Background
The case arose from a high-profile maneuver by Allergan, Inc. to protect its blockbuster dry-eye drug Restasis from generic competition. Mylan Pharmaceuticals and other generic manufacturers had petitioned the Patent Trial and Appeal Board (PTAB) for inter partes review (IPR) of the Restasis patents—patents that Allergan feared would be invalidated. To block those IPRs, Allergan executed an unusual deal: it transferred formal title of the Restasis patents to the St. Regis Mohawk Tribe, a federally recognized Native American tribe, while retaining an exclusive license and all economic benefits. The theory was that the Tribe’s sovereign immunity—which generally shields tribal governments from suit—would bar the PTAB from conducting IPR proceedings against a tribal patent owner.
The PTAB rejected the immunity argument and proceeded with the IPRs. The St. Regis Mohawk Tribe appealed to the Federal Circuit, arguing that sovereign immunity principles applicable to states (affirmed by the Supreme Court in Florida Prepaid and related cases) should extend to federally recognized tribes and require dismissal of the IPR petitions.
The Court’s Holding
The Federal Circuit unanimously affirmed the PTAB’s denial of sovereign immunity. Writing for the panel, Judge Moore held that tribal sovereign immunity does not apply in inter partes review proceedings. The court reasoned that IPR is an in rem-like proceeding—it is directed at the patent itself, not at the patent owner as a party. The PTAB examines whether a patent should have been granted in the first place; it is essentially an extension of the USPTO’s original examination authority. Because the federal government has authority over its own patent grants, a tribe (or any sovereign) cannot invoke immunity to shield a patent from the government’s reconsideration of whether that patent was validly issued.
The court distinguished the tribal-immunity context from state sovereign immunity, noting that states have explicit Eleventh Amendment protections that the Supreme Court has addressed in specific patent contexts. Tribes, by contrast, have a different constitutional and statutory relationship with the federal government, and Congress did not waive or incorporate tribal immunity into the AIA’s IPR framework. More fundamentally, the court was skeptical of allowing any sovereign—state or tribal—to effectively nullify the IPR system through ownership transfers, emphasizing that permitting such maneuvers would undermine a critical mechanism Congress created to weed out invalid patents.
Key Takeaways
- Tribal sovereign immunity does not apply in PTAB inter partes review proceedings—pharmaceutical and technology companies cannot use patent assignments to tribes as a shield against IPR validity challenges.
- IPR is treated as an in rem or quasi-in rem proceeding targeting the patent grant itself, which falls within the federal government’s authority regardless of who holds title to the patent.
- The decision closed off a significant attempted workaround in the patent litigation playbook—Allergan’s Restasis strategy was definitively rejected, and the Restasis patents were ultimately held invalid by the PTAB.
- State sovereign immunity in IPR remains a separate (and more contested) question; the Federal Circuit’s reasoning here was specific to tribal immunity and the structure of IPR, leaving state-immunity questions open.
Why It Matters
This case was one of the most-watched patent decisions of 2018 because it tested whether patent owners could use creative ownership structures to escape IPR entirely. Had the Federal Circuit accepted the sovereign-immunity argument, it would have created a significant loophole: any patent holder facing an IPR could assign patents to a tribe or state entity and potentially immunize them from PTAB review. Drug companies in particular—who have strong financial incentives to extend patent protection on high-revenue drugs—were watching closely.
The Federal Circuit’s firm rejection of the strategy preserved the integrity of the IPR system. The decision also sent a clear signal that courts will look critically at patent ownership arrangements that appear designed primarily to manipulate litigation procedure rather than reflect genuine transfers of economic interest. For the pharmaceutical industry, St. Regis Mohawk confirmed that the IPR route to challenging drug patents remains open, regardless of who nominally holds the patent.