Update on Tribal Sovereignty at the PTAB

By: Suzanne Lecocke


In October 2017, we published an article entitled “TRICK or TREAT!  … or TROLL or TRIBE?” raising possible ramifications if a patent owner was allowed to avoid an inter partes (IPR) proceeding by transferring its patent rights to a Native American tribe and then relying on the tribe’s right of sovereign immunity.[1]

Would the sovereignty of American Indian tribes become an available and coveted defense to avoid being sued in a patent context even where the tribe has no real relation to the patent other than as a way of generating income?  Would tribes become patent trolls?  Would major corporations change their view on patent trolls?  Would the U.S. judicial system consistently apply the same standards to Native American Tribes as they do state government agencies?  Would the combination of revenue-raising and sovereignty be good or bad for the patent system in this country?  Would sovereignty also become a defense to litigation concerning the Abbreviated New Drug Application (“ANDA”) under the Hatch-Waxman Act?

On February 23, 2018, the Patent Trial & Appeal Board (“PTAB”) took the first step in answering some of these questions by issuing two key decisions.  It denied St. Regis Mohawk Tribe’s Motion to Terminate several IPR proceedings, and it also denied Allergan’s Motion to Withdraw from the IPRs, even though Allergan had “allegedly assigned” its Restasis patent rights to the St. Regis Mohawk Tribe.[2]  The PTAB distinguished tribal sovereignty immunity from state/state agency sovereignty immunity and held that “[t]here is no statutory basis to assert a tribal immunity defense in inter partes review proceedings.”[3]  The PTAB had previously held that state universities can invoke sovereign immunity to preclude the PTAB from determining whether their patents are invalid.[4]

Just as we published our original article, the federal district court ruled that Allergan’s Restasis patents were invalid due to obviousness.[5]  Earlier on the district court judge had declined to weigh in on the validity of the assignment from Allergan to Saint Regis Mohawk Tribe, specifically leaving that question to be decided in the IPR proceeding; the PTAB then also declined to decide that issue.  With neither the court nor the board addressing the underlying contractual issue at the heart of the case, a litany of other legal issues has arisen and the fight is just beginning.

Saint Regis Mohawk Tribe and Allergan have jointly appealed on numerous grounds the PTAB’s decision to the Federal Circuit.[6]  The IPR proceedings are stayed pending appeal.  Whatever the outcome at the Federal Circuit, the case most assuredly is headed to the Supreme Court.  It remains to be seen whether the Supreme Court feels any adjustment to the boundaries of tribal immunity is warranted.  As it stands, the landmark case of Montana v. United States[7] held that tribal immunity does not extend “beyond what is necessary to protect tribal self-government.”   The Supreme Court’s more recent case, Michigan Mills v. Bay Mills Indian Community,[8] deferred to Congress to determine in what instances immunity should not apply, so that immunity may be a defense in some matters but not in others.

If the Supreme Court eventually hears the case and ultimately upholds the PTAB ruling, patentees will no longer reap any benefits from assigning their patent rights to Indian tribes.  However, this may not stop patent holders from attempting to game the system.  The Texas attorney who brokered the deal between Allergan and the St. Regis Mohawk Tribe is supposedly looking at underfunded state colleges and universities to partner with commercially successful patent holders.  The money is good for the underfunded school or tribe.  Allergan paid St. Regis Mohawk Tribe $13.75 million upfront and agreed to pay an additional $15 million per year for the life of the patents in order to avoid IPR challenges to its Restasis patents.  On the flip side, the cost was relatively miniscule for Allergan.  Allergan earns a billion and a half dollars per year on Restasis.  Generic manufacturers are zealous to enter that market and were eager to have the patents invalidated in a relatively inexpensive and fast IPR proceeding using lower standards than federal district courts for patent invalidation.  Allergan is fighting to maintain its cash cow for as long as possible.

Allergan’s Restasis case and IPR proceeding might soon become moot, but the questions remain.  Pharmaceutical patents in particular, not to mention other industry patents, can be wildly profitable, and any attempt to protect them from invalidity challenges for as long as possible may be worth the risks.  But obstacles are springing up.  Even prior to these PTAB decisions, Senator Claire McCaskill put forth a bill in Congress calling for the abrogation of Native American sovereign immunity in patent cases.[9]  The bill would not affect states’ sovereignty.  There have been limited calls for a constitutional amendment for tribal immunity, but with little support.

For now, patentees who have already “assigned,” or are thinking about assigning, patent rights to Native American tribes and who want to rely on the sovereign immunity of the tribes to avoid IPR proceeding must reassess the practicality and costs of bringing an IPR in the name of the tribe.  Such proceedings would certainly be stayed and, if any are currently pending, will definitely be stayed.  Meanwhile, any district courts cases hearing the same issue would proceed.


[1] See Lecocke, S. (2017, Oct.). “TRICK or TREAT! … or TROLL or TRIBE?” Osha Liang Newsletter.

[2] Saint Regis, IPR2016-01127, -01128, -01129, -01130, – 01131, -01132, Paper Nos. 129 and 131 (Feb. 23, 2018 PTAB).  The cases were brought by companies who were eager to market generic versions of Restasis.

[3] Id., Paper No. 130 at 10 (citations omitted).

[4] See Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., IPR2016-01914 (PTAB July 13, 2017); NeoChord, Inc. v. Univ. of Md., Balt., IPR2016-00208 (PTAB May 23, 2017); Covidien LP v. Univ. of Fla. Research Found., Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017).

[5] Allergan, Inc. v. Teva Pharms. USA, Inc. 2017 U.S. Dist. LEXIS 170825 (E. D. Tex. Oct. 16, 2017).

[6] Allergan, Inc. v. Teva Pharms. USA, Inc., Case No. 18-1130 (Fed. Cir. 2017).

[7] 450 U.S. 544 (1981).

[8] 134 U.S. 2024 (2014).

[9] A bill to abrogate the sovereign immunity of Indian tribes as a defense in inter partes review of patents, S.1948, 115th Congress (2017-18).