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Using Sovereign Immunity of Public Universities to Avoid IPR Proceedings?


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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 the USPTO.

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, which provides:

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 IPR?

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.

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