Federal Circuit Rules That Tribal Sovereign Immunity Does Not Apply In IPR Proceedings

In a closely-watched case, the U.S. Court of Appeals for the Federal Circuit affirmed a decision by the USPTO's Patent Trial and Appeal Board and held that tribal sovereign immunity does not apply to inter partes review proceedings under the America Invents Act. The court reasoned that IPR proceedings are essentially an agency review of its decision to grant the challenged patent, rather than an adjudicatory proceeding between two private parties. Thus, under prior Supreme Court authority, the court held that tribal immunity does not apply to IPRs involving patents owned by tribes. The decision upsets recent attempts to avoid AIA post grant challenges by assigning patent rights to Native American tribes. Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc., No. 2018-1638 (Fed. Cir. July 20, 2018).

Background

Allergan, Inc. owned patents covering Restasis, a drug used to treat dry eye symptoms. A competitor, Mylan Pharmaceuticals, Inc., filed IPR petitions challenging multiple Allergan patents. IPR2016-01127. Allergan then assigned the patents to the Saint Regis Mohawk Tribe in a sale and license-back transaction. The PTAB denied the Saint Regis tribe's motion to dismiss the petition based on tribal sovereign immunity. The PTAB ruled that tribal immunity is "subject to the superior and plenary control of Congress," Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978), and since the AIA established IPR proceedings for any patent, regardless of ownership, the PTAB had jurisdiction over the patents. Furthermore, the PTAB determined that an IPR "is not the type of 'suit' to which an Indian tribe would traditionally enjoy immunity under the common law[,]" because it could not result in damages or an injunction, only an administrative review of the issued patent. The Saint Regis tribe appealed the PTAB decision to the Federal Circuit.

On March 28, the Federal Circuit stayed proceedings in the IPR until June, when the appeals court scheduled expedited hearing on the issue. In the meantime, Sen. Claire McCaskill (D-Mo.) and four other senators introduced the Preserving Access to Cost Effective Drugs Act, or PACED, that would remove tribal sovereign immunity in patent proceedings before the PTAB, ITC, and federal courts.

Federal Circuit Rejects Tribal Immunity Claim

In a panel decision written by Circuit Judge Moore, the Federal Circuit affirmed the PTAB and ruled that IPR proceedings are not barred by sovereign immunity. The court did not address...