Sovereign Immunity

• Author: International Law Group
• Pages: 37-38

Page 37

The Board of Regents of the University of Texas System (UT) and Hydro-QuÈbec (HQ) (Plaintiffs) filed a suit in a Texas court alleging that a scientist of Nippon Telegraph & Telephone Corporation (Defendant) acquired certain confi dential information while at the University of Texas at Austin in 1993-1994. Defendant supposedly used that information to apply for a Japanese patent related to the technology of lithium rechargeable batteries. In the meantime, UT applied for a provisional patent for similar technology and signed a licensing agreement with HQ. Plaintiffs now claim that Defendant's Japanese patent interferes with their licensing agreement.

Defendant eventually removed the case to federal court where it filed a motion to dismiss. The district court denied the motion. Defendant then filed this interlocutory appeal, claiming that it is immune from suit as an "organ of a foreign state" under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. ß 1603(b)(2).

The U.S. Court of Appeals for the Fifth Circuit affirms and remands for the district court to send it back to Texas state court. In its view, Defendant is not entitled to foreign-sovereign status under the FSIA.

Defendant bases his immunity claims on 28 U.S. C. ß 1604. It provides generally that: "[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States ..." The definition of "foreign state" includes "an agency or instrumentality of a foreign state." 28 U.S.C. ß 1603(b).

The Circuit Court, however, is not persuaded. "Our caselaw has developed a fi ve-factor framework to assist in determining organ status: "(1) whether the foreign state created the entity for a national purpose; (2) whether the foreign state actively supervises the entity; (3) whether the foreign state requires the hiring of public employees and pays their salaries; (4) whether the entity holds exclusive rights to some right in the [foreign] country; and (5) how the entity is treated under the foreign...