As many patent owners are already
aware, issued patents often face challenges to validity, even after examination
by the United States Patent and Trademark Office (USPTO). In the past, such
challenges were filed exclusively in the federal court system. However, the
passage of the America Invents Act (AIA) introduced a new form of patent
challenge – an inter partes review (IPR)
before the USPTO. Now, a patent owner can face simultaneous challenges to the
patent in federal court and before the Patent Trial and Appeal Board (PTAB) of
Due to the dual-threat to
validity faced by patent owners, attorneys for a pharmaceutical company,
Allergan Inc., employed an interesting strategy during a set of IPR proceedings.
Allergan transferred ownership in its RESTASIS® patents to a sovereign
entity, the Saint Regis Mohawk Tribe (“the Tribe”). According to reports,
Allergan will pay the Tribe $13.75 million to buy the patents. The Tribe is
also eligible to receive up to $15 million in annual royalties. In return, the
Tribe granted an exclusive license to Allergan, allowing the company to
continue to make, use, and sell pharmaceuticals under the RESTASIS® brand.
Then, as a sovereign nation, the Tribe sought a stay on all IPR
proceedings involving RESTASIS® patents, based on sovereign immunity.
The principle of sovereign
immunity is based on the Eleventh Amendment to the United States Constitution,
The Judicial power of the United States
shall not be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another State, or by
Citizens or Subjects of any Foreign State.
So long as the sovereign entity
does not waive sovereign immunity, such as by filing or consenting to a lawsuit
in federal court, the federal court does not have jurisdiction over the
sovereign entity. Accordingly, the action must be dismissed for lack of subject
matter jurisdiction. Further, since sovereign immunity is a question of subject
matter jurisdiction, the issue may be raised at any time during a lawsuit. See Fed. R. Civ. P. 12(h)(3).
Similar to native tribes, public
universities also have sovereign immunity from challenges under federal laws,
since public universities are state entities. Two public universities (the
University of Florida and the University of Maryland) have already succeeded in
dismissing IPRs based on sovereign immunity. Moreover, a licensee of the
University of Maryland could not be subject to an IPR without a waiver of
sovereign immunity by the university. This raises an interesting question: could
the Allergan strategy be employed with public universities, wherein patent
owners assign ownership of their patents to universities in exchange for an
exclusive license, thereby shielding those patents from invalidation through an
Having previously dismissed IPR
proceedings based on sovereign immunity for public universities, the PTAB will
likely dismiss the IPRs challenging the RESTASIS® patents (the parties will brief the
issue over the next month). If the PTAB dismisses the proceedings, this
precedent could provide ammunition for patent owners to fight back against
potentially-devastating IPR proceedings.