Tribal Sovereign Immuity and Patents: The Federal Circuit Arguments

It is always difficult to predict which way a court will go based on oral arguments. When I covered the Supreme Court argument in 2017 in the dispute between Amgen and Sandoz over interpretations of the biosimilar statute, the justices began shooting questions to the Sandoz attorney before he had barely said a word of his prepared remarks. When the attorney for Amgen had his turn, the justices scarcely asked him a question. Some interpreted this to mean that they had no issues with the Amgen argument. And yet, the high court ruled in favor of Sandoz. The barrage of questions was likely indicative of them solidifying their opinions, dotting the i's, crossing the t's.

On June 4, all three judges on the Federal Circuit panel peppered Jonathan Massey, who argued on behalf of Allergan and the St. Regis Mohawk Tribe, with questions, as they did the attorney representing Mylan. Mark Freeman of the Department of Justice, arguing for the U.S. government, took the position that the IPR proceedings should proceed despite the tribe's sovereign immunity argument. He seemed to have an easier time. 

The judges' questions during the arguments may tell us nothing of how they will rule. The judges also were given amicus briefs from petitioners, and all of them supported Mylan, none supported Allergan and the tribe. Most patent attorneys who have blogged have been derisive of the tribe taking ownership of the patents for the sole purpose of allowing Allergan to avoid an IPR challenge, referring to it as "rent a tribe." Freeman echoed this view when he said, seemingly in passing to the judges, "We all recognize a shell game when we see one."

And yet, many of the attorneys I have spoken with noted that, in the briefs they submitted to the court, the tribe and Allergan made a very convincing case.

Much of the June 4 arguments dealt with whether an IPR proceeding was intended as a federal agency proceeding or as an alternative substitute for federal court litigation, which was one of the claims put forward by the lawmakers developing the America Invents Act of 2010, which created the IPR process. Freeman argued that an IPR is an agency action that doesn't involve tribal sovereign immunity.

In response to questions from Judge Timothy Dyk that transferring patent ownership to the tribe was a "cirumvention," Massey replied, "I don't think it was a circumvention. It is using a system created by Congress. The system is such that it results in tribal immunity. And if that's the system created by Congress, it's not a circumvention." Maxwell contended that it isn't the court's job to narrow tribal immunity but that of Congress, and he noted that there are bills before Congress to address the issue of tribal sovereign immunity and patents.

Judge Kimberly Moore kept calling the IPR proceedings "a hybrid," implictly questioning the argument that it is clearly an agency proceedings and not a substitute for federal litigation. Freeman agreed with her that it is a hybrid, but he concluded by reiterating his argument that an IPR "is an action by the U.S. government against which a tribe does not have tribal immunity." He asked the court to decide the issue, saying that, if the court did not, the issue would keep coming up.

The court is expected to issue its opinion quickly.

Copyright 2018 by John T. Aquino