The U.S. Court of Appeals for the Federal Circuit has stepped into the debate over tribal sovereign immunity at the Patent Trial and Appeal Board.

The D.C.-based appellate court on Wednesday stopped a PTAB proceeding in which the board has declined to recognize the Saint Regis Mohawk Tribe's sovereign immunity. The Federal Circuit scheduled a June hearing on the tribe's bid to dismiss the proceedings, in which generic pharmaceutical companies challenge the validity of patents on Allergan's Restasis dry eye medication.

Allergan assigned its patents to the tribe last summer in exchange for $15 million. The tribe then asserted its sovereign immunity before the PTAB, arguing that should end the inter partes review proceedings. The move generated a storm of controversy, including congressional hearings and at least two legislative proposals to block such arrangements.

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The PTAB ruled earlier this year that tribal immunity doesn't apply to IPR proceedings, and that even if it did, Allergan is still the effective owner of the patents and can proceed without the tribe. “Based on the record before us, we find that the tribe has not retained anything more than an illusory or superficial right to sue for infringement of the challenged patents,” the PTAB order stated. It set an April 3 hearing to decide the validity of the patents.

The tribe and Allergan jointly sought an immediate appeal to the Federal Circuit. Saint Regis counsel Shore Chan DePumpo argued that the PTAB is creating “ad hoc rules and new forms of PTAB standing through board decisions to facilitate what it perceives to be its mission as the gatekeeper of what is patentable.”

Perkins Coie; Wilson Sonsini Goodrich & Rosati; Sterne, Kessler, Goldstein & Fox; and Sughrue Mion represent PTAB petitioners Mylan Pharmaceuticals Inc., Teva Pharmaceuticals Inc. and Akorn Inc. They argue that Allergan and the tribe waited until just before the oral hearing last September to assert the tribe's immunity, which took nearly six months to decide. The Federal Circuit appeal is “the latest step in their elaborate and unprecedented effort” to draw out the PTAB proceedings and prolong Allergan's monopoly on Restasis, they told the court. The appeals should be decided after the PTAB issues its final written decision, they said.

The Federal Circuit issued two brief, unsigned orders Wednesday. The court said that “at this juncture, it appears” that exclusive jurisdiction to resolve the immunity lies with the Federal Circuit, and that the PTAB proceedings would be stayed at least until the June hearing.

Shore Chan partner Michael Shore welcomed the news. “We are pleased Article III judges will decide the application of tribal immunity,” he said, “as opposed to APJs who have no knowledge, background or experience with such an important issue.”