Allergan-tribe ruling raises questions over immunity at PTAB: lawyers

The US Court of Appeals for the Federal Circuit’s ruling that tribal sovereign immunity doesn’t apply in inter partes review (IPR) proceedings has sparked questions over state protections at the Patent Trial and Appeal Board (PTAB).

On Friday, July 20, the Federal Circuit backed a ruling from the PTAB, in a blow to Allergan and the Saint Regis Mohawk Tribe.

In September last year, Allergan paid the tribe $13.75 million to acquire dry-eye treatment Restasis (cyclosporine ophthalmic emulsion), and the company was then granted an exclusive licence to the treatment.

But generic companies including Mylan brought IPRs against the patents covering Restasis and, in February, the PTAB rejected the tribe’s attempt to dismiss the IPRs based on tribal immunity.

“While the court acknowledged the tribe has sovereign immunity, it took the position that an IPR is controlled by the US—against whom the tribe cannot assert immunity—rather than private parties,” said a spokesperson for the tribe.

The tribe is reviewing the decision while continuing its work on other “innovative projects that have come out of this initiative which are not impacted by this decision”, it added.

Kevin Noonan, partner at McDonnell Boehnen Hulbert & Berghoff, believes the tribe will file a petition for certiorari at the US Supreme Court.

“In view of the importance of the issue of the proper scope of tribal sovereign immunity (and the court’s recent penchant for patent law cases), there is a good chance that the final decision on this matter has not been rendered,” he said.

Jonathan Stroud, chief IP counsel at Unified Patents, agreed, adding that there is too much money at stake and too much invested in these drugs to stop now.

Think twice

Noonan explained that it would be foolhardy for a patentee to enter into a similar arrangement until the Supreme Court and/or Congress weighs in.

Stroud added that the decision should make parties think twice about “concocting elaborate legal schemes” to avoid having their patents challenged on their merits.

“The fear is that it will impact similar arguments that have been raised successfully, as regards the 11th Amendment state sovereign immunity for state university patent owners,” he said.

There are other deals inked—for example, technology company SRC Labs transferred around 40 patents to the tribe in early August 2017, according to Reuters—but Stroud expects these to be abandoned or at least side-lined.

Mylan, one of the generic companies which had brought the IPRs, said the Federal Circuit’s decision is a victory in the company’s ongoing efforts to stop patent abuses by brand companies and to help drive access to more affordable medicine.

“Today’s ruling reaffirms that Allergan’s attempt to leverage the Saint Regis Mohawk Tribe for patent protection represents another inappropriate tactic to delay the availability of generic medicines for patients who need them,” said Heather Bresch, CEO of Mylan.

The Federal Circuit concluded that the IPR is more like “an agency enforcement action than a civil suit brought by a private party”.

It said the IPR is a “hybrid proceeding” with adjudicatory characteristics similar to court proceedings, but in other respects, it “is less like a judicial proceeding and more like a specialised agency proceeding”.

The role of the parties in IPR cases suggests immunity does not apply, said the court, explaining that once the IPR has been initiated, the board may choose to continue with the review even if the petitioner chooses not to participate.

Circuit Judge Kimberly Moore, on behalf of the court, added that the “mere existence of more inquisitorial proceedings in which immunity does not apply does not mean that immunity applies in a different type of proceeding before the same agency”.

Moore also noted the US Patent and Trademark Office director’s unfettered discretion at the institution stage, which should reinforce the administrative authority to act at the institution stage to ensure just results, according to Stroud.

Noonan added that this decision continues the shift from a patent being a private property right to a public right that can be “taken without the usual protections against the public taking of private property without compensation”.

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