Published in Landslide® magazine, Volume 10, Number 3, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
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Amendment may be precisely what the Supreme Court
Waive Sovereign Immunity in the USPTO by Filing
Patent Infringement Suit?
Where sovereign immunity is present, a prospective pat-
ent challenger might consider waiting until the state entity
les a patent infringement suit in a federal court, potentially
waiving sovereign immunity. Indeed, the Covidien panel
expressly declined to decide “whether the existence of such
a case would effect a waiver of sovereign immunity.”23 How-
ever, in this regard, the Federal Circuit has shown reluctance
to extend waiver of sovereign immunity from one suit to a
separate suit, let alone one in a completely different forum.24
Accordingly, it is possible that sovereign immunity at the
PTAB would remain intact even if a state entity led an
infringement suit in a federal court.
Tribal Sovereign Immunity: Allergan IPR
The question of the metes and bounds of sovereign immunity,
in this case tribal sovereign immunity, is currently being tested
by a global pharmaceutical company, Allergan, which owns
six Orange Book–listed patents relating to the blockbuster
drug Restasis. Competitors, looking to remove these barriers
to entry, led IPR challenges against all six patents.25 Aim-
ing to protect its patents, Allergan transferred ownership of the
patents to the Saint Regis Mohawk Tribe.26 In turn, the Tribe
granted Allergan exclusive licenses.27 Under the agreement, the
Tribe will receive $13.75 million and will be eligible to receive
$15 million in annual royalties.28 As the owner of the patents,
the Tribe announced plans to rely on the Covidien and Neo-
Chord decisions in motions to dismiss the IPRs.29
Allergan is not alone. SRC Labs LLC, for example, has also
transferred patent rights to the Tribe.30 Still, it is not clear whether
tribal sovereign immunity will ultimately provide the same protec-
tion as state sovereign immunity, as the Supreme Court has held
that state sovereign immunity is rooted in the Constitution, while
tribal sovereign immunity is a creation of federal law.31
Patent owners are closely watching developments in this
area.32 If Allergan’s approach succeeds, some may argue
that the failure to counsel a client with valuable intellectual
property to implement this or a similar approach could even
constitute malpractice. This may be especially true if courts
determine that tribal immunity prohibits attacking patents in
district court on invalidity and inequitable conduct grounds,
leaving noninfringement as the sole dispute at issue.
Practical Implications for PTAB Practice
First, many patent owners will likely make deals to insulate their
patents against IPRs. Sovereign entities, such as public univer-
sities, Indian tribes, or entities owned by a foreign country, may
also approach patent owners to propose similar arrangements.
Lawyers will also increasingly counsel their patent owning cli-
ents to consider entering into these arrangements.
In particular, transaction counsel will look to include, in
licenses to university and tribal patents, provisions specically
enumerating that there is no waiver, or only limited waiver under
certain conditions, of sovereign immunity. In fact, based on the
distinction between NeoChord and Reactive Surfaces, licensing
agreements could become preferred to joint research agree-
ments—provided the license is appropriately crafted and fully
accounts for patent statutory provisions and considerations.
Second, licensing fees and running royalties paid to sover-
eign entities may result in product price increases that could
be passed on to consumers.
Third, Congressional and USPTO oversight of the PTAB
may become more hands-on, as some have opined that any
unintended consequences of PTAB sovereign immunity deci-
sions might lie not with the PTAB, but with its oversight.33
Finally, district court litigation would take on an increas-
ing importance in adjudicating patent proceedings—perhaps
with an emphasis on refereeing noninfringement arguments.
Many questions remain as authority on state and tribal sover-
eign immunity evolves. And the issues raised by state and tribal
sovereign immunity might be an opportunity for a reset. For
example, the USPTO might wish to consider (1)increasing
director oversight of the PTAB, and (2)implementing the routine
ability to amend claims during IPRs, as in European oppositions.
In any event, these cases surely will not be the nal word
on sovereign immunity for patent holders, as they argu-
ably abrogate congressional intent expressed in the AIA. Of
course, sovereign immunity from IPRs would be moot if the
Supreme Court holds that IPRs are not constitutional.34 But
one thing is certain: interested parties should keep abreast
of the latest developments, regularly consult counsel, and be
prepared to take appropriate legal action. n
1. A. I P. L A’ (AIPLA), R
E S 37, 43 (2015).
35 U.S.C. §§282(a), 316(e)
4. Patent Trial and Appeal Board Motion to Amend Study,
USPTO (Apr.30, 2016), https://www.uspto.gov/sites/default/les/
5. JenniferR. Bush, Administrative Patent Judges: Not Your Typi-
cal Federal Judge, F & W LLP (July10, 2014), https://
6. Rob Sterne & Gene Quinn, PTAB Death Squads: Are All Commer-
cially Viable Patents Invalid?, IPW (Mar.24, 2014),
7. Sovereign Immunity: A Post-Grant Tool for Patent Owners?,
PTAB R. (Wilson Sonsini Goodrich & Rosati, Palo Alto, Cal.),
June 2017, at 4, https://www.wsgr.com/email/PTAB-Review/2017/
8. 35 U.S.C. §§200–212.
9. Ronda Britt, Universities Report Continuing Decline in Fed-
eral R&D Funding in FY 2014, N’ S. F. (Nov.17, 2015),
10. U.S. C. amend. XI (“The Judicial power of the United
States shall not be construed to extend to any suit in law or equity,
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