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Federal Circuit Considers Possible Tribal Immunity from Inter Partes Review

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By Daniel S. Ivie and David G. Barker

Last week, a Federal Circuit panel considered whether transferring patents to a tribal nation invoked the tribe’s sovereign immunity precluding inter partes review. The panel heard oral argument in Saint Regis Mohawk Tribe et al. v. Mylan Pharmaceuticals Inc. et al., which concerns an appeal from the Patent Trial and Appeal Board’s recent decision that the St. Regis Mohawk Tribe’s sovereign immunity did not shield it from inter partes review.

In late 2017, pharmaceutical company Allergan transferred the patents for its dry-eye medication Restasis to the St. Regis Mohawk Tribe. Allergan paid the tribe $13.75M to take ownership of the patents, with a license back to Allergan subject to future royalties from the sale of Restasis. Allergan has said that the transfer responded directly to challenges to the Restasis patents filed by generic drug companies intending to produce a generic version of Restasis.

During oral argument, attorneys for Allergan and the Mohawk Tribe argued that the inter partes review process is akin to that of a civil lawsuit, from which Native American tribes enjoy sovereign immunity. Mylan’s attorneys argued that inter partes review is closer to a federal regulatory proceeding, to which immunity does not apply. Judge Moore called the inter partes review process a “hybrid situation” that shares similarities with both civil suits and regulatory proceedings, while Judge Reyna noted it differs from civil suits in that inter partes review can continue even if the initiating party withdraws from the process. Judge Dyk, skeptical of Allergan’s transfer of the Restasis patents, asked whether Allergan is “buying sovereign immunity or renting it” from the tribe. Judge Dyk also highlighted the fact that Allergan appeared to receive nothing from the Mohawk Tribe in the transfer other than the tribe’s sovereign immunity.

If the Federal Circuit decides that Mohawk’s sovereign immunity shields it from inter partes review, the decision could lead to a number of companies transferring the patents related to billion dollar products to tribal entities in order to preserve and protect them from otherwise legitimate inter partes reviews. But, considering the apparent division in the panel, and the potential for en banc or Supreme Court review, it likely will be some time before the issue is resolved.