The Federal Circuit recently affirmed the PTAB’s decision that tribal immunity cannot be asserted in an IPR (Saint Regis Mohawk Tribe v. Mylan Pharma Inc., Case No. 2018-1638 (Fed. Cir. July 20, 2018). On appeal, Allergan, Inc. (“Allergan”) argued that the Board improperly denied its motion to withdraw from IPR proceedings, and the Saint Regis Mohawk Tribe (“the Tribe”) argued that the Board improperly denied its motion to terminate the IPR based on sovereign immunity. See Mylan Pharma Inc. v. Saint Regis Mohawk Tribe, Case IPR2016-01127, Paper 130 (February 23, 2018) (discussed here).

This appeal stems from a dispute between Allergan and various generic drug manufacturers including Mylan Pharmaceuticals, Inc. (“Mylan”) regarding Allergan’s Restasis® patents for alleviating the symptoms of chronic dry eye.  The Board had instituted several IPR proceedings for patents covering Restasis®.  During the IPRs, Allergan assigned the Restasis® patents to the Tribe, which moved to terminate the proceedings on the basis of sovereign immunity one week before a scheduled consolidated oral hearing before the Board.

In determining that sovereign immunity does not apply to IPR proceedings, the court looked at a number of distinctions between IPR proceedings and district court litigation:

  1. The court looked to the role of the Director.  Because the court determined that the PTO Director has broad discretion and authority in deciding whether to institute a proceeding against the sovereign, the court reasoned that IPR is more like cases in which an agency chooses whether to institute a proceeding based on information provided by a private party.  In Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743, 754–56 (2002) (“FMC”), the Supreme Court decided that immunity does not apply to such a proceeding.
  2. The court looked to the role of the parties in an IPR.  In an IPR, the Board may choose to continue the proceeding even if the petitioner chooses not to participate, and the Director has the right to participate even if a private party drops out.  The court reasoned that because of these roles, “IPR is an act by the agency in reconsidering its own grant of a public franchise” and such roles of the parties in IPR suggests immunity does not apply.
  3. The court compared the administrative (IPR) procedures to the Federal Rules of Civil Procedure.  The court enumerated numerous ways in which IPR differs functionally and procedurally from district court proceedings, and differentiated the agency procedures in FMC as being more like those of civil litigation than those of IPR.
  4. The court looked to other PTO proceedings in which immunity does not apply.  The court acknowledged that the Supreme Court in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct.

2143–44 (2016), recognized inter partes reexamination and IPR both serve the same basic purpose of reexamining an agency decision.  Because immunity does not apply to inter partes reexamination, the court concluded that tribal immunity does not extend to other agency reconsideration decisions.

The court concluded that the PTO “is acting as the United States in its role as superior sovereign to reconsider a prior administrative grant of a patent and protect the public interest” with respect to patent monopolies, and that Indian tribes may not rely on tribal sovereign immunity to bar a suit by a superior sovereign.  A concurring opinion by Judge Dyk elaborated on the history of IPR proceedings to confirm that IPRs are fundamentally agency reconsiderations and not adjudications between private parties.  It remains to be seen whether the Tribe will appeal this decision to the Supreme Court.