Indian tribes ability to shield patents from review at the United States Patent and Trademark Office’s (“USPTO”) Patent Trial and Appeal Board (“PTAB”) took another blow at the Federal Circuit.  The Federal Circuit in a precedential decision, affirming the decision of the PTAB, held that tribal sovereign immunity cannot be asserted in inter partes review (“IPR”) proceedings before the PTAB.[1]

The Federal Circuit based the decision on two principles extrapolated from Supreme Court decisions.  First, the general proposition that “immunity does not apply where the federal government acting through an agency engages in an investigative action or pursues an adjudicatory agency action.”[2]  Second, the Supreme Court’s recognized distinction between adjudicative proceedings brought by a private party against a state, on the one hand, and federal agency-initiated enforcement proceedings, on the other.  According to the Federal Circuit, immunity may generally be invoked in the private party actions, but not in the federal agency-initiated enforcement proceedings.

The opinion allocates a majority of its analysis distinguishing IPR proceedings from a Federal Maritime Commission proceeding in which the Supreme Court held that state sovereign immunity could be invoked.  In FMC Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743 (2002) (“FMC”), the Supreme Court decided that because the FMC proceedings had “overwhelming” similarities with civil litigation in federal court which made them “virtually indistinguishable,” that they were the “type of proceedings from which the Framers would have thought the States possessed immunity when they agreed to enter the Union.”[3]  The Federal Circuit, deeming the FMC decision as instructive to questions of tribal immunity, clung to the Supreme Court’s acknowledgement that there are certain federal agency-initiated actions to which the states could not invoke immunity.[4]

The Federal Circuit highlighted four differences between IPR proceedings and adjudicative proceedings brought by a private party before a federal agency like the one in FMC.  First, The Federal Circuit highlighted that the  Director of the USPTO has “broad discretion in whether to institute a review.”[5]  According to the Court, although the Director is “significantly constrained” in how he conducts IPR proceedings, the “complete discretion” whether or not to institute a proceeding “embraces the entire proceeding.”[6]  Thus it is the Director, a “politically accountable, federal official,” and not a private party who “ultimately decides whether to proceed against the sovereign.”[7]

Second, the “role of the parties” in an IPR suggests immunity does not apply.  In other words, the Director’s ability to continue an IPR proceeding or to participate in any appeals when a petitioner drops out “reinforces the view that IPR is an act by the agency in reconsidering its own grant of a public franchise.”[8]

Third, the procedures in an IPR, unlike FMC, do not mirror the Federal Rules of Civil Procedure (“FRCP”).  Unlike the proceedings in FMC and the FRCP, in an IPR proceeding, the petitioner cannot amend the petition (except for minor typographical or clerical errors), the patent owner can amend claims, there are less discovery options, and there is a difference in preliminary proceedings.[9]  These differences were enough for the Court to conclude that IPR proceedings “are both functionally and procedurally different from district court litigation.”[10]

Finally, the fact that the USPTO has authority to utilize other “more inquisitorial”  proceedings to review or reexamine patents, does not mean that an IPR proceeding is one in which Congress intended tribal immunity to apply.  “The mere existence of more inquisitorial proceedings in which immunity does not apply does not mean that immunity applies in a different type of proceeding before the same agency.”[11]

In short:

The Director’s important role as a gatekeeper and the [PTAB]’s authority to proceed in the absence of the parties convinces [the Federal Circuit] that the USPTO is acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies within their legitimate scope.[12]

It is unclear whether this saga is over, however, unless there is an appeal, it appears that the alleged scheme of transferring ownership of patents to Indian tribes won’t shield the patents from IPR proceedings.


[1] Saint Regis Mohawk Tribe, Allergan, Inc., v. Mylan Pharmaceuticals Inc., Teva Pharmaceuticals USA, Inc., Akorn, Inc. (Fed. Cir. 2018). (Download Opinion)

[2] Slip Op. at 5

[3] Id. at 6 (citing FMC at 756 and 759)

[4] The Federal Circuit explicitly stated that it was not deciding the applicability of state sovereign immunity in PTAB actions.

[5] Id. at 8

[6] Id.

[7] Id. at 9

[8] Id.

[9] Id. at 10

[10] Id.

[11] Id. at 11

[12] Id. (internal quotes omitted)