Proponents of states, which are major users of licensed products such as software, say the Constitution bars aggrieved companies from suing states in federal court in most circumstances and that, short of a new amendment, nothing can change that. Advocates for private companies disagree, saying that states should be accountable, like anyone else, when their employees infringe someone's intellectual property.
Under the 11th Amendment, states are deemed "sovereigns" that are immune from most federal lawsuits. Appeals courts are split on whether states can waive that immunity. College Savings Bank vs. Florida Prepaid Postsecondary Education Expense Board is expected to settle the matter once and for all.
Software advocates say the case will be important to their attempts to root out piracy.
"Some of the major customers for computer software and other information services are state governments and their agencies," said Mark Traphagen, general counsel at the Software and Information Industry Association, formerly the Software Publishers Association. "The question that's presented is, does Congress have the power to make state governments liable for violations of the federal law?"
Until recently, courts held that Congress could override, or "abrogate" a state's immunity simply by enacting a law. But a Supreme Court ruling in 1996 changed that. It held that a state's "sovereign immunity" rights were absolute and that, short of amending the Constitution, Congress was unable to do anything about that in most cases.
Since that ruling, however, appeals courts have differed on whether states can involuntarily waive their immunity rights when they assert their own intellectual property rights or take other actions. An appeals court in Washington, D.C., for instance, ruled that states do not give up their rights merely be enforcing patents against private companies. But an appeals court in Texas arrived at a different conclusion in a copyright case.
People on both sides of the issue say the case will be ground-breaking.
"There's absolutely no reason to treat state government offices using copied software any differently than private businesses or organizations," said Bob Kruger, vice president of enforcement at the Business Software Alliance. "The arguments that the states have been asserting are not well-founded on policy grounds, and I hope that the court finds they're not well-founded on constitutional grounds, either."
But for Gerald Dodson, an attorney that represents the University of California in a high-profile patent dispute with biotech giant Genentech, the issue boils down to the proper relationship between states and the federal government, as spelled out in the Constitution.
"The 11th Amendment was passed to insulate the states from the federal judiciary, and there's nothing that Congress can do about that by passing a federal law saying states are subject to federal jurisdiction, absent passing a new amendment." A partner at Arnold White & Durkee, Dodson wrote an amicus, or friend-of-the-court brief in the Texas appeals case.
But Joseph Re, a Knobe Martens Olson & Bear lawyer who wrote an opposing amicus brief in the case, disagreed, arguing that Congress does in fact have authority under the Constitution to abrogate a state's immunity.
"States should be accountable for infringement under the Copyright and Patent Act because patents and copyrights are property," said Re, who argued on behalf of the American Intellectual Property Law Association. "Under the 14th Amendment, states cannot deprive one of property rights."