The U.S. Court of Appeals for the Federal Circuit has decided whether tribal sovereign immunity required termination of inter partes review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB). At the PTAB, Mylan had petitioned for IPR of several patents owned by Allergan relating to the dry eye treatment Restasis, to which Teva and Akorn were joined. During the pendency of those proceedings, Allegan transferred title of the patents to the Saint Regis Mohawk Tribe, and the Tribe moved to terminate the proceedings on the basis of tribal sovereign immunity, which motion the PTAB denied. In Saint Regis Mohawk Tribe, Allergan, Inc. v. Mylan Pharmaceuticals Inc., TEVA Pharmaceuticals USA, Inc., Akorn, Inc.,¹ before the panel of Judges Dyk, Moore, and Reyna, and in a decision authored by Judge Moore with Judge Dyk concurring, the Federal Circuit affirmed the Board.

In concluding that tribal sovereign immunity did not apply, the Federal Circuit relied on Fed. Maritime Comm'n v. S.C. State Ports Auth.² for the proposition that there is no "blanket rule that immunity does not apply to federal agency proceedings." The court noted that in that decision, the U.S. Supreme Court recognized a "distinction between adjudicative proceedings brought against a state by a private party and agency-initiated enforcement proceeding." According to the Federal Circuit, IPR is not clearly an action brought by a private party, but nor is it clearly an agency enforcement action. In determining that it is, however, more like an agency enforcement action, the court relied heavily upon the Director's broad discretion in determining whether to institute IPR, and that the Director is politically accountable for that decision. Given that discretion, the Federal Circuit concluded that an IPR was more analogous to those cases in which the agency determines whether an action should be instituted based on information provided by a private party.

The Federal Circuit also pointed out that the PTAB may continue a review, even if the petitioner drops out, reinforcing "the view that IPR is an act by the agency in reconsidering its own grant of a public franchise." Moreover, the court noted that the rules used by the PTAB do not mirror the Federal Rules of Civil Procedure and that IPR proceedings are "nothing like" patent cases before Federal district courts. Finally, the court observed that even though ex parte reexamination proceedings may be "more inquisitorial and less adjudicatory" than an IPR proceeding, it did not necessarily follow that sovereign immunity applies to the more adjudicatory IPR proceeding. Judge Moore specifically stated in the decision, however, that the court was "only deciding whether tribal immunity applies in IPR," and left the issue of whether state sovereign immunity applied for "another day." Judge Dyk, in his concurrence, although joining fully in Judge Moore's decision, would have gone further. Judge Dyk concluded that because IPR is an "executive proceeding that enlists third-party assistance," sovereign immunity, including state sovereign immunity, is not applicable.

It is unclear, however, how this or another panel of the Federal Circuit would be able to distinguish Judge Moore's analysis in determining that tribal sovereign immunity does not apply in IPR to come to the conclusion that state sovereign immunity does. FMC, which Judge Moore's decision relies on, is a state sovereign immunity case. In addition, the analysis regarding the Director's discretion in instituting, the differences between IPR proceedings and district court proceeding, as well as the analysis grounded on ex parte reexamination, would be the same whether it was a tribe or a state asserting immunity. Accordingly, more likely than not, an en banc court would have to conclude that an IPR may be terminated on the basis of any type of sovereign immunity, including state. And, given the lengths that Allergan has resorted to protect the Restasis patents from IPR, request for Supreme Court review is almost certain.