IPRs and Tribal Sovereign Immunity

On July 20, 2018, the Federal Circuit held in Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc. that Native American tribes cannot assert tribal immunity to avoid inter partes review (IPR) proceedings. IPR proceedings, enacted under the America Invents Act and conducted by the Patent Trial and Appeal Board (PTAB), allow parties to challenge patent claims’ novelty or nonobviousness over certain forms of prior art. Pharmaceutical company Allergan sued competitor Mylan for infringing its patents for treating dry eyes. Mylan then petitioned for an IPR which the PTAB instituted. Subsequently, Allergan entered into an agreement with the Saint Regis Mohawk Tribe and, a week before the scheduled date of the IPR oral hearing, notified the United States Patent and Trademark Office (USPTO) that it had assigned its patents to the Tribe. The Tribe then asserted tribal immunity in its motion to terminate the IPR. The PTAB denied the motion and the Tribe appealed.

The Court reasoned that whether sovereign immunity could be asserted to avoid IPRs depended on the nature of IPR proceedings. According to its interpretation of Supreme Court precedent, sovereign immunity can be asserted to block civil suits brought by private parties but cannot always be raised against agency enforcement actions. Ultimately, the Federal Circuit held that although IPRs are “hybrid proceedings” with “adjudicatory characteristics,” there were some factors that suggested that IPRs should be characterized as agency enforcements against which tribal sovereign immunity cannot be asserted. First, the USPTO Director has discretion on whether to institute an IPR. Second, unlike private party actions, IPRs continue even after the petitioner stops participating. Thus, the Director’s “gatekeeper” role combined with the PTAB’s authority to continue with the IPR without the parties’ participation “convince[d the Court] that the USPTO [acts] as the United States in its role as a superior sovereign.” The Court also considered the difference in procedural rules; for example, patent claims can be amended during the IPR proceeding. “An IPR hearing is nothing like a district court patent trial,” the Court said.

State Sovereign Immunity

Still, the question of sovereign immunity and IPRs remains unsettled. First, the Tribe’s petition for certiorari with the Supreme Court, in which it argues that the Federal Circuit misinterpreted Supreme Court precedent that IPRs are “party-directed, adversarial proceedings,” is pending. Additionally, the Federal Circuit is currently considering a related question: whether state sovereign immunity can be asserted against IPRs. In Regents of the University of Minnesota v. LSI Corporation, the University of Minnesota asserted state sovereign immunity and moved to dismiss IPRs filed for its research patents. The PTAB denied the motion and the University appealed. In the time between when the appellees filed their brief and the University filed its reply, the Federal Circuit decided Saint Regis Mohawk Tribe, in which the court expressly left the state immunity question open.

The University of Minnesota is now trying to distinguish Saint Regis Mohawk Tribe. Their main argument is that tribal sovereign immunity differs fundamentally from state sovereign immunity. According to the University, tribal immunity is a “common-law [sovereign] immunity which Congress may amend.” However, “[s]tate sovereign immunity is a constitutional limit on federal authority that was established when the States joined the Union.” States are protected from IPR proceedings because they never consented to be hauled before the PTAB, the argument goes. And, therefore, the “hybrid” nature of IPRs, though “sufficient to overcome” tribal sovereign immunity, cannot trump state sovereign immunity, according to the University. The University also distinguishes Saint Regis Mohawk Tribe by arguing that, in its case, the Director had not instituted the IPR and thus the argument based on the Director’s “gatekeeper” role—relied upon in Saint Regis Mohawk Tribe to categorize the IPR as an agency enforcement action—was unavailable.

The Federal Circuit, in oral arguments held on March 11, 2019, was mostly skeptical of the University’s arguments. The panel questioned the relevance, in this case, of the distinction between common-law sovereign immunity and constitutional sovereign immunity. The University also argued that sovereign immunity was necessary to protect the State from the IPR’s potential estoppel effect and destruction of other substantive rights. The court, however, doubted whether IPRs even involved compulsion. The panel also suggested that sovereign immunity may not apply because IPRs are by nature in rem proceedings. The patent itself may not get the benefit of sovereign immunity.

Going Forward

Ultimately, it is unlikely that the Federal Circuit will permit sovereign immunity to be asserted either by Native American tribes or by states to avoid IPRs. This may be the intuitively correct result. Whether the Supreme Court will grant the Tribe’s cert petition—and what arguments it will put forth in case it does—is unknown. The Federal Circuit took a doctrinal approach in Saint Regis Mohawk Tribe but some may find persuasive Mylan’s argument that the Tribe is “impermissibl[y] attempt[ing] to ‘market an exception’ from the law.” Although the University of Minnesota owned the patents at issue all along, whether states will be permitted to claim such an exception remains to be seen.