Statement of Marybeth Peters
The Register of Copyrights
before the
Subcommittee on Courts and Intellectual Property
Committee on the Judiciary

United States House of Representatives
106th Congress, 2nd Session

July 27, 2000

State Sovereign Immunity and Protection of Intellectual Property

Mr. Chairman, Congressman Berman, Members of the Subcommittee, thank you for inviting me to appear before the Subcommittee today. It is always a pleasure to testify before this Subcommittee, and I appreciate the opportunity to present my views on the important issues of state sovereign immunity from suits for infringement of intellectual property rights.

We can probably all agree that when a State, or a State agency or an officer or employee of a State acting in an official capacity, infringes a copyright or another federal intellectual property right, the State should be held accountable for that infringement just as any other person or entity would be. For most of our history, it has been assumed that the States enjoyed no special immunity from suits for infringement of intellectual property rights, but in the past fifteen years those assumptions have been called into question as the Supreme Court has breathed new life into the doctrine of sovereign immunity. Last year, the Court held that provisions of the patent law and the Lanham Act permitting suits for damages against States were unconstitutional, and the Court offered little reason to hope that the analogous provision in the Copyright Act could be found constitutional. This year a court of appeals held that the copyright law provision is unconstitutional, and today we find ourselves in a situation where States can infringe copyrights, patents, and trademarks with impunity.

Today I would like to provide you with some background information to explain how we arrived at the current unsatisfactory situation. I will then describe the current state of the law. Finally, I will offer a preview of some of the alternatives Congress may wish to consider if, as I believe it should, it decides to take action in response to the recent decisions of the Court.

I. Background

The doctrine of sovereign immunity is an ancient legal principle, dating back to feudal Europe, when power flowed from the King down through the nobility and very little trickled down to the peasantry. It is rooted in the premise that to submit to the jurisdiction of a court implies that one is subservient or inferior to the power of that court. To understand this, one must recall that in feudal times courts were not judicial bodies as we have come to understand them in the United States today, but rather the courts of a King or feudal Lord, often presided over by the King or Lord himself. Thus, even a court of the King, which derived its authority from the King himself, could not exercise any authority over the King unless the King should consent.

Because the American model of government presumes the opposite of feudal structures, that power flows up from the people to the States and to the Federal Government, the application of sovereign immunity is far less intuitive. Indeed, the modern application of this doctrine is controversial precisely because it is fundamental to the relationship of the government to the people and of the Federal Government to the States. It is the latter relationship which we are considering today. The specific question raised by the topic of today's hearing is: are States permitted (and if so, should they be permitted) to run afoul of valid federal laws protecting intellectual property without subjecting themselves to the monetary liability to which all others are vulnerable?

In the United States, state sovereign immunity is articulated by the Eleventh Amendment to the Constitution.(1) The Eleventh Amendment was adopted in 1795, but its true meaning remains a subject of much discussion. Last year the Supreme Court breathed new life and vitality into the doctrine of state sovereign immunity. In June of 1999, the Supreme Court handed down a trio of rulings that, taken together, dramatically altered the landscape of the enforceability of federal law with regard to States.(2) In order to fully appreciate the context of these rulings, it is necessary to review the prior precedent and developments in the law.

The United States passed its first Copyright Act in 1790. There is no decision in the ensuing 172 years that invoked sovereign immunity to exempt States from any of the remedies available under the Copyright Act. Then, in 1962, the United States Court of Appeals for the Eighth Circuit dismissed a copyright infringement suit against a state agency on sovereign immunity grounds.(3) However, that case did not usher in a new era of sovereign immunity.

Just two years later, the Supreme Court issued its ruling in Parden v. Terminal Railway of Alabama (Parden).(4) In that case, employees of a state-owned railroad sued the State of Alabama in federal court under the Federal Employees' Liability Act (FELA). FELA specifically created a cause of action in federal court against "every common carrier by railroad" for damages suffered by employees from job-related personal injuries.

In addressing Alabama's sovereign immunity defense, the Court engaged in a three-step analysis. First, the Court discussed whether Congress intended to subject States to suit under FELA. The Court reasoned that the express language of the statute created a cause of action against "every common carrier," and absent express language to the contrary, a statutory exception for States should not be presumed. Thus, the Court determined that Congress did intend to subject States to suit in federal court under FELA.

Second, the Court considered whether Congress had the power to subject a State to suit in federal courts notwithstanding the Eleventh Amendment. The Court found that in giving Congress the power to regulate interstate commerce, the States had surrendered any sovereign immunity that would impede that regulation. Therefore, in acting under its Commerce Clause power, Congress could abrogate state sovereign immunity.

Finally, the Court queried whether Alabama's operation of a railroad in interstate commerce after its waiver of sovereign immunity implied that the State had consented to suit in federal court under FELA. Finding that it did, the Court held that "when a State leaves the sphere that is exclusively its own and enters into activities subject to congressional regulation, it subjects itself to that regulation as fully as if it were a private person or corporation."(5)

Because the Copyright Act, in language very similar to FELA, provided for suit against "anyone"(6) who infringed a copyright, the decision in Parden left little doubt that States could be sued for copyright infringement.

Over time the decision in Parden was gradually eroded. More than twenty years after Parden, in Atascadero State Hospital v. Scanlon (Atascadero),(7) the Court reversed itself on the legislative requirements necessary to find congressional intent to abrogate state sovereign immunity. In that case, a disabled person sued a state hospital in federal court for alleged employment discrimination. The suit was brought pursuant to the Rehabilitation Act of 1973, a statute which the Court assumed had been enacted under the authority of Section 5 of the Fourteenth Amendment. The statute provided for remedies against "any recipient of Federal assistance," a class that arguably included States.

The Court recognized Congress' power to abrogate a State's immunity in circumstances in which "the usual constitutional balance between the States and the Federal Government does not obtain."(8) The Court went on to hold that in the instant case, the Eleventh Amendment barred recovery from the States because a "general authorization for suit in federal court is not the kind of unequivocal language sufficient to abrogate the Eleventh Amendment."(9) Rather, what is required for congressional abrogation of state sovereign immunity is that the federal statute be "unmistakably clear" that States are included in the defendant class.

Under this more stringent test, the language of many statutes that had been assumed to abrogate sovereign immunity, including the Copyright Act, the Patent Act, and the Lanham Act, failed to achieve that purpose. Thus, there was reason to believe that States might be immune to suits for damages under the Copyright Act and the other federal intellectual property laws..

The Supreme Court issued another significant ruling in 1989 in Pennsylvania v. Union Gas Co. (Union Gas).(10) That case involved a suit by a private company against the State for third-party liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) to recover certain costs to clean a spill of coal tar into a creek.

The Court considered two questions. First, did CERCLA clearly abrogate state sovereign immunity? The Act provided for the liability of "persons" and included within its definition of that term, "States." This provision, along with the presence in the Act of language excepting States from liability in particular circumstances, satisfied the Court that the law was unmistakably clear in its intent to make States liable in all but the excepted instances. Thus, the Court quickly concluded that CERCLA did properly purport to abrogate state sovereign immunity.

The second question the Court considered was whether Congress had authority to enact such an abrogation. CERCLA was enacted pursuant to Congress' Article I, Section 8 authority, specifically, the Commerce Clause. A plurality of the Court found that "to the extent that the States gave Congress the authority to regulate commerce, they also relinquished their immunity where Congress found it necessary, in exercising this authority, to render them liable."(11)

This ruling strengthened the hand of copyright owners. However, the uncertainty arising from the Atascadero decision remained.

As a result of that uncertainty, Congress acted. In 1990 Congress enacted the descriptively-named Copyright Remedy Clarification Act (CRCA).(12) That law added to Title 17 provisions which state in clear terms that remedies for infringement are available against States, and that States "shall not be immune, under the Eleventh Amendment of the Constitution . . . or any other doctrine of sovereign immunity, from suit in Federal Court . . . for a violation of the exclusive rights of a copyright owner . . . ."(13) These clear statements left little doubt that Congress intended to make States liable for infringement and to abrogate their sovereign immunity. Thus, once again, the apparent uncertainty about the immunity of States from suits for damages for copyright infringement was removed.

A substantial portion of the legislative history of the CRCA, which would later become critical, was a June, 1988 report produced by the Copyright Office entitled "Copyright Liability of States and the Eleventh Amendment." That report surveyed the legal history of the Eleventh Amendment and applied contemporary Supreme Court jurisprudence to copyright infringement suits against States. As part of that application, the report cited several instances of alleged copyright infringement by States that had been brought to the Office's attention. Additionally, a Congressional Research Service survey of waivers of sovereign immunity by States and the extent of those waivers was appended to the Copyright Office report.

Congress followed the CRCA in 1992 with the Trademark Remedy Clarification Act(14) (TRCA) and the Patent and Plant Variety Remedy Clarification Act(15) (PRCA). These acts were nearly identical to the CRCA. Taken together, the three acts appeared to settle the issue of state liability for infringement of intellectual property.

The series of positive developments for intellectual property owners ended with the enactment of the TRCA and the PRCA. What followed was a series of highly controversial decisions, almost all by a highly charged 5-4 vote.

Four years after the TRCA and PRCA were enacted, the Court handed down its ruling in Seminole Tribe of Florida v. Florida (Seminole Tribe).(16) That case involved a suit by an Indian tribe under the Indian Gaming Regulatory Act to compel the State of Florida to engage in good faith negotiations with the Tribe. The Act was adopted pursuant to Congress' Article I, Section 8 authority: the Indian Commerce Clause.

The Court considered the same two issues it had considered in Union Gas. The first was whether Congress has "unequivocally expresse[d] its intent to abrogate [state] immunity."(17) The Act left little room for discussion. It instructed that district courts would have jurisdiction to hear cases arising from the failure of a State to engage in good faith negotiations. Obviously, only States could be defendants in such actions and therefore Congress, in enacting this provision, clearly intended the States' immunity to be abrogated. The Court reached this conclusion quickly.

The second issue was whether Congress had authority to enact such an abrogation. At the outset of its analysis, the Court noted that "we have found authority to abrogate under only two provisions of the Constitution . . . the Fourteenth Amendment . . . [and] the Interstate Commerce Clause . . . ."(18) Because the Act being reviewed was adopted pursuant to Article I authority, the Union Gas decision was strong support for the constitutionality of the Act in this case. However, by a 5-4 vote the Court reversed itself and overruled Union Gas, finding that "the background principle of state sovereign immunity embodied in the Eleventh Amendment is not so ephemeral as to dissipate when the subject of the suit is an area, like the regulation of Indian commerce, that is under the exclusive control of the Federal Government."(19) Thus, after Seminole Tribe, Congress had only its authority under Section 5 of the Fourteenth Amendment as a valid source of power to abrogate state sovereign immunity.

This ruling cast a shadow on the constitutionality of the CRCA, PRCA and TRCA. Those laws were most intuitively exercises of Congress' Article I power. Now, in order to sustain the CRCA, PRCA and TRCA, it was necessary to find sufficient authority in the Fourteenth Amendment, which subjected those laws to a much higher level of scrutiny. In his dissent in Seminole Tribe, Justice Stevens noted the potential for the Court's decision to disrupt numerous fields of federal law because "it prevents Congress from providing a federal forum for a broad range of actions against States, from those sounding in copyright and patent law, to those concerning bankruptcy, environmental law, and the regulation of our vast national economy."(20)

The Supreme Court turned to the scope of Congress' Fourteenth Amendment authority the following year in City of Boerne v. Flores (City of Boerne).(21) In that case, the Supreme Court was faced with the constitutionality of the Religious Freedom Restoration Act (RFRA), which Congress had enacted to overrule a previous Court decision and apply the strict scrutiny test to State and local laws of general applicability that had an incidental effect on the free exercise of religion. RFRA had been enacted pursuant to Congress' power under Section 5 of the Fourteenth Amendment. The case was brought under RFRA by a Roman Catholic Archbishop to contest the denial of a permit to expand a church building by the Historic Landmark Commission of the city of Boerne.

The issue before the Court was whether RFRA was a valid exercise of Congress' Fourteenth Amendment authority. By a vote of 6-3, the Court found that it was not because it read RFRA as seeking to alter the substantive meaning of the Fourteenth Amendment and the Free Exercise Clause of the First Amendment.

The design of the Amendment and the text of � 5 are inconsistent with the suggestion that Congress has the power to decree the substance of the Fourteenth Amendment's restrictions on the States. Legislation which alters the meaning of the Free Exercise Clause cannot be said to be enforcing the Clause. Congress does not enforce a constitutional right by changing what the right is. It has been given the power "to enforce," not the power to determine what constitutes a constitutional violation.(22)

The Court went on to expound upon what standards Congress must adhere in order to remain within the bounds of its Fourteenth Amendment power. The key to this analysis is that "[t]here must be a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end."(23)

While this was not a sovereign immunity case, it is crucial to sovereign immunity analysis because, after Seminole Tribe, Congress may abrogate state sovereign immunity only pursuant to the Fourteenth Amendment. Thus, this case set the stage for the courts to review the constitutionality of the CRCA and parallel legislation concerning patents and trademarks.

That brings us to the Supreme Court's triad of opinions on June 23, 1999. It is worth noting that all three of these cases were decided by the same 5-4 vote and all three engendered strong dissenting views. The decision in Alden v. Maine (Alden)(24) undergirded the other two decisions. In that case, John Alden and other employees of the State of Maine filed suit in federal court against that state for violation of the overtime provisions of the Fair Labor Standards Act, a federal law. In light of the Supreme Court's decision in Seminole Tribe, the District Court dismissed the action. The dismissal was upheld by the Court of Appeals.

Petitioners then filed the same action in state court in Maine. The state trial court dismissed the suit on grounds of sovereign immunity and the Maine Supreme Judicial Court affirmed. The United States Supreme Court also affirmed.

The Court's holding in this case went well beyond the routine recognition that a State is a sovereign entity that maintains an immunity to lawsuits by private parties to which it has not consented. The Court's holding is important because of the broad applicability of state sovereign immunity to the State's own courts as well as to the federal courts.

Specifically, the Court reasoned that the Eleventh Amendment was not the origin of state sovereign immunity. Rather,

the States' immunity from suit [in the State's own courts and in federal courts] is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today . . . except as altered by the plan of the Convention or certain constitutional Amendments.(25)

In this view, then,

[t]he Eleventh Amendment confirmed rather than established sovereign immunity as a constitutional principle; it follows that the scope of the States' immunity from suit is demarcated not by the text of the Amendment alone but by fundamental postulates implicit in the constitutional design.(26)

The Court's conclusion that Congress can abrogate a state's sovereign immunity only in narrow circumstances owes it origins to this view. "Although the sovereign immunity of the States derives at least in part from the common-law tradition, the structure and history of the Constitution make clear that the immunity exists today by constitutional design."(27) The Court continued that:

[t]he federal system established by our Constitution preserves the sovereign status of the States in two ways. First, it reserves to them [through the Tenth Amendment] a substantial portion of the Nation's primary sovereignty, together with the dignity and essential attributes inhering in that status . . . . Second, even as to matters within the competence of the National Government, the constitutional design secures the founding generation's rejection of "the concept of a central government that would act upon and through the States" in favor of "a system in which the State and Federal Governments would exercise concurrent authority over the people--who were, in Hamilton's words, the only proper objects of government."(28)

A preponderance of the opinion of the Court purports to demonstrate, through numerous references, the historical accuracy of its view of the origins of state sovereignty. Interestingly, the Court did not extend respect for a State's sovereign immunity into the realm of another State's courts.(29)

The Court concluded its opinion with an implicit recognition of the potential for states to profit unfairly from its ruling. Thus, the Court noted several limits on its holding. First, states may waive their immunity and Congress may provide incentives for such waiver, as provided in South Dakota v. Dole (483 U.S. 203 (1987) .(30) Second, the immunity "bars suits against States, but not lesser entities. The immunity does not extend to suits prosecuted against a municipal corporation or other governmental entity which is not an arm of the State."(31) Additionally, injunctive and declaratory relief are not precluded by state immunity.(32) Clearly, this leaves the States with a tremendous opportunity to evade federal law. The Court provided cold comfort in its declaration that "[w]e are unwilling to assume the States will refuse to honor the Constitution or obey the binding laws of the United States."(33)

In the second of the June 23 cases, the Court applied the principles of its recent decisions to the TRCA in College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd (College Savings).(34) In that case, College Savings Bank sued the State of Florida for false advertising in federal court under section 43(a) of the Lanham Act. In light of the Supreme Court's decision in Seminole Tribe, the District Court granted Florida's motion to dismiss on sovereign immunity grounds. The Third Circuit affirmed. The Supreme Court also affirmed.

The Court considered two avenues through which College Savings' claim could survive state immunity. First, that Congress had abrogated state immunity through enactment of the TRCA. Second, that by participating in the scheme of the Lanham Act, States have waived their immunity by implication.(35)

The Court first turned to the question of whether the TRCA abrogated state sovereign immunity. As I have already outlined, current Supreme Court precedent admits only one source of constitutional authority from which Congress may abrogate state immunity: the enforcement power in Section 5 of the Fourteenth Amendment.(36)

The Fourteenth Amendment instructs in relevant part that "No State shall . . . deprive any person of . . . property, without due process of law."(37) Because the Court held that College Savings did not allege deprivation of a property right within the meaning of the Fourteenth Amendment, the avenue of congressional abrogation of state immunity was closed.(38) The Court did not hold that trademarks are not property. Just the opposite, in fact:

The Lanham Act may well contain provisions that protect consti-tutionally cognizable property interests--notably, its provisions dealing with infringement of trademarks, which are the "property" of the owner because he can exclude others from using them.(39)

However, the Court recognized that College Savings was not suing for trademark infringement, but for misrepresentation. The right to be free from misrepresentation is not, the Court held, a property right within the meaning of the Fourteenth Amendment.(40)

Next, the Court turned to the question of implied state waiver of immunity. Invoking the precedent of Parden, College Savings sought to show that Florida had impliedly waived its immunity by participating in a scheme that is enforceable in federal court.(41) Not only did the Court reject this argument, but it overruled Parden and renounced the doctrine of implied waiver of state immunity.(42)

The Court's holding requires that a state's waiver be explicit and voluntary in order to be effective. However, Congress may provide incentives to the state by conditioning use of its discretionary authority such as that found in the Spending Clause and the Compact Clause on state waiver.(43) Nonetheless, the Court apparently disapproves of the use of at least some Commerce Clause authority in this manner:

In the present case, however, what Congress threatens if the State refuses to agree to its condition is not the denial of a gift or gratuity, but a sanction: exclusion of the State from otherwise permissible activity . . . . [W]e think where the constitutionally guaranteed protection of the States' sovereign immunity is involved, the point of coercion is automatically passed--and the voluntariness of waiver destroyed--when what is attached to the refusal to waive is the exclusion of the State from otherwise lawful activity.(44)

In a companion case, the third of the three opinions issued on June 23, Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, (Florida Prepaid),(45) College Savings Bank sued the State of Florida in federal court, claiming patent infringement. Despite the Supreme Court's ruling in Seminole Tribe, the District Court denied Florida Prepaid's motion to dismiss. The District Court held that Congress had abrogated the State's immunity in this case by virtue of the PRCA.(46) The Federal Circuit affirmed. The Supreme Court reversed.

The question presented was whether Congress' attempt to abrogate state sovereign immunity was valid. The Court considered this question under the two-part test articulated in Seminole Tribe:

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."(47)

The first part of the test was met easily, as the statute was very clear on the point. The second part of the test, however, was not met to the Court's satisfaction.

As noted above, current Supreme Court precedent admits only one source of constitutional authority from which Congress may abrogate state immunity: the enforcement power in Section 5 of the Fourteenth Amendment. It was on this basis that College Savings Bank sought to have the statute upheld. The Court acknowledged that patents are property within the meaning of the Fourteenth Amendment.(48) Thus, the Fourteenth Amendment's provision that "No State shall . . . deprive any person of . . . property, without due process of law" was potentially applicable to patent infringement. However, the Court held that the legislative enactment at issue in this case did not fall within Congress' Fourteenth Amendment power for several reasons.

First, as the Court held in City of Boerne, Congress "must identify conduct transgressing the Fourteenth Amendment's substantive provisions, and must tailor its legislative scheme to remedying or preventing such conduct."(49) The Court found that Congress failed to meet this burden because it did not identify a pattern of patent infringement by states.(50)

Second, the Court recognized that patent infringement by a state is not a violation of the Fourteenth Amendment if the state provides a remedy, that is, due process.(51) Because the statute was drafted to apply to all states, without regard to state-provided remedies, the Court held that it went beyond the power conveyed by the Fourteenth Amendment.(52)

Third, the Court noted that "a state actor's negligent act that causes unintended injury to a person's property does not 'deprive' that person of property within the meaning of the Due Process Clause."(53) Because a claim for patent infringement requires no showing of intent in order for the plaintiff to prevail, the Court held that the legislative enactment at issue in this case was again overbroad.(54)

This decision applied the general rule articulated in City of Boerne, and the high barriers erected by that application spelled almost certain doom for the CRCA, which is closely analogous to the PRCA that the Court struck down in Florida Prepaid. However, a glimmer of hope for CRCA's survival was provided by Justice Stevens' dissent. In acknowledging that the legislative history of the PRCA did not meet the Court's newly articulated standards, Justice Stevens noted that:

The legislative history of [the CRCA] includes many examples of copyright infringement by States . . . Perhaps most importantly, the House requested that the Register of Copyrights prepare a study, which he [sic] described in his transmittal letter as, "a factual inquiry about enforcement of copyright against state governments . . . This report contains comments from industry groups, statistics, and legal analysis relating to copyright violations, actual and potential, by States."(55)

Although the Supreme Court has not ruled directly on the constitutionality of the CRCA, the Fifth Circuit applied the Supreme Court's recent rulings early this year in Chavez v. Arte Publico Press (Chavez).(56) That case involved a suit by an author claiming copyright infringement of her book by the University of Houston, a state university.

The court followed the analysis in Florida Prepaid, first inquiring whether Congress identified a pattern of infringement by States. While noting that the legislative history in support of the CRCA, which included the report of the Copyright Office, was somewhat more substantial than that of the PRCA, the court found that the record was still inadequate to support the legislative enactment. Second, the court noted that in adopting the CRCA, Congress "barely considered the availability of state remedies for infringement."(57) That the legislative history did not meet requirements the Court articulated a decade after the law was enacted is not surprising. Thus, the Fifth Circuit refused to enforce the CRCA.

The same result was reached in another Fifth Circuit case, Rodriguez v. Texas Comm'n on the Arts,(58) in a brief opinion that presumably is based upon the same rationale as that circuit's decision in Chavez. Given the current Supreme Court precedent, it is difficult to find fault with the ruling in Chavez, and we believe that the CRCA most likely is now bad law.

II. The Current Situation

Copyright owners have but one arrow left in their quiver to prevent or deter infringement of their intellectual property rights by States. That arrow is injunctive relief against particular employees of the State. Although the doctrine of state sovereign immunity has been dramatically strengthened in recent years, the Court has thus far retained the injunctive relief available under the reasoning of a 1908 case, Ex parte Young.(59) The reasoning behind this rule is that when a state official acts in violation of valid federal law, that official is by definition acting outside the scope of his official duties because a State clearly cannot lawfully authorize one of its employees to act in violation of valid federal law. And, an employee of a State is cloaked with the State's immunity only when acting within the scope of his duties. Therefore, an employee of a State who acts in violation of a valid federal law is not immune and may be enjoined from that activity.

The Ex parte Young doctrine provides only limited relief, however, because it provides no compensation for the damages already inflicted upon a copyright owner due to past infringement by a State. Moreover, given the Court's movement in recent years, one might question whether this doctrine will remain in force.

The practical question that is begged by the legal analysis is: are the States taking advantage of their immunity to infringe copyrights? Given the legal structure that the Supreme Court has erected, one might very well expect the answer to be in the affirmative. And it may very well be so. Unfortunately, the extent of State infringements is largely unknown at this time, only a year after the decisions in Florida Prepaid, College Savings and Alden. Information on infringements by States has not traditionally been collected, nor is it conveniently available from a single or few sources. Merely reviewing dismissed court cases would overlook a potentially large number of cases never brought because potential plaintiffs see such a suit as futile in the face of the Court's rulings. The question may only be answered, if at all, by a comprehensive study, and even then there is a substantial possibility that numerous complaints that were never brought to court are virtually impossible to find. In effect, it may be logistically impossible to satisfy the Court's demands for legislative findings to support abrogation of state sovereign immunity. What appears certain is that so long as States remain immune from suits for damages from infringements of copyrights and other intellectual property rights, States are likely to be tempted to infringe and the number of actual infringements by States is likely to increase.

Another subject for which a study would be necessary to ascertain the scope of the problem is the availability of alternative state remedies that would satisfy due process. This information is significantly easier to obtain than alleged infringements because, of course, state law is readily available to innumerable researchers throughout the country. It is our presumption that such measures are largely unavailable. We believe this for several reasons. First, based on the CRS report appended to the 1988 Copyright Office study "Copyright Liability of States and the Eleventh Amendment," few States appeared to have waived their immunity for copyright infringement suits in federal court. Moreover, copyright infringement suits may be heard only in federal court, so even if a State has waived immunity in its own courts, they would not offer a proper forum in which the infringement claim could be brought. Finally, State remedies are largely preempted by the Copyright Act. Nonetheless it remains an open question whether the Court would find that a substitute state remedy, such as an action for the uncompensated taking of private property or an action in tort, would not run afoul of preemption and also would satisfy the Fourteenth Amendment's requirement of due process.

We do have some sense of the extent to which States make use of the Copyright Office's registration function. The Copyright Office reviewed the registrations issued to four-year state colleges and universities for monographs(60) since 1978. Over 32,000 such registrations were found. That is an average of 645 registrations for each State. Put differently, on average the Copyright Office has issued a registration for a work by a State (not including State entities other than four-year colleges and universities, and not including serials) once every twelve calendar days for the last twenty-two years. Clearly, States are availing themselves of the copyright protection provided by federal law.

III. Possible Solutions

Although the purpose of this oversight hearing is to explore the nature of the problem rather than to consider legislation to remedy the problem, it is important that this Subcommittee understand what alternatives Congress will have when, as I hope it will do, it decides to redress the imbalance created by the recent decisions of the Supreme Court in this area. Let me make it clear that I believe Congress should act. I recognize that the legislative calendar makes such action highly unlikely this year, and I also understand that many parties crucially interested in this issue believe that further study is required before an effective legislative response can be identified. An effective solution may be difficult to reach in light of the constraints placed upon Congress by the current majority on the Supreme Court.

But legislation should be considered in the next Congress, and I hope that this hearing serves as a valuable first step in that process. Although the Supreme Court has created formidable constitutional impediments to abrogation of States' sovereign immunity, neither the Court nor, I believe, anybody else has asserted that States should not be held accountable when they infringe copyrights, patents or trademarks. As I have already mentioned, States take advantage of the copyright laws by owning valuable copyrights, as reflected in their registration practice. I believe the same is true with respect to patents and trademarks. Why should States be able to enjoy the benefits of federal intellectual property protection if they are not subject to the same burdens that govern other participants in the federal intellectual property system? And even if a State were to decide not to take advantage of copyright, patent and trademark law, should not a State be held responsible for the harm it causes to a copyright owner--or to a patent or trademark owner--when it becomes an infringer?

Several months before the Court handed down its opinions in Florida Prepaid, College Savings and Alden, the Copyright Office (anticipating unfavorable outcomes) began to investigate the options for legislative responses to holdings invalidating the abrogation of sovereign immunity. After the Court ruled, several Members of Congress, including the Chairman of this Subcommittee, asked that we suggest legislative approaches to this problem. In doing so we were guided by two equally important principles: constitutionality and effectiveness. A proposal that fails either of these criteria is of little value.

One option that was considered was to amend 28 U.S.C. � 1338(a) to permit suits against States in state courts. The Supreme Court's decision in Alden, that state immunity in state courts is equal to state immunity in federal courts, virtually eliminates the effectiveness of this option. States still have the ability to block the courthouse door to copyright owners. Permitting suit in state courts would be an improvement only to the extent States have waived their immunity in their own courts.(61) It is not known how many (if any) States fall into that category. Further, those that do could simply revoke that waiver and defeat this maneuver.

There are also certain drawbacks to this approach, even if it were effective. The current exclusive federal jurisdiction to hear copyright cases under 28 U.S.C. � 1338 reflects a congressional determination that the copyright system would function more effectively if relatively uniform decisions could be achieved. If state courts are permitted to hear copyright cases, the potential would exist for at least 50 different interpretations of the same federal statutory provision. Although the final decision rendered in the state court system would be reviewable by the U.S. Supreme Court, the Court would only be able to take a very small fraction of the cases in order to resolve conflicting interpretations.

Additionally, state court judges at all levels have virtually no experience with the copyright law. Even if state courts were given jurisdiction to hear copyright cases against the States, the volume of cases could be expected to be fairly low, affording state court judges little opportunity to gain experience.(62)

Another option we considered is to condition States' receipt of certain federal funds on a waiver of immunity for infringement suits. The leading case for determining the validity of such an enactment is South Dakota v. Dole.(63) That case set forth a four-part test:

  • The exercise of the spending power must be in pursuit of the general welfare;
  • The condition must be unambiguous, enabling the States to exercise their choice knowingly;
  • The conditioned spending must be related to the Federal project or program; and
  • The condition must not be barred by other constitutional provisions.

The first two conditions are satisfied easily. The third is not easily satisfied. Unlike driving and highway funds, copyrights do not easily relate to federal spending.(64) Some have suggested tying waiver of immunity to federal spending on higher education, but this would be politically unpopular, and I would not support legislative action that would penalize our colleges and universities by withholding needed funds simply because state legislatures are unwilling to waive their sovereign immunity. We have not found any case law regarding spending-conditioned waiver of state sovereign immunity, but the Court's decisions in both Alden and College Savings explicitly refer to the spending power as a legitimate means of inducing voluntary State waiver. However, if the Court finds the amount of money conditioned to be so great as to become coercive, it may strike down the condition. There is little or no guidance on what qualifies as coercive in the case law. One legislative drawback of this option is that it might require re-enactment in appropriations legislation every year.

A third option is to empower a federal agency to bring actions against States for violating copyright rights of private parties. State sovereign immunity does not extend to suits brought by the United States. Thus, federal agencies could, at least theoretically, be used to circumvent that immunity.

There are numerous problems with this approach. First, any agency charged with enforcing copyrights against States would probably require significant resources to conduct such actions. During a period when Congress places great emphasis on fiscal discipline, it seems unlikely that such an agency would be adequately staffed and funded.

Second, under the doctrine of Ex Parte Young, a private litigant can bring an action against a state officer to obtain prospective injunctive relief against continuing violations of federal law.(65) In the copyright context that means that an individual can stop a continuing infringement by a State, but has no remedy for the State's past infringements. Unless a structure can be devised whereby the federal agency can obtain damages for past infringements and turn them over to copyright owners, it is difficult to see any advantage to enforcement by a federal agency that cannot already be obtained under Ex Parte Young. Such a structure might have been available in the form of a qui tam suit, where an individual is authorized to pursue a right of action of the Federal Government. However, the use of qui tam suits to circumvent state sovereign immunity is of questionable constitutionality, and the Supreme Court recently noted that "there is 'a serious doubt' on that score."(66)

Third, past rulings of the Supreme Court cast doubt on whether an effort to substitute a federal agency for the copyright owner in order to circumvent state sovereign immunity would be upheld. In New Hampshire v. Louisiana,(67) the Supreme Court dealt with a situation very close to the one contemplated by this option. In that case, several individuals with creditor claims against the State of Louisiana assigned those rights to the State of New Hampshire. Their hope was that New Hampshire would be able to proceed against Louisiana where individuals were met with the roadblock of sovereign immunity. The Court did not allow the scheme to prevail, holding that "one State cannot create a controversy with another State . . . by assuming the prosecution of debts ow[ed] by the other State to its citizens."

Similarly, in North Dakota v. Minnesota,(68) North Dakota sued Minnesota for damages to state and private property as a result of flooding caused by Minnesota's rerouting of a river. The Court noted that the farmers whose lands were damaged contributed to a fund to pay for this litigation and that those contributors would share in any damages award. Citing New Hampshire v. Louisiana, the Court dismissed the claims for damage to private property on grounds of sovereign immunity.

Further, citing these cases, the Supreme Court held in Hawaii v. Standard Oil Co.(69) that:

[a]n action brought by one State against another violates the Eleventh Amendment if the plaintiff State is actually suing to recover for injuries to designated individuals.(70)

It is uncertain whether the Federal Government could succeed in championing the cases of individuals where States could not. However, these decisions cast serious doubt on the constitutionality of this option.

Fourth, expansion of the role of the Federal Government in a sphere that has heretofore been the sole concern of private litigants runs counter to recent trends in government. It would be difficult to defend the use of taxpayer money to litigate on behalf of multi-million dollar corporations. Of course, if the Supreme Court has left no other option for the effective enforcement of intellectual property rights, the justification might be easier to find.

A fourth option is for Congress to abrogate state sovereign immunity by appropriately-tailored legislation under Section 5 of the Fourteenth Amendment. As noted above, the Supreme Court's decision in Florida Prepaid severely limits the application of this option. In order to adopt a strong abrogation provision that would still be within the limitations of Florida Prepaid, the legislation would have to be tailored to meet three criteria.

First, Congress must establish a strong record of infringement by States. If, as would be desirable, the legislation were to include patent and trademark, a record of infringement by States of those rights must be established as well. As noted above, this record is not currently available. Second, the abrogation must be drafted so that it applies only to States that do not provide a remedy or some form of due process to an aggrieved copyright owner. Such remedies need not be equivalent to the standards of Title 17. This option therefore carries with it a risk of undermining national uniformity of copyright protection. It is unclear whether the abrogation must be flexible so as to apply only to States that provide no remedy at the time a particular suit is brought (or for the entire duration of a suit), or whether the availability of remedies at the time of enactment permanently defines the scope of the abrogation. Third, the abrogation may only extend to non-negligent infringement by a State. Additionally, an abrogation provision drafted so as to maximize its chances of surviving judicial scrutiny by requiring individual plaintiffs to demonstrate a deprivation of property without due process, thus obviating the need for extensive legislative findings, might be impractical for individual litigants and thus ineffective.

A fifth option is to condition States' exercise of federal intellectual property rights, including copyright, patent and trademark rights, on a waiver of sovereign immunity for infringement suits. In College Savings, the Court overturned Parden and completely eliminated the implied waiver doctrine. This option, therefore, would have to be structured to induce States affirmatively to waive their sovereign immunity, most likely by state statute. This could be accomplished by rendering state works ineligible for protection in the absence of an express waiver by the State of its immunity in copyright infringement cases. The incentive for States to waive their immunity could be made even stronger by tying the issues of copyright, patent, and trademark infringement together. There is a symmetry to this approach. It is clear and salable, with a compelling proportionality and nexus between the problem and the remedy.

There is language in the majority opinion in College Savings that could be read as a dicta commentary suggesting that if Congress conditions State's access to protections under a law enacted pursuant to the Commerce Clause on waiver of state immunity, such waiver is not voluntary and thus not valid. However, the better reading of the relevant language is that implied waiver is inherently involuntary but that where Congress clearly gives the State a choice, so long as the choice is not coercive, a State's choice to explicitly waive its immunity is effective.

There is little case law on express waiver, and what little there is focuses on whether or not an express waiver occurred, rather than on the State's motivation in waiving immunity. In other contexts of waivers of constitutional rights or immunities, the Court has looked to the circumstances surrounding the waiver and, on occasion, found the waiver to be ineffective where it was essentially coerced. This option arguably contains an element of coercion because it conditions States' enforcement of intellectual property rights on a waiver of immunity.

Some may view this approach as overly coercive, although the Copyright Office has not yet heard a legal argument that persuasively supports that view. There are two strong counter-arguments: First, this approach is no more coercive than the unilateral abrogation of State immunity in current law. While that law is probably unenforceable in light of the Court's rulings, it was nonetheless adopted with the support of many current Members of Congress. Unlike abrogation, States would be given a real choice between waiving immunity or accepting the consequences. As discussed below, many States may take the latter course. Second, there is a strong nexus between the consequences of not waiving immunity and the problem that a waiver is intended to solve. In the absence of waiver, copyright owners are deprived of their rights. This approach merely imposes the same result on non-waiving States. The issue is one of fundamental fairness.

It is far from a foregone conclusion that States will uniformly waive their immunity under this approach. Many States may conclude that immunity from copyright infringement suits serves their interests better than the ability to enforce their own copyrights, and that the same is true with respect to patents and trademarks. Linking all federal intellectual property rights (including copyright, patent, and trademark) together would strengthen the incentive for States to waive their immunity.

After reviewing the above options, the Copyright Office came to two conclusions. First, an approach that would effectively abrogate state sovereign immunity from suits for infringement of federal intellectual property rights would be the most desirable approach. A straightforward return to the status quo as it was before the Supreme Court ruled on the constitutionality of the PRCA and the TRCA would resolve the issue in a fair and equitable way. Unfortunately, that is the one approach that the rulings of the Court have clearly foreclosed. The variation on this approach that would attempt to abrogate sovereign immunity by navigating the minefield of conditions laid down by the Court is problematic. We do not yet know whether Congress could build a record of findings that would satisfy the Court that abrogation is justified. Even if it did, the limitation to cases of non-negligent infringement could lead to denial of relief in a significant number of cases of infringement. We are skeptical whether this approach would satisfy both requirements of constitutionality and effectiveness.

At the beginning of this year, we sent you a draft of legislation that we believe would be both constitutional and effective. It follows the fifth approach that I outlined above. The centerpiece of the proposal is a provision that would prospectively strip a State's intellectual property of protection unless that State waived its sovereign immunity for intellectual property suits in federal court. This provision would effectuate itself by operation of law. For the reasons discussed above, we believe that this approach is the best opportunity for a solution that is both constitutional and effective.

Senator Leahy introduced S. 1835, the Intellectual Property Protection Restoration Act, on October 29, 1999. The overall approaches of the two proposals are similar. The fact that Senator Leahy and the Copyright Office independently arrived at similar approaches after considering a number of alternatives lends support to our belief that it is the best of a number of imperfect alternatives.

We have discussed our proposal with other interested parties and, in response to their comments, have modified it in some respects. This is not the occasion to address the details of our proposal or Senator Leahy's, but we hope that the next Congress will be in a position to consider and enact effective and constitutional legislation that will undo the damage caused by the Court's recent decisions.

Some appear to advocate that Congress not seek to enact a solution right away, but rather wait and see how the situation develops. This approach has the benefit of providing ample time for studies that may be necessary if Congress ultimately chooses to attempt to abrogate state sovereign immunity. However, this approach also delays justice to aggrieved copyright owners, and if Congress ultimately does not choose to enact an abrogation provision, the delay will have been largely unnecessary.

IV. Conclusion

It is only logical that in the current legal environment, without an alteration of the status quo, infringements by States are likely to increase. Only Congress has the power to remedy the existing imbalance, and it is the recommendation of the Copyright Office that it do so. The Supreme Court's rulings and State's rights must surely be respected, but the current state of affairs is unjust and unacceptable. Congress should use the tools it has to prevent the successful assertion of state sovereign immunity where it has become a tool of injustice.

1. "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." U.S. Const., amend. XI.

2. College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 119 S. Ct. 2219 (1999); Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, 119 S. Ct. 2199 (1999); Alden v. Maine, 119 S. Ct. 2240 (1999).

3. Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962).

4. 377 U.S. 184 (1964).

5. Id. at 196.

6. 17 U.S.C. � 501(a).

7. 473 U.S. 234 (1985).

8. Id. at 242.

9. Id. at 246.

10. 491 U.S. 1 (1989).

11. Id. at 19-20.

12. Pub. L. No. 101-553.

13. 17 U.S.C. � 511.

14. 15 U.S.C. �� 1122, 1125(a)(2).

15. 35 U.S.C. �� 271(h), 296.

16. 517 U.S. 44 (1996).

17. Id. at 55 (quoting Green v. Mansour, 474 U.S. 64, 68 (1985)).

18. Id. at 59 citing Fitzpatrick v. Bitzer, 427 U.S. 445, 455 (1976); Pennsylvania v. Union Gas, 491 U.S. 1, 19-20 (1989).

19. Seminole Tribe, 517 U.S. at 72.

20. Id. at 77 (Stevens, J., dissenting).

21. 521 U.S. 507 (1997).

22. Id. at 519.

23. Id. at 520.

24. 119 S. Ct. 2240 (1999).

25. Id. at 2246-47.

26. Id. at 2254.

27. Id. at 2256 (emphasis added).

28. Id. at 2247 (quoting Prinz v. United States, 521 U.S. 898, 919-20 (1997)(quoting The Federalist No. 15 at 109)).

29. Id. at 2258-59 ("[T]he Constitution did not reflect an agreement between the States to respect the sovereign immunity of one another....").

30. Id. at 2267.

31. Id.

32. Id.

33. Id. at 2266.

34. 119 S. Ct. 2219 (1999).

35. Id. at 2222.

36. Id. at 2223.

37. U.S. Const., amend. XIV.

38. College Savings, 119 S. Ct. at 2224-25.

39. Id. at 2224.

40. Id. at 2224-25.

41. Id. at 2226.

42. Id. at 2228.

43. Id. at 2231.

44. Id.

45. 119 S. Ct. 2199 (1999).

46. 35 U.S.C. �� 271(h), 296(a).

47. Florida Prepaid, 119 S. Ct. at 2205.

48. Id. at 2206.

49. Id. at 2207.

50. Id.

51. Id. at 2208.

52. Id. 2210.

53. Id. at 2209 (citing Daniels v. Williams, 474 U.S. 327, 328 (1986)).

54. Id. at 2210.

55. Id. at 2215 n.9 (Stevens, J., dissenting).

56. 204 F.3d 601 (5th Cir. 2000).

57. Id. at 606.

58. 199 F.3d 279 (5th Cir. 2000).

59. 209 U.S. 123 (1908).

60. Monographs are individual works such as a book, poem, or song. Not included in the survey were serial registrations such as magazines. Based on a brief investigation into the number of serials registered by certain state universities, the Copyright Office has reason to believe that such registrations may approach or even equal the number of monograph registrations that were found.

61. This assumes that States will generally not waive their immunity in federal courts without some incentive. Of course, where a State has waived its immunity from suits to enforce intellectual property rights in federal courts, no remedy is needed.

62. Similar concerns underlie the exclusive federal jurisdiction for patent infringement cases.

63. 483 U.S. 203 (1987).

64. The same is most likely true with respect to patents and trademarks.

65. In Seminole Tribe, the Court held that the plaintiff could not use Ex parte Young to enforce the federal statute at issue. The statute contained detailed remedial provisions and the Court found that permitting the plaintiff to proceed under Ex parte Young would, in effect, create a judicial remedy that Congress did not intend. Although this does not appear directly applicable in the copyright context (the Copyright Act authorizes injunctions against infringers), it could signal that the Court will take a more restrictive view of Ex parte Young in future cases.

66. Vermont Agency of Nat. Resources v. Ex Rel. Stevens, 120 S. Ct. 1858, 1870 (2000).

67. 108 U.S. 76 (1883).

68. 263 U.S. 365 (1923) .

69. 405 U.S. 251 (1972).

70. Id. at 258 n. 12 (citations omitted).