Source: https://georgetownlawtechreview.org/in-search-of-ip-protection-tribal-immunity-falls-short/GLTR-03-2018/
Timestamp: 2019-04-20 22:57:01+00:00

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On Friday, February 23, 2018, the Patent Trial and Appeal Board (PTAB) ruled against the St. Regis Mohawk Tribe’s motion to terminate a patent challenge on the basis of sovereign immunity.1Mylan Defeats Allergan’s Maneuver to Rent Tribal Sovereign Immunity to Avoid Restasis® Patent Challenge, MYLAN (Feb. 23, 2018), http://newsroom.mylan.com/2018-02-26-Mylan-Defeats-Allergans-Maneuver-to-Rent-Tribal-Sovereign-Immunity-to-Avoid-Restasis-R-Patent-Challenge. The unique circumstances that led to a Native American tribe holding the patents of the blockbuster drug Restasis were the subject of much controversy in September 2017, when the pharmaceutical giant Allergan first announced its transaction.2See Jody Karol, Patents for Restasis Are Invalidated, Questions About Allergan-Tribe Patent Deal Linger, GEO. L. TECH. REV. (Dec., 2017), https://georgetownlawtechreview.org/patents-for-restasis-are-invalidated-questions-about-allergan-tribe-patent-deal-linger/GLTR-12-2017/. The drug company transferred its patents to the St. Regis Mohawk Tribe, attempting to use sovereign immunity to avoid proceedings which might rule its drug patents invalid.3See id. Allergan’s ongoing license came with a one-time payment of $13.75 million to the tribe, and the potential for $15 million annually if the patents remained valid.4See Katie Thomas, How to Protect a Drug Patent? Give It to a Native American Tribe, N.Y. TIMES (Sept. 8, 2017), https://www.nytimes.com/2017/09/08/health/allergan-patent-tribe.html. The transaction may in hindsight appear to be a grave miscalculation following the PTAB ruling, but it was not baseless; it sought to escape a procedure—inter partes review (IPR)—criticized for serving as a “patent death squad.”5Matt Levy, Death to All Patents? Really? Why Inter Partes Review Shouldn’t Be Controversial, IPWATCHDOG (Nov. 6, 2015), http://www.ipwatchdog.com/2015/11/06/death-to-all-patents-inter-partes-review/id=62935/. The outcome likely closes the door on evasive techniques by patent holders and leaves the last word on IPRs to the upcoming Supreme Court decision in Oil States v. Energy Group where the Court will determine the constitutionality of the proceeding.6Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, SCOTUSBLOG, http://www.scotusblog.com/case-files/cases/oil-states-energy-services-llc-v-greenes-energy-group-llc/ (last updated Mar. 8, 2018).
In the recent ruling, the PTAB held that the St. Regis Mohawk Tribe established neither that sovereign immunity applied to their IPR proceedings nor that Allergan’s commercial interests wouldn’t allow the IPR to continue.7Mylan Defeats Allergan’s Maneuver to Rent Tribal Sovereign Immunity to Avoid Restasis® Patent Challenge, supra note 1. The PTAB emphasized that Allergan’s continued interests in the patent’s validity being tested under the IPR supported a ruling that sovereign immunity should not shield the patents from the proceeding.8See id. Though this ruling on sovereign immunity comes from administrative patent judges, it clearly has support from at least one Article III judge: Senior United States Circuit Judge William Bryson of the Federal Circuit.9See Katie Thomas, Patents for Restasis Are Invalidated, Opening the Door to Generics, N.Y. TIMES (Oct. 16, 2017) https://www.nytimes.com/2017/10/16/health/allergan-restasis-patent-.html. Judge Bryson, sitting in designation in the Eastern District of Texas over Allergan’s Hatch-Waxman litigation involving the Restasis patent, criticized the acts of private companies seeking to “monetize” sovereign immunity.10See id. This criticism of such transactions would not bode well for Allergan if it were to appeal the PTAB ruling on the constitutional question of sovereign immunity (allowed under Cuozzo Speed Technologies, LLC v. Lee), as an appeal would be directed to Judge Bryson’s home court—the United States Court of Appeals for the Federal Circuit.11Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, 2136 (2016).
Although sovereign immunity was successfully used in January of 2017 by the University of Florida as a basis for dismissing three IPR proceedings,12Mary Anne Schofield et al., When It Comes to IPRs Are University Patents Bullet Proof?, LEXOLOGY (Feb. 2, 2017) https://www.lexology.com/library/detail.aspx?g=2deb3f53-13bd-448e-ac34-f60de4a560c8. the circumstances of Allergan and the St. Regis Mohawk Tribe differ. Whereas the University of Florida was the sole owner of its patent, the PTAB emphasized “joint ownership” between Allergan and the St. Regis Mohawk Tribe as the basis for continuing the IPR proceeding.13Mylan Pharmaceuticals Inc., 8,629,111 B2, 2018 WL 1055669 (Patent Tr. & App. Bd. Feb. 23, 2018). Unlike a single entity owning and operating the patent, such as a state university, Allergan retains its commercial interest in the patents held by the tribe and entered the transaction seeking to benefit from the sovereign immunity status. The continuation of the PTAB proceeding for Allergan likely has little value in this case since a federal court already invalidated the Restasis patent,14Thomas, supra note 9. but it establishes the PTAB’s position for future “rent a tribe” arrangements.
Though the door has seemingly closed on tribal patent transfers, patent holders concerned with IPR proceedings still can await the Supreme Court ruling in Oil States for the future. The ruling in Oil States will resolve the question of whether IPR proceedings violate the Constitution by extinguishing private property rights—the patents—without a jury by using administrative judge rulings.15Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, supra note 6. Some patent holders express concern over the “double jeopardy” scenario where their patents are expected to pass validity thresholds both under a federal district court judge as well as with the PTAB.16Thomas, supra note 9. Others, such as Neal Solomon, CEO of Advanced System Technologies, Inc., criticize IPRs for violations of due process, citing “judge biases . . . lack of a presumption of validity, ignorance of the clear and convincing evidentiary standard and limited ‘discovery’” in the proceedings.17Gene Quinn, Predicting Oil States After Supreme Court Oral Arguments, IPWATCHDOG (Nov. 28, 2017) http://www.ipwatchdog.com/2017/11/28/predicting-oil-states-supreme-court-oral-arguments/id=90558/. Oil States will answer the question of whether IPRs are constitutional,18Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, supra note 6. but until then Allergan is left with a disappointing and potentially final chapter in its tribal sovereign immunity gambit.

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