A panel of the Patent Trial and Appeal Board (hereinafter “PTAB”) has rejected an attempt by Allergan and the Saint Regis Mohawk Tribe (hereinafter “the Tribe”) to dismiss a pending inter partes review proceeding on a theory of Tribal sovereign immunity. The inter partes review proceedings at issue concern six patents related to Allergan’s Restasis® eyedrops. The proceedings in which dismissal was sought included: IPR2016-01127 (U.S. Patent 8,685,930); IPR2016-01128 (U.S. Patent 8,629,111); IPR2016-01129 (U.S. Patent 8,642,556); IPR2016-01130 (U.S. Patent 8,633,162); IPR2016-01131 (U.S. Patent 8,648,048); and IPR2016-01132 (U.S. Patent 9,248,191). Against a backdrop of fifteen amicus briefs (and two responses to amicus briefs filed by Allergan and the Tribe), the PTAB weighed issues of Tribal sovereign immunity in the context of prior PTAB decisions interpreting sovereign immunity in the context of public universities. Mylan Pharms. Inc. v. Saint Regis Mohawk Tribe, IPR2016-01127, -1128, -01129, -01130, -01131, -01132, Paper No. 130 at 3–4 (PTAB Feb. 23, 2018) (hereinafter “Paper No. 130”) (referencing Paper Nos. 104–119, 121 of the proceedings). Ultimately, the PTAB determined that (1) tribal sovereign immunity does not apply to inter partes review proceedings, and, (2) in light of the unique ownership arrangement between Allergan and the Tribe, the proceedings could continue “without the Tribe’s participation.” Id. at 39. This decision illustrates not only that Tribal sovereign immunity cannot be used to dismiss an inter partes review, but also elaborates on the PTAB’s identity of interest jurisprudence and emphasizes the need to be cognizant of how shared ownership arrangements for patents can influence the trajectory of an inter partes review (and its potential implications for patent validity).
Allergan is the manufacturer of Restasis® (cyclosporine ophthalmic emulsion) and is the erstwhile patent owner of six Orange Book-listed patents thereupon. See Patent and Exclusivity for: N050790 (Restasis®), FDA.GOV, https://www.accessdata.fda.gov/scripts/cder/ob/patent_info.cfm?Product_No=001&Appl_No=050790&A ppl_type=N.
In August of 2015, Allergan brought a Hatch-Waxman suit against Teva Pharmaceuticals, Apotex, Akorn, and Mylan Pharmaceuticals in the Eastern District of Texas, alleging infringement of five Restasis® patents listed on the Orange Book (U.S. Patents 8,629,111, 8,633,162, 8,642,556, 8,648,048, and 8,685,930). See Allergan, Inc. v. Teva Pharms. USA, Civil Action No. 2:15-cv-01455-WCB (E.D. Tex. filed Aug. 24, 2015). While that litigation was pending, defendant Mylan Pharmaceuticals petitioned for inter partes review of six Orange Book patents directed to Restasis® (the same patents asserted by Allergan and additionally U.S. Patent 9,248,191) in separate filings on June 3, 2016. See, e.g., Petition for Inter Partes Review of U.S. 8,685,930, Mylan Pharms. Inc. v. Saint Regis Mohawk Tribe, Case IPR2016-01127, Paper No. 3 (PTAB June 3, 2016). Defendant Teva Pharmaceuticals filed separate petitions for inter partes review against the same six patents on January 6, 2017 – those proceedings were joined with the respective Mylan inter partes review actions. See, e.g., Institution of Inter Partes Review and Grant of Motion for Joinder, Teva Pharms. v. Allergan, Inc., Case IPR2017-00578, Paper No. 9 (PTAB Mar. 31, 2017) (instituting the trial and granting joinder with the Mylan-filed IPR2016-01128). After trial was instituted on December 8, 2016, the PTAB granted motions allowing Teva Pharmaceuticals USA, Inc., and Akorn, Inc. to join as petitioners. See Paper No. 130 at 2.
In October 2017, Allergan’s Hatch-Waxman lawsuit resulted in the invalidation of all asserted patent claims. See Findings of Fact and Conclusions of Law, Allergan, Inc. v. Teva Pharms. USA, Civil Action No. 2:15-cv-01455-WCB, Dkt. 523 at p.134 (E.D. Tex. Oct. 16, 2017). Allergan has appealed the decision to the Federal Circuit. See Notice of Appeal, Allergan, Inc. v. Teva Pharms. USA, Civil Action No. 2:15-cv-01455-WCB, Dkt. 527 (E.D. Tex. Oct. 27, 2017).
In September of 2017, just prior to the decision in the lawsuit, Allergan announced that the Tribe “now owns all Orange Book-listed patents for RESTASIS® . . . and that Allergan has been granted exclusive licenses in the patents related to the product.” Allergan and Saint Regis Mohawk Tribe Announce Agreements Regarding RESTASIS® Patents, ALLERGAN.COM (Sept. 8, 2017), https://www.allergan.com/news/news/thomson-reuters/allergan-and-saint-regis-mohawk-tribe-announce-agr (hereinafter “Allergan Press Release”). The press release noted that in light of the PTAB’s cases dealing with sovereign immunity in the context of public universities, the Tribe would be “filing a motion to dismiss the ongoing inter partes review (IPR) of the RESTASIS® patents based on their sovereign immunity from IPR challenges.” See id.
Allergan has come under significant fire for its tactics. Within months of Allergan’s announcement, a group of Senators requested documents from Allergan disclosing details of its transaction with the Tribe. U.S. senators press Allergan for details on patent deal with tribe, REUTERS.COM (Nov. 7, 2017, 2:53 PM), https://www.reuters.com/article/us-allergan-patents/u-s-senators-press-allergan-for-details-on-patent-deal-with-tribe-idUSKBN1D72WE. Senator Maggie Hassan (D-NH), leading a committee of four senators, has referred to the arrangement as “blatantly anti-competitive.” See Allergan responds to mounting criticism of Mohawk patent deal, CNBC.COM (Oct. 3, 2017, 9:45 AM ET), https://www.cnbc.com/2017/10/03/allergan-responds-to-mounting-criticism-of-mohawk-patent-deal.html. Senator Claire McCaskill (D-MO) stated that she has drafted a bill specifically to prevent entities from invoking tribal sovereign immunity as a means of avoiding PTAB review of a patent. Senator McCaskill drafts bill in response to Allergan patent maneuver, REUTERS.COM (Oct. 5, 2017, 1:16 PM), https://www.reuters.com/article/us-allergan-patents-congress/senator-mccaskill-drafts-bill-in-response-to-allergan-patent-maneuver-idUSKBN1CA2D0. Perhaps the most thorough criticism of the maneuver came from Judge Bryson of the Eastern District of Texas, who presided over Allergan’s Hatch-Waxman litigation. In his opinion joining the Tribe as a plaintiff to the lawsuit, Judge Bryson wrote as follows:
The Court has serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed. The essence of the matter is this: Allergan purports to have sold the patents to the Tribe, but in reality it has paid the Tribe to allow Allergan to purchase—or perhaps more precisely, to rent—the Tribe’s sovereign immunity in order to defeat the pending IPR proceedings in the PTO.
Memorandum Opinion and Order, Allergan, Inc. v. Teva Pharms. USA, Civil Action No. 2:15-cv-01455-WCB, Dkt. 522 at 47 (E.D. Tex. Oct. 16, 2017). Despite Allergan’s contentions as to the legitimacy of the maneuver, Judge Bryson continued, noting that “such circumstances are frequently encountered in sham transactions, such as abusive tax shelters” and opined that such transactions are “disregarded if [they] are contrary to the policies underlying the relevant laws.” Id. at 5–6. Judge Bryson did not make reference to Allergan and the Tribe’s arrangement in his decision finding the asserted patent claims to be invalid.
Sovereign Immunity and Inter Partes Review
Allergan was correct to point out that PTAB case law indicates a willingness to apply the doctrine of sovereign immunity to public universities. In two cases, NeoChord, Inc. v. University of Maryland and Covidien LP v. University of Florida Research Found. Inc., the PTAB considered how the sovereign immunity afforded by the Eleventh Amendment applies to public universities in inter partes review proceedings before the PTAB. See NeoChord, Inc. v. University of Maryland , IPR2016-00208, Paper No. 28 (PTAB May 23, 2017) (terminating inter partes review on the basis of patent owner’s sovereign immunity), and Covidien LP v. University of Florida Research Found. Inc., IPR2016-01274, Paper No. 19 (PTAB Jan. 25, 2017) (same). In concluding that sovereign immunity does apply to public universities, the PTAB stated that “[o]n the whole, considering the nature of inter partes review and civil litigation, we conclude that the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment.” Covidien, IPR2016-01274, Paper No. 19 at p.24. In each case, the PTAB terminated the IPR proceeding after finding that the university could invoke sovereign immunity.
In NeoChord, the PTAB also considered whether the existence of an exclusive licensee, itself not subject to the protections of sovereign immunity, could be considered the “effective patentee” such that the proceeding should be allowed to proceed. NeoChord, IPR2016-00208, Paper No. 28 at p.18. The NeoChord PTAB determined that because the “University has retained rights under the license agreement, and transferred less than ‘substantially all’ rights” to the exclusive licensee, “the University remains a necessary and indispensable party” to the IPR. Id. at 19.
More recently, the PTAB considered a case in which the party asserting sovereign immunity co-owned the patents at issue with another, non-public entity. In Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp, the PTAB considered the University of Minnesota’s motion to dismiss the IPR on the basis of sovereign immunity, and granted the motion in part, dismissing only the university and allowing the proceeding to continue with Toyota as the remaining patent owner. Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp, IPR2017-00572, Paper No. 32, p.15–18 (PTAB July 13, 2017). The PTAB noted that Toyota and the university held “identical interest” in the patent at issue, such that “under the Federal Rules of Civil Procedure, Toyota would adequately represent the interests of the [university] in the challenged patent.” Id. at 15–16. The PTAB expressly distinguished NeoChord, characterizing the issues as one of interests in the patent:
In NeoChord, the inter partes review was terminated because the patent owners did not share identical interests in the challenged patent. But NeoChord is factually distinguishable from this case. There, the remaining “patent owner” was an exclusive licensee to whom the absent sovereign patent owner had ‘transferred less than ‘substantially all’ rights.’ Here, Toyota is as much an owner of the ‘571 patent as the Regents.
Id. at 16, fn. 4. The PTAB has also considered the impact of concurrent litigation filed by a patent owner on the patent owner’s ability to invoke sovereign immunity in an inter partes review proceeding. Two cases, Ericsson Inc. v. Regents of the University of Minnesota and LSI Corp. v. Regents of the University of Minnesota, discuss issues related to the waiver of Eleventh Amendment sovereign immunity by entities otherwise entitled to assert the defense. See Ericsson Inc. v. Regents of the University of Minnesota, IPR2017-01186, Paper No. 14 (PTAB Dec. 19, 2017) and LSI Corp. v. Regents of the University of Minnesota, IPR2017-01068, Paper No. 19 (PTAB Dec. 19, 2017). In Ericsson, the court noted that previous decisions on university sovereign immunity had not considered the issue in the context of a patent owner “that filed an action in federal court alleging infringement of the same patent being challenged in the petition for an inter partes review.” Ericsson, IPR2017-01186, Paper No. 14 at p.7. Drawing on Federal Circuit precedent, the Ericsson PTAB determined that “it is reasonable to view a State that files a patent infringement action as having consented to an inter partes review of the asserted patent.” Id. The Ericsson PTAB noted also that because the filing of a patent infringement action in federal court creates a one-year statutory bar for an inter partes review under 35 U.S.C. § 315(b), “it would be unfair and inconsistent to allow a State to avail itself of the federal government’s authority by filing a patent infringement action in federal court, but then selectively invoking its sovereign immunity to ensure that defendant is barred from requesting an [IPR] of the asserted patent . . . .” Id. at 7–8. Accordingly, the Ericsson PTAB denied the university’s attempt to invoke sovereign immunity and the case moved forward. Id. at 10–12.
The Decision Denying Dismissal
The Tribe’s Motion to Dismiss
The Tribe filed its motion to dismiss based on tribal sovereign immunity on September 22, 2017. See Corrected Patent Owner’s Motion to Dismiss for Lack of Jurisdiction Based on Tribal Sovereign Immunity, Mylan Pharms. Inc. v. Saint Regis Mohawk Tribe, Case IPR2016-01127, -1128, -01129, -01130, -01131, -01132, Paper No. 81 (PTAB Sept. 22, 2017) (hereinafter, “Tribe’s Motion to Dismiss”). The Tribe argued that, similar to other sovereign entities – in particular public universities as described in Covidien, NeoChord, and Reactive supra – the Tribe possesses immunity from suit. In particular, the Tribe argued that “[a]s a federally recognized, sovereign Indian Tribe, the Tribe has inherent sovereign immunity.” Id. at 8. The Tribe also invoked NeoChord (discussed supra) to argue that it is “an indispensable party under both the Board’s identity-of-interest test first articulated in NeoChord and the four factor test for Federal Rule of Civil Procedure 19.” See id. at 16. The Tribe’s motion distinguishes the situation from that in Reactive (discussed supra), noting that unlike in Reactive, “Allergan is not a co-owner and the Tribe is represented by its own independent counsel,” thus “identity of interest” is not adequate to permit the proceeding to carry on without the Tribe. Id. at 17.
The Tribe further argued also that arrangements like the one with Allergan provide a “critical revenue stream” to the Tribe, and royalties it expects to receive “will allow the Tribe to address some of the chronically unmet needs” of the Tribe, “such as housing, employment, education, healthcare, cultural, and language preservation.” Id. at 19. As such, the Tribe argued, the Board “cannot strip” the Tribe of its “critical revenue” from patent rights while it is absent from the proceeding. Id.
Petitioners’ Opposition to the Tribe’s Motion to Dismiss
The opposition filed by petitioners argued in turn that the Tribe is not the effective owner of the patents, either practically or legally. See Opposition to Motion to Terminate, Mylan Pharms. Inc. v. Saint Regis Mohawk Tribe, Case IPR2016-01127, -1128, -01129, -01130, -01131, -01132, Paper No. 87 at 3 (PTAB Oct. 13, 2017) (hereinafter “Petitioners’ Opposition”). Petitioners argued that Allergan remains the true patent owner as it retains “all substantial rights,” including control of litigation, exclusive rights under the patents with respect to Restasis®, the rights to sublicense and negotiate settlements, control of the duration of rights, and the proceeds from commercial litigation. Id. at 3–9. Petitioners asserted that in view of those facts, the arrangement is merely “the latest in a long series of schemes to buy tribal immunity for dubious activities,” and is a “sham assignment made to destroy jurisdiction” using a “strawman” with “no real interest in the outcome of the case.” Id. at 11. Furthermore, petitioners argued, even were Tribal sovereignty to be applied in this case, the Tribe is not an “indispensable party” under PTAB precedent or Federal Rule of Civil Procedure 19 because the rights retained by the Tribe under the licensing agreement are very thin, and because Allergan can adequately represent all interests in the licensed patents. Id. at 13–20. Lastly, petitioners argued as a general matter that tribal immunity does not apply to inter partes review, and distinguished the cases cited by the Tribe as being directed towards “private suits,” which do not “make tribally owned patents immune from USPTO review.” Id. at 23 (emphasis in original).
The Decision to Deny the Tribe’s Motion
After reviewing the parties’ voluminous motions, as well as fifteen amicus briefs and two responses to those briefs by Allergan and the Tribe, the PTAB issued its decision denying the Tribe’s motion to dismiss on February 23, 2018. See generally, Paper No. 130.
A. Tribal Immunity Does Not Apply to Inter Partes Review Proceedings
Noting that the doctrine of tribal immunity “is not co-extensive with that of the States” (id. at 9 (quoting Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 756 (1998))) and “exists only at the whim of Congress and is subject to complete defeasance” (id. at 7 (quoting United States v. Wheeler, 435 U.S. 313, 323 (1978))), the PTAB disposed of the Tribe’s cited case law precedent regarding the applicability of tribal sovereign immunity to administrative proceedings. The Board noted also that “precedent cautions against” applying non-statutory defenses in IPR proceedings, and noted that there is “no statutory basis” for the assertion of tribal immunity in the IPR context. Id. at 10.
The PTAB framed the issue as whether tribal immunity was compelling enough in this context to warrant the exemption of tribally held patents from the purview of a federal statute—in this case, the Patent Act. The PTAB explained that inter partes review is a component of the Patent Act to which all granted patents are subject, and that inter partes review is a statutory mechanism by which the patent office may “reconsider” the patentability of claims. Id. at 11–12 (citing MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1289 (Fed. Cir. 2015)). The PTAB reasoned that in order for tribal immunity to grant an exception from a generally applicable federal statute, the following must be satisfied:
“(1) the law touches ‘exclusive rights of self-governance in purely intramural matters,’ (2) the application of the law to the tribe would ‘abrogate rights guaranteed by Indian treaties,’ or (3) there is proof ‘by legislative history or some other means that Congress intended [the law] not to apply to Indians on their reservations.”
Id. at 12–13 (quoting Donovan v. Coeur d’Alene Tribal Farm, 751 F.2d 1113, 1116 (9th Cir. 1985)). Concluding that none of these situations were implicated by the application of inter partes review to tribally owned patents, the PTAB found that “an inter partes review proceeding is not the type of suit to which an Indian tribe would traditionally enjoy immunity under the common law.” Id. at 16. In several paragraphs that appear to echo arguments made in the pending Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, case concerning the constitutionality of inter partes review (see Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 639 Fed. App'x 639 (Fed. Cir. 2016), cert. granted 198 L. Ed. 2d 677 (U.S. Jun. 12, 2017) (No. 16-712)), the PTAB laid out the differences between an IPR adjudication and a lawsuit:
In these proceedings, we are not adjudicating any claims in which Petitioners may seek relief from the Tribe, and we can neither restrain the Tribe from acting nor compel it to act in any manner based on our final decisions. Indeed, there is no possibility of monetary damages or an injunction as a “remedy” against the Tribe. Rather, as discussed above, the scope of the authority granted by Congress to the Patent Office with respect to inter partes review proceedings is limited to assessing the patentability of the challenged claims.
Furthermore, the Board does not exercise personal jurisdiction over the patent owner. At most, the Board exercises jurisdiction over the challenged patent in an inter partes review proceeding. The Tribe cannot be compelled to appear as a party in these proceedings.
Paper No. 130 at 16–17.
B. Allergan Remains the True “Patent Owner”
The PTAB agreed with petitioners that Allergan, despite the technical transfer of patent ownership to the Tribe, remained the true “patent owner.” Id. at 19. In reaching this determination, the PTAB examined factors expounded by the Federal Circuit in Azure Networks, LLC v. CSR PLC, which included:
(1) the nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services under the patent; (3) the scope of the licensee’s right to sublicense; (4) the reversionary rights to the licensor following termination or expiration of the license; (5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the licensor to supervise and control the licensee’s activities; (8) the obligation of the licensor to continue paying maintenance fees; and (9) any limits on the licensee's right to assign its interests in the patent.
Id. at 19–20; Azure Networks, LLC v. CSR PLC, 771 F.3d 1336, 1342 (Fed. Cir. 2014). The PTAB identified the relevant factors as being (1) the right to sue for infringement, (2) the right to make, use, and sell products under the patent, (3) the right to sublicense, (4) the reversion of rights to the licensor, (5) the right to litigation and licensing proceeds, (6) the obligation of the licensor to pay maintenance fees, and (7) the right to assign interests in the patents. Id. at 20–34. The PTAB’s analysis of these factors in the context of the license terms resulted in a finding that all of the factors pointed towards Allergan as the true owner:
(1) Right to Sue: “[W]e find that several License terms significantly limit the Tribe’s right to sue for infringement of the challenged patents.” Id. at 25.
(2) Right to Make, Use and Sell: “[T]he Tribe’s own right to practice and license the challenged patents is significantly limited insofar as the Tribe “shall not directly or indirectly develop, market or license any Competing Product or engage in or license activities that would and/or intended to result in a Competing Product,” regardless of whether such a “Competing Product” requires FDA approval.” Id. at 28.
(3) Right to Sublicense: “The Tribe has not pointed to any License terms that allow it to veto or otherwise control the terms of sublicenses that may be granted by Allergan.” Id. at 30.
(4) Reversionary Rights: “The rights granted to Allergan under the License are “perpetual” and “irrevocable,” and the License will continue to be in force either until the challenged patents expire or until all the claims are rendered invalid in a non-appealable final judgment. As such, the Tribe does not have any reversionary rights in the challenged patents.” Id. at 30–31 (internal citations omitted).
(5) Right to Litigation Proceeds: “The License, however, does not allow theTribe to receive a portion of the proceeds from any of Allergan’s commercially relevant litigation or licensing activities.” Id. at 31.
(6) Obligation to Pay Maintenance Fees: “The License provides Allergan with the primary right, but not the obligation, to prosecute and maintain the challenged patents, as well as the responsibility for any ‘Administrative Proceedings’ before the PTO. The Tribe itself is not obligated to pay any maintenance fees.” Id. at 32.
(7) Right to Assign Interests: “The License does not allow the Tribe to freely assign interests in the challenged patents,” nor may the Tribe “’take or fail to take any action, or enter into any agreement that would result in the transfer’ of the challenged patents to any third party or ‘Component of Licensor,’ which includes Tribe-owned companies or other related entities. . . . We find these provisions to be significant restrictions on the Tribe’s purported ownership rights.” Id. at 33–34.
The PTAB also rejected the Tribe’s contention that the recording of the assignment specifying it as the assignee was dispositive: “[W]e determine that the presumption associated with the recorded assignment of the challenged patents has been overcome in this case.” Id. at 34.
C. The Tribe is not an “Indispensable Party”
The PTAB assessed the Tribe’s contention that it was an “indispensable party” under Federal Rule of Civil Procedure 19(b), such that its dismissal from the proceeding would require termination of the inter partes review. See id. at 35–36; see also Tribe’s Motion to Dismiss. As a threshold matter, the PTAB noted that “the Federal Rules of Civil Procedure do not apply to inter partes review proceedings.” Paper No. 130 at 36. Acknowledging that past PTAB precedent had found Rule 19(b)(1)’s four-factor analysis “instructive” (id. at 36 (citing Reactive, IPR2017-00572)), the PTAB applied the factors and concluded that they did not demonstrate that the Tribe was an indispensable party. Indeed, the PTAB found that “Allergan has at least an identical interest to the Tribe – if not more of an interest as the effective patent owner for the reasons discussed above – in defending the challenged patents.” Id. at 37.
Federal Rule of Civil Procedure 19(b) sets forth four factors useful in the determination of whether a party is indispensable:
(1) the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoid by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person’s absence would be adequate; and
(4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.
See Fed. R. Civ. P. 19(b) (“If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.”). Applying these factors, the PTAB found that the Tribe would not be significantly prejudiced by its decision not to appear on the basis of sovereign immunity, because “Allergan will be able to adequately represent any interests the Tribe may have.” Paper No. 130 at 37–38. Further, the PTAB disagreed with the Tribe that termination of the proceeding would leave the petitioner with an adequate remedy in light of the pending case in the Eastern District of Texas, because “the challenged claims and patents litigated [in that case] are not co-extensive with the claims and patents challenged in this proceeding.” Id. at 39. Accordingly, the PTAB found that it could “continue with these proceedings without the Tribe’s participation,” thus, the Tribe was not an indispensable party. Id.
The PTAB’s denial of the Tribe’s motion to dismiss represents another evolution in the PTAB’s sovereign immunity jurisprudence and, for now, should allay concerns about patent owners rushing to, in the words of Judge Bryson, “rent” sovereign immunity from Native American tribes. See Memorandum Opinion and Order, Allergan, Inc. v. Teva Pharms. USA, Civil Action No. 2:15-cv-01455-WCB, Dkt. 522 at 4–7 (E.D. Tex. Oct. 16, 2017). While the PTAB avoided a discussion of allegations that the arrangement between Allergan and the Tribe constituted a “sham” (see Paper No. 130 at 34, fn. 11), the PTAB’s exploration of the factors enumerated in Azure suggest that it was at least skeptical of the legitimacy of the tactic. See Azure Networks, 771 F.3d at 1343.
For State actors – typically state universities – the decision illustrates how the PTAB draws lines when ascertaining identity of interests. The PTAB’s decision here, together with the decision Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp. emphasizes that entities looking to enter into patent licensing arrangements, for example, technology transfer departments at public universities, should be wary of entering into arrangements that purport to create equal partners in the holding of patent rights. Indeed, after the university was dismissed from the proceeding in Reactive, the remaining patent owner (Toyota) requested an adverse judgment with respect to the challenged claims, resulting in a default judgment in favor of the petitioner and invalidation of those claims. See Patent Owner’s Request for Adverse Judgment Pursuant to 37 C.F.R. § 42.73(b)(2), Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp., IPR2017-00572, Paper No. 40 (PTAB Jan 23, 2018), and Termination Decision Document, Reactive Surfaces Ltd., LLP, v. Toyota Motor Corp., IPR2017-00572, Paper No. 40 (PTAB Feb. 5, 2018) (granting same). In the coming months, we will likely have an opportunity to see what the federal circuit thinks on the issue of Tribal sovereign immunity in inter partes