Federal Circuit Holds that Tribal Sovereign Immunity Does Not Bar Inter Partes Review
By Adam R. Steinert & Katherine J. Rahlin
In a closely-watched case, the United States Court of Appeals for the Federal Circuit held today that a Native American tribe may not assert sovereign immunity to bar inter partes review (IPR) proceedings before the Patent and Trademark Office’s (PTO’s) Patent Trial and Appeal Board. In Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., he court held “that IPR is more like an agency enforcement action than a civil suit brought by a private party, and … [as a result] tribal immunity is not implicated.”
The Saint Regis Mohawk Tribe case resulted from Allergan’s efforts to enforce patents covering its drug Restasis, which is used to treat the symptoms of chronic dry eye. Allergan sued several generic drug manufacturers for patent infringement, prompting the defendants to seek IPRs of the asserted patents. While the IPRs were pending, Allergan assigned the patents to the Saint Regis Mohawk Tribe, which moved to terminate the IPRs on the basis of tribal sovereign immunity.
The Federal Circuit held that whether sovereign immunity applied to IPRs hinged on whether the proceedings were more like traditional district court litigation between private parties or more like a traditional government agency enforcement action. The court found that three factors made IPRs more like enforcement actions than civil litigation:
(1) Broad discretion not to institute IPRs – The Federal Circuit found that the PTO Director’s broad discretion not to institute an IPR (even if the petition has merit) weighed heavily in favor of finding that IPRs are like enforcement actions:
If the Director decides to institute, review occurs. If the Director decides not to institute, for whatever reason, there is no review. In making this decision, the Director has complete discretion to decide not to institute review. … The Director bears the political responsibility of determining which cases should proceed. While he has the authority not to institute review on the merits of the petition, he could deny review for other reasons such as administrative efficiency or based on a party’s status as a sovereign. … Therefore, if IPR proceeds on patents owned by a tribe, it is because a politically accountable, federal official has authorized the institution of that proceeding.
(2) The Board’s ability to proceed ex parte – Another significant factor for the Federal Circuit was the Board’s ability to continue an IPR ex parte even if the petitioner settled its dispute with the patent owner: “Once IPR has been initiated, the Board may choose to continue review even if the petitioner chooses not to participate. … The Director has also been granted the right to participate in appeals ‘even if the private challengers drop out.’”
(3) Procedural differences between an IPR and district court litigation – The third factor underlying the Federal Circuit’s reasoning was the differences between PTO post-grant procedure and the Federal Rules of Civil Procedure. The court identified several procedural differences between IPRs and civil litigation, including the limited corrections a petitioner can make to an IPR petition once it has been filed, the patent owner’s ability to amend the patent claims during the IPR, and the limited discovery allowed in an IPR.
Taking these factors together, the Federal Circuit concluded that “The Director’s important role as a gatekeeper and the Board’s authority to proceed in the absence of the parties convinces us that the USPTO is acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies ‘within their legitimate scope.’ … The Tribe may not rely on its immunity to bar such an action.”