PTAB Denies St. Regis Mohawk Assertion of Sovereign Immunity

After months of criticism that even spilled into a judges opinion in a separate case, Allergans Restasis patent deal with the Saint Regis Mohawk Tribe just didnt work. Thanks to a Friday ruling, the blockbuster eye drug has to face the very patent challenge Allergan sought to prevent.

On Friday, the Patent Trial and Appeal Board struck down a motion by the tribe to dismiss the review. The tribe argued that sovereign immunity exempted it from the patent challenge at the Patent and Trademark Office, but the board didnt buy the argument. 

The U.S. Patent Trial and Appeal Board will hear Mylan NVs challenge of patents on dry-eye treatment Restasis as the company works to bring a generic version of the product to market.

PTAB said the tribe failed to establish that immunity stretches to inter partes reviews. Plus, it concluded that because Allergan still has a commercial interest in Restasis, the review can proceed, according to a release from Mylan, which filed the challenge. The generic drugmaker said an oral hearing is set to take place on April 3. 

Mylan noted that, in a move admittedly designed to protect the Restasis patents from cancellation by the PTAB, Allergan announced in September that it had assigned the rights of six patents to the Tribe. The Tribe immediately moved to dismiss the proceedings, arguing that its tribal sovereign immunity prevented the PTAB from reviewing the patents. On Feb. 23, the PTAB denied the Tribes motion on multiple grounds.

Sovereign nonsense: Patent board joins the lineup of critics dissing Allergans illusory IP deal with the Mohawks

Allergan entered its tribal licensing agreement back in September and quickly generated backlash, though some market watchers thought the deal was an innovative way to shield brands from early competition—and, if successful, likely to spread. The company was open about its intentions; the deal was explicitly designed to protect against IPR patent challenges, a “flawed” review system that amounts to “double jeopardy.” 

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Currently, generic companies can challenge patents in federal courts and at the PTAB. Allergans CEO Brent Saunders has been among the top critics of the system, and the company, along with others, has pushed for reform. 

“Mylan has always been vocal in its efforts to challenge and break down barriers to access,” CEO Heather Bresch said in a statement. “The PTABs ruling reinforces our belief that Allergans maneuvers to engage the St. Regis Mohawk Tribe for patent protection were a sham. We will continue to be steadfast in our efforts on both the legal and regulatory fronts to bring a generic version of Restasis to patients as quickly as possible.”

The PTAB decision comes after Allergan already suffered a federal court defeat for its key eye med. In an October decision, U.S. District Judge William Bryson said he had “serious concerns about the legitimacy of the tactic that Allergan and the tribe have employed.”

On Friday, Feb. 23, the U.S. Patent Trial and Appeal Board denied a motion from the St. Regis Mohawk Tribe to dump a challenge to patents it acquired from Allergan last year and then leased back to the drugmaker. The tribe bought the patents for Restasis in a move by Allergan to sidestep a challenge by Mylan NV (MYL) and others, which plan to bring a generic version of the dry-eye drug to market.

“What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits through the administrative mechanism for canceling invalid patents,” Judge William Bryson wrote at the time, striking down Restasis patents. Allergan has appealed that decision.

Allergans legal theory has not found much in the way of either popular or legal support. Besides the PTAB rejection, Judge William Bryson of the U.S. Court of Appeals for the Federal Circuit rejected Allergans original attempt to protect its patents until 2024, saying the new methods of treatment claimed by the Dublin-based drugmaker were obvious in light of the drugs current patents.

Due to the ongoing litigation, industry watchers arent sure when Restasis generics will hit. On the companys fourth-quarter conference call, former CFO Maria Teresa Hilado said the company is assuming generic entry between April and July. Bernstein analyst Ronny Gal and his team recently said they expect generic competition in 2018 and predicted the med will lose half its revenue this year.

The transfer of patents also wasnt popular with five Democratic senators, who demanded details about the deal with the tribe last November. Maggie Hassan of New Hampshire, Patty Murray of Washington, Amy Klobuchar of Minnesota, Sherrod Brown of Ohio and Al Franken of Minnesota sent a letter to Allergan asking for documents tied to the agreement.

Mylan: PTAB Denies Tribes Motion To Terminate Patent Challenge On Restasis

Allergans $AGN attempt to make an end run around an inter partes review of its patents for its blockbuster Restasis franchise has been dissed by a federal judge, ridiculed by a US Senator and now tossed out by the Patent Trial and Appeal Board.

Handing over the patents to a Mohawk tribe, which then declared that IPR could not apply to a group with sovereign immunity, swiftly boiled up into a controversy in which Allergan’s Brent Saunders stoutly defended the legitimacy of the deal. And Allergan handed over close to $14 million in cash to get it rolling, with quarterly payments totaling $15 million a year to keep it going.

At stake in this patent battle is a $1.5 billion cash cow that Allergan needs badly. The company announced just a few weeks ago that it is axing 1,000 staffers to make way for the expected patent loss, which is likely arriving whatever happens to the IPR debate.

In handing over the patents and then immediately leasing them back, says PTAB, Allergan remained the true owner of the patents. And PTAB agreed with Mylan that the tribe obtained only “contingent, illusory rights to enforce the patents. Finally, ruled PTAB, Congress has already severely restricted the sovereign rights of Indian tribes, which are enough to prevent a deal like this from sticking.

Upon consideration of the record, and for the reasons discussed below, we determine the Tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings. Furthermore, we determine that these proceedings can continue even without the Tribes participation in view of Allergans retained ownership interests in the challenged patents. The Tribes Motion is therefore denied.

That doesnt, however, mean its over. The widely ridiculed maneuver is likely to wind up in federal court as the tribe tries to make its argument stick, defending a point that it hopes will win more such lucrative deals like this.

So far, though, its not looking good for Allergans patent treaty with the Mohawks.

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