TRIBAL SOVEREIGN IMMUNITY AS A DEFENSE AT THE PATENT TRIAL AND APPEAL BOARD? OR A VIOLATION OF U.S. ANTITRUST LAWS?

• Author: Roth, Samantha

INTRODUCTION I. TRIBAL SOVEREIGN IMMUNITY II. SOVEREIGN IMMUNITY AND INTELLECTUAL PROPERTY III. UNITED STATES ANTITRUST LAW AS AN ALTERNATIVE MEANS OF DETERRENCE CONCLUSION INTRODUCTION

Pharmaceutical companies have been known to make moves that much of the general public may find questionable at best, reprehensible at worst. The infamous case of Martin Shkreli, who earned the title of "most-hated man in America" after he was accused of serious price gouging on a life-saving medication, comes to mind. (1) Beyond Shkreli, companies that produce opioids, which have been accused of worsening the opioid epidemic, have been indicted on criminal charges. (2) However, despite this bad press, it has not deterred more poor decision-making from other pharmaceutical companies.

Most recently, (3) Allergan was taken to task after it transferred its patent for Restasis (an incredibly profitable drug for the company) to the Saint Regis Mohawk Indian Tribe (Regis Mohawk Tribe) in an attempt to avoid an inter partes review (IPR) by the Patent Trial and Appeal Board (PTAB). (4) According to Allergan's press release, the Regis Mohawk Tribe would receive $13.75 million upon execution of the agreement and $15 million each year in royalties. (5) In return, the Regis Mohawk Tribe promised to not waive its sovereign immunity in any forthcoming IPR challenges, and Allergan would have an exclusive license to continue producing and profiting from Restasis. (6) The impact of shielding Restasis from any IPR challenges is two-fold: (1) other drug companies will have one less option for invalidating the patent, and (2) it opens up the market for generics. (7)

Allergan and the Regis Mohawk Tribe made this deal following the decision by the PTAB in Covidien LP v. University of Florida Research Foundation ("Covidien") in early 2017 that held that state entities are protected from IPR due to their sovereign immunity. (8) Presumably, Allergan assumed that the sovereign immunity rights given to state entities would extend to tribal sovereign immunity. Allergan's conclusion that it could contract with a tribe to essentially purchase its immunity has been questioned by other courts. For example, in Allergan, Inc. v. Teva Pharmaceuticals USA, Inc., the court had to consider whether to join the Regis Mohawk Tribe to a patent infringement suit between Allergan, the plaintiff, and competitor TEVA, the defendant. (9) The court questioned the validity of Allergan's arrangement with the Regis Mohawk Tribe on multiple grounds, including questioning whether there was a valid contract between Allergan and the Regis Mohawk Tribe or if the transfer was a sham and the contract was void due to lack of valid consideration. (10) The court ultimately did not have to decide this issue, leaving it for the PTAB to determine at a later date. (11)

The PTAB recognized the doctrine of tribal immunity but considered a line of cases that indicated that Congress could impliedly abrogate immunity when a statute is of general applicability. (12) The PTAB concluded that the IPR proceedings were based on statutes of general applicability, which impliedly abrogates the Regis Mohawk Tribe's immunity as a defense in IPR proceedings. (13) On appeal, the Federal Circuit ignored the PTAB's reasoning and determined that agency proceedings by the Patent and Trademark Office (PTO) are akin to actions by the federal government, and no immunity is allowed as a defense. (14)

This Comment will address two primary issues. First, it will analyze the basis of sovereign immunity rights of tribes, with a focus on the relationship between intellectual property rights and sovereignty. Second, it will discuss whether this arrangement violates the antitrust laws of the United States. This Comment concludes that even if a claim of tribal sovereign immunity is legitimate, it is likely that such an arrangement still violates the relevant antitrust claims.

1. TRIBAL SOVEREIGN IMMUNITY

   The foundation of any tribal sovereignty analysis begins with the Constitution, which states that Congress shall have the power "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." (15) Conflict between the tribes and the United States has been around for longer than the nation has actually been a nation. (16) Thus, trying to navigate the extent of the relationship between our nation and the tribal nations has been going on for over two hundred years: initially in treaties and later in congressional acts. (17) Congress' right to regulate the tribes was described in Lone Wolf v. Hitchcock. (18) The Court stated, "plenary authority over the tribal relations of the Indians has been exercised by Congress from the beginning...." (19)

   The foundational cases establishing a general concept of tribal sovereign immunity were decided in the early 1800s, and taken together, they are referred to as "The Marshall Trilogy." (20) The first of these cases, Johnson v. M'Intosh, established that the tribes possessed lesser rights than the complete federal sovereignty of the United States. (21) Tribal sovereigns enjoyed sovereignty rights accorded to "independent nations" insofar as they had the right to occupy their lands and "use it according to their own discretion," but the official title to the land belonged to the government of the United States. (22)

   The second case in the trilogy is Cherokee Nation v. Georgia. (23) In Cherokee Nation, the state of Georgia sought to seize the lands of the Cherokee Nation and enforce certain laws against the Tribe. (24) The Cherokees sued in the Supreme Court, arguing that the Supreme Court had jurisdiction over controversies arising between states and foreign states. (25) The Court rejected the Cherokee Nation's argument that they were a foreign state. (26) Rather, the Court contended that there was a "peculiar" relationship between the United States and the tribes that was unlike anything else in existence. (27) The tribes relied on the U.S. government for protection and trade, and they were granted some representation in Congress when deemed appropriate. (28) Because of this unique relationship, the Cherokee Nation could not be considered a foreign nation as it was meant by the Constitution. (29) Rather, the tribes were more appropriately designated "domestic dependent nations" because the United States was essentially their guardian while the tribal nations were merely the United States' wards. (30)

   The last case in the trilogy, Worcester v. Georgia, came about after Georgia again attempted to enforce its laws against a member of the Cherokee Nation. (31) However, the Court found that the Cherokee Nation was "a distinct community occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force." (32) The regulation of the Cherokee Nation was "committed exclusively to the government of the union." (33) Therefore, only the federal government could exercise any power over a tribe, and the state in which the tribe resided had no regulatory authority.

   Based on this initial framework set forth by these earlier cases, the Court in Turner v. United States, declared that "the Creek Nation was free from liability for injuries to persons or property due to mob violence or failure to keep the peace" after tribal members destroyed the fence of a neighboring property. (34) No liability could exist against the Tribe without authorization from Congress or consent from the Tribe because the Creek Nation was "a distinct political community." (35) However, the Court at the time declined to adopt a full sovereign immunity doctrine, stating that "[t]he fundamental obstacle to recovery is not the immunity of a sovereign to suit, but the lack of a substantive right to recover the damages resulting from failure of a government or its officers to keep the peace." (36)

   Finally, the Supreme Court, resting on its holding in Turnery, talked explicitly of the immunity of tribal nations for the first time in 1940. (37) The Court held that the tribes possessed an immunity from any direct suit or cross suit absent Congressional authorization. (38) The Court reaffirmed the tribal sovereign immunity doctrine in 1977 stating that "[a]bsent an effective waiver or consent, it is settled that a state court may not exercise jurisdiction over a recognized Indian tribe." (39)

   Despite this seemingly settled doctrine, the Supreme Court has called into question the continuation of this policy. (40) The Court in Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc. expressed that perhaps Turner was never intended to be the basis for a doctrine of tribal immunity, and the doctrine only evolved because later courts kept citing to it with little analysis. (41) The Court criticized the continuance of the doctrine, arguing that its relevance in the modern world was questionable. (42) Nevertheless, the Court upheld the doctrine. (43) The Court recognized Congress' right to regulate tribal policy and deferred to Congress to make any changes to the currently standing doctrine. (44) However, acts of Congress since Kiowa have done little to disturb the tribal immunity doctrine. (45)

   This tribal sovereign immunity is different from what is enjoyed by the states, which are granted their immunity under the Eleventh Amendment. (46) While both tribal nations and states are generally immune from suit by private parties, two key distinctions exist. First, individuals can sue tribes in a broader range of circumstances because tribes can have their immunity abrogated by Congress whereas states generally cannot. (47) Indeed, there are only two circumstances that allow an individual to sue a state: (48) "Congress may authorize such a suit in the exercise of its power to enforce the Fourteenth Amendment [or] a State may waive its sovereign immunity by consenting to suit." (49) Second, tribes are immune from suit by states, whereas states are not...