Gensetix, Inc. v. Baylor College of Medicine

Case: 19-1424 Document: 77 Page: 1 Filed: 07/24/2020
United States Court of Appeals
for the Federal Circuit
______________________
GENSETIX, INC.,
Plaintiff-Appellant
v.
THE BOARD OF REGENTS OF THE UNIVERSITY
OF TEXAS SYSTEM,
Plaintiff-Appellee
v.
BAYLOR COLLEGE OF MEDICINE, DIAKONOS
RESEARCH LTD, WILLIAM K. DECKER,
Defendants-Appellees
______________________
2019-1424
______________________
Appeal from the United States District Court for the
Southern District of Texas in No. 4:17-cv-01025, Judge An-
drew S. Hanen.
______________________
Decided: July 24, 2020
______________________
PAUL SKIERMONT, Skiermont Derby LLP, Dallas, TX,
argued for plaintiff-appellant. Also represented by SARAH
ELIZABETH SPIRES; MIEKE K. MALMBERG, Los Angeles, CA;
CHRISTOPHER MICHAEL HODGE, Oracle Corp., Irving, TX;
IMRON T. ALY, Schiff Hardin, Chicago, IL.
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2 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
PETER E. MIMS, Vinson & Elkins LLP, Houston, TX, ar-
gued for plaintiff-appellee. Also represented by OLIN RAY
HEBERT, III, Austin, TX.
MICHAEL HAWES, Baker Botts, LLP, Houston, TX, ar-
gued for defendants-appellees Baylor College of Medicine,
Diakonos Research Ltd. Defendant-appellee Baylor Col-
lege of Medicine also represented by PAUL R. MORICO.
GORDON ARNOLD, Arnold, Knobloch & Saunders,
L.L.P., Houston, TX, for defendant-appellee Diakonos Re-
search Ltd.
MURRAY JULES FOGLER, Fogler Brar O'Neil and Gray
LLP, Houston, TX, for defendant-appellee William K.
Decker.
______________________
Before NEWMAN, O’MALLEY, and TARANTO, Circuit Judges.
Opinion for the court filed by Circuit Judge O’MALLEY.
Opinion concurring in part and dissenting in part filed by
Circuit Judge NEWMAN.
Opinion concurring in part and dissenting in part filed by
Circuit Judge TARANTO.
O’MALLEY, Circuit Judge.
This case involves the interplay of state sovereign im-
munity under the Eleventh Amendment and required join-
der of parties under Rule 19 of the Federal Rules of Civil
Procedure. Gensetix, Inc. (“Gensetix”) exclusively licensed
U.S. Patent Nos. 8,728,806 and 9,333,248 from the Univer-
sity of Texas (“UT”), an arm of the state of Texas. Gensetix
then sued Baylor College of Medicine, Diakonos Research
Ltd., and William K. Decker (collectively, “Baylor”) for in-
fringement of the patents-in-suit, naming UT as an
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 3
involuntary plaintiff pursuant to Rule 19(a). The District
Court for the Southern District of Texas determined that
the Eleventh Amendment barred joinder of UT as an invol-
untary plaintiff. Gensetix, Inc. v. Baylor Coll. of Med., 354
F. Supp. 3d 759, 766 (S.D. Tex. 2018). The court also con-
cluded that, under Rule 19(b), the suit could not proceed in
UT’s absence. Id. at 773–74. Accordingly, the court dis-
missed the suit. This appeal followed. For the reasons
stated below, we affirm-in-part, reverse-in-part, and re-
mand.
I. BACKGROUND
The patents-in-suit are directed to methods of modify-
ing a patient’s immune system to kill cancer cells. Decker,
the named inventor of the patents-in-suit, developed his in-
vention during his employment at the University of Texas
MD Anderson Cancer Center. Pursuant to the terms of
Decker’s employment agreement, the patents-in-suit were
assigned to UT. 1 In September 2008, UT granted an exclu-
sive license in the patents-in-suit to Alex Mirrow, a third
party not relevant to this suit. In January 2014, Mirrow
assigned his rights in the exclusive license to Gensetix. UT
confirmed Mirrow’s assignment of the exclusive license to
Gensetix in a June 2014 amendment.
The license agreement provides that, Gensetix, at its
own expense, must enforce any patent “covered by the li-
cense and is entitled to retain recovery from such enforce-
ment.” Gensetix, 354 F. Supp. 3d at 769. UT retained a
secondary right to sue if Gensetix fails to file suit against a
substantial infringer within six months of knowledge of
1 According to the complaint, Decker left the Univer-
sity of Texas MD Anderson Cancer Center around 2011 and
joined the faculty at Baylor College of Medicine. J.A. 119.
Neither Decker nor Baylor College of Medicine have li-
censed the patents-in-suit from UT or Gensetix.
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4 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
infringement. Id. The parties agreed to fully cooperate
with each other in any infringement suit. And, the parties
agreed that nothing in the agreement shall be deemed a
waiver by UT of its sovereign immunity. Id. at 772.
In April 2017, Gensetix filed this suit against Baylor,
alleging infringement of the patents-in-suit. Gensetix
noted that, before filing its complaint, it requested that UT
join as a co-plaintiff, but UT declined. Gensetix therefore
named UT as an involuntary plaintiff pursuant to
Rule 19(a). J.A. 115–16. In its complaint, Gensetix alleged
that Decker “continued and continues to use technology
that infringes one or more claims of the [p]atents-in-[s]uit
. . . as part of his work at” Baylor. J.A. 119. Gensetix also
alleged that in 2013 and 2014, Decker published content
while at Baylor that “gives Gensetix reason to believe” that
Decker has practiced methods infringing at least claim 1 of
each of the patents-in-suit. Id. According to the complaint,
in May 2016, Baylor filed two patent applications, naming
Decker as an inventor, which rely on the methods claimed
in the patents-in-suit. J.A. 127.
UT filed a motion to dismiss pursuant to Rule 12(b)(1),
seeking to dismiss itself from the lawsuit. UT argued that
it is a sovereign state entity under Texas law and that, un-
der the Eleventh Amendment, the district court had no
subject matter jurisdiction over UT. 2 It argued that,
2 As the district court noted, the Eleventh Amend-
ment “confers waivable immunity upon sovereign entities
‘rather than a nonwaivable limit on the Federal Judiciary’s
subject-matter jurisdiction.’’’ Gensetix, 354 F. Supp. 3d
at 764 (quoting Idaho v. Coeur d’Alene Tribe of Idaho, 521
U.S. 261, 267 (1997). The court correctly concluded that
the Eleventh Amendment does not necessarily deprive fed-
eral courts of subject matter jurisdiction, rather, the “issue
in this case is whether the Eleventh Amendment prevents
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 5
pursuant to the license agreement, it had not waived its
sovereign immunity, nor did it have the authority to do so
because such authority lies only with the Texas Legisla-
ture.
Baylor argued that: (1) UT is a necessary party be-
cause it owns the patents-in-suit and transferred less than
all substantial patent rights to Gensetix; (2) UT cannot be
joined as an involuntary plaintiff because, as an entity of
the State of Texas, it is entitled to Eleventh Amendment
sovereign immunity; and (3) the Rule 19(b) factors weigh
in favor of dismissing the suit, rather than proceeding in
UT’s absence.
The district court granted UT’s motion to dismiss. It
held that “[t]he purpose of the Eleventh Amendment is to
prevent states from being compelled to litigate.” Gensetix,
354 F. Supp. 3d at 766 (internal quotation marks omitted).
It found that, while “there [were] currently no claims
against UT, requiring joinder would, in effect, force UT to
pursue claims against its will.” Id. Accordingly, the court
held that, because “UT did not waive its immunity, initiate
[the] suit, or agree to participate in [the] litigation,” the
Eleventh Amendment prohibited involuntary joinder. Id.
As to whether the infringement suit could proceed in
UT’s absence, the court held that UT was a “necessary”
party under Rule 19(a) because it retained substantial
rights in the patents-in-suit. 3 Analyzing the applicable
UT from being joined as an involuntary plaintiff in a patent
suit.” Id.
3 Rule 19 no longer uses the term “necessary party;”
the more modern term is “required party.” See Republic of
the Phil. v. Pimentel, 553 U.S. 851, 855–56 (2008). The
Rule also no longer uses the term “indispensable.” Id.
These changes were intended to be stylistic only. See Fed.
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6 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
Rule 19(b) factors, the district court concluded that UT was
an “indispensable” party, and that the suit could not pro-
ceed in its absence. Id. at 773–74. Accordingly, the court
dismissed the case. Gensetix timely appealed. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
II. DISCUSSION
On appeal, Gensetix argues that the district court
(1) erred in holding that sovereign immunity bars coercive
joinder of UT pursuant to Rule 19(a); and (2) abused its
discretion in determining that, under Rule 19(b), the in-
fringement suit should be dismissed rather than proceed in
UT’s absence. 4 We address each argument in turn.
A. Sovereign Immunity Bars Rule 19(a)(2) Joinder
Rule 19(a)(2) requires a court to order a required plain-
tiff “who refuses to join as a plaintiff” to “be made either a
defendant or, in a proper case, an involuntary plaintiff.”
Fed. R. Civ. P. 19(a)(2). The Eleventh Amendment pro-
vides, however, that “[t]he 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.
Although the procedural issue of joinder under Rule 19 is
not unique to patent law, and we thus review its applica-
tion under the law of the regional circuit, to the extent the
district court assessed the interplay between Rule 19 and
the Eleventh Amendment, we review that question using
the law of our circuit. Regents of Univ. of N.M. v. Knight,
321 F.3d 1111, 1124 (Fed. Cir. 2003). We therefore apply
R. Civ. P. 19 advisory committee’s note to 2007 amend-
ment.
4 Gensetix does not challenge the district court’s con-
clusion that, pursuant to the license agreement, UT did not
transfer all substantial rights in the patents to Gensetix.
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 7
our law and review the district court’s decision on Eleventh
Amendment immunity de novo. Id.
On appeal, Gensetix argues that sovereign immunity
does not preclude coercive joinder of a sovereign under
Rule 19(a)(2). In Gensetix’s view, the Eleventh Amend-
ment bars suits brought by private citizens against the
state, which is not the case here. Appellant’s Br. 41–42
(citing Regents of the Univ. of Cal. v. Eli Lilly & Co.,
119 F.3d 1559, 1564 (Fed. Cir. 1997) (“Regents of UC”)).
Gensetix argues that, like Regents of UC, here, there are
no claims or counterclaims against UT, thereby making
sovereign immunity inapplicable. Id. at 43. Gensetix also
contends that both the Supreme Court and our court have
consistently held that a patentee who refuses to voluntarily
join an infringement action initiated by its exclusive licen-
see can nonetheless be joined as an involuntary plaintiff.
Id. at 39–41 (citing, e.g., Indep. Wireless Tel. Co. v. Radio
Corp. of Am., 269 U.S. 459, 473 (1926), and Abbott Labs. v.
Diamedix Corp., 47 F.3d 1128, 1133 (Fed. Cir. 1995)).
UT responds that sovereign immunity protects it from
private party litigation and this protection extends to join-
der under Rule 19(a). According to UT, sovereign immun-
ity “controls over the joinder process of Rule 19.” UT
Br. 14. And, relying on the Supreme Court’s decision in
Pimentel, 553 U.S. at 869, UT argues that, where there is
a “potential for injury to the interests” of the absent sover-
eign, the suit must be dismissed. Id. at 15.
Like UT, Baylor argues that the Eleventh Amendment
forbids the court from ordering UT to subject its property
to federal court adjudication. Baylor Br. 16–17. According
to Baylor, a state’s property rights cannot be limited or de-
feated where the state neither brought a claim nor agreed
to join the suit. And, like UT, Baylor points to the express
language of Section 15.4 of the license agreement as indic-
ative of UT’s refusal to waive sovereign immunity. Id. at
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8 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
18–19. We agree that sovereign immunity is to be applied
more broadly than the face of its text.
Gensetix’s attempt to limit the Eleventh Amendment
to its text—i.e., to cases “against” a state—is contrary to
Supreme Court guidance. “[T]he sovereign immunity re-
flected in (rather than created by) the Eleventh Amend-
ment transcends the narrow text of the Amendment itself.”
Coll. Sav. Bank v. Fla. Prepaid Postsecondary Ed. Expense
Bd., 527 U.S. 666, 687 n.5 (1999). The Supreme Court has
“understood the Eleventh Amendment to stand not so
much for what it says, but for the presupposition . . . which
it confirms.” Seminole Tribe of Fla. v. Fla., 517 U.S. 44, 54
(1996) (quoting Blatchford v. Native Vill. of Noatak, 501
U.S. 775, 779 (1991)). Importantly, the Court has made
clear that “[t]he Eleventh Amendment does not exist solely
in order to prevent federal-court judgments that must be
paid out of a State’s treasury; it also serves to avoid the
indignity of subjecting a State to the coercive process of ju-
dicial tribunals at the instance of private parties.” Semi-
nole Tribe, 517 U.S. at 58 (citations and internal quotation
marks omitted).
Gensetix provides no basis for suggesting that these
principles are inapplicable in cases where the state is
joined as an involuntary plaintiff. Indeed, Gensetix’s reli-
ance on our decision in Regents of UC is misplaced. Regents
of UC involved a suit initiated by the University of Califor-
nia in the Northern District of California. 119 F.3d
at 1559. In opposing transfer to the Southern District of
Indiana, the university asserted that it only waived sover-
eign immunity with respect to California federal courts and
that the Eleventh Amendment barred transfer to a differ-
ent district court. Id. at 1564. The defendant, Eli Lilly,
argued that the Eleventh Amendment is inapplicable
where a state asserts a claim and the suit involves no coun-
terclaims against the state. Id. We agreed with Eli Lilly,
explaining that the Supreme Court has “not construe[d]
the Eleventh Amendment to apply to suits in which a state
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 9
is solely a plaintiff, as UC is here.” Id. We further ex-
plained that:
[T]he Eleventh Amendment applies to suits
“against” a state, not suits by a state. Thus, we
need not determine whether UC waived its immun-
ity only in California, because this case does not
create an Eleventh Amendment jurisdictional is-
sue concerning which the question of waiver even
arises. This case only involves UC’s patent in-
fringement claims and Lilly’s defenses; it does not
involve any claim or counterclaim against UC that
places UC in the position of a defendant. Accord-
ingly, we conclude that the Eleventh Amendment
does not deprive the Indiana district court of juris-
diction in this case.
Id. at 1564–65.
Gensetix erroneously reads Regents of UC to broadly
hold that Eleventh Amendment immunity is inapplicable
in all cases where the state is a plaintiff (even if involun-
tarily) and there are no counterclaims against the state.
But Regents of UC did not create a rule whereby parties
may drag a sovereign into the federal court system against
its will simply because there is no claim “against” the sov-
ereign. Instead, our holding in that case was predicated on
the state voluntarily submitting itself to federal court ju-
risdiction. Indeed, we recently explained that our interpre-
tation of the Eleventh Amendment in Regents of UC was
“guided by” the Supreme Court’s reasoning that:
“[W]here a state voluntarily become[s] a party to a
cause, and submits its rights for judicial determi-
nation, it will be bound thereby, and cannot escape
the result of its own voluntary act by invoking the
prohibitions of the 11th Amendment.” Gunter v.
Atl. Coast Line R.R. Co., 200 U.S. 273, 284 (1906).
Moreover, [i]t would seem anomalous or incon-
sistent for a State both (1) to invoke federal
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10 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
jurisdiction, thereby contending that the “Judicial
power of the United States” extends to the case at
hand, and (2) to claim Eleventh Amendment im-
munity, thereby denying that the “Judicial power
of the United States” extends to the case at hand.
Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535
U.S. 613, 619 (2002).
Regents of the Univ. of Tex. Sys. v. Bos. Sci. Corp., 936
F.3d 1365, 1376–77 (Fed. Cir. 2019) (alterations in origi-
nal).
We conclude that the key distinction between Regents
of UC and the present case—that UT did not voluntarily
invoke federal court jurisdiction—is dispositive. Unlike
the sovereign in Regents of UC, UT did not attempt to avail
itself of federal court jurisdiction, and, in fact, has repeat-
edly made clear that it does not want to participate in this
litigation. 5 It is immaterial that there are no claims
against UT, or that UT is named an involuntary plaintiff
rather than an involuntary defendant. The Eleventh
Amendment serves to prevent “the indignity of subjecting
a State to the coercive process of judicial tribunals” against
its will. Seminole Tribe, 517 U.S. at 58. Accordingly,
Rule 19(a)(2) cannot be used to drag an unwilling UT into
federal court.
5 Gensetix argues that “numerous appellate courts
have confirmed” its reading of Regents of UC. Appellant’s
Br. 43–44 (citing, e.g., California v. Atl. Richfield Co.,
488 F.3d 112 (2d Cir. 2007); Oklahoma ex rel. Edmondson
v. Magnolia Marine Transp. Co., 359 F.3d 1237 (10th Cir.
2004)). But, as UT correctly points out, every case Gensetix
relies on in support of this argument involves litigation in-
itiated by a state as plaintiff, and a subsequent assertion of
sovereign immunity to prevent removal. UT Br. 23–24.
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 11
Gensetix fares no better in its attempt to distinguish
the other cases relied upon by the district court in reaching
the same conclusion. For example, in Thomas v. Bearings
Corp., 50 F.3d 502 (8th Cir. 1995), the Eighth Circuit for-
bade involuntary joinder of a state agency in a lawsuit by
city residents against a company that had allegedly con-
taminated their drinking water. The court held that the
“Eleventh Amendment provides immunity from suit, not
merely immunity from liability . . . . It may be circum-
vented by waiver, abrogation, or a suit against state offi-
cials, but federal courts cannot simply deem a state’s
Eleventh Amendment defense inapplicable.” Id. at 506.
The Eighth Circuit specifically noted that the Eleventh
Amendment precludes involuntary joinder even if it in-
volves later realignment of the state agency as a plaintiff.
Id. at 502, 504 n.5. Gensetix argues that, in Thomas, the
Eighth Circuit was concerned with subjecting the state
agency to premature litigation, “strik[ing] at the very heart
of the Eleventh Amendment by undermining the state’s as-
serted autonomy in decision-making.” Appellant’s Br.
44–45 (citations omitted). In Gensetix’s view, here, joining
UT as an involuntary plaintiff does not undermine the
state’s autonomy. But forcing UT to litigate against its will
does exactly that.
Gensetix also relies on Independent Wireless, 269
U.S. 459 (1926), and Abbott Laboratories, 47 F.3d 1128
(Fed. Cir. 1995), to argue that “equity and justice” require
joinder of UT. See Appellant’s Br. 39–40. In Gensetix’s
view, UT voluntarily granted an exclusive license to Gen-
setix and this license includes “an implied obligation” to the
use of UT’s name. Appellant’s Br. 40 (citing Indep. Wire-
less, 269 U.S. at 469). Although Gensetix acknowledges
that UT did not waive sovereign immunity, it nonetheless
argues that UT willingly entered into the license agree-
ment and must now abide by its terms. We disagree.
When it comes to suits between private parties, Gen-
setix is correct that a patentee who refuses to voluntarily
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12 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
join an infringement action initiated by its exclusive licen-
see can ordinarily be joined as an involuntary plaintiff un-
der Rule 19(a). See, e.g., Indep. Wireless, 269 U.S. 459
(1926); Lone Star Silicon Innovations LLC v. Nanya Tech.
Corp., 925 F.3d 1225, 1237 (Fed. Cir. 2019) (collecting
cases). But we refuse to extend that principle to this case,
which involves coercive joinder of a state sovereign. In-
deed, none of the cases identified by Gensetix examined the
interplay between Rule 19(a) and state sovereign immun-
ity. Accordingly, it is of no moment that the license agree-
ment requires initiation of an infringement suit by
Gensetix or cooperation by UT in any infringement suit.
Although UT willingly entered into the license agreement,
so too, did Gensetix. It agreed to terms expressly stating
that UT was not waiving its sovereign immunity, and
terms that allow UT to initiate a suit on behalf of Gensetix,
but not the other way around. As we explain above, in the
absence of a state voluntarily availing itself of federal court
jurisdiction, or an express waiver of sovereign immunity,
Rule 19(a) must yield to the state’s assertion of sovereign
immunity.
In sum, neither Supreme Court case law, nor the deci-
sions of this circuit or our sister circuits, support Gensetix’s
arguments that, absent waiver, a sovereign may be joined
as an involuntary plaintiff under Rule 19(a). Accordingly,
we affirm the district court’s conclusion that UT may not
be joined as an involuntary plaintiff. 6
6 While I may not speak for our splintered majority
on this point, I have some sympathy for Judge Newman’s
views. Unfortunately, absent abrogation of Florida Pre-
paid Postsecondary Education Expense Board v. College
Savings Bank, 527 U.S. 627 (1999), which I suspect would
be welcome by many, I remain of the view that involuntary
joinder of UT as a plaintiff to this action is impermissible.
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 13
B. The District Court Abused Its Discretion
In Concluding That This Case Must Be
Dismissed In UT’s Absence
We next consider whether the district court properly
concluded that this case cannot proceed in UT’s absence. A
district court’s analysis under Rule 19(b) is a matter of re-
gional circuit law. Univ. of Utah v. Max-Planck-Gesell-
schaft zur Forderung der Wissenschaften E.V., 734 F.3d
1315, 1320 (Fed. Cir. 2013). The Fifth Circuit reviews a
district court’s decision to dismiss a suit pursuant to the
Rule 19(b) inquiry for abuse of discretion. Hood v. City of
Memphis, 570 F.3d 625, 628 (5th Cir. 2009). “Determining
whether [a suit should be dismissed in the absence of a re-
quired party] is a highly-practical, fact-based endeavor,
and . . . a district court will ordinarily be in a better position
to make a Rule 19 decision than a circuit court would be.”
Id. (internal citations omitted). 7 “A district court abuses
its discretion if it: (1) relies on clearly erroneous factual
findings; (2) relies on erroneous conclusions of law; or
(3) misapplies the law to the facts.” In re Volkswagen of
Am., Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc)). And,
“[a] district court would necessarily abuse its discretion if
7 Gensetix submits that we should review this issue
de novo and argues that the district court committed legal
error by (1) assuming that UT was indispensable even be-
fore it conducted its factor-by-factor analysis, and (2) fail-
ing to consider the equities. Appellant’s Br. 16–24. We
reject this attempt to manufacture legal error based on out-
of-context statements from the district court’s opin-
ion. Gensetix cannot deny that the district court did, in
fact, conduct a factor-by-factor Rule 19(b) analysis. Con-
trary to Gensetix’s arguments, moreover, the district court
did not fail to consider the equities in its Rule 19(b) analy-
sis. This analysis is properly reviewed under an abuse of
discretion standard.
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14 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
it based its ruling on an erroneous view of the law or on a
clearly erroneous assessment of the evidence.” Highmark
Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559,
564 n.2 (2014).
Rule 19(b) provides that, where joinder of a required
party is not feasible, “the court must determine whether,
in equity and good conscience, the action should proceed
among the existing parties or should be dismissed.” Fed.
R. Civ. P. 19(b). This inquiry involves consideration of four
factors: (1) the extent to which a judgment rendered might
prejudice the missing required party or the existing par-
ties; (2) the extent to which any prejudice could be lessened
or avoided (3) whether a judgment rendered in the required
party’s absence would be adequate; and (4) “whether the
plaintiff would have an adequate remedy if the action were
dismissed for nonjoinder.” Id. On appeal, Gensetix argues
that the district court abused its discretion by failing to
meaningfully analyze each of the Rule 19(b) factors. 8 As
explained below, we agree.
8 UT and Baylor argue that Gensetix waived many
of its arguments regarding the court’s Rule 19(b) analysis.
Under Fifth Circuit case law, “an argument is not waived
on appeal if the argument on the issue before the district
court was sufficient to permit the district court to rule on
it.” In re Liljeberg Enters., Inc., 304 F.3d 410, 427 n.29 (5th
Cir. 2002). Gensetix’s arguments to the district court were
sufficient. It is true, moreover, that a party cannot waive
objection to a court’s failure to apply the correct legal
standard to the question presented. Myco Indus., Inc. v.
BlephEx, LLC, 955 F.3d 1, 11 (Fed. Cir. 2020) (citing
United States v. Ali, 508 F.3d 136, 144 n.9 (3d Cir. 2007),
and Brown v. Smith, 551 F.3d 424, 428 n.2 (6th Cir. 2008)).
Accordingly, we conclude that Gensetix did not waive any
arguments regarding the Rule 19(b) inquiry.
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 15
The district court found that three out of the four
Rule 19(b) factors weighed in favor of dismissing the case.
As to the first factor—the extent to which a judgment ren-
dered in UT’s absence might prejudice UT or the parties to
the litigation—relying on our decision in A123 Systems,
Inc. v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010), the
court found that “UT risks an invalidation of its patent
without the opportunity to litigate.” Gensetix, 354 F. Supp.
3d at 764. It concluded that it “must give sufficient weight
to the prejudice to UT, which is absent from this suit based
on a claim of sovereign immunity.’’ Id. (quoting A123,
626 F.3d at 1221). Without any analysis of the second fac-
tor, the court also found that it would not be able to lessen
or avoid prejudice to UT. Id. (citing A123, 626 F.3d
at 1222 n.1). As to the third factor, the court found that a
judgment rendered without UT would be inadequate. Id.
It noted Baylor’s argument that there is a risk of multiple
suits against Baylor on the same patents. But, it nonethe-
less “decline[d] to determine whether UT would be judi-
cially estopped from later filing suit against [Baylor] for the
purposes of this Rule 19(b) analysis.” Id. Finally, as to the
fourth factor—whether Gensetix would have an adequate
remedy if the action were dismissed for nonjoinder—the
court found it “seemingly” weighed in favor of Gen-
setix. Regardless, the court “refused to effectuate a rescue”
by joining UT, noting that, “[w]hile this result may be
harsh, it is an inherent risk for anyone who chooses to con-
tract with a sovereign entity.” Id.
The parties argue at length about the facts applicable
to each factor, but we need not delve into each argument to
assess the appropriateness of the district court’s analysis.
We conclude that the district court abused its discretion by
collapsing the multi-factorial Rule 19(b) inquiry into one
dispositive fact: UT’s status as a sovereign. For example,
in evaluating the prejudice to UT, the district court relied
on our decision in A123 and concluded that it must give
weight to the fact that the sovereign risked losing rights in
Case: 19-1424 Document: 77 Page: 16 Filed: 07/24/2020
16 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
its patent without an opportunity to defend itself. Gen-
setix, 354 F. Supp. 3d at 764. But in A123, we noted that
the interests of the licensee and licensor were “overlap-
ping” not “identical,” because the licensee had only a field-
of-use license. A123, 626 F.3d at 1221. We concluded that
this left open the possibility of the licensee advancing ar-
guments during litigation that served its own interests but
not that of the absent licensor. Id. Here, as Gensetix cor-
rectly points out, it has a license in every field, and, as such,
the parties’ interests in the validity of the patents-in-suit
are identical. Appellant’s Br. 27. The prejudice to UT is
minimal, or at least substantially mitigated, because, un-
like the licensee in A123, Gensetix will adequately protect
UT’s interests in the validity of the patents-in-suit.
Likewise, the court dismissed the lack of an adequate
remedy for Gensetix resulting from UT’s nonjoinder—i.e.,
the fourth Rule 19(b) factor—as simply “an inherent risk
for anyone who chooses to contract with a sovereign entity.”
Id. That may be true, but this fact is more relevant to join-
der under Rule 19(a) than it is to the Rule 19(b) analysis.
Rather than cede control, once again, to UT’s claim of sov-
ereign immunity, the district court should have given
weight to the fact that Gensetix is without recourse to as-
sert its patent rights because UT cannot be feasibly joined.
Accordingly, we conclude that the district court abused its
discretion in giving overwhelming weight to UT’s sovereign
status to the exclusion of all other facts.
Pimentel, on which UT relies, does not compel a differ-
ent conclusion. Pimentel involved an interpleader action
commenced to determine ownership of property allegedly
stolen by Ferdinand Marcos, the former President of the
Philippines. In concluding that the action should not have
proceeded in the Republic of Philippines’ absence, the Su-
preme Court noted that a sovereign’s immunity from suit
is a “privilege [that] is much diminished if an important
and consequential ruling affecting the sovereign’s substan-
tial interest is determined, or at least assumed, by a federal
Case: 19-1424 Document: 77 Page: 17 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 17
court in the sovereign’s absence and over its objection.” Pi-
mentel, 553 U.S. at 868 (emphasis added). The Court ex-
plained that, “where sovereign immunity is asserted, and
the claims of the sovereign are not frivolous, dismissal of
the action must be ordered where there is a potential for
injury to the interests of the absent sovereign.” Id. at 867
(emphasis added). This seemingly broad language is best
understood, however, within the specific facts of Pimentel.
First, the case dealt with foreign sovereign immunity, not
state sovereign immunity, and the Court placed some
weight on the “[c]omity and dignity interests” at play. Id.
at 869. No comity concerns exist here. Second, and more
importantly, there was no dispute in Pimentel that the ab-
sence of the Philippines in the interpleader suit would re-
sult in its interests going unprotected. Id. at 863–64. By
contrast, here, Gensetix is fully able (and willing) to step
into UT’s shoes and protect the absent sovereign’s interests
in the validity of the patents-in-suit. Indeed, in the license
agreement, UT required that it do so. Finally, in Pimentel,
the claim was not extinguished for lack of an alternative
forum, unlike here.
In his dissent-in-part, Judge Taranto, respectfully,
reads too much into Pimentel. We do not agree that the
Court gave “controlling weight to the sovereign interest” in
that case. In evaluating the first Rule 19(b) factor, the
Court concluded that the district court and the Court of Ap-
peals “gave insufficient weight to the likely prejudice to”
the sovereign. Id. at 869. The Court nonetheless analyzed
the remaining Rule 19(b) factors before concluding that the
action must be dismissed. Rather than announcing a
bright-line rule, the Court clarified that “Rule 19 cannot be
applied in a vacuum, and it may require some preliminary
assessment of the merits of certain claims.” Id. at 868. It
also made clear that in conducting “the Rule 19(b) inquiry,
a court must examine, to some extent, the claims presented
and the interests likely to be asserted both by the joined
parties and the absent entities or persons.” Id. (emphasis
Case: 19-1424 Document: 77 Page: 18 Filed: 07/24/2020
18 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
added). The deciding factor in Pimentel was the court giv-
ing insufficient, rather than controlling, weight to the
likely prejudice to the sovereign. 9 We conclude that a
proper application of Pimentel mandates consideration of
the claims presented and the interests asserted by UT,
Gensetix, and Baylor—an analysis the district court failed
to properly engage in.
Beyond giving controlling weight to UT’s status as a
sovereign in its analysis of several of the applicable factors,
in concluding that a judgment rendered in UT’s absence
would be inadequate, the district court also refused to
properly analyze the third Rule 19(b) factor. In refusing to
consider whether UT would be barred from filing suit
against Baylor, such that there would be a risk of multiple
suits, the court ignored its own express finding that, under
the terms of the agreement, UT’s right to sue is secondary,
and it cannot initiate a lawsuit against Baylor now that
Gensetix has done so. Therefore, allowing the litigation to
proceed in UT’s absence does not pose a substantial risk of
multiple suits.
9 We are likewise unpersuaded by that opinion’s ref-
erence to decisions from two of our sister circuits in support
of the assertion that a court must give “decisive weight” to
a state’s sovereign interest in conducting this analysis. See
Taranto Op. at 3–4 (citing, e.g., Kickapoo Tribe of Indians
v. Babbitt, 43 F.3d 1491, 1498 (D.C. Cir. 1995) and Dine
Citizens Against Ruining Our Env’t v. Bureau of Indian Af-
fairs, 932 F.3d 843, 858 (9th Cir. 2019)). The cited cases
either pre-date Pimentel or do not interpret it. And, these
cases do not present a situation, where, like here, one of the
parties to the litigation has an interest in the subject mat-
ter of the litigation that is identical to the absent sover-
eign’s interest, thereby mitigating the prejudice to the
sovereign.
Case: 19-1424 Document: 77 Page: 19 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 19
The proper analysis of the Rule 19(b) factors is far more
nuanced than the district court’s. As to the prejudice to
UT, the interests of UT and Gensetix are aligned. Despite
UT’s sovereign status, given Gensetix’s identical interest
in the validity of the patents-in-suit, any prejudice to UT is
greatly reduced. There is also no risk of multiple suits be-
cause, under the express terms of the parties’ agreement,
UT may not sue Baylor once Gensetix has commenced liti-
gation. And, as an exclusive licensee with less than all sub-
stantial rights in the patents-in-suit, Gensetix cannot
enforce its patent rights without the court allowing the suit
to proceed in UT’s absence. Given this clear factual record,
we conclude that it was an abuse of discretion to find that
the suit may not proceed in UT’s absence. Accordingly, we
reverse the district court on this point.
III. CONCLUSION
We have considered the parties’ remaining arguments
and find them unpersuasive. For the foregoing reasons, we
affirm-in-part, reverse-in-part, and remand for proceed-
ings consistent with this opinion.
AFFIRMED-IN-PART, REVERSED-IN-PART, AND
REMANDED
COSTS
Each party to bear its own costs.
Case: 19-1424 Document: 77 Page: 20 Filed: 07/24/2020
United States Court of Appeals
for the Federal Circuit
______________________
GENSETIX, INC.,
Plaintiff-Appellant
v.
THE BOARD OF REGENTS OF THE UNIVERSITY
OF TEXAS SYSTEM,
Plaintiff-Appellee
v.
BAYLOR COLLEGE OF MEDICINE, DIAKONOS
RESEARCH LTD, WILLIAM K. DECKER,
Defendants-Appellees
______________________
2019-1424
______________________
Appeal from the United States District Court for the
Southern District of Texas in No. 4:17-cv-01025, Judge An-
drew S. Hanen.
______________________
NEWMAN, Circuit Judge, concurring in part, dissenting in
part, concurring in the judgment.
The panel majority holds that the Board of Regents of
the University of Texas System (“the University” or “UT”)
has Eleventh Amendment immunity that shields it from
involuntary joinder in this infringement suit against Bay-
lor College of Medicine and others. Respectfully, I disa-
gree.
Case: 19-1424 Document: 77 Page: 21 Filed: 07/24/2020
2 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
The University is the assignee of the patents at issue,
of which William K. Decker et al. are inventors. The Uni-
versity licensed the patents to Gensetix, Inc. for commer-
cial development, with significant payments to the
University. The “Patent And Technology License Agree-
ment” grants Gensetix the exclusive right to make, use,
and sell the patented subject matter for the life of the pa-
tents, and requires Gensetix to enforce the patents against
any infringer. However, when Gensetix sought cooperation
in this infringement suit, the University refused to join or
be joined as a party, and invoked the Eleventh Amendment
to bar involuntary joinder, thus preventing enforcement of
the patents. The district court deemed the University to be
a necessary party, and dismissed Gensetix’s infringement
suit. 1
I respectfully dissent from the court’s holding that the
University has Eleventh Amendment immunity from join-
der in this litigation. However, this infringement suit may
proceed without the University as a party, in conformity
with Federal Rule of Civil Procedure 19(b); thus I concur in
the court’s judgment.
The Eleventh Amendment does not insulate a
State from its contractual obligations
Just as the State must pay its bills, it also must comply
with its contracts. The purpose of the Eleventh Amend-
ment is to shield a State’s sovereign functions of govern-
ance from judicial oversight in federal courts. See William
A. Fletcher, The Eleventh Amendment: Unfinished Busi-
ness, 75 Notre Dame L. Rev. 843, 854 (2000). When a State
agency enters into commercial transactions, it is subject to
the rules of commerce. As Justice Breyer explained in Col-
lege Savings Bank v. Florida Prepaid Postsecondary
1 Gensetix, Inc. v. Baylor Coll. of Med., 354 F. Supp.
3d 759 (S.D. Tex. 2018) (“Dist. Ct. Op.”).
Case: 19-1424 Document: 77 Page: 22 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 3
Education Expense Board, 527 U.S. 666 (1999): “When a
State engages in ordinary commercial ventures, it acts like
a private person, outside the area of its ‘core’ responsibili-
ties, and in a way unlikely to prove essential to the fulfill-
ment of a basic governmental obligation.” Id. at 694
(Breyer, J., dissenting).
The Eleventh Amendment is not an authorization
whereby State agencies may violate their commercial and
contractual obligations. Its purpose is not to absolutely
“prevent states from being compelled to litigate,” as the dis-
trict court stated. Dist. Ct. Op. at 766 (internal quotation
marks omitted). The Supreme Court expressed this view
in Ex parte Young, 209 U.S. 123 (1908), holding that even
if the State is immune from suit on a particular issue, its
officials may not be immune. Id. at 167. As a recent illus-
tration, in Pennington Seed, Inc. v. Produce Exchange No.
299, 457 F.3d 1334 (Fed. Cir. 2006), this court explained
that although the University of Arkansas may assert Elev-
enth Amendment immunity from suit for patent infringe-
ment, that University’s officials can be sued. Id. at 1342.
Here, the University of Texas obtained United States
patents on inventions of the University’s scientists, and en-
tered into an exclusive License Agreement with Gensetix
for development and commercialization. 2 Paragraph 7.1 of
the License Agreement provides that Gensetix “must en-
force any patent exclusively licensed hereunder against in-
fringement by third parties,” and that if Gensetix does not
do so within 6 months of learning of infringement, the Uni-
versity has the right to sue the infringer(s) and retain any
2 “Section 3.1 of the License Agreement states that
Gensetix has the ‘exclusive’ right to manufacture, use, im-
port, and sell the licensed product within the ‘licensed ter-
ritory’ (L.A. § 2.5: ‘licensed territory means worldwide’) for
use within the ‘licensed field’ (L.A. § 2.2: ‘licensed field
means all fields of use.’).” Dist. Ct. Op. at 770.
Case: 19-1424 Document: 77 Page: 23 Filed: 07/24/2020
4 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
recovery. License Agreement at 13–14. And Paragraph 7.2
of the License Agreement states that in any infringement
action “the parties agree to cooperate fully with each
other.” License Agreement at 14.
The University now refuses such cooperation, by refus-
ing to be named as a party to the suit, thereby preventing
enforcement of the patents—although the License Agree-
ment requires Gensetix to enforce the patents. The Uni-
versity not only violates its agreement to “cooperate fully,”
but also deprives its licensee of the agreed upon exclusivity.
The University achieves this result by invoking the Elev-
enth Amendment.
This is not a matter of shielding the State from the “in-
dignity” of judicial process, as in Seminole Tribe of Florida
v. Florida, 517 U.S. 44, 58 (1996). When a State enters into
commerce, it accedes to the rules of commerce. See White
v. Massachusetts Council of Const. Employers, Inc., 460
U.S. 204, 207 (1983) (“There is no indication of a constitu-
tional plan to limit the ability of the States themselves to
operate freely in the free market.” (quoting Reeves, Inc. v.
Stake, 447 U.S. 429, 436–47 (1980))).
I do not share the majority’s conclusion that the Elev-
enth Amendment shields the University from compliance
with its contractual obligation to “cooperate fully” with its
exclusive licensee, Gensetix, in enforcing these patents
against infringers. 3
3 The Supreme Court recently reaffirmed “a princi-
ple as old as the Nation itself: The Government should
honor its obligations. Soon after ratification, Alexander
Hamilton stressed this insight as a cornerstone of fiscal
policy. ‘States,’ he wrote, ‘who observe their engage-
ments . . . are respected and trusted: while the reverse is
the fate of those . . . who pursue an opposite conduct.’ Cen-
turies later, this Court’s case law still concurs.” Maine
Case: 19-1424 Document: 77 Page: 24 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 5
This infringement suit may proceed under
Rule 19(b) without joinder of the University
The district court held that the University, as patent
assignee, is a necessary party to this infringement suit
brought by its exclusive licensee. If the assignee is indeed
a necessary party, in most situations it can be joined as a
voluntary or involuntary party. However, if joinder is not
available, the question is whether it is an indispensable
party. Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d
1266, 1272 (Fed. Cir. 1998).
The question of whether and when a licensee may sue
infringers in its own name was elaborated in Waterman v.
Mackenzie, 138 U.S. 252 (1891); the Court stated:
The patentee or his assigns may, by instrument in
writing, assign, grant, and convey, either (1) the
whole patent, comprising the exclusive right to
make, use, and vend the invention throughout the
United States; or (2) an undivided part or share of
that exclusive right; or (3) the exclusive right under
the patent within and throughout a specified part
of the United States. Id. § 4898. A transfer of ei-
ther of these three kinds of interests is an assign-
ment, properly speaking, and vests in the assignee
a title in so much of the patent itself, with a right
to sue infringers. In the second case, jointly with
the assignor. In the first and third cases, in the
name of the assignee alone.
Id. at 255. Following the Court’s holding in Waterman, a
conveying of the “whole patent, comprising the exclusive
Community Health Options v. United States, 140 S. Ct.
1308, 1331 (2020) (ellipses in original) (quoting Report Rel-
ative to a Provision for the Support of Public Credit (Jan.
9, 1790), in 6 Papers of Alexander Hamilton 68 (H. Syrett
& J. Cooke eds. 1962) (internal citations omitted)).
Case: 19-1424 Document: 77 Page: 25 Filed: 07/24/2020
6 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
right to make, use, and vend the invention throughout the
United States” is tantamount to an assignment, and vests
in the assignee “a right to sue infringers . . . in the name of
the assignee alone.” Id. However, the district court relied
on Alfred E. Mann Found. for Sci. Research v. Cochlear
Corp., 604 F.3d 1354 (Fed. Cir. 2010) to support holding
that the University’s default right to sue infringers if Gen-
setix did not do so, was a right so substantial that it de-
feated Gensetix’s right to sue as exclusive licensee. Dist.
Ct. Op. at 769–71.
Here, the issue is resolved not only by Federal Rule
19(b), but also by legal and equitable theories of property
rights, such as the constructive trust described in Inde-
pendent Wireless Telegraph Co. v. Radio Corporation of
America, 269 U.S. 459, 468 (1926) (patent owner holds title
in trust for exclusive licensee); or determining whether the
license is “by way of mortgage and liable to be defeated by
non-performance of a condition subsequent,” as described
in Vaupel Textilmaschinen KG v. Meccanica Euro Italia
SPA, 944 F.2d 870, 875 (Fed. Cir. 1991) (holding that “the
termination provisions in the agreements were entirely
consistent with an assignment.”).
Applying the principles of precedent to the Gensetix-
University License Agreement, the default provision for su-
ing infringers is consistent with the assignment of exclu-
sive patent rights, whereby Gensetix may sue infringers in
its own name when, as here, the University declines to join
or be joined.
I join the court’s ruling that this litigation may proceed
without the University as a party, and concur in the appli-
cation of Federal Rule 19(b).
Case: 19-1424 Document: 77 Page: 26 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 7
The University’s rights of scientific publica-
tion, research, and teaching are not patent
rights
In the district court, Baylor had moved for dismissal on
the ground that “the only allegations of patent infringe-
ment in the Complaint were allegations of research activi-
ties.” University Br. 5 n.1. The district court did not decide
this motion, instead dismissing the action on the Eleventh
Amendment ground.
The License Agreement states that the University has
the right to “[p]ublish the general scientific findings from
research,” to use the subject matter for “academically-re-
lated purposes” such as “research, teaching, [and] patient
care,” and to transfer to “academic or research institutions
for non-commercial research use.” License Agreement at 5
(¶¶ 3.1(a), (b), (c)). The scientific/technologic information
in patents is part of the balance in the Constitution’s pro-
vision “To promote the Progress of Science and useful
Arts,” Art. I, § 8, cl. 8. As explained by Justice Story in
Sawin v. Guild, 21 F. Cas. 554, 555 (C.C.D. Mass. 1813),
this balance distinguishes “the making with an intent to
use for profit, and not for the mere purpose of philosophical
experiment, or to ascertain the verity and exactness of the
specification.” This principle has supported centuries of in-
novation.
The License Agreement’s acknowledgement of scien-
tific knowledge is not a reservation of patent rights, and
was inappropriately held by the district court to comprise
substantial retained patent rights and thus to support
Eleventh Amendment immunity.
CONCLUSION
Although I do not agree with the court’s holding that
the University has Eleventh Amendment immunity from
participation in this litigation, I do agree that this action
may proceed in the absence of the University as a party.
Case: 19-1424 Document: 77 Page: 27 Filed: 07/24/2020
8 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
Thus I join in holding that this infringement suit may pro-
ceed without joinder of the University, and in remanding
for further proceedings.
Case: 19-1424 Document: 77 Page: 28 Filed: 07/24/2020
United States Court of Appeals
for the Federal Circuit
______________________
GENSETIX, INC.,
Plaintiff-Appellant
v.
THE BOARD OF REGENTS OF THE UNIVERSITY
OF TEXAS SYSTEM,
Plaintiff-Appellee
v.
BAYLOR COLLEGE OF MEDICINE, DIAKONOS
RESEARCH LTD, WILLIAM K. DECKER,
Defendants-Appellees
______________________
2019-1424
______________________
Appeal from the United States District Court for the
Southern District of Texas in No. 4:17-cv-01025, Judge An-
drew S. Hanen.
______________________
TARANTO, Circuit Judge, concurring in part and dissenting
in part.
I join Parts I and II-A of Judge O’Malley’s opinion
except for footnote 6. Those portions of the opinion
conclude that the constitutionally preserved protection of
state sovereign immunity bars a coerced joinder of the
University of Texas (UT), which is an arm of the State of
Case: 19-1424 Document: 77 Page: 29 Filed: 07/24/2020
2 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
Texas, as an involuntary plaintiff in this federal action,
which Gensetix, Inc., as UT’s exclusive licensee, initiated
to assert infringement of UT-owned patents. I agree that
joinder of UT under Federal Rule of Civil Procedure 19(a),
even though UT is a “required” party under that provision,
would improperly subject UT “to the coercive process of
judicial tribunals at the instance of private parties.”
Seminole Tribe of Florida v. Florida, 517 U.S. 44, 58 (1996);
see Franchise Tax Board of California v. Hyatt, 139 S. Ct.
1485, 1497 (2019).
I part company with Judge O’Malley’s opinion in its
conclusion, in Part II-B, that the district court erred in
ruling that the infringement action should not proceed
under Rule 19(b) without the presence of required-party
UT. For that reason, I dissent from the majority’s reversal
of the district court’s dismissal of the action. The Supreme
Court’s decision in Republic of Philippines v. Pimentel, 553
U.S. 851 (2008), explains that when a sovereign entity is a
required party under Rule 19(a), is protected against
joinder by sovereign immunity, and makes a non-frivolous
assertion that it will be prejudiced by a suit proceeding in
its absence, a district court is generally obligated to dismiss
the suit under Rule 19(b). Because UT made such an
assertion, I see no abuse of discretion in the district court’s
dismissal of this action, which I would affirm.
I
In Pimentel, the Supreme Court considered whether a
federal-court action may proceed, under Rule 19(b),
without the presence of a sovereign entity that was a
“required” party under Rule 19(a) but that could not be
joined because of sovereign immunity. 553 U.S. at 863.
The Court recognized that it “ha[d] not considered a case
posing the precise question presented,” but it noted that
there were “some authorities involving the intersection of
joinder and the governmental immunity of the United
States.” Id. at 866. The “analysis of the joinder issue in
Case: 19-1424 Document: 77 Page: 30 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 3
those cases”—Mine Safety Appliances Co. v. Forrestal, 326
U.S. 371 (1945) and Minnesota v. United States, 305 U.S.
382 (1939)—“was somewhat perfunctory,” the Court wrote,
“but the holdings were clear: A case may not proceed when
a required-entity sovereign is not amenable to suit.”
Pimentel, 553 U.S. at 866–67 (emphasis added).
Based on those holdings, the Court in Pimentel stated
its conclusion in the following bright-line-rule terms:
“where sovereign immunity is asserted, and the claims of
the sovereign are not frivolous, dismissal of the action must
be ordered where there is a potential for injury to the
interests of the absent sovereign.” Id. at 867 (emphasis
added). The Court stated that rule, as it stated its
summary of the earlier holdings, in terms of an immunity-
protected “sovereign” generally, not only a foreign
sovereign or the United States. Moreover, the Court’s
statement that “dismissal of the action must be ordered”
lacks a qualifier allowing for other Rule 19(b) factors to
outweigh the protection of a sovereign’s non-frivolous
interest. Although the Court discussed such other factors,
the discussion gives controlling weight to the sovereign
interest. Id. at 869–72.
Consistent with Pimentel, at least two federal courts of
appeals have mandated, or at least approved, giving
decisive weight under Rule 19(b) to avoiding impairment of
a sovereign interest in the contexts of sovereign immunity
of States and Indian tribes. In a case involving state
sovereign immunity, the D.C. Circuit concluded, before
Pimentel, that “[w]hile Rule 19(b) sets forth four non-
exclusive factors . . . ‘there is very little room for balancing
of other factors’ set out in Rule 19(b) where a necessary
party under Rule 19(a) is immune from suit because
immunity may be viewed as one of those interests
‘compelling by themselves.’” Kickapoo Tribe of Indians v.
Babbitt, 43 F.3d 1491, 1496 (D.C. Cir. 1995) (quoting
Wichita & Affiliated Tribes of Oklahoma v. Hodel, 788 F.2d
765, 777 n.13 (D.C. Cir. 1986)). In a case involving tribal
Case: 19-1424 Document: 77 Page: 31 Filed: 07/24/2020
4 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
sovereign immunity, the Ninth Circuit observed, before
Pimentel, that “some courts have held that sovereign
immunity forecloses in favor of tribes the entire balancing
process under Rule 19(b).” Am. Greyhound Racing, Inc. v.
Hull, 305 F.3d 1015, 1025 (9th Cir. 2002). More recently,
the Ninth Circuit reiterated that “there is a ‘wall of circuit
authority’ in favor of dismissing actions in which a
necessary party cannot be joined due to tribal sovereign
immunity—‘virtually all the cases to consider the question
appear to dismiss under Rule 19, regardless of whether [an
alternate] remedy is available, if the absent parties are
Indian tribes invested with sovereign immunity.’” Dine
Citizens Against Ruining Our Environment v. Bureau of
Indian Affairs, 932 F.3d 843, 857 (9th Cir. 2019) (citing
White v. University of California, 765 F.3d 1010, 1028 (9th
Cir. 2014)).
I see neither authority nor a persuasive basis for
excluding state sovereign immunity from the Pimentel rule,
which, as noted, the Supreme Court stated in terms
covering immunity-protected sovereigns generally. In any
event, and what suffices for the present case, I see no
authority or good reason for prohibiting a trial court from
giving controlling effect to the protection of a state
sovereign’s non-frivolous interest from impairment by
litigation in its absence when the state sovereign is a
required party under Rule 19(a).
II
Whether a suit can proceed without an absent,
required party is a “matter of regional circuit law.”
University of Utah v. Max-Planck-Gesellschaft zur
Forderung der Wissenschaften E.V., 734 F.3d 1315, 1320
(Fed. Cir. 2013). The Fifth Circuit reviews such a
determination for an abuse of discretion. See Acevedo v.
Allsup’s Convenience Stores, Inc., 600 F.3d 516, 520 (5th
Cir. 2010) (“Rulings on the joinder of parties are reviewed
for abuse of discretion.”). A district court “abuses its
Case: 19-1424 Document: 77 Page: 32 Filed: 07/24/2020
GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 5
discretion when it makes ‘a clear error of judgment in
weighing relevant factors or in basing its decision on an
error of law or on clearly erroneous factual findings.’”
Thermolife International LLC v. GNC Corporation, 922
F.3d 1347, 1356 (Fed. Cir. 2019) (citing Bayer CropScience
AG v. Dow AgroSciences LLC, 851 F.3d 1302, 1306 (Fed.
Cir. 2017)).
Here, it suffices, to find no abuse of discretion, that UT
has made a non-frivolous claim that its interests as patent
owner could easily be harmed—by, e.g., narrow-scope
rulings or invalidation—if the suit proceeds in its absence.
See Brief for University of Texas at 32–33 (“UT would risk
an invalidation of its patents without the opportunity to
litigate”); id. at 34 (“In its filing below, UT pointed out the
invalidation risk as well as the risk that the ‘construction
of those claims [] will impact the value of the patents.’”
(citing J.A. 628)).
It is not disputed on appeal that UT retained
substantial rights in the asserted patents, as the district
court concluded. Gensetix, Inc. v. Baylor College of
Medicine, 354 F. Supp. 3d 759, 768–71 (S.D. Tex. 2018).
The district court noted that “UT retains a broad right to
sue and control litigation”; that UT “retained the right to
publish general findings, use licensed subject matter for
research, teaching, or other academic purposes, and
transfer rights to other research institutions for non-
commercial research use”; and that Gensetix’s rights “are
subject to termination provisions.” Id. at 770–71.
Moreover, the district court observed, “UT and Gensetix
share a financial interest in litigation because if Gensetix
initiates an infringement suit, both entities are entitled to
recovery.” Id. at 771. UT thus has a substantial interest
in maintaining the value of the patents.
It is far from frivolous to assert that UT’s interest could
be impaired by an invalidity ruling or a narrow claim
construction. The doctrines of claim and issue preclusion
Case: 19-1424 Document: 77 Page: 33 Filed: 07/24/2020
6 GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE
might prevent UT from relitigating such adverse rulings
made in this suit, given that the UT-Gensetix license
agreement designates Gensetix as UT’s representative in
infringement litigation, J.A. 314–15. See Restatement
(Second) of Judgments § 41 (a “person who is not a party to
an action but who is represented by a party is bound by and
entitled to the benefits of judgment as though he were a
party”). In any event, a ruling that the patents’ claims are
invalid or are narrow in scope would be harmful at least as
adverse precedent. In A123 Systems, Inc. v. Hydro-Quebec,
another case involving UT, we relied on Pimentel and
affirmed the district court’s conclusion that “were it to
reinstate the action and declare the patents invalid, UT
would lose all rights in its patents despite the fact that it
had no opportunity to defend its interests in the litigation.”
626 F.3d 1213, 1221 (Fed. Cir. 2010). Accordingly, we were
obligated to “give sufficient weight to the prejudice to UT.”
Id. The same is true here.
This conclusion suffices to affirm the district court’s
dismissal of the present action as not an abuse of
discretion. I have no reason to doubt that this result leaves
Gensetix without any forum to press the infringement
claims it has presented in this action. (Whether Gensetix
may sue UT for breach of contract is a separate matter.)
But in Pimentel, the Court expressly noted that
“[d]ismissal under Rule 19(b) will mean, in some instances,
that plaintiffs will be left without a forum for definitive
resolution of their claims” and that such a “result is
contemplated under the doctrine of foreign sovereign
immunity.” 553 U.S. at 872; see also Wichita & Affiliated
Tribes, 788 F.2d at 777 (stating that “dismissing an action
where there is no alternative forum” is “less troublesome”
when dismissal is compelled by sovereign immunity
because the loss of forum results not from “some procedural
defect such as venue” but from “the fact that society has
consciously opted to shield [sovereigns] from suit without
. . . consent”). More generally, the Supreme Court’s state
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GENSETIX, INC. v. BAYLOR COLLEGE OF MEDICINE 7
sovereign immunity jurisprudence contemplates that
patent owners may be left without a remedy when States
are involved. See Allen v. Cooper, 140 S. Ct. 994, 1001
(2020).
Because UT made a non-frivolous assertion that it will
be harmed if this suit proceeds, I would hold that the
district court did not abuse its discretion by dismissing the
suit. I respectfully dissent from the judgment of the court
reversing the district court’s decision.