Last October, a federal appeals court in Washington reignited a heated debate over patent infringement that may now be headed to the US Supreme Court. At issue is sovereign immunity, which protects states - including state universities - from being sued for patent infringement in the federal court system. Yet, state universities can sue others for patent infringement. In other words, they can have it both ways.

And so a little-known company, Biomedical Patent Management, is hoping the Supremes will hear its argument that such immunity is not only unwarranted, but unfair. The company’s lawyers recently filed a request, known as a petition for writ of certiorari, for the court to hear its case, which has potentially far-reaching ramifications for industries, notably drugmakers and biotechs, that invest large sums to create and defend their inventions.

“The judgements these universities win raise the cost of research and development, and manufacturing and more,” says Andrew Dhuey, one of Biomedical’s attorneys, who notes that private universities, for example, have no right to sovereign immunity. “They’re very big patent litigators. And the University of California is the biggest of them all. And for them, it’s sue, but never be sued.”

Indeed, California has successfully alleged some sizeable patent infringement claims - between 2000 and 2006, there were more than $900 million in judgments and settlements in patent-infringement actions, according to the company’s Supreme Court filing. Genentech, for instance, paid a $200 million settlement. Over the last 20 years, however, sovereign immunity was cited by the university to dismiss a half dozen patent challenges.

That brings us to Biomedical, which sought royalties on a patented method of screening birth defects, but lost after the University of California raised its patent shield. The patent is Biomedical’s only asset, so a great deal is at stake. PhRMA and BIO, meanwhile, are considering filing friend-of-the-court briefs. Whether the Supreme Court agrees to hear the case, or seek the opinion of the US Solicitor General, remains to be seen, but Dhuey and his colleagues make a compelling argument:

“A state has no right simultaneously to use the federal courts to extract revenue from industry competitors and to avoid any responsibility in those same courts for its own actions,” they write. “The Eleventh Amendment (which grants states sovereign immunity) is not a license to print money, and those who drafted (the amendment) would never have embraced California’s exploitative interpretation, which has little to with sovereignty and everything to do with unjust financial enrichment.

“All (Biomedical) has ever sought is a level playing field for enforcing patent rights. When a state can enter and exit the judicial arena at its pleasure, non-state actors are severely handicapped. And when states manipulate the courts to gain a competitive edge in the patent market, they jeopardize the balance struck by Congress in creating incentives for inventors to innovate by giving them a time-limited monopoly.”

It’s hard not to agree with such logic. Even US District Court Judge Marilyn Hall Patel, who dismissed the case two years ago, appeared to sympathize: “The court is indeed troubled by the University of California’s ability to reap the benefits of the patent system without being exposed to liability for infringement. Similarly situated private universities enjoy no such advantage.” The law, however, remains the law. Unless the Supreme Court is willing to restore some balance to the system.