Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank

1999-06-23

Headline: Court limits Congress’s power by blocking a law that let people sue states for patent infringement, leaving state agencies largely immune and making federal patent lawsuits against states harder.

Holding:

Real World Impact:

Limits ability of patent owners to sue states in federal court.
States regain protection from many federal patent lawsuits without clear congressional record.
Congress must show a pattern of constitutional violations to abrogate state immunity.

Topics: patent lawsuits, state immunity from suits, Congress and Fourteenth Amendment, federal vs state authority

Summary

Background

College Savings Bank, a New Jersey bank that patented a tuition‑prepayment financing method, sued Florida Prepaid, a state entity that runs similar tuition prepayment contracts, for patent infringement in federal court in 1994. Congress had enacted the 1992 Patent Remedy Act to make States subject to patent suits. The District Court denied Florida Prepaid’s immunity plea and the Federal Circuit upheld that ruling before the case reached this Court.

Reasoning

The central question was whether Congress validly used its Fourteenth Amendment enforcement power to abrogate state sovereign immunity for patent claims. The majority said no. It held Seminole Tribe bars using Article I powers and, under City of Boerne, §5 enforcement must be congruent and proportional to a pattern of constitutional violations. The Court found the legislative record showed few examples of state patent infringements and little evidence that States left patentees without remedies. Because the Act’s scope was broad and not tailored to the constitutional wrong identified, the Court concluded Congress lacked authority to enact it and reversed the Federal Circuit.

Real world impact

The ruling leaves States largely protected from federal patent lawsuits unless States consent or Congress can justify abrogation under a proper §5 record. Patent owners who sued states for damages or injunctions may lose federal forums and remedies. The decision affects state agencies, universities, and patent holders seeking uniform federal remedies and signals that Congress must build a stronger record to subject States to suit.

Dissents or concurrances

Justice Stevens dissented, arguing Congress had authority to enact the law to protect patent property rights and that uniform federal patent enforcement justified subjecting States to suits; he would have upheld the 1992 Act.