The Saint Regis Mohawk Tribe administration and community building in Akwesasne, New York. Photo: SRMT

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All eyes on Saint Regis Mohawk Tribe in contentious patent case

Thursday, March 29, 2018

A closely-watched and contentious patent dispute involving the Saint Regis Mohawk Tribe is moving into the federal court system.

The tribe made waves last fall when it acquired the patents to RESTASIS®, a lucrative dry-eye drug. Members of Congress from both parties condemned the move as an attempt to stifle competition under the guise of tribal immunity.

"This is not something that's good for Native American sovereignty," Rep. Darrell Issa (R-California) said at the winter meeting of the National Congress of American Indians in Washington, D.C., last month.

The U.S. Patent Trial and Appeal Board apparently agreed with that sentiment. A week after the issue came up at NCAI's meeting, the board rejected the tribe's attempt to invoke its sovereign immunity in what is known as an inter partes review (IPR) of the drug patents.

In doing so, the board answered a question NCAI President Jefferson Keel raised last month. State-run universities have successfully quashed IPRs by raising a sovereign immunity defense, he noted.

"Why should tribes be treated any different than these state universities, or states, for that matter?" Keel asked.

According to the board, the U.S. Supreme Court has already provided guidance on that front. In a 1998 opinion often cited in sovereignty cases, Justice Anthony Kennedy observed that the "immunity possessed by Indian tribes is not coextensive with that of the states."

So tribes, in the eyes of the board, can't invoke their sovereignty in the same manner as state universities, or states, for that matter.

"In view of the recognized differences between the state sovereign immunity and tribal immunity doctrines, and the lack of statutory authority or controlling precedent for the specific issue before us, we decline the tribe’s invitation to hold for the first time that the doctrine of tribal immunity should be applied in inter partes review proceedings," the board's February 23 decision read.

An Allergan site in Irvine, California. Photo: Allergan

But the fight is far from over. The tribe immediately challenged the ruling by taking it to the Federal Circuit Court of Appeals and by requesting a delay in the IPR, pending resolution of the matter in the judicial system.

According to the tribe, the board got a lot of things wrong in what has been acknowledged to be a novel legal issue. It "effectively usurped the power of Congress to abrogate tribal immunity, created the fiction of an 'effective' patent owner to further its efforts to move the case forward, and misapplied the well-established law of tribal sovereignty," a motion for a stay read.

Noting that the "final" IPR hearing was scheduled for next Tuesday, the Federal Circuit agreed to grant the tribe's motion. The court also agreed to expedite the case by holding oral arguments sooner rather than later.

"The stay shall remain in effect until the day after oral argument in the appeals in June 2018," the court's order on Wednesday read.

The stay had been opposed by three companies that are challenging the RESTASIS® patents. Before the Patent Trial and Appeal Board even reached its decision, a federal judge in Texas invalidated the patents owned by Allergan, the original developer.

At the time, Heather Bresch, the CEO of Mylan, one of the challengers, said the judge's ruling was "binding" on the tribe. Following the patent board's ruling last month, she said Allergan's deal with the tribe was a "sham."

The tribe and Allergan have been upfront about their arrangement, saying it was intended to block the ongoing IPR. Their deal, announced last September, drew significant attention in the mainstream media before members of Congress got mad about it.

“This is one of the most brazen and absurd loopholes I’ve ever seen, and it should be illegal,” McCaskill, who is the top Democrat on the Senate Homeland Security and Governmental Affairs Committee, said as she introduced a bill to abrogate tribal sovereign immunity in IPRs.

Concerns appear to be financial in nature. The tribe received an immediate $13.75 million payment for taking on the patents in dispute. By licensing the product back to Allergan, the tribe stands to make up to $15 million in royalties a year.

"To ensure the strength and vigor of our regional economy and to protect against persistent threats to our tribal general fund and federal funding, we have been forced to diversify our investment strategies," the tribe said in a letter to lawmakers who raised questions about the deal.

But it looks like Allergan remains the real winner. According to the Republican and Democratic leaders on the House Committee on Oversight and Reform, which has launched an investigation into the "unconventional deal," the firm benefits greatly from the tribe's claim of immunity.

"As Allergan's second best-selling drug, Restasis generated nearly $1.5 billion in revenues for the company last year," the lawmakers wrote in a letter to the firm in October.

Rep. Darrell Issa (R-California) addresses the National Congress of American Indians winter session in Washington, D.C., on February 13, 2018. Photo: NCAI

Rep. Issa, who is retiring from Congress later this year, previously served as chairman of Oversight and Reform. He was frank with his take on the controversy, saying the tribe was no better than the University of California in his district, which he described as a "major troll" when it comes to patents.

"States are doing wrong," Issa told tribal leaders at NCAI. "States are, in fact, trolls in many cases."

Issa said universities license their patents to law firms "who do nothing but sue people frivolously" for allegedly violating those patents.

"What they are saying is, 'Heads I win, I take your money. Tails, I lose, you can't go after me or invalidate my patent,'" he added. "Most people kind of get it -- that really isn't fair."

Issa pointed out that Allergan, which is headquartered in Ireland, operates an office in his district and is one of the major employers there. Nevertheless, he said the firm engaged in a "cute trick" by bringing the tribe on board in an attempt to quash the IPR.

"Was it the tribe's patent or the did the tribe take money and put it behind a firewall? Well, the answer was the latter," he said of the Allergan-Mohawk arrangement.