By Kevin E. Noonan --
Not unexpectedly, on Friday, the Saint Regis Mohawk Tribe (SRMT) filed a motion before the Patent Trial and Appeal Board (PTAB) to have inter partes review Nos. IPR2016-01127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132, instituted against U.S. Patent Nos. 8,685,930, 8,629,111, 8,642,556, 8,633,162, 8,648,048, and 9,248,191 respectively, dismissed based on the tribe's sovereign immunity upon Allergan's assignment of the patents to them (see "Allergan Avails Itself of Sovereign Immunity").
The SRMT's assertion of its sovereign immunity is based, according to the brief, on the principle that only Congress can abrogate the Tribe's immunity as a sovereign government (and then only explicitly) or that the immunity can be waived by the Tribe, which the brief affirmatively states is has not done and will not do. Citing recent PTAB precedent related to the principle as it applies to state universities (Covidien LP v. Univ. of Fla. Research Found. Inc.; Neochord, Inc. v. Univ. of Md. et al.; and Reactive Surfaces Ltd, LLP v. Toyota Motor Corp.), the Tribe asserts that it does not submit to the Board's authority or jurisdiction (except insofar as is necessary to appear to defend its motion) and that the IPRs should be dismissed.
The brief (perhaps wisely but certainly strategically) sets forth this tribe's (like all Native American tribes') need to find ways to develop their economy and the difficulties tribes have had in doing so. Paradoxically, these difficulties stem in part to the restricted sovereignty Native American tribes have, insofar as they cannot levy property nor income taxes and yet are responsible for providing essential government functions such as education, policing, infrastructure, housing services, social services, and health care. The history of tribes' attempts to develop their economies over the past thirty years have most famously involved casinos and other venues for gambling in jurisdictions where such practices are otherwise banned. The brief notes that efforts to remedy tribes' economic woes extends to Federal government policy, putting the government's imprimatur generically if not specifically to this particular effort at economic development (citing the Indian Self-Determination and Education Assistance Act, 25 U.S.C. § 5302(b) and the Indian Financing Act, 25 U.S.C. § 1451). Similar support for Indian sovereignty is cited from the Executive branch (Executive Order 13647) and the judiciary (Justice Sotomayor's concurring opinion in Michigan v. Bay Mills Indian Community, 134 S. Ct. 2024, 2043–44 (2014) (Sotomayor, J., concurring)).
In view of these economic realities, the brief puts its acquisition of the Allergan patents in context, as a way to generate much-needed revenue for the tribe's citizens. Not merely a one-off, the brief asserts that this agreement is the result of efforts by the Tribe's Economic Development Department and the Office of Technology, Research and Patents. The Office intends to "strengthen the Tribal economy by encouraging the development of emerging science and technology initiatives and projects, and promoting the modernization of Tribal and other businesses" to "create revenue, jobs, and new economic development opportunities for the Tribe and its members."
Turning to its legal arguments, the brief asserts the Tribe's inherent sovereign immunity from suit as recognized for almost two centuries. Worcester v. State of Ga., 31 U.S. 515, 519 (1832). This common law immunity has been consistently reaffirmed by the Supreme Court, according to the brief, citing Kiowa Tribe of Okla. v. Mfg. Techs. Inc., 523 U.S. 751, 754 (1998); Okla. Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 510 (1991); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978); Puyallup Tribe, Inc. v. Dep't of Game, 433 U.S. 165, 172-73 (1977); and U.S. v. U.S. Fid. & Guar. Co., 309 U.S. 506, 512 (1940). In somewhat of an understatement, this long line of consistent precedent shows that the Tribe's sovereign immunity is "firmly established."
One exception to the Tribe's sovereign immunity (and a way that it differs from that immunity enjoyed by the States) is when Congress has expressly (not impliedly) abrogated it. Santa Clara Pueblo v. Martinez and Ransom v. St. Regis Mohawk Educ. and Cmty. Fund, Inc., 86 N.Y.2d 553, 560 (1995). The other exception is when a Tribe waives the immunity, which also must be "unequivocally expressed," C & L Enters. Inc. v. Citizen Band Potawatomi Tribe of Okla., 532 U.S. 411, 418 (2001), and cannot stem from a Tribe's actions (an important consideration here, where this should be an expected line of argument by Petitioners). Florida v. Seminole Tribe of Florida, 181 F.3d 1237, 1243 (11th Cir. 1999). Indeed, Demontiney v. U.S. ex rel. Dept. of Interior, Bureau of Indian Affairs, 255 F.3d 801, 811 (9th Cir. 2001), supports the existence of a presumption against any such waiver unless the presumption is expressly rebutted. Moreover, a party challenging the Tribe's sovereign immunity bears the burden of establishing waiver or abrogation of the immunity.
The brief then sets forth the lack of either abrogation or waiver in this case. As for abrogation, it is undisputed that nothing in the Patent Act abrogates Tribal sovereign immunity and that Congress has tried (and failed) to abrogate State sovereign immunity (e.g., in Florida Prepaid Postsecondary Education Expense Bd. v. College Savings Bank, 527 U.S. 627, 635-36 (1999). Analogous circumstances regarding gaming support the proposition that the Tribe's participation in the patent system (by accepting assignment of the Allergan patents) does not act to abrogate the Tribe's sovereign immunity. Florida v. Seminole Tribe of Florida. Not only has the Tribe not waived its sovereign immunity but the brief affirmatively states that it will not do so, and the brief characterizes as "black letter law" that waiver cannot be implied. And the brief cautions the PTAB that "waiver of tribal sovereign immunity cannot be premised on policy concerns, fairness, or the unique circumstances of a case. No court has ever found a waiver of tribal sovereign immunity based on equitable or policy concerns and it would be unprecedented for the Board to do so," citing Ute Distrib. Corp. v. Ute Indian Tribe, 149 F.3d 1260, 1267 (10th Cir. 1998).
While the legal arguments and precedent cited in the brief relate in large part to lawsuits, the brief also cites Supreme Court precedent that sovereign immunity extends to adjudicatory proceedings of all kinds, including administrative agency matters. Fed. Mar. Comm'n v. S.C. State Ports Auth., 535 U.S. 743, 754–756 (2002). The Board has applied this reasoning in the Covidien, Neochord, and Reactive Surfaces cases, and the brief argues their position is supported (albeit not directly addressed) by the Federal Circuit, for example, in SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016); In re Magnum Oil Tools Int'l, Ltd., 829 F.3d 1364, 1375 (Fed. Cir. 2016); and Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376, 1382 (Fed. Cir. 2007). Extension of Tribe's sovereign immunity to administrative proceedings has also been affirmed in other situations. See, In the Matter of Jamal Kanj v. Viejas Band of Kumeyaay Indians, 2007 WL 1266963, *1 (DOL Adm. Rev. Bd. Apr. 27, 2007); Great Plains Lending, LLC v. Conn. Dep't of Banking, No. HHBCV156028096S, 2015 WL 9310700, at *4 (Conn. Super. Ct. Nov. 23, 2015); In the Matter of Tammy Stroud v. Mohegan Tribal Gaming Authority, 2014 WL 6850018, at *2-3 (DOL Admin Rev. Bd. Nov. 26, 2014); lhameed v. Grand Traverse Resort & Casino, 10 OCAHO 1126 (DOJ Exec Office for Hearing Review Sept. 25, 2008); and In the Matter of Private Fuel Storage, 56 N.R.C. 147, 159 (Oct. 1, 2002).
The patents having been assigned, and sovereign immunity established, the brief then notes that the IPRs cannot proceed without the Tribe as an indispensible party under Fed. R. Civ. Pro. 19 and otherwise. Allergan cannot substitute for the Tribe because their interests are not identical (A123 Sys. Inc. v. Hydro-Quebec, 626 F.3d 1213, 1217 (Fed. Cir. 2010)) as the Board found in the Reactive Systems case. Supporting their position, the Tribe argues that it has transferred less than "substantially all" of their patent rights, specifically being limited in a field-of-use license for "all FDA-approved uses in the U.S." and retains the right to sue third parties, either outside the scope of Allergan's license or if Allergan declined to file suit. The Tribe controls prosecution and maintenance of the patents should Allergan decline to do so, and Allergan cannot assign its rights without the Tribe's consent. Finally, in addition to these considerations, the brief notes that a sovereign's rights are granted "heightened protections" under Klamath Tribe Claims Comm. v. United States, 106 Fed. Cl. 87, 95 (2012), aff'd sub nom. 541 F. App'x 974 (Fed. Cir. 2013), and that Allergan cannot adequately protect the Tribe's interests in favor of it members and citizens.
While the Federal Rules of Civil Procedure do not apply to Board proceedings, the "four factors" set forth in Rule 19(b)"have served as a touchstone" for determining whether a case can go forward without a consenting sovereign. These four factors are:
(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 can be lessened or avoided by protective provisions in the judgment, the shaping of relief, or other measures;
(3) whether a judgment rendered in the person's absence will be adequate; and
(4) whether the plaintiff will have an adequate remedy if the action is dismissed for non-joinder.
As a threshold matter, with regard to sovereign immunity per se, the Tribe's interest in its immunity must be given "significant, if not dispositive, weight" according to the brief. Regarding the factors, there would be "significant prejudice" under the first factor if the IPRs continued, citing inter alia the possibility that Allergan might be willing to accept (or not challenge) a claim construction that supported patent rights necessary for its field of use but would not support aspects of the patents not licensed to Allergan. Having the Board invalidate the patents would be severely prejudicial in view of the financial consequences to Tribe revenue. As to mitigation the Board's decision is "binary" according to the brief; the patents are valid or they are not and there is no opportunity for mitigation under these circumstances. Petitioners have an adequate alternative remedy (the ANDA litigation recently concluded) and the brief notes that the aspects of patent invalidity considered in district court are much broader than the more limited grounds under §§ 102 and 103 available before the PTAB in an IPR.
Finally, the brief argues that only Petitioners and patentees can participate in an IPR and, after assigning its rights to the Tribe, Allergan is neither under the IPR statute.
While it is possible that the Board will deny the Tribe's motion it is unlikely, in view of the Board's position regarding sovereign immunity for state universities. Petitioners have the ability to file briefs in opposition, and the content of those briefs will be reviewed in a later post.