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The Reach of Sovereign Immunity in IPRs

How does one balance the rights of sovereigns residing within a greater jurisdiction with fundamental rules of fairness? This question was recently decided by the Federal Circuit in the context of Inter Partes Review (IPR) in the case of St. Regis Mohawk Tribe. The St. Regis Mohawk tribe gained national attention when Allergan sold their patent rights to the tribe in exchange for money and an exclusive license to the drug. The lawyer orchestrating this transaction openly admitted that his purpose was to take advantage of the tribe’s sovereign immunity and avoid the easier-to-file-than-a-regular-lawsuit IPRs. This open attempt to beat the system is perhaps one reason why the Patent Trial and Appeal Board (PTAB) stated that tribal immunity didn’t apply to their proceedings. The Federal Circuit agreed, stating that IPRs are different enough from Article III adjudication to not trigger tribal immunity. At the end of their opinion, the court said that they would “leave for another day the question of whether there is any reason to treat state sovereign immunity differently.” But the court’s analysis in the decision may already answer that question.

The test for attachment of sovereign immunity in agency proceedings hinges on the similarity between said proceeding and civil litigation. The question then is, does an IPR look like civil litigation? On the one hand, the Supreme Court has stated that IPRs “mimic[] civil litigation.” However, in Oil States, the case where the Supreme Court declared IPRs not unconstitutional, the Court described the proceedings as being a “reconsideration of the Government’s decision to grant a public franchise.” With these in mind, the Federal Circuit, in deciding St. Regis Mohawk, analyzed different aspects of the IPR procedure and explained that IPRs act more like agency enforcement actions than civil suits, so tribal immunity is not implicated.

The question left by the Federal Circuit for another day is worth considering. If an IPR is not sufficiently like a judicial proceeding to trigger tribal immunity, will the PTAB be able to continue allowing sovereign immunity to the states? The answer is likely not. If an IPR is different enough from a judicial proceeding that tribal immunity is not triggered, the same could be said for state immunity. The Supreme Court explained in Michigan v. Bay Mills Indian Community that tribes share “common-law immunity from suit traditionally enjoyed by sovereign powers.”

The PTAB’s justification for treating the state and tribal entities differently makes sense based on the facts of the cases. Concerns with allowing sovereign immunity are stronger when that sovereignty seems to “be treated as a monetizable commodity” than when it is used by the actual inventors at state universities. However, it should be remembered that the Mohawk Tribe was engaging in a legitimate business transaction in order to help raise much-needed revenue. More importantly, the law of sovereign immunity does not have an exception for commercial activity. The case for sovereign immunity rises and falls with an action’s similarity to civil suits—not with outside factors. The Federal Circuit’s analysis is backed by the words of the Supreme Court: IPRs, like civil suits, will likely yield the same conclusion in state as in tribal sovereign immunity claims.*

*Brianna Potter is an associate editor on the Michigan Technology Law Review.

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