## Facts

- The University of Florida Research Foundation (UFRF) was affiliated with the University of Florida, a state university, and existed to license patents developed by university employees and collect royalties from those licenses.
- UFRF’s operations were broadly controlled by the University of Florida Board of Trustees.
- UFRF entered into a license agreement with Medtronic PLC and related Medtronic entities concerning a University of Florida patent.
- UFRF sued Medtronic in Florida state court for breach of the license agreement.
- Medtronic filed a counterclaim seeking a declaratory judgment that it had not infringed the patent underlying the license.
- Medtronic removed the case to federal court, relying in part on 28 U.S.C. § 1454, which permits removal when any party asserts a claim for relief arising under federal patent law.
- UFRF moved to remand, arguing that it was an arm of the State of Florida and therefore immune from being sued in federal court under the Eleventh Amendment.
- Medtronic argued that UFRF waived Eleventh Amendment immunity by filing suit and triggering a compulsory counterclaim that, in Medtronic’s view, could only be heard in federal court under 28 U.S.C. § 1338.

## Issues

1. Whether UFRF qualifies as an arm of the State of Florida entitled to Eleventh Amendment immunity in federal court.
2. Whether UFRF waived Eleventh Amendment immunity by initiating a state-court contract action, where the defendant asserted a patent-law counterclaim and removed the case under 28 U.S.C. § 1454.
3. If Eleventh Amendment immunity bars the removed case from proceeding in federal court, whether the proper disposition is remand to state court.

## Decision

- The court held that UFRF functioned as an arm of the State of Florida and was entitled to Eleventh Amendment immunity from suit in federal court absent consent.
- The court rejected Medtronic’s waiver argument, concluding that UFRF did not consent to federal jurisdiction merely by filing a breach-of-contract action in state court, even if Medtronic’s patent counterclaim was compulsory and within the exclusive jurisdiction of the federal courts under § 1338.
- The court determined that § 1454’s patent-based removal mechanism did not override Eleventh Amendment limits or supply federal adjudicatory power over an immune state entity.
- Because the action had been removed from state court and could not proceed in federal court, the court remanded the case to Florida state court.

## Legal Principles

- Whether an entity is an “arm of the state” for Eleventh Amendment purposes depends on a multi-factor inquiry that considers the entity’s legal status under state law, the degree of state control, the entity’s funding, and the effect of a judgment on the state treasury.
- The Eleventh Amendment bars federal courts from hearing suits against a state or its arms unless the state clearly consents to federal jurisdiction or Congress validly abrogates immunity.
- Waiver of Eleventh Amendment immunity must be clearly expressed; a state entity’s choice to sue in state court does not, by itself, constitute consent to suit in federal court.
- A defendant cannot force a state entity into federal court by asserting a patent declaratory-judgment counterclaim, characterizing it as compulsory, and removing under § 1454; neither the Federal Rules nor exclusive federal patent jurisdiction displaces sovereign immunity.
- When a case is removed but cannot be maintained in federal court because of Eleventh Amendment immunity, remand to the originating state court is an appropriate remedy.

## Conclusion

The court concluded that UFRF was an arm of the State of Florida and therefore immune from being compelled to litigate in federal court; UFRF did not waive that immunity by filing a state-court breach-of-license action, and Medtronic’s patent counterclaim and removal under § 1454 did not supply federal jurisdiction, so the case was remanded to Florida state court.


University of Florida Research Foundation v. Medtronic, 2016 WL 3869877 (2016)