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US – Patent IPRs: Sovereign immunity defence heading on up?

In this post, we discuss the sovereign immunity defence for IPRs which has garnered much attention, with the final chapter likely ending up at SCOTUS. The article was first published in Intellectual Property Magazine, April 2018.


So how does the sovereign immunity saga end? The PTAB and Congress have already made their scepticism of tribal sovereign immunity known. Despite that, one should not expect a definitive answer for some time. Initial action in Congress has created buzz, but the lawmaking process is typically arduous and often fails to materialise.

A more immediate answer will likely come from the Federal Circuit on the tribe and Allergan’s appeal.

However, given the high stakes of the patents-at-issue in that case, it should be expected that any Federal Circuit decision, regardless of result, may be further appealed to SCOTUS.

That said, this developing area of the law should be monitored closely. If PTAB decisions from the past year are an indication of future trends, look for it to continue to explore ways, through its regulations, procedures, and rulemaking authority, to curtail the effectiveness of sovereign immunity defences moving forward. Continue reading for a full analysis:

Last September, Allergan and the Saint Regis Mohawk Tribe (tribe) entered into an agreement, under which Allergan transferred certain patents directed to an eye treatment drug called Restasis to the tribe and, in turn, the tribe licensed the patents back to Allergan. The tribe then filed motions to dismiss inter partes reviews (“IPRs”) relating to six of these patents, arguing that the parties’ arrangement shielded the patents from AIA challenges under the doctrine of sovereign immunity. The unique defence is relatively new to Patent Trial and Appeal Board (“PTAB”) proceedings, having been asserted for the first time in January 2017 (Ref.1) In that case, Covidien filed IPRs challenging several patents owned by the University of Florida Research Foundation. The PTAB decided that state sovereign immunity applied to IPRs, thus precluding Covidien’s IPR challenges. The PTAB noted in its decision that “[Covidien] does not point to, and we do not find there is, an unequivocal, express intent by Congress in the [America Invents Act] to abrogate immunity for purposes of IPR.” This decision set the stage for future patent owners attempting to leverage similar privilege claims to avoid IPRs.

In May 2017, the PTAB reaffirmed the validity of the state sovereign immunity defence. It held that patent owner, the University of Maryland, Baltimore, had state sovereign immunity from an IPR challenge raised by NeoChord, and thus dismissed the IPR (Ref. 2). While noting that the Covidien decision was not binding precedent, the PTAB acknowledged that it should reach a similar outcome, given the patent owners in both cases were state entities (ie, a state-run research foundation and a state university). Covidien and NeoChord thus appeared to firmly establish a state sovereign immunity defence against IPRs, but it was still unclear whether Native American tribes would benefit from an analogous immunity.

Well before Covidien and NeoChord, courts have held that state sovereign immunity could apply in certain administrative proceedings (Ref. 3). The Supreme Court of the US (SCOTUS), moreover, has largely held that the 11th Amendment applies to Native American tribes the same as it does for state entities, at least in terms of providing sovereign immunity from lawsuits in federal courts (Ref. 4). The tribe was the first to assert tribal sovereign immunity in an IPR – a novel legal manoeuvre that effectively combined the aforementioned precedent with Covidien and NeoChord in the IPR context. Indeed, the Allergan-St Regis Mohawk Tribe deal appears to be the first of its type (ie, a transfer of a patent portfolio to a Native American tribe) crafted with an outcome of defending against an IPR challenge.

In the wake of this deal and the tribe’s subsequent filing of motions to dismiss, the PTAB seemed to more heavily scrutinise sovereign immunity. For example, shortly after the deal, a PTAB panel denied a state university’s motion to dismiss an IPR based on sovereign immunity (Ref. 5). The PTAB decision acknowledged that state entities are generally immune from IPRs – as was found in Covidien and NeoChord – but held in this case that the university had waived its immunity by filing a prior lawsuit in federal court, alleging infringement of the same patents at issue in the IPR. This decision was a first signal that the PTAB might seek to curtail the sovereign immunity defence.

This scrutiny of sovereign immunity manifested itself again roughly two months later when the PTAB denied the St Regis Mohawk Tribe’s motions to dismiss (Ref. 6). In its ruling, the three-judge PTAB panel held unanimously that “the tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings.” In other words, the PTAB panel diverted from Covidien and NeoChord and held, unlike state sovereign immunity, tribal sovereign immunity does not apply to shield patent owners from IPRs. Interestingly, the PTAB went so far as to reject tribal sovereign immunity as a defence in its entirety when it arguably did not need to do so. The decision further concluded that the IPRs could continue regardless of sovereign immunity considerations because Allergan remained the effective patent owner and could participate in the proceedings. In so finding, the PTAB identified several provisions in the Allergan-St Regis Mohawk Tribe licence that it found reserved substantial rights and obligations to Allergan. Thus, it appears that the PTAB could have reached the same result under this rationale alone, without having to opine on the validity of the tribal sovereign immunity defence.

Allergan and the tribe have already appealed the PTAB decision to the Federal Circuit. The appeal will address the ultimate issue (among an array of others): whether tribal sovereign immunity can serve as a basis to dismiss IPRs. It is unclear whether the Federal Circuit will stay the IPRs pending the appeal. Allergan and the tribe filed their appeal under the “collateral order doctrine”, which permits appeals of certain issues prior to issuance of a final judgment. Absent action to the contrary by the Federal Circuit, the PTAB has discretion to carry on with the IPRs against the tribe’s patents, including proceeding to a hearing on the patents’ validity.

The Allergan-St Regis Mohawk Tribe deal transcended the patent community. It immediately drew interest from Congress. In October, shortly after the deal was announced, Senator McCaskill introduced a bill to abrogate tribal sovereign immunity as a defence to IPRs. That bill was quickly drafted and introduced, including only a single line: “Notwithstanding any other provision of law, an Indian tribe may not assert sovereign immunity as a defence in [an IPR].” That bill did not appear to gain traction, but a renewed effort to abrogate tribal sovereign immunity surfaced earlier this month. This time, five senators, including Senator McCaskill, introduced a new bill into the Senate, entitled the Preserving Access to Cost Effective Drugs (PACED) Act. It is more detailed than Senator McCaskill’s first bill. The new bill provides that tribal sovereign immunity cannot be asserted in IPRs, derivation proceedings, ex parte reexaminations, and post-grant review proceedings. While the bill is coloured as being directed to patents in the pharmaceutical space to protect consumers from increased medical and drug costs, the bill does not discriminate. Any type of patent, if owned or transferred to a Native American tribe, would apparently not be protected from challenges at the US Patent and Trademark Office under the bill.


  1. Covidien LP v Univ of Florida Research Found Inc, IPR2016-01274, Paper 21 (PTAB 25 Jan 2017).
  2. NeoChord, Inc v Univ of Md Baltimore, IPR2016- 00208, Paper 28 (PTAB, 23 May 2017).
  3. Eg, Fed Maritime Comm’n v SC State Ports Auth., 535 US 720 (2002).
  4. See, eg, Okla Tax Comm’n v Potawatomi Indian Tribe, 498 US 505, 509 (1991) (“Indian tribes are ‘domestic dependent nations’ that exercise inherent sovereign immunity over their members and territories. Suits against Indian tribes are thus barred by sovereign immunity absent a clear waiver by the tribe or congressional abrogation.”) (citations omitted); see also Michigan v Bay Mills Indian Community, 134 S Ct 2024 (2014).
  5. Ericsson Inc v Regents of the Univ of Minnesota, Case No IPR2017-01186 et al, Paper 14 (PTAB 19 Dec 2017).
  6. Mylan Pharm Inc v Saint Regis Mohawk Tribe, IPR2016-01127 et al, Paper 130 (PTAB 23 Feb 2018).