USPTO and Copyright Office Reports Attempt to Quantify Extent and Effect of IP Infringement by State Entities

“The Copyright Office report concluded that ‘the evidence indicates that state infringement constitutes a legitimate concern for copyright owners’ and ‘that those infringements can cause harm to the value of the copyrighted works.’”

On August 31, at the request of Senators Thom Tillis (R-NC) and Patrick Leahy (D-VT), the United States Patent and Trademark Office (USTPO) provided a report to Congress analyzing infringement disputes between patent and trademark rights holders and states and state entities. The U.S. Copyright Office produced a similar, much lengthier report, also in response to a letter from Tillis and Leahy, studying whether there is sufficient basis for federal legislation abrogating State sovereign immunity when States infringe copyrights. The Senators’ letters were prompted by the March 2020 Allen v. Cooper Supreme Court decision. While the USPTO report came to no conclusions, the Copyright Office found that “the evidence indicates that state infringement constitutes a legitimate concern for copyright owners.”

The 11th Amendment of the Constitution provides that state entities are immune from suits in federal court with two exceptions: (1) if the state has waived its immunity; or (2) if Congress authorized the action under the 14th Amendment. However, in the intellectual property context, Congress has never passed a statute abrogating state immunity for liability that passed constitutional muster. In Florida Prepaid,  the Court held a statute that abrogated state immunity from patent infringement to be unconstitutional. Florida Repaid Postsecondary Educ. v. College Saving Bank, 527 U.S. 627 (1999).

Allen v. Cooper

More recently, in Allen v. Cooper, petitioner Frederick Allen claimed that the State of North Carolina infringed his copyrights in images and videos of the salvage of Blackbeard’s pirate ship Queen Anne’s Revenge. Allen recorded videos and took photographs of the recovery of the ship, which spanned over a decade. Allen registered copyrights in all of his works, which in 2013 were posted online by the State, as part of a tourism campaign. Vexed by this unauthorized use, Allen sued the State for infringement. Previously, the Fourth Circuit had ruled that the 11th Amendment to the Constitution provided states with some protection against copyright infringement. However, Allen argued that the 1990 Copyright Remedy Clarification Act (CRCA) provided an exception to this immunity. Unfortunately for Allen, the Supreme Court was unconvinced that the CRCA had a valid constitutional basis and unanimously ruled that the 11th Amendment provided North Carolina with sovereign immunity. Justice Kagan did note that a modified version of the CRCA could potentially be written to give copyright holders expanded protections while satisfying constitutional requirements if, among other things, it were supported by sufficient evidence of state infringement.

Additionally, for a state’s deprivation of property to violate the 14th Amendment, the Court has said the infringement must be “intentional, or at least reckless” and the state must fail to provide an adequate remedy. In Allen, the Court suggested that an acceptable statute should link the scope of its abrogation to the redress or prevention of unconstitutional injuries and that this link should have support in the legislative record.


USPTO Report

With this case in mind, the USPTO investigated “the extent to which patent and trademark owners experience infringement of their intellectual property by states and state entities without adequate remedies under state law and the extent to which such infringement may be intentional or reckless.” The study identified 78 instances of asserted state infringements since 1985, including 49 claims of patent and 29 claims of trademark infringement. The Supreme Court has stated that for statutory abrogation of state immunity to be justified, the infringement must be widespread and persisting. However, the Court did not provide an indication of metrics that would be sufficient to satisfy this standard. Accordingly, the USPTO took no position on whether the cases identified were sufficient to warrant legislative intervention. Additionally, the USPTO was unable to conclude whether the infringement was intentional or reckless. Furthermore, noting the difficulty of ascribing general conclusions about the adequacy of varied state laws, the USPTO concluded that obstacles for rights holders to recover from state or state entities’ infringement “may often be significant.”

To provide a more robust analysis, the USPTO invited interested members of the public to answer questions regarding the extent and nature of assertions of patent and trademark infringement by state entities. The USPTO received 11 responses to their Request for Information from a range commenters with differing perspectives.

  1. Public Universities

Two commenters from universities offered their perspective. Both noted that public universities play vital roles in advancing U.S. innovation, including through the Bayh-Dole Act of 1980. This pair argued that abrogation of sovereign immunity would undermine universities’ role in innovation by forcing resources to go to defend against “frivolous infringement claims.” Additionally, one commenter opined that since universities often commercialize technologies by licensing them to non-state business entities, aggrieved patentees could find relief suing these businesses.

  1. Generic Pharmaceutical Industry

Pharmaceutical organizations, pointing to the California Affordable Drug Manufacturing Act of 2020, argued that recent developments at the state level could lead to certain states becoming manufacturers of generic and biosimilar drugs. Therefore, these organizations reasoned, abrogation of state sovereign immunity is required.

The lack of liability for state infringement may provide states unfair advantages. First, there was a concern that state generic drug manufacturers will be able to obtain expedient dismissals of patent suits, enabling them to enter the market quicker than their private sector counterparts. Additionally, a commenter argued that, without abrogation, states will face less risk of bringing a generic product to market. For example, according to the commenter, if a private manufacturer prevailed on an infringement suit and then went to market, there is the risk of a reversal causing them to be subject to damages. However, state entities likely need not worry about this downside under the current framework.

  1. Other Policy Considerations

One commenter suggested that this issue of infringement by states may be addressed without a statutory abrogation of immunity. This commenter suggested that incentives could be put in place to keep states from infringing. For example, trademark infringement may be avoided, in this commenter’s view, by the imposition of penalties for failure to properly clear trademarks before use.

Another commenter suggested that a benefit of continued sovereign immunity from IP infringement suits is that it could allow states to thwart legal challenges by patent assertion entities, aka patent trolls. In this commenter’s view, “patent protection exchanges” could be established between states and private companies. These exchanges would allow states to purchase products from companies and distribute them. This would allegedly serve two purposes. First, the company would be rid of patent infringement liability for any sales. Second, it would prevent an actual suit for damages because the sole distributor would enjoy sovereign immunity.

There are certainly interested parties that come to differing reasoned conclusions on the issue of state infringement. While the USPTO report did not provide an indication that the issue of state infringement rises to a level sufficient to justify abrogation, the Office did recognize that there have likely been more instances of state infringement than they were able to identify.

Copyright Office Report

In anticipation of producing its report, the U.S. Copyright Office issued a notice of inquiry (NOI) on June 3, 2020. The NOI was in response to Tillis and Leahy’s letter of April 28, 2020, which noted that Allen v. Cooper has “created a situation in which copyright owners are without remedy if a State infringes their copyright and claims State sovereign immunity,” and expressing concern about the “impact this may have on American creators and innovators.” The Copyright Office then announced in November 2020 that it would conduct virtual public roundtables on the following three topics: (1) evidence of actual or threatened copyright infringement by states; (2) state policies and practices for minimizing copyright infringement and addressing infringement claims; and (3) alternative remedies under state law for copyright infringement.

The Office received a list of 167 cases in response to the NOI that commenters claimed represented examples of copyright infringement suits brought against state entities that went unremedied. State representatives, however, objected to the list, arguing that they were not “entirely probative for the Copyright Office’s inquiry”, noting that “although a case may be dismissed based on sovereign immunity, ‘there are typically many meritorious defenses that are raised . . . aside from sovereign immunity,’ which ‘need to be carefully looked at’ to adequately probe whether there is a pervasive pattern or practice of infringement.”

The Copyright Office thus partnered with the George Mason University Antonin Scalia Law School’s Arts & Entertainment Advocacy Clinic to identify additional publicly available information that would allow for a more complete analysis of the submitted cases. Ultimately, 132 of the 167 cases were analyzed and the review found the following:

  • The 132 cases were filed between 1986 and 2020. Approximately 97% of the cases (128) were filed between 2000 and 2020, after the Supreme Court’s decision in Florida Prepaid.
  • The cases were filed against state entities in thirty-six states. Of the 132 cases examined, California (14), New York (13), and Texas (12) were the states in which infringement cases were filed the most frequently.
  • Approximately 58% of the cases (76) were brought against state-funded educational institutions such as universities, colleges, and school districts.
    Approximately 20% (27) were brought against state agencies or the state itself.
    Twenty-seven cases involved claims against multiple kinds of state defendants, including state employees in their individual capacities.
  • Literary works (58% or 77 cases) and pictorial, graphic, or sculptural works (30% or 40 cases) were the most common classes of works at issue.
  • Plaintiffs sought money damages in approximately 88% of the cases examined (116).
  • Approximately 53% of the cases (70) resulted in written decisions.
  • Approximately 32% of the cases (42) resulted in written decisions dismissing copyright claims on sovereign immunity grounds.

Furthermore, the complaints in approximately 59% (or 78 cases) included specific allegations of intentional infringement and at least 27% of the cases (32) appeared to have resulted in settlements. The parties reached a settlement in 28% of the cases that involved allegations of intentional or willful infringement (22 out of 78 cases). State defendants raised “sovereign
immunity” or “government immunity” as a defense in their answers in approximately 38% of the cases (50).

As part of its report, the Copyright Office also requested empirical evidence of “the degree to which copyright owners are experiencing infringement by state entities without adequate remedies under state law, as well as the extent to which these infringements are based on intentional or reckless conduct. The Copyright Alliance submitted a survey it conducted incorporating questions from the Office’s NOI which solicited feedback on copyright owners’ experiences with copyright infringement by states and states’ claims of sovereign immunity.

The survey included 657 respondents, 115 of whom said that their works had been used by state entities in a way that constituted copyright infringement. Of the 81 respondents who identified the types of works infringed, 49% selected photographs and 38% chose “books/poems/blogs/articles,” followed by “[a]udio/sound recordings (including recordings of songs)” at 16% and “[m]ovies/TV shows/videos” at 15%. State universities or institutions of higher learning were the biggest offenders, at 57% of named state entities involved in infringement.

Ultimately, the Copyright Office report concluded that “the evidence indicates that state infringement constitutes a legitimate concern for copyright owners” and “that those infringements can cause harm to the value of the copyrighted works.” While contract and tort claims may be brought in state court in some cases, these are often preempted by the copyright Act and do not provide the same remedies as are available for copyright infringement. While state entities expressed their concerns about the potential impact on their operations if infringement suits for damages were permitted to proceed, and the report acknowledged uncertainty that its evidence would meet the standard necessary to establish a pattern of unconstitutional conduct necessary to adopt abrogation legislation, the Office concluded that it “nevertheless continues to believe that infringement by state entities is an issue worthy of congressional action.”



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