The U.S. Appeals Court for the Federal Circuit decided this week to fast-track an appeal that will decide whether an American Indian tribe patent holder can assert sovereign immunity to avoid administrative patent challenges.
But even if the court says that’s OK, Congress might step in and change that.
A bill introduced by five senators aimed at foreclosing any more Allergan plc-type sovereign immunity chicanery has a decent chance at passing, observers told me earlier this month.
The Preserving Access to Cost Effective Drugs (PACED) Act (S. 2514) would bar patent holders from asserting tribal immunity to escape Patent Trial and Appeal Board review proceedings. Allergen irked members of Congress and affordable drug advocates last year when it transferred patents on its valuable Restasis dry eye drug to an upstate New York Indian tribe, which then invoked sovereign immunity to shield them from PTAB proceedings.
PTAB, part of the Patent and Trademark Office, ruled last month it has authority to address the patents’ validity, notwithstanding Allergan’s handoff. The company and tribe appealed, and the federal circuit set a prompt briefing schedule, with oral argument to take place in June. It also put the PTAB proceedings on hold while it considers the issue.
With midterm elections coming up, Senate Majority Leader Mitch McConnell (R-Ky.) will likely let the Senate bill get to the floor, Carl Gulbrandsen, former managing director of the Wisconsin Alumni Research Foundation, told me via email.
But he’s not as gung-ho as others to see it pass.
“Even if the appellate court were to reverse the PTAB, I think abrogating sovereign immunity is ill-advised,” Gulbrandsen said. “Once exceptions begin to be made, you no longer have a valid reason for sovereign immunity.”
State-funded patent-generating institutions such as WARF enjoy state sovereign immunity, which the Constitution addresses differently than tribal immunity.
In any event, “the real elephant in the room” is the inter partes review proceeding itself, Gulbrandsen said. Critics have called PTAB, which has invalidated hundreds of patents under less-stringent review standards than federal courts follow, a patent “death squad.”
“If we fixed the IPR,” he said, “we would not have a patent owner taking the drastic step that Allergan took to avoid it.”
The Supreme Court might kill off PTAB reviews altogether. It’s deciding this term whether it’s unconstitutional for an administrative board—as opposed to a court—to invalidate patents.
Read my full story here.
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