Overcoming immunity: the case of federal regulation of intellectual property.

AuthorMeltzer, Daniel J.

The Supreme Court's decisions in Seminole Tribe v. Florida and Alden v. Maine have recognized a broad state sovereign immunity that Congress lacks power simply to override. In practice, the principal result of these decisions is to disempower Congress, when legislating under Article I of the Constitution, from subjecting an unconsenting state to damages liability in suits brought by private parties.

This Article examines the importance of the constitutional foreclosure of that remedy, and the options open to Congress should it wish to compensate for the unavailability of that remedy by providing other means to deter and redress violations by states of federal intellectual property rights. The analysis focuses on the federal intellectual property statutes because the Court has already declared two of these statutes to be unconstitutional incursions upon state sovereign immunity, and because, in response to those decisions, the executive and legislative branches have begun to explore legislative alternatives. Most of this article's analysis is equally applicable, however, to other statutory schemes that Congress has enacted, or might enact, under its Article I powers.

Four principal strategies are examined: (1) creation of a narrow cause of action for those violations by states that can also be viewed as deprivations of property without due process; (2) reliance upon suits against responsible state officials for damages to be paid by them personally; (3) authorization of the United States to sue the states for damages, coupled with a mechanism for enlisting private initiative on behalf of the United States; and (4) conditioning the conferral to the states of federal benefits upon the states' waiver of immunity from suit. In general, each of these four approaches raises an intersecting set of practical and legal difficulties; none provides a surefire and easy alternative to the remedy precluded by the Court's decisions. In that respect, the analysis suggests that the Court's state sovereign immunity doctrine, although viewed by some as being of secondary importance (because it does not preclude .federal regulation of the states altogether but merely restricts the available remedies), is in fact a matter of considerable constitutional and practical importance.


There are many angles of vision on the Supreme Court's recent decisions concerning state sovereign immunity and federalism more generally. In two previous articles,(1) I have set forth my views--largely critical ones--of the Court's decisions in Seminole Tribe v. Florida(2) Alden v. Maine,(3) and Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank.(4) I will not repeat those arguments here, but rather will start from a point I have previously made.

That starting point addresses the question of how important these decisions are in practice. Dean Sullivan noted, not long after Alden and Florida Prepaid were handed down, that they "were not about whether Congress may regulate the states in these areas but rather how it may enforce such regulation."(5) For some, including Dean Sullivan, the implication of that observation seems to be that the latter question is of greatly subordinate importance.(6) And there is no doubt that the current curious state of affairs--in which Congress may regulate states under its Article I powers, but is barred by the doctrine of sovereign immunity from important enforcement techniques--is a less serious restriction of national power than a regime--like that briefly ushered in by National League of Cities v. Usery(7)--in which Congress may not regulate states at all.

But perhaps because I teach federal courts rather than the standard constitutional law course, I am predisposed to think that a central problem of constitutional law is the "creation of a machinery of jurisdiction and remedies that can transform rights proclaimed on paper into practical protections."(8) Thus, to me, a limitation on available remedies that is superimposed on all exercises of legislative power under Article I is hardly of less significance than, for example, a decision like United States v. Lopez(9) that limits congressional power altogether, but over a rather narrow range of potential federal regulation. The significance of state sovereign immunity depends heavily upon what remedies it leaves open--both extant remedies and other remedies that Congress has not yet created but has power to afford. Recently, in conjunction with inquiries organized by both the executive and the legislative branches,(10) I have had the chance to dig into the question of just how Congress might seek to close the remedial gap created by state sovereign immunity with regard to one important set of federal laws--those creating and regulating intellectual property. The Supreme Court's enthusiastic embrace of the doctrine of state sovereign immunity crossed paths with the law of intellectual property in 1999 in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank.(11) In that case, the Court held unconstitutional a congressional enactment that had purported to make states, like other actors, liable for damages when they are sued by private parties for an infringement of patent rights. Congressional efforts to subject the states to private damage actions for copyright or trademark infringement(12) must, under the reasoning of Florida Prepaid, be deemed to be equally invalid.(13)

Thus, I wish here to explore the import of these rulings in general and, more particularly, where they leave the system for enforcing intellectual property rights against the states--what remedial gaps exist, and what opportunities are open to Congress should it wish to close those gaps. Although I focus here on intellectual property regulation, must of the discussion applies generally to other schemes of federal regulation enacted under Congress's Article I powers.


    Imagine that, today, various faculty members and administrators in different departments of a state university are engaged in widespread illegal duplication of copyrighted materials. What remedies are available to the copyright holders?

    First, the Supreme Court's cases leave intact prospective injunctive remedies against state action that infringes intellectual property rights.(14) A certain form must be observed--the suit must be filed against a state official, rather than against the state or an agency of the state--and, needless to say, injunctive relief must be authorized by federal law and otherwise appropriate (as, for example, in the case of ongoing violations). But so long as the proper form is observed, the venerable decision in Ex parte Young(15) holds that sovereign immunity does not bar a prospective injunction. (What has been said about injunctions is generally applicable to declaratory judgments; in both cases, so long as the relief sought against a state official is prospective in nature, sovereign immunity does not pose a barrier.)(16) Thus, if and when the copyright holders discover that their rights are being violated, bring suit, and obtain an injunctive order, the illegal practice will presumably halt.(17)

    The constitutional difficulties arise when the holder of an intellectual property right seeks to recover damages for infringement that has already taken place. Suppose that the infringement had been going on for many years before any injunctive order was obtained. What the Florida Prepaid case held was that the plaintiff may not sue the state for damages--no matter how flagrant the violation, and no matter how clearly and insistently Congress has sought to authorize such relief.

    In our example, this holding would not necessarily mean that no avenue exists by which the copyright holders may obtain compensation for the harm suffered. But the only recourse available under existing law is to sue the responsible state officials for damages to be paid out of their personal resources,(18) Such awards are not barred by the principle of sovereign immunity, since, unlike damage awards against the state treasury, they are thought not to affect the state directly.(19) But as is developed further below, suits against officials raise a whole set of legal and practical problems that may make them a far less satisfactory option than recovering against the state itself.

    Thus, imagine that it is well known at our hypothetical state university that many professors and administrators are illegally reproducing materials. If the university did face damages liability for the acts of its staff, it might itself implement policies to bring such violations to a halt and to prevent new ones. But the incentive to take such action, given the state of current law, is considerably weaker: unless and until an injunction is issued, the university as an entity faces no risk of liability.

    In pointing to existing remedial gaps, I do not mean to suggest that states and their officials will necessarily take advantage of them. I doubt that state officials generally act like Justice Holmes' bad man,(20) motivated only by the fear of legal sanctions. "[R]outine rule-following, respect for the law, and desire to avoid the burdens of litigation often will induce compliance with federal duties."(21) If this much is correct, it may be easy to be excessively alarmist about the current state of affairs.

    However, in some instance the factors just noted may operate weakly. Professor Menell notes that university research laboratories, for example, may exhibit a competitiveness that makes them likely to press at, if not beyond, the legal margins;(22) where that is so, the threat of entity liability could be an important enforcement tool in the public as in the private sector.(23) Among the situations where entity liability may be of particular importance are those in which the scope of federal duties is uncertain or the cost of compliance is very high; in such cases...

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