Allergan Transfers Restasis Patents to Native American Tribe to Avoid Challenge

  • Oct 10 2017
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  • Category: News

The drugmaker Allergan recently announced that it had transferred six patents on it best-selling eye drug, RESTASIS, to the St. Regis Mohawk Tribe in northern New York in an effort to protect the drug from a patent dispute.

The Allergan St. Regis Deal

Under the terms of the deal, Allergan will pay the tribe $13.75 million upfront. St. Regis will then lease the patents back to Allergan in exchange for an annual royalty of $15 million for as long as the patents are valid. The deal is designed to help the drugmaker prevent a challenge to its patents at the Patent Trial and Appeal Board (“PTAB”). This is because the tribe may be able to claim sovereign immunity as grounds to dismiss an inter partes review (“IPR”) challenge.

This legal concept bars lawsuits against certain government entities such as states, universities, and Native American tribes. In fact, a board decision earlier this year held that university patents are immune to IPR under sovereign immunity. That case involved the University of Florida, which owns a patent that had been challenged by a medical device maker. The university successfully argued that as an arm of the state of Florida, it should be granted sovereign immunity and the challenges should be dismissed.

The Fate of the IPR Process

In short, Allergan is hoping to block generic drug companies from invalidating its patents so that they can produce a cheaper generic version. Some observers believe this a novel challenge to the IPR process which was ushered in under the America Invents Act in 2011. While the IPR process is designed to streamline patent challenges by allowing them to be decided by the PTAB, critics argue the process is unnecessary because patents can be challenged in federal courts. Ultimately the fate of the IPR process hinges on a case that will be heard by the U.S. Supreme Court next year.

In the meantime, the validity of 6 Restasis patents is currently under review by the PTAB, while a decision has yet to be rendered in a related case that recently concluded in the U.S. District Court in Texas. If the court decides against Restasis, the patents will be invalidated, regardless of the arrangement between Allergan and St. Regis or the PTAB ruling.

The Takeaway

Whether Allergan’s strategy will or should succeed is a matter of debate, but it does have far-reaching implications for the pharmaceutical sector and patent rights in general. If the company can successfully retain its patents with this gambit, other patent holders are likely to take this approach, regardless of the strength of their claims. In the final analysis, questions of patent validity require the advice and counsel of experienced intellectual property attorneys.