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IP Alert: PTAB Panel Says Tribal Immunity No Defense to Inter Partes Review

February 27, 2018

Last Friday, in Mylan Pharmaceuticals Inc. et al. v. Saint Regis Mohawk Tribe, a panel of the Patent Trial and Appeal Board (PTAB) decided that the Saint Regis Mohawk Tribe’s assertion of sovereign immunity cannot be used to terminate the inter partes review (IPR) of six patents covering Allergan’s popular dry-eye drug Restasis®. This decision marks the first time the PTAB has had occasion to address whether tribal sovereign immunity may be used as a defense to an IPR.

In 2017, the PTAB found in a series of decisions that state universities, as arms of the sovereign state, were immune under the Eleventh Amendment from being subject to IPR proceedings against their will. In one instance, the PTAB decided that an IPR could not continue with an exclusive licensee in place of an immune sovereign patent owner. These decisions prompted Allergan and the Saint Regis Mohawk Tribe to attempt a novel strategy to shield Allergan’s patents from being reviewed in ongoing IPRs. Allergan paid the tribe $13.75 million to take the patents in exchange for the tribe’s promise to assert sovereign immunity as a defense to the IPRs. Concurrently, the tribe granted Allergan an exclusive license to the patents in exchange for $15 million a year in future royalties.

After the transaction was completed, and shortly before oral argument was to be held, the tribe notified the PTAB it had acquired the patents and requested permission to file a motion to dismiss the proceedings as an immune sovereign. Allergan also asked to be dismissed from the proceedings, contending it was no longer the patent owner.

The PTAB reasoned that IPR proceedings were created by a generally applicable statute to which tribal sovereign immunity does not apply. In addition, the PTAB found that “reconsideration of the patentability of issued claims via inter partes review is appropriate without regard to the identity of the patent owner”; notably, this pronouncement appears to be at odds with the prior decisions finding state universities to be immune from IPR.

The PTAB also held that even if the tribe were immune, the IPRs could continue with Allergan alone despite the assignment of the patents to the tribe. The panel reviewed the license agreement and found it transferred all of the substantial patent rights back to Allergan, such that Allergan remained an owner of the patents. Further, the PTAB found the tribe was not an indispensable party to the IPR because Allergan has “at least an identical interest” to the tribe in defending the patents, “if not more of an interest."

In view of these determinations, the PTAB denied the Saint Regis Mohawk Tribe’s motion to dismiss the IPR proceedings. This decision, although not binding in other IPR proceedings, will be of interest to those considering ways to defend patents from review in an IPR.

For more information on this ruling, please contact Fitch Even partner Paul B. Henkelmann, author of this alert.

For additional background on sovereign immunity at the PTAB and beyond, including discussion of the case described above, you can view a recording of last week’s Fitch Even webinar, Immunity for Sale? Tribal and State Sovereign Immunity at the PTAB, accessible at no charge through our “Webinars” page here.

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