Despite the splintered, three-opinion decision issued by a Federal Circuit panel in July, the Federal Circuit, on October 20, denied Baylor College of Medicine’s petition for rehearing, either by the panel or en banc. In the original decision, the Federal Circuit held that due to Eleventh Amendment sovereign immunity, the University of Texas (“UT”) could not be involuntarily joined by its licensee, Gensetix, as a plaintiff to a patent infringement lawsuit. Nonetheless, despite prior case law finding that a patent owner (or someone with substantially all rights to the patent) is a necessary party, the Federal Circuit reversed the lower court to allow Gensetix to proceed on its own with the patent infringement action against Baylor College of Medicine.
On the issue of state immunity, Gensetix argued that because the case was not against UT, the text of the Eleventh Amendment provided no barrier to joinder. Relying on Supreme Court precedent, the Federal Circuit rejected that argument. The Court explained that the Eleventh Amendment is broader than its terms and that “[i]t is immaterial that there are no claims against UT, or that UT is named an involuntary plaintiff rather than an involuntary defendant. The Eleventh Amendment serves to prevent ‘the indignity of subjecting a State to the coercive process of judicial tribunals’ against its will.” In the absence of a state voluntarily availing itself of federal court jurisdiction, or an express waiver of sovereign immunity, Rule 19(a) must yield to the state’s assertion of sovereign immunity. Accordingly, the Court concluded that Rule 19(a)(2) could not be used to drag an unwilling UT into federal court.
On the issue of whether the plaintiff could proceed absent a necessary party under Rule 19(b), the Federal Circuit said yes, reversing the lower court’s ruling on that issue. The lower court abused its discretion by not properly analyzing the four-part Rule 19(b) test to determine whether “in equity and good conscience” the action should proceed or be dismissed. Instead, the district court reduced those factors to a single dispostive fact—that UT had sovereign status.
The four factors that should have been addressed were: (1) the extent to which a judgment rendered in the party’s absence might prejudice that party or existing parties; (2) the extent to which any prejudice could be lessened or avoided; (3) whether a judgment rendered in the party’s absence would be adequate; and (4) whether the plaintiff would have an adequate remedy is the action were dismissed for nonjoinder. In a proper, nuanced inquiry, the factors would lead to the action proceeding without UT. Gensetix held an exclusive license in every field, making UT’s and Gensetix’s interests identical. As such, Gensetix’s protection of its own interest would also protect UT’s interest, with any prejudice to UT being minimal. There was no risk of multiple suits because, under the express terms of the parties’ license, UT may not sue once Gensetix has commenced litigation. And, as an exclusive licensee with less than all substantial rights in the patents-in-suit, Gensetix could not enforce its patent rights without the court allowing the suit to proceed in UT’s absence. Because the lower court abused its discretion, the Federal Circuit reversed allowing the suit to proceed in UT’s absence.
This case underscores the importance of careful license drafting, especially when the licensor is a sovereign entity.
 Judge O’Malley wrote the majority opinion. Judge Newman agreed with Judge O’Malley that the action could proceed without UT, but disgreed that UT had Eleventh Amendment sovereign immunity from joinder. Judge Taranto agreed with Judge O’Malley that UT should not have been joined but dissented from the majority opinion that the action should have proceeded in UT’s absence.
 Gensetix, at *10.
 When it comes to suits between private parties, Gensetix correctly asserted that a patentee who refuses to voluntarily join can be involuntarily joined as a plaintiff under 19(a). But the same does not hold true for states.
 Fed. R. Civ. Pro. 19(b).