New Mexico has many people who invent things and whose businesses include trademarks. Sometimes, patents covering inventions and trademarks represent a large part of business value.

Last June 23, the U.S. Supreme Court handed down a group of opinions changing patent and trademark law when an infringement dispute involves a state.

Most people think of states as the governor and agencies under him, the legislature and the courts.

However, the law defines states more broadly. They include all agencies and units of government that exist because they were created by state action of some kind. Public school systems, arroyo flood control districts, municipal and county governments, state colleges and universities and many other agencies fall within the definition.

Off To College
College Savings Bank in New Jersey devised a program that allowed families to save -- in what was essentially an annuity -- for college educations for their children. The plan was novel, so College Savings won a patent protecting it.

Lawyers joke that a patent really is a lawsuit ticket, but College Savings Bank may miss the humor. It wound up with two cases in the Supreme Court.

The Florida Prepaid PostSecondary Education Expense Board then set up a similar plan, which used many of the New Jersey bank's patented techniques.

Foreseeing such problems, Congress, about 10 years ago, enacted the Patent Remedy Act. This statute makes it clear that states, their instrumentalities and their employees will not be immune from patent-infringement lawsuits.

This statute covered College Savings Bank like a blanket. So the company sued in federal court, just as the federal statute provides.

Courts, God And Immunity
Governments, including the feds, states and Indian tribes, are immune from lawsuits. They can't be sued unless they agree to be sued. Immunity stems from the medieval doctrine that the king could do no wrong, because he was crowned by a bishop, who, as a member of the apostolic succession, represented God's authority.

The 13 original British colonies were sovereign. When they adopted the Constitution and became the new nation of United States, they brought immunity with them. That immunity has been extended to the 37 states admitted to the Union since. Through the years, the doctrine has proved both durable and obnoxious. States use it to escape consequences of misdeeds -- the doctrine has no other purpose.

Today, state and federal governments make a few exceptions for such occurrences as auto accidents. West Virginia, however, allows no exceptions, nor do Indian tribes in the Southwest, but sovereign immunity cuts both ways.

Down The Tubes
About three years ago, the Seminole tribe, following provisions of the Indian Gaming Regulatory Act, tried in federal court to force Florida's governor to negotiate compact terms. New Mexico's gambling tribes had a similar case pending against former Gov. Bruce King.

Subsequently, the U.S. Supreme Court ruled that Florida was immune. The Seminoles' case went down the tubes, as did the suit against King.

College Savings Bank's case also focused on the power of Congress by statute to allow suits against states that haven't waived immunity. The Constitution's 11th Amendment prohibits cases in federal courts against states whose immunity is intact. Such suits, said the justices, stand up if immunity is waived, or when the purpose of the case is to enforce due process rights.

Florida hadn't waived anything, but College Savings tried hard to convince the justices that the state competed unfairly by using the bank's patented methods.

Good Idea, No Evidence
The Supreme Court didn't buy that for a minute. There was no evidence, said the justices, that states were going around transgressing in wholesale fashion on patent and trademark rights. Justices ignored poor College Savings Bank, which watched Florida use its methods. The bank by itself wasn't enough.

Justices observed, but only in passing, that state colleges and universities are the largest transgressors of patent, copyright and trademark rights. They copy everything for classroom and meeting handouts, calling it fair use.

Still, for now, business people dealing with states and their subdivisions may want to be cautious when it comes to goods and services covered by patent, copyright and trademark law. A state can copy your book, your pictures, your software, your methods of doing business and scientific tasks, and a great deal more, all without your consent.

If you don't like it, you can tell it to Supreme Court Justices Rehnquist and Scalia.

As an alternative: Don't do business with the state. This would be difficult for many, but as College Savings Bank learned, the state need not do business with you to steal your knowledge.

For those who want to read more, the lead case was Florida Prepaid Post-Secondary Education Expense Board v. College Savings Bank, No. 98-531 on the docket of the Supreme Court of the United States. On the Internet, check http://supct.law.cornell.edu/supct/.

Martin Paskind is an Albuquerque lawyer. His practice emphasizes legal services to small businesses. Questions or comments can be mailed to him in care of the Albuquerque Journal, P.O. Drawer J, Albuquerque, N.M. 87103. This column is not intended to provide legal advice to any specific person, or with respect to any particular problems or situations.
For advice on specific problems and circumstances, contact your attorney.