[00:00:21] Speaker 05:
The next argued case is number 191424, GenCetics Incorporated against Baylor College of Medicine.

[00:00:35] Speaker 05:
Mr. Skibon, when you're ready.

[00:00:41] Speaker 00:
Thank you, Your Honors, and may it please the Court.

[00:00:45] Speaker 00:
Gensetics contends that this court should reverse the district court either under Rule 19A, because the Board of Regents of UT can be made an involuntary plaintiff under the rule of independent wireless, or barring that, that under Rule 19B, in equity and good conscience, the case should have been permitted to proceed in the absence of UT.

[00:01:11] Speaker 04:
Is it your claim under 19A that sovereign immunity

[00:01:15] Speaker 04:
doesn't extend to bringing somebody in as an involuntary plaintiff?

[00:01:26] Speaker 00:
Well, the authority starts with the Regents of the University of California v. Lilly, which is a Federal Circuit case.

[00:01:36] Speaker 00:
And in there, this court held that the question raised by the case was whether it was a suit that has been brought against UC.

[00:01:46] Speaker 00:
And the court said they were aided by the Supreme Court's guidance in the United States v. Peters

[00:01:53] Speaker 00:
and noted that the 11th Amendment simply provides that no suit shall be commenced or prosecuted against a state.

[00:02:01] Speaker 04:
The state cannot.

[00:02:08] Speaker 00:
In Lilly, the state was the one who initiated an action in a different jurisdiction.

[00:02:14] Speaker 00:
And the issue then was whether, and then UC said that claimed sovereign immunity from the different venue.

[00:02:24] Speaker 00:
But importantly, in the Regents case, Regents did not find waiver.

[00:02:32] Speaker 00:
Period.

[00:02:32] Speaker 00:
Full stop.

[00:02:33] Speaker 00:
Regents found, based on the Supreme Court's United States v. Peters decision, that a state cannot be made a defendant to a suit by an individual, but it remains the duty of the courts of the United States to decide all cases brought before them by citizens of one state against citizens of a different state, where a state is not necessarily a defendant.

[00:02:55] Speaker 00:
And explicitly, in Regents

[00:02:58] Speaker 00:
at 1564 to 1565 specifically held that it was not finding that UC had waived sovereign immunity.

[00:03:08] Speaker 00:
Quote, we need not determine whether UC waived its immunity only in California, because this case does not create an 11th Amendment jurisdictional issue

[00:03:18] Speaker 00:
concerning which the question of waiver even arises.

[00:03:21] Speaker 04:
But in none of those cases, though, were we talking about someone being involuntarily, a state being involuntarily brought into an action, either as a plaintiff or a defendant, right?

[00:03:34] Speaker 00:
Regence was, as we've discussed, the state acted initially.

[00:03:38] Speaker 04:
And the New Court case wasn't talking about being involuntarily brought into an action as a plaintiff.

[00:03:44] Speaker 00:
The independent wireless was, but it wasn't a sovereign.

[00:03:47] Speaker 04:
But that's not a sovereign.

[00:03:48] Speaker 00:
Correct.

[00:03:49] Speaker 04:
However... We gotcha on independent wireless.

[00:03:51] Speaker 04:
We agree with you that a patent holder normally gets brought in.

[00:03:56] Speaker 04:
But we're talking about where sovereign immunity comes into play.

[00:04:00] Speaker 00:
And it was either Lone Star or I think it was actually Regents that held... There is no case

[00:04:13] Speaker 00:
that anyone has cited that says that a state cannot be made an involuntary point of to a lawsuit.

[00:04:20] Speaker 00:
And we cited a case from every circuit that said the 11th Amendment only applies to suits commenced or does not apply to suits commenced or prosecuted by a state.

[00:04:35] Speaker 03:
Why, given the obvious principle behind sovereign immunity, does it matter whether a particular party

[00:04:42] Speaker 03:
has the label plaintiff or defendant, as opposed to the substantive point, did that party come in voluntarily or not?

[00:04:51] Speaker 00:
Well, in the cases, in all of the cases that have said it applies, sovereign immunity applies to a state as a defendant, but not to a state as a plaintiff, start with the text of the 11th Amendment to the Constitution, that specifically only- Sovereign immunity law, we've known for 200 and many years,

[00:05:11] Speaker 03:
is not limited by the text of the 11th Amendment.

[00:05:14] Speaker 00:
It starts with the text of the 11th Amendment.

[00:05:17] Speaker 00:
And no case has started with the text of the 11th Amendment and concluded sovereign immunity applies to an involuntary point.

[00:05:25] Speaker 03:
The point is not to subject sovereigns unwillingly to the judgment of a court.

[00:05:34] Speaker 00:
That's correct.

[00:05:36] Speaker 03:
So why does it matter whether you put a P or a D in front of their party's data?

[00:05:41] Speaker 00:
Our argument is that it is not only the status of involuntary plaintiff versus defendant, but like all Rule 19 issues, it's based on the specific facts of the case presented here.

[00:05:53] Speaker 00:
And what we argue is the reason that regents is analogous and when UT distinguished regents, in their brief, they said, well, that is distinguishable because UC had originally agreed to file a case.

[00:06:10] Speaker 00:
Originally did file a case.

[00:06:14] Speaker 00:
But the cases that say a suit brought against a state or by a state, the difference is that UT contracted with GenCedics

[00:06:25] Speaker 00:
And by contract, required gentsetics to sue infringers within a given amount of time on paying a breach of contract and losing the exclusive license they had paid for.

[00:06:36] Speaker 00:
So while it's different than regents, it is also similar in that here we do not have a state that is being dragged into court by a federal court and it had no say so.

[00:06:49] Speaker 00:
UT entered into the exclusive license agreement, agreed to cooperate, required GenCedics to file infringement lawsuits on pain of breach of contract, and lose the ELA.

[00:07:00] Speaker 04:
In a factual... Well, those things might be all pertinent to 19B, but with respect to the sovereign immunity, didn't the agreement expressly state that there was no waiver of sovereign immunity?

[00:07:10] Speaker 00:
It did.

[00:07:10] Speaker 00:
The agreement said, the ELA said, we are not waiving sovereign immunity.

[00:07:15] Speaker 00:
And I won't belabor the point.

[00:07:17] Speaker 00:
We are not arguing waiver.

[00:07:19] Speaker 00:
We didn't argue waiver below.

[00:07:20] Speaker 00:
We're not arguing waiver here.

[00:07:21] Speaker 00:
We are arguing that there is no case that prevents a sovereign from being named as an involuntary plaintiff, particularly where that state has contracted and, on pain of another party's breach, required that entity to file a federal lawsuit for patent infringement.

[00:07:41] Speaker 00:
And then when it came time to cooperate, as they had also contractually agreed to do, they decided to stay out.

[00:07:48] Speaker 00:
They did not take a position below about whether all substantial rights had been conveyed.

[00:07:54] Speaker 00:
But they said they did not want to be joined as an involuntary plaintiff.

[00:07:58] Speaker 00:
But there's no authority for that.

[00:08:02] Speaker 00:
Nothing about making UT an involuntary plaintiff in this case, given the agreement, which is not waiver, but it is an agreement which

[00:08:10] Speaker 00:
that in the context, the exclusive license agreement means UT will not expend resources from the state treasury if they're named an involuntary plaintiff.

[00:08:20] Speaker 00:
UT is not on the hook for money damages or any of the things of the principles that sovereign immunity implicates for the state.

[00:08:31] Speaker 00:
None of them are prejudiced by adding them as an involuntary plaintiff in this case, based on their agreement with Gen 6.

[00:08:39] Speaker 03:
I mean, so wouldn't it be bound by a judgment, for example, of invalidity?

[00:08:44] Speaker 00:
Yes.

[00:08:45] Speaker 03:
And it would be presumably, well, that might be enough, but also bound by any other judgment rendered, including perhaps a judgment against the three defendants that it might very much prefer not to have them saddled with.

[00:09:07] Speaker 00:
Such as what?

[00:09:08] Speaker 03:
Monetary judgment, you, Dr. Decker, are liable for a million dollars.

[00:09:12] Speaker 03:
And UT thinks, I don't want that.

[00:09:14] Speaker 03:
I've got a side deal with Dr. Decker for all kinds of other interesting stuff that outweighs my interest in having him liable on this patent.

[00:09:23] Speaker 00:
Well, that's not what they contracted to agree.

[00:09:28] Speaker 00:
They contracted with GenCetics, required GenCetics to sue all infringers within six months.

[00:09:34] Speaker 03:
But retained the right.

[00:09:37] Speaker 03:
not to cooperate.

[00:09:40] Speaker 03:
I'm sorry, not to voluntarily be in the suit.

[00:09:45] Speaker 00:
Well, part of what this appeals about is whether they voluntarily retain that right or not, or whether because of the involuntary plaintiff procedure that does not require them to become a defendant, and that they cannot be prejudiced by because they agreed to do it,

[00:10:04] Speaker 00:
those sovereign immunity cases do not control.

[00:10:07] Speaker 00:
All of the cases say that if the state is a plaintiff, sovereign immunity, that issue, there might be other reasons that you shouldn't join, but sovereign immunity is not one of them.

[00:10:21] Speaker 00:
And I think it's notable that even in the regents' case, where it would have been very easy to find a waiver,

[00:10:30] Speaker 00:
that this court went out of its way to say, we are not finding waiver.

[00:10:36] Speaker 00:
Instead, we are finding that sovereign immunity is not implicated because the state is not a defendant, and this is not a suit against the state.

[00:10:48] Speaker 03:
Can you turn your attention to the 19B question?

[00:10:50] Speaker 03:
Yes, Your Honor.

[00:10:52] Speaker 03:
Why doesn't Pimentel put so strong a thumb on the scales, or, yes, I'll put it that way, as to require us to say that it was not an abuse of discretion for the judge here to say, I'm not going to proceed without you, even at the risk that Gencetics doesn't get to bring this infringement suit anywhere?

[00:11:21] Speaker 00:
Well, I think Pimentel is distinguishable on a number of bases.

[00:11:26] Speaker 00:
The most important.

[00:11:26] Speaker 03:
It's obviously factually distinguishable.

[00:11:28] Speaker 03:
Why doesn't its articulation of the extremely great weight to be given to the sovereign interest, again, even if the plaintiff loses the ability to, has no alternative forum,

[00:11:45] Speaker 00:
Because the sovereign interest that was articulated in Pimentel as being incredibly strong was not state sovereign immunity first.

[00:11:52] Speaker 03:
Foreign sovereign immunity.

[00:11:52] Speaker 00:
It was comedy in international relations.

[00:11:55] Speaker 03:
Foreign sovereign immunity.

[00:11:55] Speaker 03:
Foreign sovereign immunity.

[00:11:57] Speaker 03:
And the court talked almost interchangeably between federal government sovereign immunity, foreign sovereign immunity, and it talked about sovereign immunity more generally.

[00:12:06] Speaker 03:
I'm not sure that isn't, for that purpose, a unitary principle.

[00:12:11] Speaker 00:
Well, there's no question they talked about both, but in the end, the holding was even though the and the those parties that were trying to where there were parties trying to interplead.

[00:12:22] Speaker 00:
It wasn't fully an involuntary plaintiff situation.

[00:12:25] Speaker 00:
But to your point, the important point is, the court held 19B didn't affirm the 19B issue because the plaintiff did have an alternative forum.

[00:12:38] Speaker 00:
The alternative forum was in the Philippines.

[00:12:40] Speaker 00:
And because of the international comedy interests and the foreign sovereign immunity interests at play in Pimentel that are not at play in this case,

[00:12:49] Speaker 00:
The Corps basically said, who are we to say that the claimants shouldn't go to the Philippines and seek to recover the money from this fund that was created for these folks?

[00:13:03] Speaker 00:
The claimant is not without a remedy.

[00:13:06] Speaker 00:
It's in the Philippines.

[00:13:07] Speaker 00:
And in fact, the place where the alternative pursuit of this remedy is,

[00:13:12] Speaker 00:
is the better one in line with our deference to the foreign actors who have set up their own procedure for determining how to distribute these funds.

[00:13:23] Speaker 00:
And I'm happy to continue this on Pimentel, Your Honor, but I'm about out of time.

[00:13:27] Speaker 05:
All right.

[00:13:28] Speaker 05:
Let's hear from the other side.

[00:13:33] Speaker 05:
Thank you.

[00:13:34] Speaker 05:
Mr. Hawes.

[00:13:36] Speaker 02:
Thank you, Your Honor.

[00:13:37] Speaker 02:
We're splitting things up a little bit.

[00:13:38] Speaker 02:
We have defendant appellees and a plaintiff appellee.

[00:13:42] Speaker 02:
And I'll be spending 10 minutes for the defendant employees, and then my colleague will spend five minutes.

[00:13:46] Speaker 02:
OK.

[00:13:47] Speaker 02:
It's the involuntary plaintiff employee.

[00:13:49] Speaker 02:
I don't think there's a proper way to put that on the brief, so we left it.

[00:13:52] Speaker 02:
But you're 100% right, Your Honor.

[00:13:55] Speaker 02:
And actually, I'd like to start with one of your questions, which is where you challenge the idea that the sovereign immunity of a state is subject to the label.

[00:14:04] Speaker 02:
If it's not defendants and plaintiffs, what is it?

[00:14:07] Speaker 02:
And I would say that the most persuasive case

[00:14:10] Speaker 02:
for your honor is the Morrow case that we cited in our brief.

[00:14:13] Speaker 02:
And that's the Fifth Circuit case that specifically says that the court, the key issue for sovereign immunity and for the 11th Amendment is that the court does not have the power to adjudicate the state's interest in property without the state's consent.

[00:14:28] Speaker 05:
But you're telling us that if the state enters into a contract, that contract can never be enforced.

[00:14:35] Speaker 02:
Not at all, your honor.

[00:14:36] Speaker 02:
This specific contract includes

[00:14:40] Speaker 02:
a provision that says, notwithstanding anything else in the contract, you do not waive our sovereign immunity.

[00:14:47] Speaker 02:
That doesn't mean that states can't.

[00:14:49] Speaker 05:
So they're saying you can never sue us on this contract because we're not going to waive sovereign immunity even though we have entered into these elaborate commercial relationships.

[00:15:00] Speaker 02:
For this particular contract, it is our position that sovereign immunity protects the University of Texas.

[00:15:05] Speaker 02:
But a licensee doesn't have to agree to that provision.

[00:15:09] Speaker 05:
Why would anyone ever make a deal with the state, or in this case, with a university?

[00:15:15] Speaker 05:
You're just, I don't know, you're not even rolling the dice.

[00:15:20] Speaker 05:
You're just saying, whatever it is, I lose.

[00:15:23] Speaker 02:
Two scenarios, Your Honor.

[00:15:24] Speaker 02:
First of all, you license for all substantial rights.

[00:15:28] Speaker 02:
They do not challenge on appeal that they did not license for all substantial rights.

[00:15:32] Speaker 02:
If they had done so, they could bring this case by themselves, and there would be no issue of sovereign immunity.

[00:15:38] Speaker 02:
That would never even come up.

[00:15:39] Speaker 04:
Well, clearly, when you say they didn't have to agree to that provision, that not waiving sovereign immunity is generally that the state would have that provision because they don't want someone else to sue them, not to refuse to be

[00:15:56] Speaker 04:
the patent holder, if it's necessary, under independent wireless.

[00:16:03] Speaker 04:
Clearly, they don't want to be sued by the alleged infringer in a deck action.

[00:16:08] Speaker 04:
And they could assert their sovereign immunity there.

[00:16:11] Speaker 04:
But the notion that they would not only agree to let synthetics sue, but say they must sue, affirmative contractual obligation to sue, and then say, but we can make it impossible for you

[00:16:26] Speaker 02:
Your Honor, first of all, I'd say there are a number of reasons why a university would want to preserve its sovereign immunity, and that Morrow lays that out, that they don't want to have their property interests being adjudicated by a federal court without their agreement.

[00:16:39] Speaker 02:
To the extent there are those two provisions in the license agreement, I would point out that very carefully what the UT did in the provision, and this is on page of the appendix, page A, 326, was they said nothing in this agreement

[00:16:55] Speaker 02:
shall overcome our sovereign immunity.

[00:16:57] Speaker 02:
So they knew there were other things in the agreement, but they were clear, and ginsetics knew both when it entered into the agreement and when it amended the agreement, that UT, despite any other provision of the agreement, was retaining its sovereign immunity rights.

[00:17:13] Speaker 02:
And to answer your question, Judge Newman,

[00:17:15] Speaker 02:
A licensee doesn't have to agree to that.

[00:17:17] Speaker 02:
That's something they can decide on.

[00:17:19] Speaker 05:
They can sue if money is earned.

[00:17:22] Speaker 05:
They could sue.

[00:17:23] Speaker 05:
They just can't be sued.

[00:17:25] Speaker 05:
And I appreciate that your colleague has chosen not to argue waiver on the theory.

[00:17:30] Speaker 05:
And I think that the case of contract is stronger.

[00:17:35] Speaker 05:
But precedent has crossed that bridge.

[00:17:38] Speaker 05:
in many areas that once you choose as a university, whether to participate in the patent system, to participate in licensing, income generation, royalties, and all the rest of it, you're on the same playing field as anyone else.

[00:17:58] Speaker 05:
And the fact that you happen to be a state university rather than a private university does not override

[00:18:06] Speaker 05:
all of these commercial relationships.

[00:18:09] Speaker 05:
And although I've presented this to you as a question, it seems to me that precedent has crossed this bridge and answered that question.

[00:18:20] Speaker 05:
And the answer is, yes, you have waived the opportunity to not participate in anything involving the courts.

[00:18:32] Speaker 02:
Are there only really two ways UT could have waived?

[00:18:35] Speaker 02:
One would be by how it agreed in a license agreement, and it specifically said, notwithstanding anything else in this agreement, we're not waiving.

[00:18:44] Speaker 05:
We're not.

[00:18:45] Speaker 05:
They kept a right to income.

[00:18:47] Speaker 05:
They kept an interest.

[00:18:49] Speaker 05:
They agreed to hell.

[00:18:50] Speaker 05:
They agreed to participate.

[00:18:52] Speaker 05:
Now that they're being called on it, here you are saying, leave us alone.

[00:18:58] Speaker 02:
Your Honor, let me especially that participation.

[00:19:01] Speaker 02:
I point you to the provision they quote, which is on page A315 of the record.

[00:19:06] Speaker 02:
The one they're relying on says, the parties agree to cooperate fully with each other.

[00:19:12] Speaker 02:
It does not say that UT has to do anything ginsettig says.

[00:19:16] Speaker 02:
It also doesn't say that ginsettig says to do anything UT says.

[00:19:20] Speaker 02:
But it is just as much part of that provision that genocetics would cooperate with UT not wanting to sue researchers as it might be part of that agreement the other way.

[00:19:31] Speaker 04:
Well, you're not going to buy me on that argument.

[00:19:33] Speaker 04:
But a cooperation in the context of an agreement that talks about filing lawsuits and recovery under those lawsuits is a pretty well-known concept.

[00:19:44] Speaker 04:
So I'm not convinced that therefore they had to cooperate with UT not cooperating.

[00:19:50] Speaker 04:
That doesn't make any sense to me.

[00:19:52] Speaker 04:
But assuming that you're right, that they can't waive it, either because they didn't in the agreement, or they haven't waived it by participating in the patent system, though a lot of people think Florida prepaid might not be long for this world.

[00:20:06] Speaker 04:
But putting that aside, assuming that's true, it still is relevant to the 19B inquiry.

[00:20:13] Speaker 04:
So even accepting that Pimentel seems to make that first

[00:20:18] Speaker 04:
19b factor of sovereign immunity, pretty important.

[00:20:21] Speaker 04:
There's a lot of other important things that didn't show up in Pimentel, like no other avenue of relief.

[00:20:28] Speaker 02:
And the district court was very- And this kind of agreement.

[00:20:31] Speaker 02:
Right, the district court was very cognizant of that.

[00:20:33] Speaker 04:
If you look at the district court's opinion- The district court made some fact findings that don't make much sense, do they?

[00:20:38] Speaker 02:
Your Honor, the district court looked at the situation and said, there are some things, very important things, on each side.

[00:20:46] Speaker 02:
It's very important to protect sovereign immunity.

[00:20:48] Speaker 02:
It's very important not to have a patent found invalid where someone who retains substantial rights isn't even present.

[00:20:55] Speaker 02:
But they also looked at the other side.

[00:20:56] Speaker 02:
Judge Haynen also looked at, it's very important for them to have the ability to bring this suit.

[00:21:02] Speaker 02:
So there were two sides to it.

[00:21:04] Speaker 04:
And then the judge- But the judge specifically said that there would be a threat to the defendants of multiple lawsuits.

[00:21:10] Speaker 04:
But yet, under the agreement, the UT can't sue with respect to any of the uses that Genetics has unless and until Genetics fails to do so.

[00:21:22] Speaker 04:
So there is no threat of multiple loss.

[00:21:24] Speaker 02:
Respectful, Your Honor.

[00:21:26] Speaker 02:
They assert that the judge said that.

[00:21:28] Speaker 02:
But if you look at page 21, at the bottom of page 21, the judge was actually just discussing Baylor College of Medicine's argument.

[00:21:37] Speaker 02:
The judge then on page 22 said,

[00:21:40] Speaker 02:
But the court declines to determine that.

[00:21:43] Speaker 04:
Well, the court declined to determine the estoppel argument.

[00:21:48] Speaker 02:
I mean, the court didn't determine either way whose argument was correct about whether there was a risk of multiple lawsuits here.

[00:21:54] Speaker 02:
It's discussed on the bottom of page 21, page 22.

[00:21:58] Speaker 02:
All the court does is say, here's what Baylor College of Medicine argues.

[00:22:01] Speaker 02:
Here's when Jen Senex argues.

[00:22:02] Speaker 02:
I don't need to determine this.

[00:22:05] Speaker 02:
Because I've looked at the other parts of that factor, because factor three is not just about multiple losses.

[00:22:10] Speaker 02:
If you look at rule 19, factor three also includes the fact that whether it's a judgment rendered in the person's absence would be adequate.

[00:22:21] Speaker 02:
And the court determined that, no, it wouldn't be adequate, because you don't have UT involved in arguing as to what this pattern.

[00:22:28] Speaker 04:
I think you're wrong reading 21 and 22.

[00:22:30] Speaker 04:
I mean, the court said that they

[00:22:32] Speaker 04:
They're not going to decide whether there would be judicial estoppel.

[00:22:35] Speaker 04:
But the court specifically found that one of the reasons that factor weighed in favor of finding that they were an indispensable party is because there was a risk of multiple lawsuits.

[00:22:52] Speaker 02:
Respectfully, Your Honor, the first sentence says that a judgment rendered without UT would be inadequate under the third factor.

[00:22:59] Speaker 02:
The second sentence right at the bottom of page 21 says what BCM argues.

[00:23:04] Speaker 02:
The next sentence on 22 says James Settix argues.

[00:23:07] Speaker 04:
I just read the sentences.

[00:23:09] Speaker 04:
I see what you're saying, but he went back and forth between.

[00:23:12] Speaker 04:
He presented what the arguments were, and he said, I don't need to resolve this.

[00:23:16] Speaker 04:
Well, he specifically said what he wasn't resolving.

[00:23:18] Speaker 04:
But beyond that, how do you get around our Max Planck decision?

[00:23:26] Speaker 02:
So Max Planck certainly doesn't address this situation where you've got a party that agreed that sovereign immunity was going to be respected.

[00:23:36] Speaker 02:
That was not the situation in Max Planck, and that was very important to the district court here.

[00:23:40] Speaker 02:
The district court here said, look, you agreed twice that sovereign immunity was going to trump everything else in that license agreement.

[00:23:48] Speaker 02:
The language in the license agreement specifically says that that's sovereign immunity provision.

[00:23:51] Speaker 04:
Well, then it's essentially merging the 19A analysis with the 19B analysis.

[00:23:57] Speaker 04:
There's a variety of other factors that need to be considered.

[00:24:00] Speaker 04:
And then the Max Plankford court went through those factors, one of which is University of Texas interests are completely aligned with genetics in this case.

[00:24:11] Speaker 02:
Well, genetics now argues that.

[00:24:12] Speaker 02:
But genetics might certainly want a broader claim construction.

[00:24:16] Speaker 02:
for example, to try to capture infringement, but makes invalidity more possible.

[00:24:21] Speaker 02:
That's exactly what was to say.

[00:24:23] Speaker 04:
If they create a problem with validity, then they're going to be as harmed as the University of Texas.

[00:24:31] Speaker 02:
But the University of Texas might not even want to take that much of a risk when the University of Texas is not trying, as ginsetics might be trying to do, to read the claims broadly to capture an infringement.

[00:24:43] Speaker 04:
But at Matt's Plank, we specifically said that didn't make a difference.

[00:24:46] Speaker 02:
In Max Planck, we didn't deal with an additional factor, which the district court found here, which was that equitably, and under 19B, you're supposed to focus on the equity, that where someone like Jen Settix has agreed that sovereign immunity trumps the rest of the license agreement.

[00:25:02] Speaker 04:
Right, but that's what I'm saying.

[00:25:03] Speaker 04:
The court then collapses the whole thing into one factor, not four.

[00:25:07] Speaker 02:
No, because if there wasn't that particular provision, the court might not have, even if there was sovereign immunity there, the court might not have said, you agreed to this specifically, which the court did here.

[00:25:18] Speaker 02:
And given that it takes a clear error in weighing the factors for this court under an abuse of discretion standard to reverse, I posit that we haven't seen that here, and it hasn't even really been argued.

[00:25:30] Speaker 02:
But I do want to make sure my colleague gets some time, so unless the panel has additional questions.

[00:25:35] Speaker 05:
OK, no, we'll hear from Mr. Mint.

[00:25:45] Speaker 01:
Your Honor, UT is here urging you to affirm the District Court ruling, basically because we think it comports with the scope of sovereign immunity under the Constitution and the case law.

[00:25:59] Speaker 01:
Namely, that UT would not be subject to a course of Joinder under Rule 19A as an involuntary

[00:26:07] Speaker 01:
and the property of UT would be protected in its absence under Rule 19.

[00:26:12] Speaker 04:
Why doesn't UT want to abide by its contractual obligations to GenCedx?

[00:26:18] Speaker 01:
Well, UT reads this contract differently than GenCedx does.

[00:26:23] Speaker 01:
UT maintains that the provision you've spoken about, nothing in this contract will waive sovereign immunity, is in fact a placeholder that does allow

[00:26:34] Speaker 04:
UT's actions in this case are nullifying the license agreement.

[00:26:39] Speaker 01:
Well, they're nullifying the bringing of a lawsuit at this time.

[00:26:42] Speaker 01:
Remember, sovereign immunity focuses on the decision-making rights of a sovereign state on its own property.

[00:26:50] Speaker 01:
And when they entered the union, they retained their sovereignty.

[00:26:53] Speaker 04:
I don't have any problems with sovereign immunity generally.

[00:26:56] Speaker 04:
What I'm saying is that as a commercial actor, they entered into a license agreement.

[00:27:02] Speaker 04:
If they don't say in the license agreement, GenCedics may only sue if we give them authority to do so.

[00:27:08] Speaker 04:
In fact, it says they must sue.

[00:27:11] Speaker 01:
Right.

[00:27:12] Speaker 01:
The point is that the state of Texas in sovereign immunity limits bringing actions against or involving the state of Texas.

[00:27:20] Speaker 01:
There are state laws that address when you can and cannot sue the state.

[00:27:24] Speaker 04:
Well, then why are they?

[00:27:27] Speaker 04:
an indispensable party.

[00:27:28] Speaker 04:
Why not just proceed without them?

[00:27:29] Speaker 01:
Well, because it's our property, it's University of Texas' property, and they retain the right as a sovereign to control the decision-making over their property.

[00:27:37] Speaker 01:
There are various factors in the prejudice to UT of the case going forward that are listed in the record.

[00:27:43] Speaker 01:
I mean, we've talked about validity, claim construction.

[00:27:47] Speaker 01:
Also, UT was not involved in any kind of

[00:27:50] Speaker 01:
pre-evaluation of the claims in terms of assessing the merits.

[00:27:55] Speaker 01:
And this case involves seven other causes of action, which we're not even involved in.

[00:27:59] Speaker 01:
So UT has certain prerogative as a sovereign under the constitutional framework.

[00:28:04] Speaker 04:
But they certainly have a prerogative not to participate.

[00:28:07] Speaker 04:
Why do they have a prerogative to prevent the action from going forward?

[00:28:11] Speaker 01:
They're going forward under 19B.

[00:28:13] Speaker 01:
Because as a sovereign, they don't want their property adjudicated without their presence.

[00:28:18] Speaker 01:
This is the nature of immunity from suit, whether it's tribal, foreign, US government, or state.

[00:28:25] Speaker 01:
There's a consequence.

[00:28:26] Speaker 01:
And often in sovereign immunity cases, that's the consequence.

[00:28:31] Speaker 01:
If you look at the Ninth Circuit case cited by the defendants, the Ninth Circuit has a number of cases where they basically say the consequence of sovereign immunity is, in fact, that someone will not have a claim in a court.

[00:28:44] Speaker 01:
And so that does happen now.

[00:28:47] Speaker 01:
There's a complicated petition and claims involved here.

[00:28:51] Speaker 01:
And we argued what the prejudice was.

[00:28:56] Speaker 01:
UT maintains that under the constitutional standard in the case of the Supreme Court, they are correct.

[00:29:02] Speaker 01:
The district court was correct in summon substance in ruling on 19A and B.

[00:29:08] Speaker 01:
One thing I do want to point out about the 11th Amendment, and Judge Taranto, you pointed this out, that is that the 11th Amendment is not literal.

[00:29:19] Speaker 01:
And that's one of their primary arguments in their reply brief.

[00:29:22] Speaker 01:
And if you look at the FMC case, which is a popular case these days in the courts, it says the 11th Amendment does not define the scope of the state sovereign immunity, is but one particular exemplification of that immunity.

[00:29:36] Speaker 01:
And that's a very broad statement.

[00:29:38] Speaker 01:
But if you look at the case law we cited about involuntary plaintiffs, and there are not a lot of them, but we cited the Eighth Circuit case, Thomas, and there's also Hartley.

[00:29:49] Speaker 01:
Those cases basically are protecting the state from being forced to make a decision to initiate a legal action before it's ready at a time and place when they don't want to.

[00:29:59] Speaker 01:
And the University of Texas in this particular situation made that determination.

[00:30:04] Speaker 01:
And the pleadings reflect, that's what it said.

[00:30:07] Speaker 01:
Now, I will note, I think the proper way to have originally brought us in was as an involuntary, as a third-party plaintiff, then realign us as an involuntary plaintiff, if we had been someone who actually ended up being in the case.

[00:30:22] Speaker 01:
I think the label of involuntary plaintiff or third-party defendant are interchangeable.

[00:30:26] Speaker 01:
If you look at the Rule 19, how you bring someone in, the court would have realigned us if he held that we were supposed to be there as an involuntary plaintiff.

[00:30:35] Speaker 01:
But I think that's procedurally was the more correct way to do it.

[00:30:40] Speaker 01:
If I could address 19A, I do think it's important that independent wireless did not involve a state sovereign.

[00:30:48] Speaker 01:
There's talk about applying.

[00:30:49] Speaker 01:
They wanted to argue that independent wireless provided the analysis on 19B.

[00:30:54] Speaker 01:
But if you look at the independent wireless case, there's no mention of sovereign immunity.

[00:31:00] Speaker 01:
And they're also, the way the court characterized it, it was almost

[00:31:04] Speaker 01:
If there's a problem for the patent owner, that's too bad.

[00:31:09] Speaker 01:
There wasn't an accommodation like there obviously has to be with sovereign immunity.

[00:31:16] Speaker 01:
So those are my general remarks.

[00:31:17] Speaker 01:
I'm happy to answer any more questions the panel has.

[00:31:21] Speaker 05:
Okay.

[00:31:22] Speaker 05:
Thank you, Mr. Mannes.

[00:31:29] Speaker 00:
Thank you, Your Honor.

[00:31:29] Speaker 00:
I'd like to return to Judge Toronto's question and address it in the context of Rule 19B specifically, because I really think that's where the... Which question was that?

[00:31:38] Speaker 00:
The Pimentel and how it's different.

[00:31:42] Speaker 00:
And it's actually, I think it is more important to the Rule 60B analysis, because that was the analysis, it did the four-factor

[00:31:49] Speaker 00:
discussion in Pimentel.

[00:31:51] Speaker 00:
And so the reason why Pimentel... 19B.

[00:31:58] Speaker 00:
The reason that Pimentel does not kind of tip the balance or so heavily weigh in favor of not an abuse of discretion is because arguably the two most important factors for a Rule 19B analysis come out the other way in Pimentel and in this case.

[00:32:14] Speaker 00:
In Pimentel there was no

[00:32:17] Speaker 00:
There was no other party that was aligned with the interests of the absent sovereign, the Philippines.

[00:32:24] Speaker 00:
And in fact, they were not coming in as an involuntary plaintiff.

[00:32:28] Speaker 00:
They were kept out from interpleading their own claim.

[00:32:33] Speaker 00:
But the point is, not only were their claims not represented by any other party in that case, the other party's claims in that case were antagonistic to the nation of Philippines' claims that were absent.

[00:32:47] Speaker 00:
So on the one hand, the sovereign in the Philippines, their interests were not going to be protected in the suit.

[00:32:56] Speaker 00:
And by contrast, there was an alternative form.

[00:33:02] Speaker 00:
The case could proceed in the Philippines.

[00:33:04] Speaker 00:
And I think this is important.

[00:33:05] Speaker 00:
The Supreme Court basically found that the Philippines noting the comedy interest

[00:33:11] Speaker 00:
in allowing a foreign state to use its own courts for dispute if it has a right to do so, and the U.S.

[00:33:16] Speaker 00:
courts should defer to that forum concerning the issue of how funds recovered from President Marcos should be distributed.

[00:33:24] Speaker 00:
Here, there is no forum like that for gensetics, and the interests of UT are entirely protected and aligned with gensetics interest.

[00:33:35] Speaker 00:
So under the four-factor test of Rule 19B,

[00:33:39] Speaker 00:
Frankly, if anything, Pimentel illustrates how strong the case is here compared to how weak it was in Pimentel, where the sovereign had no one protecting their interests in the action.

[00:33:54] Speaker 00:
And there was an alternative forum for the other party could go to the Philippines to press their claim.

[00:34:04] Speaker 00:
There's no place for gentsetics to go.

[00:34:06] Speaker 00:
and UT's interests are adequately represented.

[00:34:10] Speaker 00:
For that reason, that is why I think, coming back to Judge O'Malley's comment, that the University of Utah case does in many ways control this case.

[00:34:20] Speaker 00:
Although that was an inventorship issue, the issues were the same.

[00:34:24] Speaker 00:
The issue was the inventorship challenge, essentially, that could go forward in the absence of the sovereign,

[00:34:34] Speaker 00:
did not matter under Rule 19B or in the weighing of the factors was found not to predominate because the other parties in the case and the other party that was aligned with the University of Utah

[00:34:48] Speaker 00:
also had every incentive in inventorship not changing and would adequately protect the absent sovereign's interests.

[00:34:55] Speaker 00:
Just like here, there is no finding below, there is no even argument from UT about what interests wouldn't be protected in the litigation with or without UT.

[00:35:07] Speaker 00:
that no argument because the interests are exactly the same.

[00:35:11] Speaker 00:
The claim construction argument about we might want a broader claim construction for infringement in addition to the reason Judge O'Malley identified that, of course, if we're going to invalidate the patent, we're not going to make any money either.

[00:35:23] Speaker 00:
So interests are totally aligned.

[00:35:25] Speaker 00:
That point actually is important for why this case is different than this court's A123 decision, which denied a 19B on a sovereign, because in that case,

[00:35:40] Speaker 00:
The licensee had only a field of use license and this court and the district court below said the interests between the licensee and the patent owner are not entirely aligned because with a field of use licensee may have different incentives about arguing for claim construction.

[00:35:58] Speaker 00:
than the patent owner, who retained some uses outside the field of use.

[00:36:04] Speaker 00:
Here, undisputed fact, Gensetics had a field of use license worldwide every use.

[00:36:11] Speaker 00:
There were no restrictions on the field of use.

[00:36:14] Speaker 00:
And so that is another reason, advanced in the papers and below, for why there is no difference between the interest that Gensetics will be seeking to protect and UT's interest.

[00:36:26] Speaker 00:
100% aligned.

[00:36:27] Speaker 00:
and no other form for gensetics.

[00:36:30] Speaker 00:
Under this court and the U.S.

[00:36:32] Speaker 00:
Supreme Court's law, this is what Rule 19B was designed to address, a situation where in equity and good conscience, it is not fair for gensetics to sit on the sidelines

[00:36:46] Speaker 00:
because UT won't join, when all of the prudential reasons for having the patent owner in the case aren't implicated here by proceeding in their absence.

[00:36:56] Speaker 00:
Their interests are protected.

[00:36:57] Speaker 00:
The defendants can get complete relief.

[00:37:03] Speaker 00:
And there's no alternative forum for genetics.

[00:37:06] Speaker 00:
All four of the factors weigh heavily in favor of allowing this to proceed.

[00:37:11] Speaker 00:
And that's where the contract comes in.

[00:37:15] Speaker 00:
under Rule 19B.

[00:37:17] Speaker 00:
The equities, whether equity in good conscience, to the extent that there's an equitable concern about UT's absence,

[00:37:26] Speaker 00:
you know, tilting in the balance of not letting it go forward, they should not be heard to argue about their prejudice, about prejudice in their absence, given the contract.

[00:37:36] Speaker 00:
And while I understand from the panel that that argument may not be sufficient to take this into what side of the V you are on for whether sovereign immunity is implicated at all, but for Rule 19B, that argument should be dispositive.

[00:37:51] Speaker 05:
Okay.

[00:37:52] Speaker 05:
Thank you.

[00:37:53] Speaker 05:
Thank you all.

[00:37:54] Speaker 05:
The case is taken under submission.