Tribal Sovereign Immunity and Patents

Of late, I've gotten involved in a discussion about tribal sovereign immunity for Native American Tribes and patents. I entered this discussion because I have covered patent law as a journalist and because I was executive director of an association for tribal environmental and solid waste issues.

The discussion arose because of a recent legal decision. The drug company Allergan is facing challenges to the validity its patents covering the dry eye treatment drug Restasis before the Patent and Trademark Office's Patent Trial and Appeal Board. Mylan, Teva Pharmaceutical and Akorn are challenging the Allergan patents because they want to sell Restasis generics. Allergan arranged in 2017 to license its patents to the St. Regis Mohawk Tribe in upstate New York. The tribe would then argue that the proceedings before the PTAB could not proceed because the tribe has sovereign immunity. Under federal law, a tribe can be sued only where Congress has authorized the suit or when the tribe has waived its immunity.

On February 23, the PTAB denied the tribe's motion to terminate the patent challenges. It acknowledged that the use of sovereign immunity was an issue of "first impression" before the PTAB. And yet, it held, tribal sovereign immunity does not apply to matters before the PTAB. It distinguished cases cited by the tribe because they involved state sovereign immunity and not tribal sovereign immunity and decided that decisions by federal agencies on tribal federal immunity didn't apply to the PTAB. 

Commentators have noted that because the PTAB was established by the American Invents Act, which became law in 2011 and became effective in 2013, almost everything before the board is a matter of first impression. They stated the PTAB appears to believe this means they have a clean slate and are not bound by precedent. Some commentators described the ruling as another example of the PTAB considering itself a world onto itself. Others noted that legislation has been introduced in Congress that would prohibit tribal sovereign immunity as a defense to patent validity challenges.

I entered into this discussion just yesterday by commenting on a blog on another site. I stated that sovereign immunity is important to tribes and wished the PTAB's reasoning on the issue hadn't been so idiosyncratic. I received some comments on that blog and by email from patent attorneys suggesting that tribes should find another avenue to assert tribal sovereign immunity. Others referred to the tribe's involvement in Allergan's legal proceedings as "sham litigation."

Well, after having all their land taken from them and most of what land they were given held in trust for them by the federal government, Native American tribes have had to be resourceful with what little they have. According to a 2015 study, the average household income of Native Americans is 30% less than that of the U.S. as a whole. Some tribes have agreed to host toxic and hazardous sites on their land for the revenue that brings. Two hundred and forty three out of the 566 Native American tribes own a portion of tribal casinos built on their land. Some like the Mohegan Sun in Connecticut are very large and successful; others I have been to are much smaller. Tribal sovereign immunity was an attraction to the casino investors. The St. Regis Mohawk Tribe saw its casino revenues drop in recent years. Among the St. Regis Mohawk Tribe's other resourceful enterprises,given the thaw in Cuban-American relations during the Obama administration, it has explored collaboration with the Cuban government concerning a drug developed in Cuba to treat diabetes, a disease that disproportionately affects Native Americans.

Given Native American history, to say that tribes should just explore other avenues to assert their tribal sovereign immunity than accepting a business deal with a pharmaceutical company is a bit glib--it assumes other opportunities are available to tribes every day. Drug companies, as well as companies in other industries, have been known to collaborate with entities in other countries for tax reasons and other purposes. Why are tribes, which under law have sovereign immunity, different? Why shouldn't tribes utilize their land and the immunity they have been given under law in business transactions? There may be reasons as they pertain to patents why they cannot exert their immunity. If the St. Regis Mohawk tribe appeals the PTAB's decision, the court may provide more clarity as to why they can't than the PTAB did. Or it can decide tribal immunity does apply in patent matters. Or Congress may settle it. But, as I stated in the blog on the other site, sovereign immunity is part of the soul of tribal existence, and I personally think the PTAB should have given it greater respect and not treated it so casually.

Copyright 2018 by John T. Aquino