Federal Circuit Summary

Before Dyk, Moore, and Reyna. Appeal from the Patent Trial and Appeal Board.

Summary: Tribal sovereign immunity does not shield Indian Tribe owned patents from IPR.

Generic drug manufacturers petitioned for IPR of Allergan’s patents relating to the dry eye treatment Restasis. The Board instituted the IPR, but before the scheduled hearing, Allergan assigned the Restasis patents to the Saint Regis Mohawk Tribe. The Tribe moved to terminate the IPR on the basis of sovereign immunity, and Allergan moved to withdraw from the proceedings. The Board denied both motions, and the Tribe and Allergan appealed.

The Federal Circuit affirmed. The Court noted that immunity generally does not apply where the federal government acts through an agency to engage in an investigative action or to pursue an adjudicatory agency action. However, in view of the Supreme Court’s decision in Federal Maritime Commission v. South Carolina State Ports Authority, the Court recognized that immunity may apply in adjudicative proceedings brought against a sovereign by a private party, where such proceedings are virtually indistinguishable from civil litigation.

The Court held that tribal sovereign immunity cannot be asserted in an IPR because an IPR is more like an agency enforcement action than a civil suit brought by a private party. First, the Director, a federal official, has broad discretion to decide whether to institute review. Thus, a private party cannot unilaterally hale a sovereign before the Board. Second, once an IPR has been initiated, the Board may continue review even if the petitioner chooses not to participate, and the Board may participate in an appeal even if the petitioner drops out. Third, there are substantial differences between IPR procedure and the Federal Rules of Civil Procedure. Fourth, an IPR serves the same basic purposes as an inter partes reexamination, and the Tribe acknowledged during oral argument that sovereign immunity would not apply to inter partes reexamination.