It was an all-Texas affair at the U.S. Court of Appeals for the Federal Circuit on Tuesday as lawyers from Vinson & Elkins, Baker Botts and Skiermont Derby hashed out a patent dispute that poses novel issues of sovereign immunity.

Skiermont Derby's Paul Skiermont argued to the D.C.-based appellate court that the University of Texas had unfairly granted his client, Gensetix Inc., the right to license a cancer treatment developed at the university, but then refused to join in a suit against alleged infringers at the Baylor College of Medicine.

When a patent is jointly owned, both owners must participate for the lawsuit to go forward. The Supreme Court has said that a patent holder can be involuntarily joined to a lawsuit if there's no other way of securing justice for a licensee. But U.S. District Judge Andrew Hanen of Houston ruled that UT's sovereign immunity trumped that principle and dismissed the case.

Skiermont argued Tuesday in Gensetix v. The Board of Regents of the University of Texas System that the Eleventh Amendment shields states only from being sued as defendants. "There is no case that prevents a sovereign from being named as an involuntary plaintiff," he said. Plus, UT's license agreement with Gensetix requires it to bring lawsuits whenever it learns about infringement, putting it in an untenable situation, he said.

Federal Circuit Judge Richard Taranto noted that even as a plaintiff, UT could be putting the validity of its patent at risk in a lawsuit. "The point is not to subject sovereigns unwillingly to the judgment of a court," he said. "So why does it matter whether you put a P or a D in front of their party status?"

Baker Botts partner Michael Hawes echoed that theme in his argument for Baylor. "The key issue for sovereign immunity and the Eleventh Amendment is that the court does not have the power to adjudicate the state's interest in property without the state's consent," he said.

But Judges Pauline Newman and Kathleen O'Malley questioned how the licensing agreement could possibly be valid.

"Why would anyone ever make a deal with a state, or in this case with a university," Newman asked Hawes. "You're not even rolling the dice. You're just saying, whatever it is, I lose."

O'Malley told Vinson of counsel Peter Mims, representing UT, that "UT's actions in this case are nullifying the license agreement."

"They're nullifying the bringing of a lawsuit at this time," Mims said, reminding O'Malley that when Texas "entered the union, they maintained their sovereignty."

"I don't have any problems with sovereign immunity generally," O'Malley told him. "What I'm saying is as a commercial actor they entered into a license agreement." UT could have spelled out in that agreement that Gensetix could sue only with the university's approval, she said.

Mims stressed that the license agreement explicitly reserves the university's sovereign immunity.

Newman said that even if sovereign immunity applies, UT might have waived it. "Once you choose as a university … to participate in the patent system, to participate in licensing, income generation, royalties and all the rest of it, you're on the same playing field as anyone else," Newman said.