By Jason Rantanen
Saint Regis Mohawk Tribe, Allergan, Inc. v. Mylan Pharmaceuticals Inc., Teva Pharmaceuticals USA, Inc., AKORN, Inc. (Fed. Cir. 2018) Download Opinion
Panel: Dyk (concurring), Moore (author), Reyna
Last fall, Allergan transferred a set of patents relating to its Restasis product (the “Restasis Patents”) to the Saint Regis Mohawk Tribe (“the Tribe”). The Tribe promptly asserted tribal sovereign immunity in the pending inter partes review proceedings involving the Restasis patents. In February, the PTAB denied the Tribe’s motion to terminate the IPRs, a decision the Tribe appealed. Following an expedited briefing schedule, the Federal Circuit has now affirmed the PTAB’s denial of sovereign immunity.
The panel opinion, joined by all three judges, addressed only one of the arguments against sovereign immunity: that under the Supreme Court’s analysis in Fed. Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743 (2002), tribal sovereign immunity does not apply. It’s important to note at the outset that “Generally, immunity does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action.” Slip Op. at 5.
The Court in FMC looked to whether the adjudications at issue were “the type of proceedings from which the Framers would have thought the States possessed immunity when they agreed to enter the Union.” Id. at 5-6. In particular, the Federal Circuit observed that “[i]n doing so, the Court recognized a distinction between adjudicative proceedings brought against a state by a private party and agency-initiated enforcement proceedings.” Id. at 6.
This question is similar to that of whether an administrative agency can hear a dispute at all, and unsurprisingly the court looked to the Supreme Court’s recent decisions for guidance. “IPR is neither clearly a judicial proceeding instituted
by a private party nor clearly an enforcement action brought by the federal government,” the court observed, before comparing the views offered by the Court in Oil States v. Greene’s Energy and SAS v. Iancu. Ultimately, the court concluded, “IPR is more like an agency enforcement action than a civil suit brought by a private party….” Thus, “we conclude that tribal immunity is not implicated.” Id. at 8.
How is IPR more like an agency enforcement action? For one thing, the Director chooses whether to institute an IPR. And while that discretion is limited to an all-or-none decision under SAS, “if the Director decides not to institute, for whatever reason, there is no review.” Id. at 8. In addition, “the Board may choose to continue review even if the petitioner chooses not to participate,” reinforcing “the view that IPR is an act by the agency in reconsidering its own grant of a public franchise.” Id. at 9. There are also differences between the IPR rules of procedure and the Federal Rules of Civil Procedure; because of these distinctions “the agency procedures in FM much more closely approximated a civil litigation than those in IPR.” Id. at 10. Nor does the existence of more “inquisitorial” proceedings in which sovereign immunity would not apply, such as ex parte and inter parte reexamination, mean that sovereign immunity must apply to IPRs.
Judge Dyk joined the panel opinion in full, but wrote separately to describe the history of inter partes review and why those reviews are not adjudications between private parties. His opinion is a great reference if one wants a thorough description of the history of the proceeding, complete with numerous source citations.
This dispute is clearly not at an end, and I suspect that the Tribe and Allergan will seek en banc review, if not head straight for a cert petition. Given the expedited briefing schedule, I expect this issue to continue to move quickly. At the same time, however, keep in mind that in the parallel infringement proceeding in the Eastern District of Texas, Judge Bryson (sitting by designation) found the Restasis Patents obvious following a bench trial. Allergan (now joined by the Tribe) appealed that determination. Oral argument is currently scheduled for September.
Is there another potential issue in this case? On July 9 for the first time the Fed. Cir. has acted to enforce the requirement to identify the “real party in interest” in an IPR. Applications in Internet Time v. RPX Corporation vacating a series of final written decisions issued by the PTAB. The Panel held that the PTAB applied an unduly restrictive test in determining the statutory meaning of real party in interest for the purposes of instituting inter partes review (IPR) proceedings
To answer your question, there IS another issue in this case.
But it is not a new issue.
The “real party” issue is just the same “is this a sham deal” issue.
So, yet again, it is a shame that the legal test for “sham deal” was not committed to by the court.
In the early days of AIA trial proceedings (not that long ago), patentees filed writs of mandamus, during trials, to the Federal Circuit that were quickly denied because the appealed issue, even if dispositive of the case, could be reviewed after a final decision by the PTAB. The one-year deadline in the cases did not require extension. Mohawk appears to be the first case heard in an interlocutory appeal from AIA trials.
It is not surprising that the Fed. Cir. decided this interlocutory appeal on the minimum basis necessary, not taking up other issues. It is a bit surprising that they heard the appeal at all. Their jurisdictional statute, while giving jurisdiction over “final decisions” of tribunals such as the Court of Internationsl Trade, does grant jurisdiction over appeal from a “decision” of the PTAB. The cases cited by the Federal Circuit when they stayed the action of the PTAB suggest that the appeals divested the PTAB of jurisdiction over the cases, but do not seem to require that the Fed. Cir. rule on the appealed issue. They could have remanded the cases with instructions that the issue could be heard after final decisions, assuming there were final decisions and the issue remained. The Fed. Cir. did say, without citation, that they had “exclusive jurisdiction” over the appealed issue. Maybe that made a difference to the panel.
What seems to be missed is that this is the last interlocutory appeal that will be heard on the issue of trial immunity. In the overall comparison of AIA proceedings and district court actions, these cases will represent an extraneous data point, or at best a footnote.
“Judge Bryson (sitting by designation) found the Restasis Patents obvious following a bench trial.”
Any earthly idea why the patent owner (whoever that is) would waive the right to a jury in the E.D. of Texas?
It’s a Hatch-Waxman case. I think there’s generally no right to a jury trial if the defendant hasn’t launched and the patent owner’s only available relief is an injunction/an order delaying the generic’s approval.
Thanks. I was curious. Whenever I start reading about Hatch-Waxman, I stop reading.
Other interesting questions as to what else could happen next in this Saint Regis Mohawk Tribe case [after this unusual interlocutory decision solely on a denied motion] include lifting of the pending IPR’s stays, treatment of the exceeded IPR proceeding time deadline, appropriateness of cert before any Final administrative or Fed. Cir. decision, etc., were already discussed below OT in the 7/19/18 Ariosa case blog comments No. 10 et seq.
I would love to see a precedential holding that the PTAB loses statutory jurisdiction to decide the case after 18 months expires. Unfortunately, that would create rather an untenable inconsistency with the CAFC’s long-standing practice of remanding cases back to the PTAB, even where the 18 month limit is already past and gone.
Greg, do you have any cites for that “long-standing practice” (that would be directly applicable – or otherwise – to the express words of the AIA)?
Greg, the PTAB says it has never previously exceeded its IPR proceeding time deadline to its final decisions. All those prior Fed. Cir. remands were in appeals from Final PTAB decisions as far as I am aware. Does anyone even remember seeing a prior Fed. Cir. Interlocutory decision on a Non-final IPR? Also, there was a Fed. Cir. stay granted in this case.
That stay expressly omitted a halt to the timing, Paul. That was noted in discussions at the time that the stay (of the PTAB decision) was announced.
Not sure if you intended it, but your comment sounds as if you are proposing that the timing aspect was also put on hold when it was not.
I could not say that there are no previous instances of interlocutory appeals (I just do not know), but even if we take this premise as accurate, I am not sure how much the distinction is worth. Think, for example, of the recent PPC Broadband v. Iancu decision.
Those IPRs were instituted in 2013. The CAFC decision came down in 2018, long after the 18 month limit had run. The CAFC vacated the PTAB decision. In other words, there is no more final PTAB decision. That decision is gone. Nevertheless, the CAFC remanded back to the PTAB.
The whole point of IPRs is that they are supposed to be quick. It seems to me that the way you give effect to this statutory intent is that you say “either the PTAB gets it done in 18 months tops, or else the PTAB loses jurisdiction and the district court gets it.” The ability to cycle this thing back and forth between PTAB and CAFC defeats the Congressional intent of a quick alternative to litigating §§ 102/103 challenges.
When assessing conformity to the Congressional intent, I do not see that the distinction between “remand after a final decision is vacated” and “remand from an interlocutory appeal that came before final decision” makes much material difference.
The ability to cycle this thing back and forth between PTAB and CAFC defeats the Congressional intent of a quick alternative to litigating §§ 102/103 challenges.
So no interlocutory appeals after institution.
Ends and means….
:dolt:
Greg, the statutory rule-directed IPR time deadline is keyed to the “issuance” of the PTAB decision by the PTAB, not its finality, which can of course be changed by later action of the Fed. Cir.. If that were not the case, given the cumulative number of Fed. Cir. remands, would not someone have already argued the IPR time deadline against a remanded IPR by now?
The Proxyconn attorneys did make that argument in Microsoft v. Proxyconn. The court declined to address that argument, but it was raised. I am not sure whether other parties have not also raised the issue.
We fully developed the “no jurisdiction to remand” untimeliness argument in a pending appeal. The appeal is set for argument in September. The USPTO intervened to oppose. Law.com covered it.
link to law.com
Thanks. Loved the title: “The Patron Saint of Lost PTAB Causes Strikes Again.”
Actually, the IPR deadline is for PTAB issuance of a “final determination” which is not the same words as a final decision, albiet the latter term seems to be used in other parts of the statute for a decision which is not really final, since per other IPR statutory language an IPR has no binding effect until the subsequent issuance of a “Certificate” after the appeal or time for appeal has expired and their is no time deadline for Certificate issuance.
White House readies plan to extend about $12 billion in emergency aid to farmers caught in Trump’s escalating trade war
Gotta love that corporate welfare.
One does have to wonder how much of that would go to Big Ag and how much might go to farmers like Mr. Bowman…
One does have to wonder how much of that would go to Big Ag and how much might go to farmers like Mr. Bowman…
I’m guessing $14.99 billion to Big Ag. Pure guess! This stuff is so hard to predict, after all.
Neat trick – 14.99 out of 12….
Unfortunately, that’s pretty much how the government works.
Specify Project Alpha will cost N Billion…
…Project Alpha has cost overruns and ends up cost R*N Billion (where R is some real number > 1.0).
This case is fine, and it appears to me that it was rightly decided. The basis of the decision, however, is fairly narrow, and because it is so narrow, I expect that the court can expect to be revisiting variations on the theme in future.
In particular, this case involved a circumstance in which the patentee tried to rent the tribal immunity. Instead of deciding whether tribal immunity can be rented at all, the court here decided only whether one can rent immunity from a PTAB challenge. The court decided that there is no tribal immunity from PTAB proceedings to be rented, but the question of whether one can rent immunity from other sorts of proceedings remains an open question.
Fundamentally, however, if tribal immunity is rentable, it is just as rentable for infringers as it is for patentees. Imagine, for example, if typical troll-targets (e.g., banks, insurance companies, telecom companies, etc) were to structure all of their e-commerce ventures as joint ventures in partnership with a sovereign tribe. Then, when a patentee served the bank with an infringement complaint, the bank (or other such defendant) could move to dismiss on the basis of a failure to join a necessary and indispensible party.
As long a tribal immunity is conceived as a rentable commodity, there are literally an infinite number of inventive new ways to structure one’s business dealings to bring oneself within the ambit of the tribe’s immunity. Given the amounts of money at stake in patent litigation, I expect that we can look forward to many new such arrangements in the future, contrived to allow some profitable business to shelter (or at least to claim that they are sheltered) under the umbrella of a tribe’s sovereign immunity.
Incidentally, there were many people on this board who belligerently asserted that only racial animus could drive opposition to Allergan’s deal with the St. Regis Mohawks. Hands up everyone who thinks that the same people who supported Allergan’s gambit will also complain—when the tables are turned, and these rent-a-tribe deals are used in the furtherance of efficient infringement—that the only explanation for opposition to the deal must be prejudice?
Good points Greg.
What does it mean for a property (public franchise property or private personal property) to be fully alienable?
Is “renting” in any situation to be constrained?
While (expressly) not reached in this (very) limited decision, the normal legal concept of a sham deal may well be an important element to consider in your answer.
In this case, the issue is whether sovereign immunity is “property”.
umno
In this case, the issue is whether sovereign immunity is “property”.
I follow what you are trying to say here, but that seems a stronger phrasing than I would endorse. “Property,” as such, should be not only rentable, but also fully assignable. No one, however, would argue that the St. Regis Mohawks could assign their immunity from suit. At most, the question is whether they can rent it out to other, non-tribal parties, while retaining the immunity themselves.
I think that it is fair to say that the St. Regis Mohawks want to treat their immunity as a salable commodity, but not quite as property.
I understand what you were and are saying, and I agree. However, anon’s comment was premised on either sovereign immunity being property, or it was a non sequitur.
You didn’t mention renting anything other than immunity. However, I now see that I shouldn’t have assumed that the topic was being maintained.
Ah, you were responding to anon and not to me. I see. I had misunderstood the context of your response. That makes more sense now.
I mentioned renting directly in relation to property, and NOT as you assumed (or as Greg may have indicated) that a non-property item such as the status of a property holder was an object of property “for rent.”
The disconnect is in Greg’s comment. It is his comment that attempts to portray the deal as a “rent of non-property AS property.”
This of course sounds more in the “sham” accusation – which is also why I have posted that it is too bad that the court did not reach a decision on that accusation. As I have previously posted, “sham” is a legal term of art and just because people may not like a particular deal does not mean that the deal IS a sham deal.
just because people may not like a particular deal does not mean that the deal IS a sham deal.
The opposite is also true. Some people may love a particular “deal” but that doesn’t mean it isn’t a sham.
I agree with you. The legal meaning of the term is what controls.
Of course, this just reflects my own consistent viewpoint on the matter.
Isn’t Sovereign immunity jurisdictional ? It’s not the cause of action – unless it relates to statutory waiver or some other remedy (limited waiver) like the court of federal claims.
there were many people on this board who belligerently asserted that only racial animus could drive opposition to Allergan’s deal with the St. Regis Mohawks.
Did any of those people really believe that? My impression was that they just relished the opportunity to project their own bullcr@p onto others.
Imagine, for example, if typical troll-targets (e.g., banks, insurance companies, telecom companies, etc) were to structure all of their e-commerce ventures as joint ventures in partnership with a sovereign tribe. Then, when a patentee served the bank with an infringement complaint, the bank (or other such defendant) could move to dismiss on the basis of a failure to join a necessary and indispensible party.
Maybe this issue has already been dealt with head-on but if these banks/insurers/telecoms have patents it would seem to constitute a waiver. Or perhaps waiver occurs when some enforcement attempt is made?
“the court here decided only whether one can rent immunity from a PTAB challenge.”
Actually not even that was decided.
To get to that, the court would have had to had addressed the “sham” question.
As I have noted to Paul, it is a shame that the court did not get to that point.
Instead of deciding whether tribal immunity can be rented at all, the court here decided only whether one can rent immunity from a PTAB challenge.
This is poorly stated. What I should have written is that the court decided whether a sovereign tribe possesses immunity from a PTAB challenge. Obviously, if there is no immunity—as the court held—then it is not possible for non-tribal parties to rent such immunity from the tribe, as Allergan attempted here. The question of whether such immunity might be rentable was never reached, because the court held that the tribe had no immunity in the first place.
You are welcome.
That’s how I read it. Which of course is wrong because the Tribes do have sovereign immunity.
Here, the tribal immunity that the Tribes have was not removed.
Instead – and quite opposite of the “throw away line” regarding State immunity – the entire legal construct as to why the (still existing) Tribal immunity is simply not in play WILL apply with equal and full force (per THIS decision, and the “logic” used in THIS decision) to take State immunity and make that as well to be “not in play.”
The “logic” of the court here simply proves too much for those thinking that the State immunity case could turn out differently.
No. If a State immunity case were to turn out differently, some different “logic” will necessarily need to be added.
Greg, it’s true that the case facts only required making a narrow decision on the ability of a patent owner to buy a defense during an IP with a [charitably put] “partial” assignment to a tribe. But I don’t see anything in this decision itself excluding denial of sovereignty defense to an IPR even to a tribe that had invented, patented and owned the technology itself before the IPR was initiated.
The decision only expressly excluded deciding at this time on STATE sovereignty defenses. I gather that so far some IPR panels have recognized it, but the Fed. Cir. has not as yet. So this is another interesting follow-on issue. [There is an arguable difference in Constitutional case law expansion of 11th amendment protection.]
You need to look again Paul.
For example, and to start with, you repeat an error of Greg’s (one that he himself has already recanted) with your lead in of “making a narrow decision on the ability of a patent owner to buy a defense”
Lots of dust being kicked up on that point when the court explicitly did not go there.
I don’t see anything in this decision itself excluding denial of sovereignty defense to an IPR even to a tribe that had invented, patented and owned the technology itself before the IPR was initiated.
True. As the court here notes, IPR proceedings are proceedings in rem. The Supreme Court has recently signaled (Upper Skagit Tribe v. Lundgren) that it does not believe that tribal immunity applies in in rem proceedings, so it would seem that a tribe could not avoid an IPR even if the tribe owned the relevant patents by virtue of a more (shall we say) traditional chain of title.
That in rem issue may be a potential point of distinction between the applicability of tribal immunity and state sovereign immunity here. I believe there are a number of cases holding that state sovereign immunity applies to proceedings even where jurisdiction is in rem, as long as that in rem jurisdiction is attempting to be exercised over property owned by the state.
> As long a tribal immunity is conceived as a rentable commodity, there are
> literally an infinite number of inventive new ways to structure one’s
> business dealings to bring oneself within the ambit of the tribe’s immunity
This is nothing new, see Indian casinos, Indian payday advance loan companies, Indian cannabis clubs, the list goes on and on. Most of these are deemed more legitimate than what Allergan did, because the business venture is generally conducted on the tribal lands (even though the profits often mostly go to non-Native Americans not part of the tribe). What Allergan did here was clearly a sham transaction, and an exceedingly transparent one. This made the PTAB and CAFC decisions easy.
The outcome here was not unexpected; a contrary ruling would have effectively eviscerated the AIA trials programs, as anyone could play this game to shield their patents from IPR/PGR. Allergan paid millions to the tribe for this sham transaction, but if it the scheme had worked, tribes would start engaging in price competition to rent their tribal immunity to patent owners. This would eventually make tribal immunity available to just about any patent owner who wishes to sue, including patent trolls. Some tribes would probably end up willing to rent their immunity for a 5-10% cut of the proceeds of the troll suit, since it’s all upside to the tribe.
But this was clearly a results-oriented decision; the “enforcement vs civil action” distinction relied upon by the CAFC is pretty sketchy. The concurring opinion’s extended discussion of the history of post-grant reexamination proceedings doesn’t change the fact that IPR, in particular, was clearly intended to take the place of an invalidity challenge in a civil action in district court. It’s all over the legislative history and structure of the AIA, and the whole point of AIA trials was to make IPR far more like an adversarial proceeding than inter partes reexamination was. The fact that the CAFC relied on the fact that AIA trials don’t technically use the Federal Rules of Civil Procedure is laughable; they do rely on the Federal Rules of Evidence, a more reliable indicia of the fact that it is, in substance, an administrative mechanism to resolve private civil disputes relating to patent validity. Unlike reexamination, there is also no procedure for “director-initiated” IPR proceedings.
This is perhaps why the Supreme Court in Oil States relied on the “public rights” doctrine to uphold the statute, and not on the assertion that post-grant AIA trials did not involve an exercise of “judicial power.”
“What Allergan did here was clearly a sham transaction, and an exceedingly transparent one. This made the PTAB and CAFC decisions easy.”
Except that is not the case – on several fronts:
1) The PTAB talked about (lead into) the “sham” condition, but did NOT conclude that it WAS a sham.
2) The CAFC expressly did not touch that issue.
3) NO ONE has provided the full legal explication of how the deal IS a sham deal
4) related to 3), the reason why is that there is plenty of arguable space as to why this is NOT a (legal) sham deal. Note here, your own comment about “it’s all upside to the tribe“…
I suggest that if you want to use the term sham, that you back that up appropriately. Otherwise, you come across as one of those mindless “sniffers” who broadcast their feelings as if those feelings actually replaced a critical thinking application of law.
What was the purpose of the Allergan deal if not for Allergan to obtain the benefit of tribal immunity? Some might call that a “sham” transaction.
I have no idea why you think that “it’s all upside to the tribe” could possibly support your position. Given that tribal immunity is a nondepletable resource, any transaction involving it is all upside to the tribe. The fact that it is all upside for one party is one of the signs of a sham transaction. Here, the tribe sold the benefit of its tribal immunity, which is arguably not vendable.
Some might call that…
And of course, they would be wrong – given, as you surely must know – that the legal term of art controls.
Plus, if you have no idea, then I suggest that BEFORE you comment, that you look into just what that legal term of art means.
It’s not that difficult, and it’s kind of important if you want to talk intelligently about the law.
Yeah, anon, the better word than “sham” would be “subterfuge.” The term “scam” is usually reserved for transactions that are illusory; these were real and enforceable agreements. They were just an obvious subterfuge or pretext to rent the tribe’s sovereign immunity.
[T]he better word than “sham” would be “subterfuge.”
Judge Bryson’s district court opinion applied the sham-transaction doctrine to the analysis, but I think that the better analogy than sham-transaction (drawn from tax law) is the “fraudulent conveyance” doctrine (drawn from bankruptcy law). Just as a piece of property sold for a sweetheart deal just before a debtor declares bankruptcy should make us question the validity of that sale, so too should we scrutinize the assignment of a patent in the context where the assignor receives little or no visible consideration during (or immediately before) a patent suit.
Which district court opinion actually completed that line of thought, Greg?
As far as I know, NO such reasoning was explicated.
Do you have a link?
As to considerations of any deal – those ARE a part of the legal determination of a sham deal, so I do not understand why there is so much effort to avoid the proper legal determinations (of a term that is being bandied about CLEARLY for the emotional impact and not the proper legal use).
We as attorneys should be especially aware of when such emotion is being used instead of critical thinking.
Oil States Anomaly #8 (are we up to 8?) – the PTAB is some sort of administrative enforcement v. civil action? ergo tribal immunity is out the window. So I guess this means the BOIA can establish a PTAB like body and adjudicate cases which would have otherwise been subject to tribal immunity in the guise of an administrative enforcement action. But then again, maybe just patents, since the revelation by SCOTUS that patents were subject to the ‘public rights’ doctrine all along – and we have all been dopes for not figuring that out for the last 200 years. Can’t see how the 11th Amendment immunity is not the next well established legal issue to be swallowed by the anomaly. It’s already swallowed the 7th, 4th and 5th. The bigger issue is whether it expands past patent law.
[P]atents were subject to the ‘public rights’ doctrine all along – and we have all been dopes for not figuring that out for the last 200 years.
Speak for yourself. Some of us knew as much before Oil States. The status of patents as public franchise rights is, after all, explained in the case law going back over a century. There was really nothing new revealed in Oil States.
Except that your past cases did not use the term as the current case uses the term (as well as several intermediate cases that cannot be squared with the old case (when one understands how the terminology is being used).
Save your bunk for someone that doesn’t know better.
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