extends Only to Compulsory Counterclaims

Private sector litigants contemplating actions against state Universities (such as those based on, e.g., joint research agreements) should heed the lessons of College Savings Bank, Xechem, and the federal circuit’s recent decision in Univ. of Mexico v. Knight, et al., No. (Fed. Cir. Nov. 9, 2004), in order to determine when and under what circumstances a University has waived its Eleventh Amendment immunity from suit in actions implicating a substantive patent dispute under Title 35.

When suing in federal court, a state University waives its Eleventh Amendment immunity for compulsory counterclaims filed by defendants, including claims for royalties (based on allegations of breach of, e.g., license), as well as claims for breach of the duties of care, good faith and fair dealing. Counterclaims for tortious interference with prospective economic advantage and malicious abuse of process are not compulsory; state universities are therefore immune from suit on such claims even though based on a set of facts giving rise to the case or controversy over which immunity was waived.

The federal circuit in Regents of the Univ. of Mexico (“UNM”) affirmed the district court’s dismissal of counterclaims by two pro se University researchers alleging various claims against UNM for royalties, breach of its duties of care, good faith and fair dealing, tortious interference with prospective economic advantage and malicious abuse of process, based on the university’s alleged entry into a faulty license agreement and filing certain documents with the PTO. The district court held the ‘breach of duty’ counterclaims were compulsory, but nevertheless barred by the statute of limitations under the New Mexico Tort Claims Act. Because the tortious interference and malicious prosecution claims were not compulsory, UNM had not waived its immunity from those claims. The district court allowed Knight’s royalties claim to proceed but later awarded summary judgment to the University on that claim.

Affirming the judgment in its entirety, the federal circuit rejected Knight’s argument that patent-related activities that are commercial in nature were not subject to sovereign immunity. Citing the Supreme Court’s decision in College Savings Bank, the court stated that State sovereign immunity is not less robust where the state engages in conduct that it could choose to abandon, even though profitable, typically performed in the private sector, and which resembles market behavior. Nor did the University’s waiver of immunity under the Eleventh Amendment constitute a waiver of state sovereign immunity under the New Mexico Tort Claims Act. The rest of defendants’ claims were rejected as untimely or procedurally improper.

To view the full decision visit

To discuss these topics further, please feel free to contact the author Michael R. Dzwonczyk, (mdzwonczyk@sughrue.com), at Sughrue Mion, PLLC in Washington DC, USA.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.

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