July 24, 2018
On July 20, in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. et al., the Federal Circuit held that tribal sovereign immunity cannot be asserted in an inter partes review (IPR) proceeding.
As previously reported, the Saint Regis Mohawk Tribe became involved in an ongoing patent dispute between Allergan and generic competitors including Mylan Pharmaceuticals when the tribe acquired the patents at issue (directed to Allergan’s dry-eye drug Restasis®) for a payment of $13.75 million. The tribe licensed the patents back to Allergan for $15 million a year in future royalties, in exchange for the tribe’s promise to assert sovereign immunity as a defense to IPRs filed against the patents. The tribe filed a motion to terminate the proceedings, but a panel of the Patent Trial and Appeal Board (PTAB) denied the tribe’s motion, finding that tribal sovereign immunity does not apply to IPRs. The tribe appealed.
The Federal Circuit affirmed. The court reasoned that under applicable Supreme Court precedent, IPRs are not similar enough to civil litigation that tribal sovereign immunity from suit should apply. In particular, the court determined that an IPR proceeding is more like an agency enforcement action where immunity does not apply. For example, the USPTO Director acts as a gatekeeper with complete discretion whether to institute trial on an IPR petition, and the PTAB has the authority to proceed in the absence of the parties in some instances. In summary, the court found that “the USPTO is acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies ‘within their legitimate scope.’” Thus, the court affirmed the PTAB’s denial of the tribe’s motion to terminate.
Although the court expressly noted that it was not deciding whether state sovereign immunity should apply to IPRs, nothing in its reasoning was based on any unique characteristic of tribal sovereign immunity or a difference between tribal and state sovereign immunity. Notably, the PTAB has decided in prior decisions that state universities may assert sovereign immunity from IPR proceedings. This decision raises questions regarding the continuing viability of the state sovereign immunity defense in IPRs.
We expect the tribe to seek en banc review or Supreme Court review and will report back with any further developments. In the meantime, for more information on this ruling, please contact Fitch Even partner Paul B. Henkelmann, author of this alert.
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