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Florida Prepaid Post-Secondary Education Expense Board v. College Savings Bank and United States

June 23, 1999

FLORIDA PREPAID POST-SECONDARY EDUCATION EXPENSE BOARD, PETITIONER
v.
COLLEGE SAVINGS BANK AND UNITED STATES



Court Below: 148 F. 3d 1343

SYLLABUS BY THE COURT

Syllabus

OCTOBER TERM, 1998

FLORIDA PREPAID POST-SECONDARY ED. EXPENSEBD. v. COLLEGE SAVINGS BANK

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

FLORIDA PREPAID POST-SECONDARY EDUCATION EXPENSE BOARD v. COLLEGE SAVINGS BANK et al.

certiorari to the united states court of appeals for the federal circuit

No. 98-531.

Argued April 20, 1999

Decided June 23, 1999

After the Patent and Plant Variety Protection Remedy Clarification Act (Act) amended the patent laws to expressly abrogate the States' sovereign immunity, respondent College Savings Bank filed a patent infringement suit against petitioner Florida Prepaid Post-secondary Education Expenses Board (Florida Prepaid), a Florida state entity. When this Court decided Seminole Tribe of Fla. v. Florida, 517 U. S. 44, Florida Prepaid moved to dismiss the action, claiming that the Act was an unconstitutional attempt by Congress to use its Article I powers to abrogate state sovereign immunity. College Savings countered that Congress had properly exercised its power pursuant to §5 of the Fourteenth Amendment in order to enforce the due process guarantees in §1 of the Amendment. The United States intervened to defend the statute's constitutionality. Agreeing with College Savings, the District Court denied the motion, and the Federal Circuit affirmed.

Held: The Act's abrogation of States' sovereign immunity is invalid because it cannot be sustained as legislation enacted to enforce the guarantees of the Fourteenth Amendment's Due Process Clause. Pp. 5-20.

(a) Florida has not expressly consented to suit, or impliedly waived its immunity, see College Savings Bank v. Florida Prepaid Post-secondary Ed. Expense Bd., post, p. ___. To determine whether the Act nonetheless validly abrogated that immunity, the Court must ask: first, whether Congress has " `unequivocally expresse[d] its intent to abrogate,' " and second, whether Congress acted " `pursuant to a valid exercise of power.' " Seminole Tribe, supra, at 55. Congress clearly made known its intent to abrogate in the Act. Whether it had the power to do so is another matter. In Seminole Tribe, this Court held that Congress does not have such power under Article I but reaffirmed its holding in Fitzpatrick v. Bizer, 427 U. S. 445, that Congress has such power under §5 of the Fourteenth Amendment. Thus, legislation that is "appropriate" under §5, as that term was construed in City of Boerne v. Flores, The opinion of the court was delivered by: Chief Justice Rehnquist

Opinion of the Court

FLORIDA PREPAID POST-SECONDARY ED. EXPENSEBD. v. COLLEGE SAVINGS BANK

____ U. S. ____ (1999)

On Writ Of Certiorari To The United States Court Of Appeals For The Federal Circuit

In 1992, Congress amended the patent laws and expressly abrogated the States' sovereign immunity from claims of patent infringement. Respondent College Savings then sued the State of Florida for patent infringement, and the Court of Appeals held that Congress had validly abrogated the State's sovereign immunity from infringement suits pursuant to its authority under §5 of the Fourteenth Amendment. We hold that, under City of Boerne v. Flores, 521 U. S. 507 (1997), the statute cannot be sustained as legislation enacted to enforce the guarantees of the Fourteenth Amendment's Due Process Clause, and accordingly reverse the decision of the Court of Appeals.

I.

Since 1987, respondent College Savings Bank, a New Jersey chartered savings bank located in Princeton, New Jersey, has marketed and sold certificates of deposit known as the CollegeSure CD, which are essentially annuity contracts for financing future college expenses. College Savings obtained a patent for its financing methodology, designed to guarantee investors sufficient funds to cover the costs of tuition for colleges. Petitioner Florida Prepaid Post-secondary Education Expenses Board (Florida Prepaid) is an entity created by the State of Florida that administers similar tuition prepayment contracts available to Florida residents and their children. See Fla. Stat. §240.551(1) (Supp. 1998). College Savings claims that, in the course of administering its tuition prepayment program, Florida Prepaid directly and indirectly infringed College Savings' patent.

College Savings brought an infringement action under 35 U. S. C. §271(a) against Florida Prepaid in the United States District Court for the District of New Jersey in November 1994.*fn1 By the time College Savings filed its suit, Congress had already passed the Patent and Plant Variety Protection Remedy Clarification Act (Patent Remedy Act), 35 U. S. C. §§271(h), 296(a). Before this legislation, the patent laws stated only that "whoever" without authority made, used, or sold a patented invention infringed the patent. 35 U. S. C. §271(a) (1988 ed.).*fn2 Applying this Court's decision in Atascadero State Hosp. v. Scanlon, 473 U. S. 234, 242-243 (1985), the Federal Circuit had held that the patent laws failed to contain the requisite statement of intent to abrogate state sovereign immunity from infringement suits. See, e.g., Chew v. California, 893 F.2d 331 (1989). In response to Chew and similar decisions, Congress enacted the Patent Remedy Act to "clarify that States, instrumentalities of States, and officers and employees of States acting in their official capacity, are subject to suit in Federal court by any person for infringement of patents and plant variety protections." Pub. L. 102-560, preamble, 106 Stat. 4230; see also H. R. Rep. No. 101-960, pt. 1, pp. 7, 33 (1990) (hereinafter H. R. Rep.); S. Rep. No. 102-280, pp. 1, 5-6 (1992) (hereinafter S. Rep.). Section 271(h) now states: "As used in this section, the term `whoever' includes any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his official capacity." Section 296(a) addresses the sovereign immunity issue even more specifically:

"Any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his official capacity, shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person ... for infringement of a patent under section 271, or for any other violation under this title."

Relying on these provisions, College Savings alleged that Florida Prepaid had willfully infringed its patent under §271, as well as contributed to and induced infringement. College Savings sought declaratory and injunctive relief as well as damages, attorney's fees, and costs.

After this Court decided Seminole Tribe of Fla v. Florida, 517 U. S. 44 (1996), Florida Prepaid moved to dismiss the action on the grounds of sovereign immunity.*fn3 Florida Prepaid argued that the Patent Remedy Act was an unconstitutional attempt by Congress to use its Article I powers to abrogate state sovereign immunity. College Savings responded that Congress had properly exercised its power pursuant to §5 of the Fourteenth Amendment to enforce the guarantees of the Due Process Clause in §1 of the Amendment. The United States intervened to defend the constitutionality of the statute. Agreeing with College Savings, the District Court denied Florida Prepaid's motion to dismiss, 948 F. Supp. 400 (N. J. 1996), and the Federal Circuit affirmed, 148 F. 3d 1343 (1998).

The Federal Circuit held that Congress had clearly expressed its intent to abrogate the States' immunity from suit in federal court for patent infringement, and that Congress had the power under §5 of the Fourteenth Amendment to do so. Id., at 1347. The court reasoned that patents are property subject to the protections of the Due Process Clause and that Congress' objective in enacting the Patent Remedy Act was permissible because it sought to prevent States from depriving patent owners of this property without due process. See id., at 1349-1350. The court rejected Florida Prepaid's argument that it and other States had not deprived patent owners of their property without due process, and refused to "deny Congress the authority to subject all states to suit for patent infringement in the federal courts, regardless of the extent of procedural due process that may exist at any particular time." Id., at 1351. Finally, the court held that the Patent Remedy Act was a proportionate response to state infringement and an appropriate measure to protect patent owners' property under this Court's decision in City of Boerne, 521 U. S., at 519. The court concluded that significant harm results from state infringement of patents, 148 F. 3d, at 1353-1354, and "[t]here is no sound reason to hold that Congress cannot subject a state to the same civil consequences that face a private party infringer," id., at 1355. We granted certiorari, 525 U. S. __ (1999), and now reverse.

II.

The Eleventh Amendment provides:

"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."

As the Court recently explained in Seminole Tribe, supra, at 54:

"Although the text of the Amendment would appear to restrict only the Article III diversity jurisdiction of the federal courts, `we have understood the Eleventh Amendment to stand not so much for what it says, but for the presupposition . . . which it confirms.' That presupposition, first observed over a century ago in Hans v. Louisiana, 134 U. S. 1 (1890), has two parts: first, that each State is a sovereign entity in our federal system; and second, that ` "[i]t is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent." ' Id., at 13 (emphasis deleted), quoting the Federalist No. 81 . . . . For over a century we have reaffirmed that federal jurisdiction over suits against unconsenting States `was not contemplated by the Constitution when establishing the judicial power of the United States.' Hans, supra, at 15."

Here, College Savings sued the State of Florida in federal court and it is undisputed that Florida has not expressly consented to suit. College Savings and the United States argue that Florida has impliedly waived its immunity under Parden v. Terminal R. Co. of Ala. Docks Dept., 377 U. S. 184 (1964). That argument, however, is foreclosed by our decision in the companion case overruling the constructive waiver theory announced in Parden. See College Savings Bank v. Florida Prepaid, Post-secondary Ed. Expense Bd., 52_ U. S. __ (1999).

College Savings and the United States nonetheless contend that Congress' enactment of the Patent Remedy Act validly abrogated the States' sovereign immunity. To determine the merits of this proposition, we must answer two questions: "first, whether Congress has `unequivocally expresse[d] its intent to abrogate the immunity,' ... and second, whether Congress has acted `pursuant to a valid exercise of power.' " Seminole Tribe, supra, at 55. We agree with the parties and the Federal Circuit that in enacting the Patent Remedy Act, Congress has made its intention to abrogate the States' immunity " `unmistakably clear in the language of the statute.' " Dellmuth v. Muth, 491 U. S. 223, 228 (1989). Indeed, Congress' intent to abrogate could not have been any clearer. See 35 U. S. C. §296(a) ("Any State . . . shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in federal court . . . for infringement of a patent.").

Whether Congress had the power to compel States to surrender their sovereign immunity for these purposes, however, is another matter. Congress justified the Patent Remedy Act under three sources of constitutional authority: the Patent Clause, Art. I, §8, cl. 8; the Interstate Commerce Clause, Art. I, §8, cl. 3; and §5 of the Fourteenth Amendment. See S. Rep., at 7-8; H. R. Rep., at 39-40.*fn4 In Seminole Tribe, of course, this Court overruled the plurality opinion in Pennsylvania v. Union Gas Co., 491 U. S. 1 (1989), our only prior case finding congressional authority to abrogate state sovereign immunity pursuant to an Article I power (the Commerce Clause). 517 U. S., at 72-73. Seminole Tribe makes clear that Congress may not abrogate state sovereign immunity pursuant to its Article I powers; hence ...


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