Interesting news item from last week: according to Allergan’s web site, on September 8 Allergan and the Saint Regis Mohawk Tribe announced that Allergan had assigned several patents to the Tribe. The patents are listed in the Orange Book for Allergan’s Restasis product, a formulation of cyclosporine for ophthalmic delivery. A trial in ANDA (Hatch-Waxman) litigation concerning the patents (with Mylan, Teva Pharmaceuticals, Akorn and Inno Pharma as defendants) was completed in Texas on September 1, but a decision has not yet been rendered. When it is eventually given, that decision is certain to be appealed.
As stated in the press release, the rationale behind the assignment was to render the patents safe from attack before the USPTO’s Patent and Trademark Appeal Board (PTAB). Numerous Inter Partes Review proceedings (IPRs) have been instituted against the patents before the PTAB. But patents owned by States of the USA – and by extension, patents owned by state universities, which are considered organs of their respective states – are immune from attack before PTAB under the doctrine of sovereign immunity. Indian tribes also enjoy a degree of sovereign immunity, and in the present case Saint Regis’ lawyers’ reasoned that tribal ownership of patents would confer the same immunity from PTAB proceedings enjoyed by state owners. Allergan’s lawyers agreed…or at least they felt it was worthwhile to transfer the ownership.
I profess no expertise in the law of tribal sovereign immunity, and have no opinion about whether or not the transfer of ownership will confer the desired immunity from the PTAB. From the little research I’ve done, Allergan’s position appears to be one that has at least some substance to it and can’t be dismissed out of hand. See, e.g., Michigan v. Bay Mills Indian Community et al., 134 S.Ct. 2024 (2014). I suppose that in addition to arguing that tribal sovereign immunity doesn’t apply here, the IPR petitioners will also argue that the assignment itself is a sham, an argument that may be bolstered by the fact that (according to the press release) Allergan paid the Tribe to take the ownership of the patents; usually it is the acquirer that pays.
But even if the sovereign immunity argument isn’t a slam-dunk, and even if the transfer is ruled a nullity, it’s hard to see where Allergan has anything to lose. As has been well-established over the past few years, the PTAB is to patents what the University of Chicago is to fun: the place where they go to die. The standard of proof for invalidation at the PTAB is lower, and thanks to the CAFC (except for Judge Newman, may she live and be the sharpest judge on the court until she’s 120) punting on the issue of estoppel/preclusion, a finding of “not invalid” by a court doesn’t preclude a later finding of “invalid” by the PTAB on the same patents, even vis-à-vis the same challengers. So even if the chance that the PTAB proceedings are taken out of play is small, that’s a good thing for a drug with sales of $1.5 billion last year. Given the appeal processes that are sure to ensue from the Texas litigation and any PTAB decisions, and given the reticence of most generic drug manufacturers to launch “at risk” (i.e. without having in had a final, unappealable decision against the patents), anything that can extend the appeal process is probably a good thing for Allergan, each additional day of exclusivity in the market being worth tens of millions of dollars. And of course, Allergan – er, Saint Regis – could win on the sovereign immunity question.
If that happens, we’re likely to see other assignments of pharmaceutical patents to Indian Tribes in order to avoid exposure to the PTAB. Certainly Orange-Book listed patents, which are litigated prior to the grant of FDA approval for the generic, and are thus usually litigated before any infringing product reaches the market, will be transferred in this manner. Transferring non-Orange Book patents is a bit less attractive: injunctions, one of the two remedies available to patent owners, have not been a sure thing since the Supreme Court’s eBay decision over a decade ago, and monetary damages, the other remedy, have to be commensurate with the patent owner’s losses. But since no tribe actually makes and sells pharmaceuticals, the amount of damages to which it would be entitled would be much smaller than the amount that would likely be awarded if the patent owner were the pharmaceutical company itself.
On the other hand, the Saint Regis Mohawk Tribe is already the assignee of pending US patent application no. 13365090, entitled “MOBILE ELECTRONIC DEVICES UTILIZING RECONFIGURABLE PROCESSING TECHNIQUES TO ENABLE HIGHER SPEED APPLICATIONS WITH LOWERED POWER CONSUMPTION”, published as US 20130157639, the assignment having been recorded and executed on August 2, 2017. So apparently someone thinks it’s worth protecting a non-Orange Book, non-pharma patent from PTAB attack. Perhaps the Tribe is planning to go into the patent troll business.
One other interesting question is, will the state universities try to get in on this game too? At least for now, transferring rights to a state university as a means to insulate patents from the PTAB would seem to be a better bet than transferring to an Indian tribe, since the law of sovereign immunity for the former is already settled whereas it’s still an open question with respect to the latter.
I also note that as of this writing, the USPTO still isn’t showing that the assignments from Allergan to Saint Regis have been recorded. I assume that’s going to change in the next few days. [UPDATE, eight hours later: now the assignment for one of the patents, 8629111, is showing in the patent assignment search. Executed and recorded September 8, 2017. It's one of six patents the assignments of which were recorded at the same time. But the assignment document itself identifies numerous patents that were assigned - 33 by my count, plus 11 pending non-provisional applications. ]
Anyway, bravo to Saint Regis’ and Allergan’s attorneys for some creative lawyering. We’ll see where it goes.