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PTAB Holds Indian Tribes Don’t Offer an Out from IPR

In a highly anticipated decision on the Saint Regis Mohawk Tribe’s motion to terminate inter partes review proceedings, the Patent Trial and Appeal Board rejected tribal sovereign immunity to IPRs.  The PTAB’s decision also raised doubts about the effectiveness of assignments even in cases where the sovereign assignee has immunity but the assignor effectively still owns the patent.  The portion of the decision broadly holding that tribal sovereign immunity does not apply to IPRs came as a surprise to some commentators, who observed that the PTAB could have reached the same result on narrower grounds.  Following on the heels of the PTAB’s December 2017 University of Minnesota decision holding that a sovereign waives immunity to IPRs when it asserts the patent at issue in district court, Saint Regis Mohawk Tribe deals another blow for patentees seeking to avoid IPRs with sovereign immunity.


The dispute began in 2015, when Allergan asserted various patents covering its dry-eye treatment, Restasis, against Mylan and other generic manufacturers in the Eastern District of Texas.  Restasis is a blockbuster product for Allergan, bringing in over $1.4 billion of U.S. sales revenue in 2016.  After being sued for infringement of the Restasis patents, the generics filed IPRs challenging the patents at the PTAB. 

To try to avoid the IPRs on the basis of sovereign immunity, in September 2017, Allergan assigned the Restasis patents to the Saint Regis Mohawk Tribe, and took an exclusive license back from the Tribe.  The Tribe received a $13.5 million upfront payment upon execution of the agreement, and is eligible to receive $15 million in annual royalties.  Following this assignment-and-license-back transaction, the Tribe joined the pending district court proceedings as a party plaintiff.  Shortly after the Tribe joined the action, the Texas district court found the Restasis patents invalid.  In the opinion, Judge William Bryson also noted that he “ha[d] serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed.”

Meanwhile, the Tribe had also filed a motion to terminate the pending IPR proceedings following the September 2017 assignment of the Restasis patents, arguing that the Tribe, as the new patent owner, enjoyed sovereign immunity from review.

The PTAB Decision

The PTAB denied the Tribe’s motion to terminate proceedings in a decision rejecting tribal sovereign immunity as a bar to IPRs.  The Board found that there was no controlling precedent or statutory basis for the application of tribal sovereign immunity in IPR proceedings.  The PTAB first rejected the idea that precedent providing state sovereign immunity to PTAB reviews extends to tribal sovereign immunity.  The PTAB then held that IPR proceedings are not the type of private “suit” to which an Indian tribe would traditionally enjoy immunity under the common law. 

Even assuming for the sake of argument that the Tribe were entitled to assert immunity, the PTAB held, the proceedings could continue with Allergan’s participation as the “patent owner.”  As the decision explained, the “party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights.”  If the licensor transfers “all substantial rights” in the patent, the exclusive license is “tantamount to an assignment,” and the licensee is effectively the patent owner.

Applying this framework, the PTAB concluded that the exclusive license the Tribe granted back to Allergan was tantamount to an assignment, pointing to a variety of factors.  Here, the license gave Allergan primary control over the right to enforce the patents, while the Tribe retained only “an illusory or superficial right to sue for infringement.”  Allergan also retained the exclusive right to use the patents for all FDA-approved uses, while the Tribe’s “own right to practice and license the challenged patents is significantly limited.”  The license also provided Allergan other substantial rights, including the right to sublicense, reversionary rights, rights to litigation and licensing proceeds, the right to defend and control prosecution in PTO proceedings, and the right to assign its interest.  Despite the parties’ characterization of their transaction as a license, the PTAB concluded that Allergan remained the effective patent owner.  Thus, the Board held that the IPR proceedings “may continue with Allergan as the patent owner, and that the Tribe is not an indispensable party to these proceedings.”

Immunity-Driven Assignments to Sovereigns following St. Regis Mohawk Tribe

With Saint Regis Mohawk Tribe and the PTAB’s recent decision in University of Minnesota, immunity-driven assignments to Indian tribes or state sovereigns are likely to be on the wane.

Since the PTAB found that the Saint Regis Mohawk Tribe could not assert sovereign immunity to IPRs in the first instance, it did not reach its recent University of Minnesota holding that a sovereign waives immunity to IRPs by asserting the patent at issue in federal court.  This narrower ground of waiver would have been another reason to reject the Tribe’s claim to sovereign immunity.  The patents at issue were already being asserted in district court and the Tribe had joined Allergan’s district court actions as a party plaintiff after entering into the assignment-and-license-back transaction with Allergan.  Indeed, as the Board explains in University of Minnesota based on Supreme Court precedent, allowing a sovereign to “selectively” assert sovereign immunity in an IPR while asserting the same patent in court “would result in substantial unfairness and inconsistency.”

Further, the PTAB’s analysis of effective patent ownership has significant implications not just for Indian tribes, but for state sovereigns and their commercial partners as well.  The Board’s finding that the Tribe’s exclusive license back to Allergan was tantamount to an assignment, making Allergan the effective patent owner, applies with equal force to immunity-driven assignments to state sovereigns.  According the PTAB, assignments that provide a sovereign with only illusory or superficial rights do not provide a bar to IPR.

With Indian tribes unable to claim sovereign immunity to IRPs, a sovereign’s assertion of a patent in district court being a waiver, and illusory assignments ineffective to shield patents from IPRs, immunity-driven patent assignments are unlikely to be pursued going forward.

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