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“Selling” Patents to Sovereign Nations Shouldn’t Mean Bad Patents Can’t Be Challenged

On September 8, 2017, the multi-billion dollar pharmaceutical company Allergan announced that it “sold” its patents relating to its eye drops drug “Restasis” to the Saint Regis Mohawk Tribe. But this was not a usual “sale.” The Tribe doesn't appear to have paid anything in exchange for becoming the legal owner of Allergan's patents. Instead, Allergan paid the Tribe $13.75 million, and also agreed to pay the Tribe up to $15 million more each year in exclusive licensing fees.

Last week, EFF and Public Knowledge explained to the Patent Office how Allergan and the Tribe’s deal doesn’t mean Allergan’s bad patents can’t be challenged.

The reason that Allergan and the Tribe engaged in this deal is not a secret. Both Allergan and the Tribe [PDF] readily admit the deal was done to try to prevent Allergan’s patents from being revoked through a Patent Office procedure known as “inter partes review.” Inter partes review allows any member of the public to challenge a patent as improperly granted based on the fact that what the patent claims as an invention was known to the public, or was an obvious change from information and innovation already held by the public.

Allergan and the Tribe’s deal, through the assertion of “sovereign immunity,” tries to prevent the Patent Office from reviewing whether the patents were improperly granted. Generally, sovereign immunity refers to the concept that a sovereign entity (here the Tribe) can’t be subject to the jurisdiction of another sovereign (here the Patent Office) unless the entity agrees. The deal between Allergan and the Tribe requires the Tribe to assert sovereign immunity in an attempt to end the Patent Office procedures before the Restasis patents are revoked.

Stated more bluntly, Allergan paid the tribe in order to block attempts to have its patents invalidated. A decision revoking the patents would lead to generic competition and lower consumer prices for Restasis. A determination that the patents can’t be challenged at the Patent Office could lead to the patents preventing generic entry and keeping prices artificially high.

This deal has significant ramifications for the patent system if it is successful. As one judge described the deal:

What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits through the administrative mechanism for canceling invalid patents.

Shortly after announcing the deal, the Tribe asked the Patent Office to end the proceedings, saying that since the Tribe owns the patents, the Patent Office has no authority to reconsider their legitimacy without the Tribe’s consent. The generic companies have opposed this motion on various grounds, arguing that the proceeding can continue. The Patent Office, perhaps in recognition of the significant controversy generated by the Allergan-Tribe deal, asked the public to weigh in as to whether the proceeding needed to be terminated.

On November 30, 2017, EFF and Public Knowledge submitted a brief arguing that the Patent Office has all the authority it needs to continue the inter partes review proceeding, despite the Tribe’s sovereign immunity. We argued that the proceeding was not one that required the Tribe’s presence at all, meaning sovereign immunity had no application. We also suggested that the Patent Office consider asking its question in a more accessible proceeding, so that more voices could be heard.

EFF and Public Knowledge were not the only parties to weigh in on this high profile dispute. Papers were also filed by other sovereign tribes, scholars, public interest groups, and industry representatives. All briefs are available through the Patent Office’s public portal, available here by searching for AIA Review Number IPR2016-01127.

It may turn out that this dispute is irrelevant in the short term, as after the deal was announced, a federal court invalidated the patents (that decision is on appeal). Regardless of the outcome with respect to the Restasis patents, however, it is clear that other patent holders are engaging in similar deals [PDF] with sovereign tribes. EFF is pushing back against these deals as an improper assertion of sovereign immunity.

 

 

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