Allergan's office in Medford, Massachusetts (Photo: Scott Eisen/Bloomberg)

The Patent Trial and Appeal Board will not recognize Indian tribal sovereign immunity in inter partes review proceedings.

A three-judge panel of the board on Friday turned away the Saint Regis Mohawk Tribe's bid to use sovereign immunity to shield Allergan Inc. from an administrative challenge to patent validity.

The board also ruled that, regardless of sovereign immunity, the proceedings can continue exclusively against Allergan because it remains the effective patent owner.

“There is no statutory basis to assert a tribal immunity defense in inter partes review proceedings,” the PTAB stated in a per curiam decision signed by Judges Sheridan Snedden, Tina Hulse and Christopher Paulraj.

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Friday's decision ends—for now—a controversy that erupted last summer when Allergan paid the tribe $13.75 million, plus an additional $15 million annually, to assume ownership of Allergan's patents on Restasis, a dry-eye treatment. Under the deal, the tribe licensed the patent rights back to Allergan for all FDA-approved uses.

The tribe then asserted its sovereign immunity before the PTAB, seeking to dismiss validity challenges that had been initiated by Mylan Pharmaceuticals Inc. and two other generic drug manufacturers. The tribe pointed out that the PTAB has dismissed challenges to patents owned by state universities under the doctrine of state sovereign immunity.

This strategy prompted a congressional hearing, a Senate bill aimed at closing a “brazen loophole,” and a flood of amicus curiae briefs both in support of and against the tribe's position.

On Friday, the PTAB ruled that the tribe hadn't pointed to any federal court or PTAB precedent that would compel it to extend the doctrine of sovereign immunity to Indian tribes. Weighing against the tribe's position is the PTAB's own statutory mission. “These proceedings do not merely serve as a forum for the parties to resolve private disputes that only affect themselves,” the decision stated. “Rather, the reconsideration of patentability of issued patent claims serves the 'important public purpose' of 'correct[ing] the agency's own errors in issuing patents in the first place.'”

The decision was quoting the Federal Circuit's decision in MCM Portfolio v. Hewlett-Packard, which the board observed in a footnote is now before the U.S. Supreme Court in the Oil States constitutional challenge to IPRs.

Separate from the sovereign immunity argument, the board refused to let Allergan withdraw from the proceedings, finding that it remains a true “patent owner” under the agreement with Saint Regis. The license to Saint Regis is “illusory,” the board ruled, because there are no meaningful non-FDA-approved uses of Restasi, and even if there were, the tribe doesn't have the authority to license them to others.

“Because Allergan remains the effective patent owner, we determine that these proceedings can continue with Allergan's participation only, regardless of whether tribal immunity applies to the tribe,” the decision stated.

The board conferred the right to appeal to the Federal Circuit on both Allergan and the tribe. It set an April hearing ahead of a final written decision on the patents.

Mylan v. St. Regis Mohawk Tribe is a win for Wilson Sonsini Goodrich & Rosati. Of counsel Steven Parmelee, partner Michael Rosato and associate Jad Mills led Mylan's team before the PTAB. Carlson, Caspers, Vandenburgh, Lindquist & Schuman represented petitioner Teva Pharmaceuticals USA Inc. and Sughrue Mion represented Akorn Inc.

Shore Chan DePumpo represents the Saint Regis Mohawk Tribe. Allergan is represented by Fish & Richardson.