Update #2 on Tribal Sovereignty at the PTAB

By: Suzanne Lecocke


The U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed the Patent Trial & Appeal Board’s (PTAB’s) denial of Allergan’s motion to terminate an inter partes proceeding (“IPR”) on the basis of tribal sovereign immunity.[1]   Allergan’s “trick”[2] of using sovereign immunity to cut off invalidity challenges has not worked at the district level, at the PTAB, or at the Federal Circuit.[3]

Unless and until the case is appealed and the U.S. Supreme Court chooses to hear this issue, the answers to the questions proposed in our first update article[4] are answered in the negative.  The sovereignty of American Indian tribes is not a coveted defense for patentees to avoid being sued, where the tribe has no real relation to the patent other than as a way of generating income.  Although patent owners are continuing to try to avoid IPRs, tribes are not likely to be of much use, at least not on this basis.

In reliance upon two recent and important U.S. Supreme Court cases,[5] the Federal Circuit considered that an IPR proceeding has both “adjudicatory characteristics” and “specialized agency” characteristics.[6]  The scales tipped in favor of the “agency” designation.  First, a politically-accountable federal official (the PTAB Director) has discretion whether or not to institute an IPR, analogous to “cases in which an agency chooses whether to institute a proceeding on information supplied by a private party.”  Second, because the PTAB can continue with an IPR even if one or all parties drop out, the IPR is a proceeding by an agency reconsidering its own grant of a patent.  Third, procedural rules are substantially different in the PTAB and in federal district cases.  Fourth, while the Tribe acknowledged that sovereign immunity would not apply in ex parte or inter partes reexamination proceedings because of the “inquisitorial” nature of those proceedings, in contrast to the “adjudicatory” nature of IPR proceedings, the Court determined that the inquisitorial vs. adjudicatory nature of a proceeding was not the distinguishing feature upon which to allow or disallow sovereign immunity.  Rather, and although a closer call than the other factors, the Court relied on the same “basic purpose [of inter partes reexamination and IPRs], namely, to reexamine an agency decision.”[7]

In conclusion, the Court held that “the [United States Patent and Trademark Office] is acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies within their legitimate scope.”[8]  A tribe cannot rely on sovereign immunity to bar a suit by a superior sovereign.

What’s next for Allergan:  The stay will be lifted and the IPR will proceed at the PTAB.  The Federal Circuit will hear oral argument in the appeal of invalidity of the Restasis patents sometime later this year.  Allergan needs to win on both counts (and at the U.S. Supreme Court if necessary) to save its multi-billion-dollar baby.[9]  Allergan has 90 days from the entry of the Federal Circuit’s judgment to petition for writ of certiorari on the tribal immunity defense.

What’s next for states:   The Federal Circuit left for another day the issue of whether states (and arms of the states) could assert sovereign immunity in an IPR.  The United States is a superior sovereign to each state, so it might seem likely the Federal Circuit would arrive at the same conclusion.  In December 2017, though, a seven-member panel of the PTAB (including the Deputy and Vice Chief Administrative Patent Judges) found that IPR is barred by state sovereign immunity, but is automatically waived if the state had previously asserted the patent in federal district court (even a different forum).[10]


[1] St. Regis Mohawk Tribe v. Mylan Pharms., Inc., 2018 U.S. App. LEXIS 20276 (Fed. Cir. July 20, 2108).

[2] Our original article, “Trick or Treat! … or Troll or Tribe?,” can be found at Osha Liang Newsletter, Oct. 2017.

[3] At the district court level, Allergan sought to substitute St. Regis Mohawk Tribe as plaintiff.  Aware of the sovereignty issue pending at the PTAB, Circuit Judge Bryson, sitting by designation, chided Allergan’s strategy as a “tactic,” “ploy,” and “scheme,” making clear that “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 responsibility.”  After a bench trial, the court found the Restasis patents to be invalid.  Allergan’s appeal of that decision is still pending before the Federal Circuit.

[4]Update on Tribal Sovereignty at the PTAB” can be found at Osha Liang Newsletter, April 2018.

[5] Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365 (2018); SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018).

[6] St. Regis Mohawk Tribe, 2018 U.S. App. LEXIS at *9-15.

[7] Id., at *9-14.

[8] Id., at *14 (emphasis added).

[9] Restasis generated $1.524 billion for Allergan from U.S. sales in 2017 alone, and 5.186 billion since sales began in 2014.  Sales forecast are estimated to be an additional $15.737 billion from 2018-2025.  https://www.statista.com/

statistics/566496/us-sales-forecast-eye-care-product-restasis/.  Generic versions of Restasis are rumored to hit the market within the next week or so.

[10] Ericsson Inc. v. Regents of the University of Minnesota, Case IPR2017-01186, Paper 14 (PTAB Dec. 19, 2017).