Supreme Court Denied Certiorari Writ by St. Regis Mohawk Indian Tribe in Restatis® IPR

By Kevin E. Noonan --

Today, the U.S. Supreme Court denied a petition for writ of certiorari by the St. Regis Mohawk Indian Tribe on the question (answered in the negative by the Patent Trial and Appeal Board and the Federal Circuit) of whether tribal sovereign immunity could protect the tribe from being named as a party in an inter partes review (IPR) proceeding after Allergan assigned to the tribe its patents in IPR.

To briefly recap, the issue arose over IPR Nos. IPR2016-01127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132 (and parallel IPRs filed by Petitioners Teva Pharmaceuticals USA, Inc. and Akorn, Inc., which had been joined with Mylan's IPRs) 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.  After the PTAB instituted IPRs against these six patents owned by Allergan and directed to its Restasis® product, Allergan assigned its rights in the patents to the Tribe in return for a license (see "Allergan Avails Itself of Sovereign Immunity").  The Tribe argued unsuccessfully before the Board that as rightful owner of the patents, the Board lost jurisdiction based on tribal sovereign immunity (see "Mohawk Nation Exercises Sovereign Immunity in Inter Partes Review").  The Board held that, as an issue of first impression, the Tribe had not borne its burden of showing it was entitled to the requested relief, and that the nature of the license left all substantive patent rights with Allergan, and thus that the company could amply represent the Tribe's rights even in its absence (see "PTAB Denies St. Regis Mohawk Tribe's Motion to Terminate IPRs based on Sovereign Immunity").

The Federal Circuit affirmed, in an opinion by Judge Moore joined by Judges Dyk and Reyna.  The opinion acknowledged the existence of tribal sovereign immunity affirmed by the Supreme Court, including Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978), and Okla. Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509 (1991), but held that the immunity "does not extend to actions brought by the federal government," citing E.E.O.C. v. Karuk Tribe Hous. Auth., 260 F.3d 1071, 1075 (9th Cir. 2001), and United States v. Red Lake Band of Chippewa Indians, 827 F.2d 380, 383 (8th Cir. 1987).  In particular, tribal sovereign immunity "does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action" according to the opinion, citing Pauma v. NLRB, 888 F.3d 1066 (9th Cir. 2018), and Fed. Power Comm'n v. Tuscarora Indian Nation, 362 U.S. 99, 122 (1960), as well as Karuk Tribe Hous. Auth.  But this exception to tribal sovereign immunity does not constitute a "blanket rule" regarding the application of tribal sovereign immunity according to the Federal Circuit, as illustrated by Fed. Maritime Comm'n v. S.C. State Ports Auth., 535 U.S. 743, 754–56 (2002).

Applying the Supreme Court's recent decisions in Oil States Energy Services v. Greene's Energy Group, LLC, 138 S. Ct. 1365 (2018), and SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Federal Circuit concluded that there were sufficient similarities between IPRs and administrative agency proceedings (here, wherein the USPTO reconsiders the propriety of granting the challenged patents) and sufficient differences from more adjudicatory proceedings (including the "broad" and "complete discretion" vested in the Director on whether to institute an IPR, the absence of any requirement that either party continue to participate once an IPR has been instituted, and procedural differences relating to, inter alia, evidentiary and discovery rules) for tribal sovereign immunity not to apply.  The "government's central role" in IPRs and the Director's unreviewable discretion (rather than the insistence of a private party) in deciding whether to institute IPR proceedings were considerations leading to the panel's conclusion that "IPR is more like an agency enforcement action than a civil suit brought by a private party" and tribal sovereign immunity could not shield the Tribe from the IPRs.

In its certiorari petition, the Tribe argued, inter alia, that the Federal Circuit's decision was contrary to the Court's characterization of IPR proceedings as being directed by the petitioner in SAS -- while the Director has absolute discretion regarding whether to institute an IPR, the petitioner decides what claims to challenge and what grounds to pursue ("the petitioner's petition, not the Director's discretion, . . . guide[s] the life of the litigation"), and that the Director was not empowered to initiate an IPR sua sponte as reasons why IPRs are not akin to agency action.

Respondent Mylan, in addition to emphasizing the policy reasons for rejecting the purportedly improper assignment from Allergan to the Tribe invoked those considerations to challenge whether this case was an appropriate vehicle for the Court to consider the question.  The Tribe did not (could not) rebut these assertions as to the facts, and relied on arguments from amici regarding why the Supreme Court should not be persuaded against granting the writ on that basis.

It is foolish to speculate why the Supreme Court denied the Tribe's petition.  But it is certainly the case that whatever the Court decided, if it had taken up the matter Congress could (and there is ample evidence they would) abrogate tribal sovereign immunity by statute.  Or perhaps it might simply be that the Court is aware that there are cases on State sovereign immunity (Ericsson v. University of Minnesota) and others (Gensetix, Inc. v. Baylor College of Medicine) that may raise the issue of sovereign immunity in IPR proceedings on more frankly constitutional grounds, and the Court would rather spend its time considering the question on those grounds.  But this decision puts to rest whether a patentee can avoid IPR proceedings by invoking tribal sovereign immunity:  a patentee cannot.

Comments

[Greg DeLassus]

"[T]his decision puts to rest whether a patentee can avoid IPR proceedings by invoking tribal sovereign immunity: a patentee cannot."

And thank heavens for that. Most tribes dodged a bullet here. If tribal sovereign immunity could be rented out by tortfeasors as a shield to their tortfeasing, there would be no option for the Congress but to curtail tribal sovereign immunity severely, and perhaps to abrogate it altogether. Mercifully, by making clear upfront that tribal sovereign immunity is not a salable commodity, the CAFC ensured that this gambit will not lead inevitably to the complete effacement of tribal sovereign immunity from the legal landscape.

[Skeptical]

I am not as sanguine as to the "benefit" of this decision, Mr. DeLassus.

I do believe that the animus comes from the view that the arrangement was a sham - and it would have been better for THAT to have been the focal point.

What this result does do is REMOVE a perfectly viable tool for Native American tribes to strike a bargain that could NOT be called a sham bargain.

There is NO benefit to that.

What this result does do is to broaden (impermissibly) the mere notion that a sham was in play. That term should NOT be so loosely bandied about (even if people do not like the deal engaged in). The term "sham" has a definite legal meaning, and what this denial of cert does is to not take the opportunity to clear up a purposefully muddied condition.

What this result does is CONDONE that purposeful muddying.

While there was certainly those in Congress that would have felt compelled to change/curtail/abrogate tribal sovereign immunity, I believe fully that such a move in Congress could well have backfired upon those IF a full and robust discussion were to have been held.

As is - we are left without that discussion. We are left with the mud.