October 2017
The Restasis Patents and Tribal Sovereign Immunity: New Developments

The battle between Mylan and Allergan over the six Orange Book patents covering Restasis has taken a next formal step. On Sept. 22, the new patent-owner, the Saint Regis Mohawk Tribe, moved to dismiss Mylan’s requests for inter partes review (“IPR”) of the patents at the U.S. Patent Trial and Appeal Board (“the PTAB”).

The Tribe’s move was expected following news earlier this month that Allergan transferred ownership of the Restasis patents to the Tribe, which is a recognized sovereign tribal government. At the same time, the Tribe granted to Allergan an exclusive, limited field-of-use patent license. If Allergan’s strategy succeeds in blocking Mylan’s IPR challenge, it will likely pave the way for other companies to follow suit.

More companies could seek to protect patents from IPR attacks by transferring patents to a recognized tribal sovereign and then claiming the tribal sovereign immunity defense, at least unless and until Congress might choose to change the law.

New Details Offered in the Tribe’s Motion

In its brief, the Tribe asked the PTAB to dismiss Mylan’s IPR challenge because the PTAB doesn’t have jurisdiction over the Tribe, pointing to legal precedent which establishes that sovereign entities, such as the federal government, states and Native American tribes, may not be sued without an express waiver of immunity, or without abrogation of the immunity by Congress. The Tribe argued it has not waived, nor has Congress abrogated its immunity from patent suits.

State sovereign immunity has successfully been asserted as a defense in recent IPRs challenging patents owned by State universities. The Tribe pointed to Covidien LP v. University of Florida Research Foundation Inc. and to Neochord, Inc. v. University of Maryland. Some important differences exist between the two cases, but in both the PTAB upheld the university’s claim to sovereign immunity and dismissed IPR proceedings against the university-owned patents, even for patents exclusively licensed to commercial entities. In both instances the PTAB concluded that Congress did not choose to limit a State patent owner’s sovereign immunity in the Patent Act.

The Tribe also noted that as the sole patent owner, it is an indispensable party, without whom the case may not proceed, and that Allergan’s license is restricted to a particular field of use and thus Allergan lacks the authority and ownership interest to be a sole participant in the proceeding. Other points emphasized in the brief are that (i) the Tribe’s retention of substantial rights in the patents means that Allergan as licensee does not share identity of rights with the Tribe; and (ii) the Tribe’s patent ownership is a critical component of the Tribe’s commitment to create a technology and innovation center for commercialization technologies to generate revenue to address the many unmet social needs of Tribe members. Mylan has until Oct. 13 to answer the Tribe’s brief before the PTAB decides on the Tribe’s motion to dismiss.

The Allergan strategy relying on tribal sovereign immunity to defend against an IPR challenge presents a case of first impression for the PTAB. Professional opinions vary as to whether the Tribe’s motion will be denied because the PTAB will view the Tribe-Allergan deal as essentially a sham arrangement, or the motion will succeed for reasons including that the U.S. Supreme Court has found that tribal immunity is broader than state sovereign immunity because Native American tribes were not present at the constitutional convention. Industry, Native American tribes and the patent bar are all keenly interested in the PTAB analysis of the Saint Regis Mohawk Tribe’s tribal sovereign immunity claim, and whether the PTAB will analogize more closely to those IPRs involving state universities or to cases involving corporate veil piercing. If the PTAB goes with the former, a remaining question will be whether the same strategy can effectively be applied more broadly to defend against patent challenges outside the USPTO, in patent litigation in federal court.

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