Seven states urge Fed Circuit to rehear tribal immunity case

Seven states have urged the US Court of Appeals for the Federal Circuit to rehear a decision rejecting the use of tribal sovereign immunity in the inter partes review (IPR) process.

In an amicus brief filed on Friday, September 7, the states claimed that the Federal Circuit panel had misapplied the law, so an en banc rehearing is required to correct this.

The states are Indiana, Hawaii, Illinois, Massachusetts, Texas, Utah, and Virginia.

Back in February, the Patent Trial and Appeal Board (PTAB) rejected the Saint Regis Mohawk Tribe’s attempt to dismiss IPRs based on the tribe’s immunity claims.

In September 2017, Allergan paid the tribe $13.75 million for the tribe to acquire dry-eye treatment Restasis (cyclosporine ophthalmic emulsion). Allergan was granted an exclusive licence to the treatment.

Allergan attempted to remove itself from the IPRs in January 2018, claiming that it was “no more than an exclusive field-of-use licensee”.

But, in February, the PTAB concluded that Allergan retained ownership in the patents and the tribe had nothing more an “illusory or superficial right” to sue for infringement of the challenged patents.

Importantly, the board found that tribal immunity doesn’t apply in IPR proceedings.

Shortly after, Allergan and the tribe appealed against the decision to the Federal Circuit, with the Saint Regis Mohawk Tribe claiming that the PTAB’s ruling contradicts other PTAB panels’ decisions from last year which held that state sovereigns do enjoy such immunity.

However, in July, the Federal Circuit sided with the PTAB, finding that the tribe hadn’t established that the doctrine should be applied to the proceedings (which had been brought by Mylan and other generic companies).

In the decision, the court said: “While we recognise there are many parallels, we leave for another day the question of whether there is any reason to treat state sovereign immunity differently.”

This appears to be at the heart of the states’ amicus submission—according to the brief, litigants have already begun claiming that the court’s reasoning “forecloses state sovereign immunity” even though the PTAB has repeatedly held that state sovereign immunity does apply in IPR proceedings.

For example, in May last year, the PTAB held that a heart valve patent owned by the University of Maryland, Baltimore was immune to IPR after the university demonstrated that it can raise sovereign immunity as a defence.

“Excluding state sovereign immunity from IPR would impose serious harms on states. States and their public universities hold many patents, and if states could not claim sovereign immunity in IPR, they would regularly be forced to appear before the PTAB,” said the brief.

The states added that the Federal Circuit’s July decision misapplies the US Supreme Court’s Federal Maritime Commission (FMC) v South Carolina State Ports Authority ruling—which held that state sovereign immunity applies in administrative proceedings—by holding that tribal sovereign immunity does not apply in IPRs.

The brief concluded: “In sum, whether state sovereign immunity applies to IPR is a critically important question for states as patent holders. Because the panel’s decision fundamentally misreads FMC, it threatens to lead the court to an incorrect resolution of this question.”

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