U.S. Court of Appeals for the Federal Circuit: Public Universities do not have Sovereign Immunity from Patent IPRs

In a new U.S. Court of Appeals for the Federal Circuit opinion, Regents of the University of Minnesota v. LGI Corporation, et al., the court held that states, including public universities, are not entitled to sovereign immunity from Inter Partes Review (IPR) proceedings filed at the United States Patent and Trademark Office (USPTO) to challenge an issued patent.  Judge Dyk, writing for the court, provides a nice overview of the history of administrative challenges to issued patents as well as the process for filing and prosecuting an IPR.  Notably, Judge Dyk points to the resource constraints of the USPTO in evaluating patentability and that the federal government is essentially drafting third parties through IPRs to test patentability.  Judge Dyk discusses and relies upon the reasoning of Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018).  In that case, the Federal Circuit refused to apply tribal sovereign immunity to IPRs.  The court notes that it was unnecessary to reach the issue whether the University of Minnesota waived sovereign immunity for an IPR by filing a patent infringement suit concerning the IPR challenged patent.  This decision puts U.S. public university generated and owned patents in the IPR crosshairs.  Interestingly, it puts U.S. public university patents on the same footing as foreign university owned and generated U.S. patents for purposes of challenge through IPRs, thus, removing a potential advantage for U.S. public universities versus foreign universities in the United States.  

Ending Soveriegn Immunity for Tribes from Inter Partes Review

U.S. Senator McCaskill has introduced a Bill that would remove sovereign immunity as a defense against Inter Partes Review of patents for Indian Tribes.  The Bill is refreshingly short.  It states:

A BILL

To abrogate the sovereign immunity of Indian tribes as a defense in inter partes review of patents.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Abrogation of tribal immunity in certain patent claims.

(a) Definition.—In this section, the term “Indian tribe” has the meaning given the term in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703).

(b) Abrogation of immunity for purposes of inter partes review.—Notwithstanding any other provision of law, an Indian tribe may not assert sovereign immunity as a defense in a review that is conducted under chapter 31 of title 35, United States Code.

As previously discussed, the Bill is directed at Allergen’s recent attempt to use sovereign immunity of Indian Tribes to insulate patents from Inter Partes Review at the PTO by transferring its patents to the tribe in exchange for cash.  Notably, Judge Bryson (of the Federal Circuit), sitting at the trial court level, recently asked Allergen to demonstrate that its transfer is not a “sham."  Judge Bryson further found the Allergen patents to be obvious.  

Gaming IP: Smart or Damaging the Entire System

Here is an interesting case of gaming the IP system.  I believe this type of tactic hurts the IP system as whole even if we may disagree about the need for reforms. 

The New York Times has an informative article titled, “How to Protect a Drug Patent?  Give It to a Native American Tribe.”  The article describes how Allergen, the pharmaceutical company:

will pay the [Native American] tribe $13.75 million. In exchange, the tribe will claim sovereign immunity as grounds to dismiss a patent challenge through a unit of the United States Patent and Trademark Office. The tribe will lease the patents back to Allergan, and will receive $15 million in annual royalties as long as the patents remain valid.

As discussed in the article, this is apparently a strategy to protect the patents from Inter Partes Review Proceedings at the United States Patent and Trademark Office.  As discussed in other posts, public universities have successfully claimed sovereign immunity under the 11^th amendment of the U.S. Constitution from IPR Proceedings.  I doubt this strategy will last long.  I can understand how Allergen may think this may play well with the public because Native American tribes will receive much needed funding, but really?  This looks very bad.  Of course, folks are going to start asking what that funding is being used for.