Federal Circuit Affirms Tribal Immunity Does Not Apply in Inter Partes Review Proceedings Before the USPTO
July 25 2018
In Saint Regis Mohawk Tribe et al. v. Mylan Pharmaceuticals Inc. et al., the U.S. Court of Appeals for the Federal Circuit held that Native American tribal sovereign immunity does not apply in Inter Partes Review (“IPR”) proceedings at the Patent Trial and Appeal Board (“PTAB”) arm of the USPTO. In do so, the Federal Circuit affirmed the PTAB’s ruling that it has the authority to decide the validity of patents transferred to the St. Regis Mohawk tribe, and rejected an attempt from Allergan to shield its patents covering dry-eye medication Restasis by transferring the patents to a Native American tribe.
In 2015, Allergan sued various generic drug manufactures in the Eastern District of Texas alleging infringement of its Restasis patents. Mylan, one of the generic manufactures sued by Allergan, petitioned the PTAB for IPRs of the Restasis patents. The PTAB instituted the IPRs, which were later joined by other defendants. However, before the IPR hearings, Allergan and the tribe entered into an agreement to transfer ownership of the Restasis patents to the tribe, and license them back to Allergan. The tribe moved to terminate the IPRs, arguing it is entitled to assert tribal sovereign immunity, and Allergan moved to withdraw. The PTAB denied the motions, which Allergan and the tribe now appeal.
In considering the issue of tribal immunity in an IPR proceeding before the PTAB, the Federal Circuit first noted that as “domestic dependent nations,” Indian tribes possess “inherent sovereign immunity,” and suits against them are generally barred “absent a clear waiver by the tribe or congressional abrogation.” However, that immunity generally does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action. But, there is not a blanket rule that immunity does not apply in federal agency proceedings.
Ultimately, four factors convinced the Federal Circuit that an IPR is more like an agency enforcement action than a civil suit brought by a private party, and that tribal immunity is not implicated. First, the Federal Circuit reasoned the PTAB possesses broad discretion in deciding whether to institute review. If the PTAB decides to institute, review occurs. If the PTAB decides not to institute, for whatever reason, there is no review. In making this decision, the PTAB has complete discretion to decide whether or not to institute review. Therefore, if IPRs proceed on patents owned by a tribe, it is because a politically accountable, federal official has authorized the institution of that proceeding. In this way, an IPR is more like cases in which an agency chooses whether to institute a proceeding on information supplied by a private party.
Second, the role of the parties in an IPR suggests immunity does not apply in these proceedings. Once IPR has been initiated, the PTAB may choose to continue review even if the petitioner chooses not to participate. The PTAB has construed its rules to allow it to continue review even in the absence of patent owner participation, and to participate in appeals “even if the private challengers drop out.” This reinforces the view that IPR is an act by the agency in reconsidering its own grant of a public franchise.
Third, the USPTO procedures in an IPR do not mirror the Federal Rules of Civil Procedure. Although there are certain similarities, the differences are substantial. The Federal Circuit noted the differences and breadth of discovery in civil litigation, ability to amend pleadings in civil litigation, ability to amend patent claims during an IPR, and the length and scope of a civil court trial versus an IPR hearing. In short, in an IPR, the agency proceedings are both functionally and procedurally different from district court litigation.
Finally, while the USPTO has the authority to conduct reexamination proceedings that are more inquisitorial and less adjudicatory than IPR, this does not mean that an IPR is thus necessarily a proceeding in which Congress contemplated tribal immunity to apply. The tribe acknowledged that sovereign immunity would not apply in ex parte reexamination proceedings because of their inquisitorial nature. The mere existence of more inquisitorial proceedings in which immunity does not apply does not mean that immunity applies in a different type of proceeding before the same agency. While IPR presents a closer case for the application of tribal immunity than ex parte reexamination, the Federal Circuit nonetheless concluded that tribal immunity does not extend to these administrative agency reconsideration decisions.
Thus, the Federal Circuit held that tribal sovereign immunity cannot be asserted in IPR, and affirmed the underlying decision of the PTAB. However, the Federal Circuit was careful to note that it was not deciding the issue of state sovereign immunity. The Federal Circuit specifically pointed out it was only deciding whether tribal immunity applies in IPR. It left for another day the question of whether there is any reason to treat state sovereign immunity differently.