On July 20 in Saint Regis Mohawk Tribe, Allergan, Inc. v. Mylan Pharmaceuticals Inc., a panel of the U.S. Court of Appeals for the Federal Circuit (Dyk, Moore and Reyna JJ) held that Native American (“Indian”) Tribes do not enjoy Sovereign Immunity which would protect their patents from challenge in inter partes review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO).
The court characterized such tribes as “domestic dependent nations” that possess an “inherent sovereign immunity,” and suits against them are generally barred “absent a clear waiver by the tribe or congressional abrogation.” but this immunity does not extend to actions brought by the federal government1. After consideration of the recent Supreme Court decisions in Oil States Energy Services v. Greene’s Energy Group, LLC 2 , and SAS Institute Inc. v. Iancu 3 , the Federal Circuit held that IPR proceedings are more like an agency enforcement action than a civil suit brought by a private party, and concluded that tribal immunity is not implicated.
The case arose following decisions by the PTAB that the sovereign immunity that the United States’ Constitution affords to the individual states protected patents owned by the states and state entities from challenge in inter partes review in the PTAB 4. Following this and noting that case law had held that Native American tribes also possessed a degree of sovereign immunity, Allergan transferred patents relating to its Restasis drug to the Saint Regis Mohawk Tribe and sought to withdraw from IPR proceedings that had been brought by Mylan and others seeking to have claims of the patents declared invalid. The tribe sought dismissal of the proceedings on the basis of its sovereign immunity. The tribe adopted an Intellectual Property Project to promote the prosperity of the tribe.
The PTAB had rejected both requests which led to the appeal to the Federal Circuit.
The Nature of Sovereign Immunity
Sovereign immunity is a judicial doctrine that prevents the government or its political subdivisions, departments, and agencies from being sued without its consent. The doctrine stems from the ancient English principle that the monarch can do no wrong. After citing a number of earlier cases, Brewer J in Price v. United States 5 stated:
It is an axiom of our jurisprudence. The government is not liable to suit unless it consents thereto, and its liability in suit cannot be extended beyond the plain language of the statute authorizing it.
28 USC 1498 provides for suits for compensation against the federal government if it uses a patented invention without permission as follows:
(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.
The Constitution of the United States (1789) sets out the powers which the states transferred to the federal government when it was adopted. These include the power to legislate for the grant of patents. The 10th Amendment to the Constitution (1791) specifically reserves to the states or the people any powers not delegated to the United States by the Constitution. The 11th Amendment (1795) provides that the judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State. The 14th Amendment (1868) provides that “No state shall… deprive any person of … property without due process of law” and gives Congress the power to enforce this by “appropriate” legislation.
In 1992, Congress enacted legislation to make the States as well as instrumentalities of states and officers and employees of states acting in a governmental capacity liable for patent infringement in the same way as nongovernmental entities 6. However, the Supreme Court held this legislation to be unconstitutional in Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank 7 on the ground of usurpation of a state’s right to sovereign immunity. Under the 14th Amendment Congress’ power to enact such a law to protect the property rights of patent owners was subject to it being “appropriate”. The Supreme Court found that there was insufficient evidence that state use of patented inventions was sufficiently large a problem for the remedy enacted by congress to be “appropriate”
It was against this background that the PTAB had held that patents owned by state entities were protected from challenge unless the state had waived its sovereign immunity, for example by seeking to enforce the patent 8. In reaching its conclusion on the application of state sovereign immunity to PTAB proceedings, the PTAB noted that in Fed. Marine Commission v. South Carolina State Ports Auth., 9 the Supreme Court had interpreted the 11th Amendment to encompass a broad principle of sovereign immunity, not only limiting the judicial authority of the federal courts to subject a state to an unconsented suit, but also precluding certain administrative proceedings, depending on the nature of those proceedings, from adjudicating complaints filed by a private party against a nonconsenting State.
PTAB Proceedings in St. Regis Mohawk Tribe v. Mylan
When confronted with the St. Regis Tribe’s claim for sovereign immunity and Allergan’s attempt to withdraw from the proceedings, the PTAB first held that the Federal Marine Commission decision noted above did not necessarily apply to the sovereign immunity of tribes because this had a different basis from the sovereign immunity of the states 10. Inter partes review proceedings were created by a federal statute of general applicability. Case law has held that such statutes normally apply to tribes unless they would affect intramural matters of the tribe, they would abrogate rights guaranteed by Indian treaties or the legislative history indicates that the law was not intended to apply to the tribes. None of these apply here.
Proceedings in the Federal Circuit
As noted above, the Federal Circuit addressed the issue on a rather different basis from the PTAB. In its view, IPR proceedings were “like cases where an agency chooses whether to institute a proceeding on information brought by a private party.” The Federal Marine Commission case had recognized that immunity would not exist in such a situation. In the Federal Marine Commission case where it had been held that immunity did apply, at least for states, the commission lacked any discretion to refuse to adjudicate complaints brought by private parties. In IPR proceedings, the Director of the USPTO was much more involved. Finally, IPR proceedings were significantly different from those in federal court. Part of the reasoning in the Federal Marine Commission case had been that sovereign immunity should not be circumvented simply by transferring a proceeding from an Article III court to an equivalent agency tribunal. This was not the case with IPR proceedings.
In concluding, the Court noted:
In this case we are only deciding whether tribal immunity applies in IPR. While we recognize there are many parallels, we leave for another day the question of whether there is any reason to treat state sovereign immunity differently.
- E.E.O.C. v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1075 (9th Cir. 2001); United States v. Red Lake Band of Chippewa Indians, 827 F.2d 380, 383 (8th Cir. 1987). ↩
- 138 S. Ct. 1365 (2018). ↩
- 138 S. Ct. 1348 (2018). ↩
- Reactive Surfaces LLP v. Toyota Motor Corp; NeoChord Inc. v. University of Maryland; Covidien LP v. University of Florida Research Fund. ↩
- 174 US 373 (1899). ↩
- Patent and Plant Variety Protection Remedy Clarification Act. ↩
- 527 U.S. 666 (1999). ↩
- As had been the case in Ericsson Inc. v. University of Minnesota. ↩
- 535 US 743. ↩
- As noted above, sovereign immunity of the states derives from the fact that when the Constitution was adopted, the states retained all rights that were not expressly transferred to the federal government. Sovereign immunity for tribes has a different basis. The pre-independence practice of governing relations with Native American tribes by treaties continued after independence (see Marshall J. in Worcester v. Georgia, 31 USC 515 (1832). However, the Indian Appropriations Act 1871 changed this practice and made the tribes subject to statute. ↩