It has been stated that the street to spoil is paved with the most effective intentions. One other tackle this aphorism is that the most effective intentions are normally not sufficient to beat the realities of a given state of affairs. Within the case of utilizing Native American tribal sovereign immunity to skirt inter partes evaluate (IPR) proceedings, this appears to be the case. As I noted in a previous article addressing this issue, some intrepid authorized minds tried to reap the benefits of such sovereign immunity by assigning patents to Native American tribes in trade for a grant-back license and attendant royalties. This novel strategy simply received trampled by the Courtroom of Appeals for the Federal Circuit (CAFC), and I can’t say I’m all that shocked by it.
Why all the eye? Somewhat recap will assist — the America Invents Act of 2012 (AIA) accounted for a few of the most profound modifications to patent legislation because the passage of the Patent Act in 1952. As soon as of the numerous modifications applied by the AIA was the establishment of the Patent Trial and Attraction Board (PTAB) , an administrative physique inside america Patent & Trademark Workplace (USPTO) that, at its core, is designed to deal with problems with patentability. Its Trial Part has change into a well-liked vacation spot for contenting patent validity in IPRs. Ostensibly meant to deal with the heavy quantity of patent infringement litigation (a lot of it by non-practicing entities making an attempt to monetize patent portfolios), this adversarial course of created an alternate mechanism for post-grant evaluate of patent claims not less than insofar as prior artwork is worried. The issue: IPRs in PTAB have resulted in much more patents being invalidated, considerably impacting patent portfolios.
So what’s a potent proprietor to do given these odds? Within the case of Allergan PLC, it transferred its patents masking its dry eye drug Restasis to the St. Regis Mohawk Tribe within the State of New York in trade for a grant-back license to Allergan for an upfront price and ingoing royalty. The speculation: these making an attempt to assault the validity of the Retasis patents in IPR proceedings would be confronted with bringing an motion in opposition to a Native American tribe (the now-owner of the patents) that enjoys sovereign immunity, defeating the establishment of the motion. The speculation was novel, and I give excessive marks to pondering outdoors the proverbial USPTO field. That stated, it was by no means on sound footing. Mylan Prescribed drugs introduced an IPR continuing within the PTAB attacking the validity of the Restasis patents, and the St. Regis Mohawk Tribe introduced its movement to dismiss primarily based upon sovereign immunity. On February 26, 2018, the PTAB issued a choice denying the tribe’s movement, and the choice was appealed to the CAFC.
Affirming the PTAB holding that “tribal sovereign immunity can’t be asserted in IPRs”, Choose Moore said in his decision that “IPR is neither clearly a judicial continuing instituted by a personal occasion nor clearly an enforcement motion introduced by the federal authorities.” As an alternative, he held it to be “a ‘hybrid continuing’ with ‘adjudicatory traits’ just like court docket proceedings, however in different respects it ‘is much less like a judicial continuing and extra like a specialised company continuing.’” Utilizing this basis, Choose Moore asserted “a number of elements” in assist of this rationale, from the USPTO Director’s “broad discretion in deciding whether or not to institute evaluate” to “the function of the events in IPR,” all of which recommend that sovereign immunity merely doesn’t apply to IPRs.
Whereas I proceed to imagine that architecting tribal sovereign immunity on this style is improper, this holding is problematic for s variety of causes, not the least of which associated to the CAFC’s rationale relating to the jurisdiction of the PTAB. The issue is that the PTAB, at greatest, asserts quasi in rem jurisdiction over the patents versus in personam jurisdiction (i.e., over the patent house owners) or direct in rem jurisdiction over the patents (because the PTAB panel solely addresses the invalidity arguments introduced by these bringing the IPR continuing and doesn’t adjudicate the rights of all different individuals associated to the patents). I notice that I get into the weeds right here, however the level is that the CAFC’s rationale just isn’t totally appropriate. Consequently, the underlying foundation for the ruling seems headed for both a CAFC rehearing en banc or, extra probably, completely located for a visit to the Supreme Courtroom. That stated, the underlying rationale could morph, however I’d be shocked if the end-result had been any totally different.
The smoke alerts have been heralding an early finish to this strategy, and the CAFC determination has solely added extra gasoline to that fireside. With out query, the St. Regis Mohawk Tribe will probably petition for reconsideration, and if not granted, probably petition the Supreme Courtroom to listen to the case. With out query, It might be unwise to undertake the prices essential to implement this strategy for what could be an unsure (if not nonexistent) achieve. Whether or not through the CAFC rehearing the matter or, extra probably, from a choice of america Supreme Courtroom, tribal sovereign immunity being asserted in IPRs isn’t just trying questionable — it appears to be going up in smoke within the course of.
Tom Kulik is an Mental Property & Data Expertise Companion on the Dallas-based legislation agency of Scheef & Stone, LLP. In non-public follow for over 20 years, Tom is a sought-after expertise lawyer who makes use of his business expertise as a former pc techniques engineer to creatively counsel and assist his shoppers navigate the complexities of legislation and expertise of their enterprise. Information retailers attain out to Tom for his perception, and he has been quoted by nationwide media organizations. Get in contact with Tom on Twitter (@LegalIntangibls) or Fb (www.facebook.com/technologylawyer), or contact him instantly at [email protected].