Allergan, Tribe to Appeal Patent Office Immunity Rejection

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By Peter Leung

Allergan and the Saint Regis Mohawk tribe will appeal a ruling that the tribe’s sovereign immunity can’t be used to block administrative patent validity challenges.

The New York-based American Indian tribe filed a notice Feb. 28 that it will appeal a Patent Trial and Appeal Board ruling to the U.S. Court of Appeals for the Federal Circuit. The PTAB, which is the Patent and Trademark Office body that decides the challenges, on Feb. 23 rejected the tribe’s motion to dismiss a patent validity attack brought by Mylan Pharmaceuticals Inc.

The move means that the question of whether sovereign immunity can be used to block PTAB proceedings will go to a court authorized under the Constitution. PTAB proceedings are decided by administrative patent law judges, and some critics suggest that sovereign immunity, which implicates constitutional concerns, are outside the body’s area of expertise.

Not Common Law

Mylan filed for inter partes review against the patents, which cover the Restasis dry-eye drug, when they belonged to Allergan. After the PTAB instituted trial, Allergan announced that it had sold the patents to the Saint Regis Mohawk tribe, which moved to dismiss the proceeding based on its sovereign immunity.

The tribe’s notice of appeal highlighted several issues that it may raise, such as whether the PTAB was correct in holding tribal immunity didn’t apply to IPRs because they were created by a statute, rather than by common law.

The tribe may also challenge the PTAB’s conclusion that the proceeding can continue with just Allergan, because the drug company is still the true owner of the patents, because it retained all the substantial rights.

After the tribe took ownership of the patents, it granted Allergan an exclusive license. Under the deal, the tribe received a one-time $13.75 million payment and $15 million a year in royalties. Critics of the arrangement suggest that the tribe is being paid to unfairly use its immunity to shield patents from challenges. However, supporters argue that state universities have also used immunity arguments to block IPRs.

Shore Chan DePumpo LLP and Fish & Richardson PC are representing the tribe. Wilson Sonsini Goodrich Rosati is representing Mylan.

The case is Mylan Pharms., Inc. v. St. Regis Mohawk Tribe , P.T.A.B., No. IPR2016-01127, notice of appeal 2/28/18

To contact the reporter on this story: Peter Leung in Washington at pleung@bloomberglaw.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bloomberglaw.com

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