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“Will Sovereign Immunity Shield Patent Owners From IPR Challenges?” New York Law Journal


“Will Sovereign Immunity Shield Patent Owners From IPR Challenges?” New York Law Journal

May 18, 2018
Michael A. Siem

“One of the most interesting issues that’s being litigated in patent law these days is the ability to sue a sovereign entity for patent infringement or challenge the validity of a patent owned by a sovereign entity at the U.S. Patent Office,” write Goldberg Segalla partners Ronald M. Daignault, Debra L. Doby, and Michael A. Siem in New York Law Journal.

While the 2013 Congressional overhaul of the America Invents Act (AIA) allowed private parties to challenge the validity of already issued patents at the PTO’s Patent Trial and Appeal Board (PTAB) through the process of inter partes review (IPR), it also marked the beginning of a counter-trend: Now, companies seeking to protect their patents from IPR — particularly pharmaceutical companies — have begun to seek creative ways to claim sovereign immunity under the Eleventh Amendment. In their article, Ron, Deb, and Mike — members of the firm’s Intellectual Property Practice Group resident in New York City — examine one of the most notable of such cases, that of the pharmaceutical manufacturer Allergan’s bid for sovereign immunity through a deal with the Mohawk Tribe.

In 2017, Allergan transferred some of its patents to the Saint Regis Mohawk Tribe, agreeing to pay the tribe approximately $15 million annually while the tribe signed an exclusive Patent License Agreement giving control of the patent back to Allergan. When Mylan Pharmaceuticals attempted to challenge one of these patents through IPR, the PTAB “denied the Mohawk Tribe’s attempt to block patent review by invoking the sovereign immunity doctrine,” determining that “the Tribe failed to establish that its sovereign immunity applies to inter partes proceedings.” The PTAB paid close attention to the questionable timing of the Allergan-Mohawk transactions in arriving at its determination.

Failure to stop the IPR process was not the end of Allergan’s woes. As Ron, Deb, and Mike explain, “Allergan’s rather blatant attempt to use tribal sovereignty as a shield has incurred the ire of several members of Congress as well. Four U.S. Senators have asked the Senate Judiciary Committee to launch an investigation into this Allergan/Mohawk deal alleging anti-competitive behavior.”

However, they add, these events might not be enough to stop other major pharmaceutical companies from seeking to use sovereign immunity to protect their patents, “particularly in less controversial circumstances.” Meanwhile, Allergan and the Saint Regis Mohawk Tribe have filed an appeal for the Federal Circuit, citing several issues, including whether tribal sovereign immunity applies to IPR proceedings.

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