March 2, 2018

PTAB Opines Tribal Sovereign Immunity Does Not Apply to IPRs

Last week, in a case of first impression, the PTAB held that the doctrine of tribal sovereign immunity does not apply to IPRs.  Mylan Pharm. Inc., et al. v. Saint Regis Mohawk Tribe, Case IPR2016-01127 (and related cases).  During the course of the IPR proceedings, the Saint Regis Mohawk Tribe (“Tribe”) entered into an assignment and license agreement, whereby original patent owner Allergen, Inc. assigned the challenged patents to the Tribe, and the Tribe licensed back to Allergen an irrevocable, perpetual, transferable and exclusive license for all FDA-approved uses.

Additionally, the License Agreement granted the first right to sue for infringement with respect to “Generic Equivalents” to Allergen and the first right to sue for other infringements unrelated to Generic Equivalents.

The Tribe filed a motion to terminate the IPRs on the basis of tribal sovereign immunity.

The PTAB denied the motion to dismiss, first finding that, as a matter of law, the doctrine of tribal sovereign immunity does not apply to IPRs.  In so finding, the PTAB cut a narrow path through existing precedent.  The PTAB acknowledged the Supreme Court’s directive that “State sovereign immunity extends to adjudicatory proceedings before federal agencies that are of a ‘type … from which the Framers would have thought the States possess immunity when the agreed to enter the Union,’” citing FMC v. South Carolina State Ports Auth., 535 U.S. 743 (2002).

The PTAB further acknowledged its own repeated reliance on state sovereign immunity to shield state universities from IPR proceedings.  Yet, the PTAB held that tribal sovereign immunity does not apply to IPRs.  The PTAB opined that an IPR proceeding “is not the type of ‘suit’ to which an Indian tribe would traditionally enjoy immunity under the common law.

The PTAB further found that, even if tribal sovereign immunity applied, the IPRs could proceed without the Tribe because, according to the PTAB, Allergen is the “effective patent owner.”  The PTAB found that the Tribe had transferred all substantial rights in the challenged patents back to Allergen, and that any rights retained by the Tribe were “illusory.”

There is little doubt that this is merely the opening act in this play.  The issue is sure to be addressed by the Federal Circuit, if not ultimately the Supreme Court.