Sovereign nonsense: Patent board joins the lineup of critics dissing Allergan’s ‘illusory’ IP deal with the Mohawks

Allergan’s $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.

Sums up the ruling:

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 Tribe’s participation in view of Allergan’s retained ownership interests in the challenged patents. The Tribe’s Motion is therefore denied.

That doesn’t, however, mean it’s 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, it’s not looking good for Allergan’s patent treaty with the Mohawks.

Image: Brent Saunders. AP Images

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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