Is Sovereign Immunity Dead with Respect to PTAB Proceedings?

March 13, 2018

      There has been a lot of discussion recently regarding claims by the Saint Regis Mohawk Tribe (“Saint Regis”) of sovereign immunity as a defense against inter partes review of certain patents owned by Saint Regis.  The issue came about as a result of a deal made between Allergan and Saint Regis under which Allergan (the original owner of the six patents involved) paid Saint Regis $13.75 million to take ownerhip of the six patents for Allergan’s Restasis drug, and license them back exclusively to Allergan, with the promise of ongoing royalties.  When those six patents were challenged in an inter partes review at the Patent Trial and Appeal Board (PTAB), Saint Regis asserted that the patents were shielded from such inter partes review by the theory of tribal sovereign immunity, by extension of a 2017 PTAB ruling that the University of Florida (as a state entity of the state of Florida) was immune to such IPR challenge by Covidien LP.  In other decisions, the PTAB has reiterated that state sovereign immunity applies in IPR’s.

35 U.S.C. 296 currently reads:

35 U.S.C. 296 Liability of States, instrumentalities of States, and State officials for infringement of patents.

(a) IN GENERAL.—Any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State, acting in his official capacity, shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person, including any governmental or nongovernmental entity, for infringement of a patent under section 271, or for any other violation under this title.

(b) REMEDIES.—In a suit described in subsection (a) fora violation described in that subsection, remedies (includingremedies both at law and in equity) are available for the violationto the same extent as such remedies are available for such aviolation in a suit against any private entity. Such remediesinclude damages, interest, costs, and treble damages undersection 284, attorney fees under section 285, and the additionalremedy for infringement of design patents under section 289. 

While this provision does address the notion of sovereign immunity, and its inapplicability with respect to lawsuits filed in Federal court for patent infringement, the statute does not address procedures before the PTAB.  Accordingly, it is this lack of mention in the statute that has been used by state entities to successfully use a claim of sovereign immunity in PTAB proceedings.

In a recent ruling by the PTAB, the board denied the motion by Saint Regis to terminate the IPR’s brought by several generics companies against the six Restasis patents, holding that tribal immunity does not apply in IPR’s. 

Because of the ongoing controversy that has ensued from the claim of tribal immunity by Saint Regis, the U.S. Senate has now introduced legislation to settle the issue once and for all.  Senators Tom Cotton, R-Arkansas, and Claire McCaskill, D-Missouri, introduced the Preserving Access to Cost-Effective Drugs or PACED Act.  Under this legislation, Title 35 would be amended to specifically abrogate sovereign immunity claims for any “foreign state” (as defined in section 1603(a) of Title 28) and for any “Indian tribe” (as that term is defined in section 4(e) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5304(e))), for each of the following types of proceedings:

  • Derivation proceedings before the PTAB, and review of decisions in such proceedings by a court of the United States;
  • Reexamination proceedings in the USPTO including any appeal to the PTAB, and review of decisions in such proceedings by a court of the United States;
  • Inter Partes Reviews before the PTAB and review of decisions in such proceedings by a court of the United States; and
  • Post Grant Reviews before the PTAB and review of decisions in such proceedings by a court of the United Sates

In each of these instances, the proposed legislation contains the caveat that the subsection shall apply only to the extent permitted by the 11th amendment to the US Constitution; and the proposed legislation permits the PTAB to determine, in cases where the entity is a foreign state, whether the patent owner is imune from PTAB jurisdiction in accordance with 28 U.S.C. 97, as if the PTAB were a court of the United States.  Accordingly, there is no such exemption for Indian tribes for the above noted types of proceedings.

With respect to 35 U.S.C. 296, the proposed legislation amends that section to specifically mention Indian tribes, and specifically states:  “In any action that involves a covered claim that is otherwise within the jurisdiction of a court of the United States, an Indian tribe may not assert sovereign immunity as a defense.”  Covered claims include any claim, counterclaim, or third party claim that arises under title 35 relating to infringement of a patent, or under section 351 of the Public Health Service Act (42 U.S.C. 262).

Accordingly, at least with respect to patent related matters before the USPTO and patent infringement and related counterclaims in front of a court of the United States, it is clear that this legislation, if passed in its current form, would spell the end of tribal immunity claims and potentially some foreign state immunity claims as well.  It will be interesting to follow the legislation’s path through the U.S. Congress.