Federal Circuit Rejects Use of Tribal Immunity to Shield Patents in IPR Proceedings

Authored by Kevin E. Noonan, Ph.D.

The Federal Circuit issued its decision today in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc. affirming the decision by the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office that denied the Tribe’s motion to dismiss Mylan’s inter partes review (IPR) proceedings as being barred by tribal sovereign immunity.

The issue arose when, after the PTAB instituted IPRs against six patents owned by Allergan and directed to its Restasis^® product, Allergan assigned its rights in the patents to the Tribe in return for a license. The Tribe argued unsuccessfully before the Board that as rightful owner of the patents the Board lost jurisdiction based on tribal sovereign immunity. The Board held that, as an issue of first impression the Tribe had not borne its burden of showing it was entitled to the requested relief, and that the nature of the license left all substantive patent rights with Allergan, and thus that the company could amply represent the Tribe’s rights even in its absence.

The Federal Circuit affirmed, in an opinion by Judge Moore joined by Judges Dyk and Reyna. The panel based its decision on the quality of IPRs as being more akin to federal administrative proceedings (in which the Federal government is the “superior sovereign” and tribal immunity does not apply) than these proceedings are to a dispute between private parties in which a government agency plays an adjudicatory role (as in the lead case upon which the tribe relied, Fed. Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 754–56 (2002)). The opinion cites the “hybrid” nature of IPRs, as discussed by the Supreme Court in its two recent decisions on these proceedings, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365 (2018) and SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). Under this precedent the panel concluded that there were sufficient similarities between IPRs and administrative agency proceedings (here, wherein the USPTO reconsiders the propriety of granting the challenged patents) and sufficient differences from more adjudicatory proceedings (including the complete discretion vested in the Director on whether to institute an IPR, the absence of any requirement that either party continue to participate once an IPR has been instituted, and procedural differences relating to, inter alia, evidentiary and discovery rules) for tribal sovereign immunity not to apply.

The opinion avoided Mylan’s other arguments, including that the assignment and relicensing of these patents was a sham intended by the parties to avoid reexamination of these patents to thwart Congressional goals of improving patent quality by providing a means to invalidate improvidently granted patents. The opinion also pointedly states that its decision was limited to tribal sovereign immunity and that the Federal Circuit “leave[s] for another day” the question of whether States can assert their Eleventh Amendment immunity against IPR proceedings (which the Federal Circuit is slated to hear in the upcoming Ericsson v. University of Minnesota appeal).

Judge Dyk wrote a concurring opinion, expressing his views on the history of reexamination proceedings before the USPTO as being consistent with the panel’s decision to uphold the Board’s refusal to recognize tribal sovereign immunity in this case.

It is very likely that the Tribe will file a petition for certiorari to the Supreme Court. In view of the importance of the issue of the proper scope of tribal sovereign immunity (and the Court’s recent penchant for patent law cases), there is a good chance that the final decision on this matter has not been rendered.

Decided July 20, 2018

The opinion can be found at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1638.Opinion.7-20-2018.pdf.

Kevin E. Noonan, Ph.D., an MBHB partner, Kevin E. Noonan is a partner with McDonnell Boehnen Hulbert & Berghoff LLP and serves as Chair of the firm’s Biotechnology & Pharmaceuticals Practice Group. An experienced biotechnology patent lawyer, Dr. Noonan brings more than 20 years of extensive work as a molecular biologist studying high-technology problems in serving the unique needs of his clients. Dr. Noonan is a frequent speaker, commentator and author on a variety of intellectual property law topics. He is a founding author of the Patent Docs weblog, a site focusing on biotechnology and pharmaceutical patent law. noonan@mbhb.com

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