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Federal Circuit Rejects Tribal Sovereign Immunity to IPRs

Allergan’s attempt to shield its Restasis patents from inter partes review by assigning the patents to the Saint Regis Mohawk Tribe was rejected last week by a unanimous Federal Circuit panel.  The Federal Circuit affirmed the PTAB’s February 2018 decision holding that tribal sovereign immunity does not bar IPRs.


The action dates back to 2015, when Allergan brought Hatch-Waxman cases asserting patents covering the dry-eye treatment against Mylan and other generics in in the Eastern District of Texas.  After being sued, the generics filed IPRs challenging the Restasis patents at the PTAB.  In September 2017, after trial in district court and just one week before the scheduled IPR hearing, Allergan announced that it had assigned the patents to the Saint Regis Mohawk Tribe, and the Tribe filed a motion to terminate IPR proceedings on the ground that, as the new patent-owner, it enjoyed sovereign immunity from review. 

The PTAB denied the Tribe’s motion on multiple grounds.  The Board rejected tribal sovereign immunity as a bar to IPRs, finding no precedent or statutory basis for tribal sovereign immunity in PTAB proceedings.  The Board further found that IPR proceedings could continue in any event with Allergan participating as the “patent owner,” since the Tribe transferred all substantial rights under the patents back to Allergan and Allergan was thus effectively still the patent owner notwithstanding the maneuvers.

The Federal Circuit Decision

The Tribe appealed the PTAB’s decision to the Federal Circuit, arguing that it was entitled to sovereign immunity from administrative proceedings like IPRs that are akin to adversarial lawsuits. The Federal Circuit disagreed, holding that an IPR is more like an agency enforcement action than civil litigation, and therefore does not implicate tribal immunity.

The court first noted that sovereign immunity generally does not apply where the federal government, acting through an agency, engages in an investigative action or pursues an adjudicatory agency action.  On the other hand, under Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) (“FMC”), sovereign immunity does bar an administrative proceeding that has “overwhelming” similarities with civil litigation.

Applying this framework, the court focused on the hybrid nature of IPRs in light of the Supreme Court’s recent decisions in Oil States and SAS.  In Oil States, the Supreme Court stated that an IPR was “simply a reconsideration of” the PTO’s original grant of a public franchise.  But in SAS, the Supreme Court discussed the way an IPR “mimics civil litigation.” 

Ultimately, the Federal Circuit determined that an IPR was more like an agency enforcement action than a civil suit brought by a private party for a few key reasons.

The court first focused on the Director’s discretion in deciding whether to institute review.  The court noted the Director’s “complete discretion” in this decision, and that the Director bears political responsibility for this determination.  This feature of IPRs, the court found, makes them more like agency proceedings initiated at the agency’s discretion based on information supplied by a private party—a situation where sovereign immunity would not apply.

Further, after an IPR has been instituted, the Board may choose to continue review even where the petitioner chooses not to participate.  In addition, IPR proceedings are different than a district court patent trial.  And even though the USPTO can conduct reexamination proceedings that are more inquisitorial and less adjudicatory than an IPR (where immunity certainly would also not apply), the mere fact that there is another type of proceeding presenting a clearer case does not mean that immunity necessarily applies in an IPR.

The Federal Circuit declined to address several of the parties’ alternative arguments, including whether the Tribe waived sovereign immunity by suing on the patents and whether the assignment was a sham or an attempt to circumvent the IPR process.

Notably, the Federal Circuit did not address one of the grounds for the PTAB’s decision: that tribal immunity is not co-extensive with state sovereign immunity.  Although the court recognized at the start of its analysis that “the precise contours of tribal sovereign immunity differ from those of state sovereign immunity,” it also recognized that there are “many parallels” between state sovereign immunity and tribal immunity.  Nonetheless, the Federal Circuit left for another day whether state sovereign immunity should be treated any differently.  However, the FMC case on which the Federal Circuit principally relies involved a state’s claim to immunity, and it would thus seem that the court’s reasoning would apply in a case involving state immunity.

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