[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10359-S10361]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      STATE SOVEREIGN IMMUNITY FROM INTELLECTUAL PROPERTY LAWSUITS

  Mr. SPECTER. I was surprised by the three decisions of the Supreme 
Court of the United States on June 23, 1999 which drastically reduced 
the Constitutional power of Congress and even more surprised by the 
lack of reaction by Members of the House and Senate to this usurpation 
of Congressional authority. [College Savings Bank v. Florida Prepaid 
1999 U.S. LEXIS 4375, Florida Prepaid v. College Savings Bank 1999 U.S. 
LEXIS 4376 and Allen v. Maine, 1999 U.S. LEXIS 4374.]
  Even though ignored by the Congress, these decisions have been 
roundly criticized by the academicians. Stanford University historian 
Jack Rakove, author of ``Original Meanings'', a Pulitzer Prize winning 
account of the drafting of the Constitution, characterizes Justice 
Kennedy's historical argument in Alden v. Maine as ``strained, even 
silly''.
  Professor Rebecca Eisenberg of the University of Michigan Law School, 
in commenting on Florida Prepaid Postsecondary Education Expense Board 
versus College Savings Bank, said:

       ``The decision makes no sense'', asserting that it arises 
     from ``a bizzarre states' rights agenda that really has 
     nothing to do with intellectual property.''

  Harvard Professor Laurence Tribe commented:

       ``In the absence of even a textual hint in the 
     Constitution, the Court discerned from the constitutional 
     `either' that states are immune from individual lawsuits.'' 
     (These decisions are) ``scary''. ``They treat states' rights 
     in a truly exaggerated way, harking back to what the country 
     looked like before the civil war and, in many ways, even 
     before the adoption of the Constitution.''

  In addition to treating the Congress with disdain, the five person 
majority in all three cases demonstrated judicial activism and 
exhibited what can only be viewed as a political agenda in drastically 
departing from long-standing law. Former Solicitor General Walter 
Dellinger described these cases as: ``one of the three or four major 
shifts in constitutionalism we've seen in two centuries.''
  A commentary in The Economist on July 3, 1999 emphasized the Court's 
radical departure from existing law stating:

       The Court's majority has embarked on a venture as detached 
     from any constitutional moorings as was the liberal Warren 
     Court of the 1960's in its most activity mood.

  In its two opinions in College Savings Bank versus Florida Prepaid 
and Florida Prepaid versus College Savings Bank, the Court held that 
the doctrine of sovereign immunity prevents states from being sued in 
Federal court for infringing intellectual property rights. In reaching 
these decisions, the Court discussed and dismissed two laws passed by 
Congress for the specific purpose of subjecting the states to suits in 
Federal Court: the Patent Remedy Act and the Trademark Remedy 
Clarification Act.
  These decisions leave us with an absurd and untenable state of 
affairs. Through their state-owned universities and hospitals, states 
participate in the intellectual property marketplace as equals with 
private companies. The University of Florida, for example, owns more 
than 200 patents. Furthermore, state entities such as universities are 
major consumers of intellectual property and often violate intellectual 
property laws when, for example, they copy textbooks without proper 
authorization.

  But now, Florida and all other states will enjoy an enormous 
advantage over their private sector competitors--they will be immune 
from being sued for intellectual property infringement. Since patent 
and copyright infringement are exclusively Federal causes of action, 
and trademark infringement is largely Federal, the inability to sue in 
Federal court is, practically speaking, a bar to any redress at all.
  The right of states to sovereign immunity from most Federal lawsuits 
is guaranteed in the Eleventh Amendment to the constitution, which 
provides that:

       The 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.

  It has long been recognized, however, that this immunity from suit is 
not absolute. As the Supreme Court noted in one of the Florida Prepaid 
opinions, the Court has recognized two circumstances in which an 
individual may sue a state:

       First, Congress may authorize such a suit in the exercise 
     of its power to enforce the Fourteenth Amendment--an 
     Amendment enacted after the Eleventh Amendment and 
     specifically designed to alter the federal-state balance. 
     Secondly, a state may waive its sovereign immunity by 
     consenting to suite.--College Savings Bank versus Florida 
     Prepaid at 7.

  Congress' power to enforce the Fourteenth Amendment is contained in 
Section Five of the Fourteenth Amendment, which provides that ``The 
Congress shall have the power to enforce, by appropriate legislation, 
the provisions of this article.'' One of the provisions of the 
Fourteenth Amendment, Section One, provides that no State shall, 
``deprive any person of . . . property . . . without due process of 
law.'' Accordingly, Congress has the power to pass laws to enforce the 
rights of citizens not to be deprived of their property--including 
their intellectual property--without due process of law.
  Employing this power under Section 5 of the Fourteenth Amendment, 
Congress passed the Patent Remedy Act and the Trademark Remedy 
Clarification Act in 1992. As its preamble states, Congress passed the 
Patent Remedy Act to ``clarify that States . . . are subject to suit in 
Federal court by any person for infringement of patents and plant 
variety protections.'' Congress passed the Trademark Remedy 
Clarification Act to subject the States to suits brought under Sec. 43 
of the Trademark Act of 1946 for false and misleading advertising.
  In Florida Prepaid versus College Savings Bank, the Court held in a 5 
to 4 opinion that Congress did not validly abrogate state sovereign 
immunity from patent infringement suits when it passed the Patent 
Remedy Act. In an opinion by Chief Justice Rehnquist, the Court 
reasoned that in order determine whether a Congressional enactment 
validly abrogates the States' sovereign immunity, two questions must be 
answered, ``first, whether Congress has unequivocally expressed its 
intent to abrogate the immunity . . . and second

[[Page S10360]]

whether Congress has acted pursuant to a valid exercise of power.''
  The Court acknowledged that in enacting the Patent Remedy Act, 
Congress made its intention to abrogate the States' immunity 
unmistakably clear in the language of the statute. The Court then held, 
however, that Congress had not acted pursuant to a valid exercise of 
power when it passed the Patent Remedy Act. The Court wrote that 
Congress' enforcement power under the Fourteenth Amendment is 
``remedial'' in nature. Therefore, ``for Congress to invoke Section 5 
it must identify conduct transgressing the Fourteenth Amendment's 
substantive provisions, and must tailor its legislative scheme to 
remedying or preventing such conduct.'' Florida Prepaid versus College 
Savings Bank at 20.
  The court found that Congress failed to identify a pattern of patent 
infringement by the States, let alone a pattern of constitutional 
violations. The Court specifically noted that a deprivation of property 
without due process could occur only where the State provides 
inadequate remedies to injured patent owners. The Court then observed 
that:

       Congress, however, barely considered the availability of 
     state remedies for patent infringement and hence whether the 
     States' conduct might have amounted to a constitutional 
     violation under the Fourteenth Amendment * * *. Congress 
     itself said nothing about the existence or adequacy of state 
     remedies in the statute or in the Senate Report, and made 
     only a few fleeting references to state remedies in the House 
     Report, essentially repeating the testimony of the 
     witnesses.--Florida Prepaid versus College Savings Bank at 
     27-28.

  Accordingly, the Court concluded that:

       The legislative record thus suggests that the Patent Remedy 
     Act does not respond to a history of widespread and 
     persisting deprivation of constitutional rights of the sort 
     Congress has faced in enacting proper prophylactic Section 5 
     legislation. Instead, Congress appears to have enacted this 
     legislation in response to a handful of instances of state 
     patent infringement that do not necessarily violate the 
     Constitution.) Florida Prepaid versus College Savings Bank at 
     31-32.

  Not only is the result of this opinion troubling--that states will 
enjoy immunity from suit--but so is the reasoning which supports this 
result. Here we have a Chief Justice of the Supreme Court choosing to 
ignore an act of Congress because he has concluded that Congress passed 
the legislation with insufficient justification. In essence, the Chief 
Justice is telling us we did a poor job developing our record before 
passing the Patent Remedy Act. As we all know, however, many of us 
support legislation for reasons that don't make it into the written 
record. The record is an important, but imperfect, summary of or views. 
This is why past Courts have been reluctant to dismiss Congressional 
motives in this fashion.
  In College Savings Bank versus Florida Prepaid, the Supreme Court 
decided in a 5 to 4 opinion that Trademark Remedy Clarification Act 
(the ``TRCA'') was not a valid abrogation of state sovereign immunity. 
The Court, in an opinion by Justice Scalia, noted that Congress passed 
the TRCA to remedy and prevent state deprivations of two types of 
property rights: (1) a right to be free from a business competitor's 
false advertising about its own product, and (2) a more generalized 
right to be secure in one's business interests. The Court contrasted 
these rights with the hallmarks of a protected property interest, 
namely the right to exclude others.
  Justice Scalia reached the surprising conclusion that protection 
against false advertising secured by Section 43(a) of the Lanham Act 
does not implicate property rights protected by the due process clause 
so that Congress could not rely on its remedies under Section 5 of the 
14th Amendment to abrogate state sovereign immunity. If conducting a 
legitimate business operation with protection from false advertising is 
not a ``property right'', it is hard to conceive of what is business 
property. That Scalia rationale shows the extent to which the Court has 
gone to invalidate Congressional enactments.
  The Court then discussed whether Florida's sovereign immunity, though 
not abrogated, was voluntarily waived. Here, the Court expressly 
overruled its prior decision in Parden v. Terminal R. Co. 377 U.S. 184 
(1964) and held that there was no voluntary waiver. In Parden, the 
Court had created the doctrine of constructive waiver, which held that 
a state could be found to have waived its immunity to suit by engaging 
in certain activities, such as voluntary participation in the conduct 
Congress has sought to regulate. Since Congress has sought to regulate 
interstate commerce, then a state which participated in interstate 
commerce by registering and licensing patents would be held to have 
voluntarily waived its immunity to a patent infringement suit. By 
overruling Parden, however, the Court held that a voluntary waiver of 
sovereign immunity must be expressed. Florida made no such express 
waiver of its sovereign immunity.
  In other relatively recent cases, the Court has gone out of its way, 
almost on a personal basis, to chastise and undercut Congress. The case 
of Sable v. FCC, 492 U.S. 115 (1989) provides a striking example of 
this trend. In Sable, the Court struck down a ban on ``indecent'' 
interstate telephone communications passed by Congress in 1988. In 
rejecting this provision, the Court focused on whether there were 
constitutionally acceptable less restrictive means, short of a total 
ban, to achieve its goal of protecting minors. The Court then declared, 
in unusually dismissive and critical language, that Congress had not 
sufficiently considered this issue:

       * * * aside from conclusory statements during the debates 
     by proponents of the bill . . . that under the FCC 
     regulations minors could still have access to dial-a-porn 
     messages, the congressional record presented to us contains 
     no evidence as to how effective or ineffective the FCC's most 
     recent regulations were or might prove to be.
       The bill that was enacted . . . was introduced on the 
     floor. . . . No Congressman or Senator purported to present a 
     considered judgement with respect to how often or to what 
     extent minors could or would circumvent the rules and have 
     access to dial-a-porn messages.

  If a member of the Congress made a judgement, by what authority does 
the Supreme Court superimpose its view that it wasn't a ``considered 
judgement''? A fair reading of the statements from the floor debate on 
this issue undercuts the Court's disparaging characterization of this 
debate. For example, Representative Tom Bliley of Virginia gave a 
rather detailed and persuasive discussion of how he concluded that a 
legislative ban was necessary. Mr. Bliley noted that in 1983, Congress 
first passed legislation which required the FCC to report regulations 
describing methods by which dial-a-porn providers could screen out 
underage callers. Mr. Bliley then walks us through the repeated failure 
of the FCC to pass regulations which could withstand judicial scrutiny. 
Finally, Mr. Bliley notes that:

       . . . it has become clear that there was not a 
     technological solution that would adequately and effectively 
     protect our children from the effect of this material. We 
     looked for effective alternatives to a ban--there were none.

  The Court repeats its critique of Congressional action in the case of 
Reno v. ACLU, 521 U.S. 844 (1997). Here the Court struck down the 
Communications Decency Act, which prohibited transmission to minors of 
``indecent'' or ``patently offensive'' communications. In this opinion, 
the Court again discusses whether less restrictive means were available 
and again concludes that Congress had not sufficiently addressed the 
issue. The opinion notes that:

       The Communications Decency Act contains provisions that 
     were either added in executive committee after the hearings 
     [on the Telecom Act] were concluded or as amendments offered 
     during floor debate on the legislation. . . . No hearings 
     were held on the provisions that became the law.

  The Court in Reno later notes that, ``The lack of legislative 
attention to the statute at issue in Sable suggests another parallel 
with this case.''
  Once again, if Congress passes a law, by what authority does the 
Supreme Court conclude that we did not devote sufficient legislative 
attention to the law? In the Reno opinion itself the Court noted that 
some Members of the House of Representatives opposed the Communications 
Decency Act because they thought that less restrictive screening 
devices would work. These members offered an amendment intended as a 
substitute for the Communications Decency Act, but instead saw their 
provision accepted as an additional section of the Act. In light of 
this record, how can the Court say that Congress did not consider less 
restrictive means?

[[Page S10361]]

  A recent trend in Supreme Court decisions, highlighted by these three 
cases, shows an activist court with a political agenda determined to 
restructure political power in America away from Congress and to the 
states. What is Congress to do? We could exercise greater care in the 
confirmation process, but that is hardly the answer. Supreme Court 
nominees in Senate confirmation hearings routinely promise to respect 
Congressional authority and not to make new law. Once on the Court, 
many of the justices ignore those commitments.
  The decision in Florida Prepaid versus College Savings Bank leaves a 
slight opening for Congress to legislate again under Article 5 of the 
14th Amendment to narrowly tailor a legislative approach to satisfy the 
Court. Given the intensity of the Court's agenda and its inventive and 
extreme rationales for declaring Congressional actions 
unconstitutional, it is highly doubtful that anything the Congress does 
will satisfy the Court in its current campaign.
  Congress may have to initiate a constitutional amendment to re-
establish its legitimate authority. Before these three cases, it was 
unthinkable that Congress' authority over trademarks, patents and 
copyrights would have been undercut by a doctrine of state sovereign 
immunity. How could that be in the face of the provisions of Article 1, 
Section 8 granting the Congress express authority over trademarks, 
patents and copyrights by its enumerated power:

       To promote the Progress of Science and useful Arts, by 
     securing for limited Times to Authors and Inventors the 
     exclusive Right to their respective Writings and Discoveries

  These important issues merit immediate and extensive consideration by 
the Congress. Perhaps a constitutional amendment is the only way to 
reinstate the balance between the authority of the Congress and the 
usurpation by the Supreme Court.

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