Patents and Tribal Sovereign Immunity

Oct 23, 2017 | Labs Blog

By Carlos Quijada for

The pharmaceutical company Allergan recently assigned its patents on eye medication Restasis to the Saint Regis Mohawk Tribe, which agreed to license them back to Allergan in exchange for a $13.5 million payment and $15 million in annual royalties. The company’s end goal is to shield the patents from federal challenges through the mechanism of tribal sovereign immunity.

Patents grant the right to exclude others from making, using, selling, offering for sale, or importing a patented invention for 20 years from the filing date.  Patents may be challenged on various grounds at the U.S. Patent Trial and Appeal Board (PTAB) and federal courts. Generic drug companies challenge the patents covering branded drugs through an inter partes review (IPR) before the PTAB because it is cheaper and faster than litigation. Generic companies have done just that in an attempt to invalidate Allergan’s patents so they themselves can introduce cheaper versions of the medication to the market. Patent owners often criticize the PTAB as an administrative panel which heavily favors challengers. This perceived disadvantage was one of the forces that drove patent owners to look for creative ways to shield their patents.

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The Saint Regis Mohawk Tribe is now seeking to shield the Restasis patents from challenge using its tribal sovereign immunity. On September 22, the tribe filed a formal motion to dismiss patent challenges filed by Mylan NV at the PTAB. The filing states:

The tribe is a sovereign government that cannot be sued unless Congress unequivocally abrogates its immunity or the tribe expressly waives it. Neither of these exceptions apply here.

Using sovereign immunity to dismiss patent challenges is not without precedent. This year the PTAB ruled in two cases that state university-owned patents are not subject to the review process because states have sovereign immunity.  In the first case, the University of Florida Research Foundation (UFRF) succeeded on a motion to dismiss pending IPRs filed on the basis of UFRF’s sovereign immunity under the Eleventh Amendment, arguing that the university should be considered an arm of the State of Florida (See IPR2016-1274, Covidien LP v. Univ. of Fla. Research Found. Inc., Patent No. 7,062,251 B2). In doing so, the PTAB was “cognizant of the fact that applying an Eleventh Amendment immunity to inter partes review . . . precludes the institution of inter partes review against a state entity entitled to Eleventh Amendment immunity,” but held that such an outcome was “precisely the point of the Eleventh Amendment, which is the preservation of the dignity afforded to sovereign states” (IPR2016-1274, decision of the Patent Trial and Appeal Board, Patent No. 7,062,251 B2, paper no. 21, at 26 (Jan. 25, 2017)).

In the second case, the PTAB granted a similar motion to dismiss on the basis of sovereign immunity under the Eleventh Amendment in a case filed by the University of Maryland, Baltimore (UMDB) (See IPR2016-208, NeoChord, Inc. v. Univ. of Md., Baltimore, Patent No. 7,635,386 B1). The PTAB found that the fact that UMDB had transferred less than “substantially all” rights to the licensee made UMDB a necessary and indispensable party to the proceedings, and granted the motion to dismiss based on UMDB’s sovereign immunity (Id. at 19-20).

Although sovereign immunity helped these two state institutions defeat IPRs challenging their patents, it is not clear that the tactic will work for Native American tribes. As professor Alex Skibine, an expert in Indian law has explained, States derive their sovereign immunity from the Eleventh Amendment while tribes’ sovereign immunity was granted by Congress. Tribes enjoy immunity from suit—in federal, state, or tribal courts—unless they consent to the suit, or unless the federal government explicitly abrogates that immunity. The Supreme Court, through cases such as Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978), has cemented the idea that federal courts have no jurisdiction to hear matters against tribal nations.

However, the mechanism of tribal sovereign immunity does not guarantee the Restasis patents will be considered inherently immune from legal challenges.  For instance, the contract might face scrutiny for lack of legal consideration and being a sham transaction. Moreover, courts could find that the exclusive license-back agreement to Allergan constitutes an assignment instead of just a licensing agreement, which effectively negates the prior assignment to the tribe. The Federal Circuit has repeatedly held that if a license conveys all substantial rights to a patent, it is equivalent to an assignment (See, e.g., Pac. Coast Marine Windshields Ltd. v. Malibu Boats, LLC., 739 F.3d 694, 699 at n.1 (Fed. Cir. 2014)). If the exclusive license-back agreement is viewed as an effective assignment, the PTAB might treat Allergan as a co-owner for the purposes of an IPR, keeping them in the challenge while dismissing the tribe. In Reactive Surfaces Ltd., LLP v. Toyota Motor Corp, The PTAB dismissed the Regents of the University of Minnesota from the IPR proceeding because they had sovereign immunity, but declined to dismiss Toyota, which was co-owner of the patent (See IPR2016-1914, Reactive Surfaces Ltd., LLP v. Toyota Motor Corp.).

In all, it is not clear how Allergan’s current strategy will turn out.  Congress has taken notice of the agreement and on Oct. 5, Democratic Sen. Clare McCaskill (D-MO) introduced legislation to abrogate the sovereign immunity of Indian tribes as a defense against IPRs. Sen. McCaskill publicly stated that “This is one of the most brazen and absurd loopholes I’ve ever seen, and it should be illegal . . . Given its recent comments regarding corporate responsibility, PhRMA can and should play a role in telling its members that this action isn’t appropriate, and I hope they do that” (Meg Tirrell, More scrutiny for Allergan over Native American tribe deal, CNBC (Oct. 02, 2017)).

On Oct. 16, the US District Court for the Eastern District of Texas found four of the Restasis patents invalid because they do not cover a new invention (Allergan, Inc. v. Teva Pharmaceuticals USA, Inc. et al, E.D. Tex., No. 2:15-cv-01455, 10/16/17). A court’s invalidation of the Restasis patents would render the Allergan and St. Regis tribe agreement moot. However, Allergan vowed to appeal the decision, saying it remained committed “to vigorously defending the intellectual property of our products, which allows us to continue to invest in developing and bringing forward new medicines for millions of patients.” Interestingly, Judge William Bryson commented on the agreement between Allergan and the Saint Regis Mohawk Tribe. He acknowledged: “Sovereign immunity should not be treated as a monetizable commodity that can be purchased by private entities as part of a scheme to evade their legal responsibilities” (See Memorandum Opinion and Order).

Viewpoint of The Saint Regis Mohawk Tribe

It is worth pausing to think about why the Saint Regis Mohawk Tribe engaged in this enterprise. The tribe consists of 15,600 members located mainly in upstate New York. They defend the tribe’s right to contract with Allergan and argue that they utilize the same business model and legal positions long employed by public universities to assert sovereign immunity and defeat the jurisdiction of the PTAB. They feel it is in their best interest to allow their economic diversification strategy to proceed and will So far, they received around 40 patents from SRC Labs LLC, an independent, not-for-profit, research, and development technology corporation specializing in the areas of defense, environment and intelligence (See USPTO, Aug. 2, 2017, Assignment of Assignor’s Interest by SRC Labs, LLC, reel/frame 043174/0318 (recorded Aug. 2, 2017)). In North Dakota, a tech company called Prowire LLC, which is suing Apple Inc. for patent infringement, assigned its patent to a patent holding company wholly owned by the Mandan, Hidatsa, and Arikara Nation, again presumably to avoid challenges to the patent (See USPTO, Aug. 2, 2017, Assignment of Assignor’s Interest by Prowire, LLC, reel/frame 043399/0919 (recorded Aug. 24, 2017)).

The St. Regis Mohawk Tribe plans to invest the licensing and royalty revenues earned from these patents in health, safety, education and cultural programs. The Tribe has created an Office of Technology Research and Patents that will be an active participant in any proceedings to protect tribal ownership of all its intellectual property (See Saint Regis Mohawk Tribe, Frequently Asked Questions About New Research and Technology (Patent) Business).

With respect to the bill introduced by Congress, the tribe responded with a letter which says: “the Saint Regis Mohawk Tribe is outraged that U.S. Senator Claire McCaskill (D-MO), has introduced legislation that specifically targets Indian tribes, yet exempts state universities and other sovereign governments engaged in the very same IPR process. The double standard that is being introduced by the Senator as a solution for a perceived abuse of the IPR proceedings does nothing to solve the underlying problem. The Tribe’s authority is inherent and has been reaffirmed through treaties and legislation from the earliest days of the country” (Saint Regis Mohawk Tribe News, “Saint Regis Mohawk Tribe Outraged at Senator McCaskill’s Attempt to Abrogate Sovereign Immunity”).


Carlos is originally from Venezuela and moved to Utah from Florida. He studied Biology and Public Health at the University of Florida and proceeded to work in the Caribbean Island of Saba. Passionate about science and policy, the transition to Law School was a natural fit. His interests include intellectual property, health policy and human rights. He runs a pro bono legal clinic and enjoys supporting a number of student organizations. He is also in the US Navy and has served a tour in Afghanistan. In his free time, Carlos loves to hike and travel. Grateful for a great group of family and friends, Carlos makes sure to spend quality time with them.