On September 8, 2017, Allergan created a stir in the media when it announced that it had transferred all the patents for its eye drug Restasis to the Native American tribe Saint Regis Mohawk Tribe, which then granted Allergan back an exclusive license. As part of the deal, the tribe will get $13.75 million and potentially $15 million in annual royalties. The move by Allergan enables the tribe to raise sovereign immunity as a defense against IPR petitions filed against the Restasis patents. It also brings to focus the controversy surrounding the inter partes review (IPR) and the constitutionality of such IPRs. Although the Allergan-St. Regis deal was widely reported in the press, several parties have successfully used sovereign immunity as a shield against IPRs.
The Eleventh Amendment, as interpreted by the U.S. Supreme Court, grants immunity to the States against certain adjudicative proceedings brought against them by private parties. The defense of sovereign immunity has already been raised in cases where the patent owner is a state university. The PTAB upheld a defense of sovereign immunity asserted by the University of Florida and dismissed three IPR petitions filed by Covidien. Covidien LP v. Univ. of Florida Research Foundation Inc., IPR2016-01274, -01275, -01276 (PTAB Jan. 25, 2017). In its determination that sovereign immunity defense applies to IPRs, the Board relied on the Supreme Court's decision in Fed. Mar. Comm'n v. South Carolina State Ports Auth., 535 U.S. 743 (2002) and concluded that the University was an "arm of the State" under Manders v. Lee, 338 F.3d 1304 (11th Cir. 2003). Subsequently, a different PTAB panel reached the same conclusion and found that the University of Maryland could raise the sovereign immunity defense to the IPR proceeding even though it exclusively licensed the patents to a commercial entity. NeoChord, Inc. v. Univ. of Maryland, IPR2016-00208 (PTAB May 23, 2017).
The Eleventh Amendment, as interpreted by the U.S. Supreme Court, grants immunity to the States against certain adjudicative proceedings brought against them by private parties. The defense of sovereign immunity has already been raised in cases where the patent owner is a state university. The PTAB upheld a defense of sovereign immunity asserted by the University of Florida and dismissed three IPR petitions filed by Covidien. Covidien LP v. Univ. of Florida Research Foundation Inc., IPR2016-01274, -01275, -01276 (PTAB Jan. 25, 2017). In its determination that sovereign immunity defense applies to IPRs, the Board relied on the Supreme Court's decision in Fed. Mar. Comm'n v. South Carolina State Ports Auth., 535 U.S. 743 (2002) and concluded that the University was an "arm of the State" under Manders v. Lee, 338 F.3d 1304 (11th Cir. 2003). Subsequently, a different PTAB panel reached the same conclusion and found that the University of Maryland could raise the sovereign immunity defense to the IPR proceeding even though it exclusively licensed the patents to a commercial entity. NeoChord, Inc. v. Univ. of Maryland, IPR2016-00208 (PTAB May 23, 2017).
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