State waived sovereign immunity in choice of law provision

In Baum Research and Development Company et al. v. University of Massachusetts at Lowell, No. 2006-1330, 2007 WL 2937300 (Fed. Cir. Oct. 10, 2007) Charles Baum was the inventor of a device for testing baseball bats of varying construction. He was awarded two U.S. patents for his inventions. Charles Baum and Baum Research and Development (collectively “Baum”) entered into a Confidential License Agreement with the University of Massachusetts at Lowell (“University”). The Agreement included the following section III-3. Governing law.:

“This Agreement will be construed, interpreted and applied according to the laws of the State of Michigan and all parties agree to proper venue and hereby submit to jurisdiction in the appropriate State or Federal Courts of Record sitting in the State of Michigan.”

A dispute arose between Baum and the University, and Baum filed suit in the United States District Court for the Western District of Michigan alleging breach of contract and patent infringement. The University asserted it was immune from suit based on its Eleventh Amendment sovereign immunity.

The district court denied the University’s motion to dismiss based on sovereign immunity, and ruled that the University waived its immunity by agreeing to submit to jurisdiction in the appropriate State or Federal Courts in Michigan. More specifically, the district court reasoned that “by agreeing to this provision [III-3], Defendant affirmatively agreed to resolve in federal court any disputes that may arise.”

The University appealed the district court decision to the Court of Appeals for the Federal Circuit, which hears all appeals involving questions relating to patent law. The Federal Circuit affirmed the district court decision that the University waived its immunity and was subject to suit in district court for patent infringement. The Federal Circuit reasoned that “the contract between Baum and the University is not ambiguous as to the mutual obligations to submit to jurisdiction of the state and federal courts in Michigan, and that the University thereby wavied its Eleventh Amendment immunity.”

As a general rule, a State cannot be sued in federal court without its consent. Certain types of cases, such as patent infringement suits, involve matters of federal law and can be filed only in federal court. Thus, a State cannot be sued for patent infringement without its consent. According to the court in Baum, however, a State effectively consents to suit in federal court and can be sued for patent infringement, among other federal causes of action, by agreeing to a choice of law provision in which the parties submit to jurisdiction in the appropriate state or federal courts of a given state.