Mylan Pharmaceuticals, Inc., Teva Pharmaceuticals USA, Inc., and Akron, Inc. petitioned for inter partes review (IPR) of various patents owned by Allergan, Inc., which the  Board instituted. One week before the scheduled IPR hearing, Allergan recorded with the Patent and Trademark Office an assignment transferring title of the patents to the Saint Regis Mohawk Tribe. The Tribe then moved to terminate the IPR on the basis of sovereign immunity, and Allergan moved to withdraw from the IPR. The Board denied both motions.

In an interlocutory appeal of that decision, the Tribe and Allergan argued that the Board erred in denying the motion to terminate the IPR on the basis of sovereign immunity. They argued that, under Supreme Court precedent, sovereign immunity applies in proceedings that bear a strong resemblance to civil litigation. They argued that IPRs  fall into that category because they are contested, adjudicatory proceedings between private parties.

The Federal Circuit disagreed and affirmed the Board’s decision. The Federal Circuit “h[e]ld that trial sovereign immunity cannot be asserted in IPRs.” It stated that while IPRs are hybrid proceedings, they are “more like an agency enforcement action than a civil suit brought by a private party.” It found that “IPR is an act by the agency in reconsidering its own grant of a public franchise,” including to “protect the public interest in keeping patent monopolies ‘within their legitimate scope.’”

In support of its finding, the Federal Circuit noted the role of Director in IPRs, who “possesses broad discretion in deciding whether to institute review.” It noted that “[w]hile [the Director] has the authority not to institute review on the merits of the petition, he could deny review for other reasons such as administrative efficiency or based on a party’s status as a sovereign.” Thus, “if IPR proceeds on patents owned by a tribe, it is because a politically accountable, federal official has authorized the institution of that proceeding.”

The Federal Circuit also distinguished the party’s rights and obligations in IPR from litigation. The Court noted that, unlike in civil suits, “[o]nce IPR has been initiated, the Board may choose to continue review even if the petitioner chooses not to participate.” It also noted that “the USPTO procedures in IPR do not mirror the Federal Rules of Civil Procedure.” For example, in IPR a petitioner may only make clerical or typographical corrections to its petition, a patent owner may seek to amend its patent claims, and live testimony is rarely allowed.

The Federal Circuit “h[e]ld that trial sovereign immunity cannot be asserted in IPRs.”

RELATED CASES

• Watch for the potential effect on state sovereign immunity at issue in Regents of the Univ. of Minn. v. LSI Corp., No. 18-1559 (pending appeal).