Last December, we reported on an Amicus Brief filed by Askeladden LLC (“Askeladden”) with the Patent Trial and Appeal Board (“PTAB”) arguing that efforts by the St. Regis Mohawk Tribe (“the Tribe”) to dismiss a series of inter partes review (“IPR”) proceedings involving patents covering Restasis®, were based on misplaced notions of “tribal sovereign immunity.”
On February 23, 2018, the PTAB agreed with Askeladden’s position and denied the Tribe’s Motion to Terminate the proceeding. See Mylan Pharmaceuticals Inc. v. St. Regis Mohawk Tribe, IPR2016-01127, Paper 129 (PTAB Feb. 23, 2018) (per curiam).
Thereafter, the Tribe filed an interlocutory appeal to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) under the collateral order doctrine to challenge this decision. See St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, Inc., Nos. 2018-1638, -1639, -1640, -1641, -1642, -1643 (Fed. Cir.).
The Federal Circuit then took the unusual step of granting a motion to stay the PTAB proceedings and setting an accelerated briefing and hearing schedule.
Askeladden again submitted an amicus brief to the Federal Circuit on May 17, 2018 supporting the PTAB’s decision below. A copy of that amicus brief is available here.
In this submission, Amicus Curiae Askeladden LLC advocated in support of the PTAB’s decision below based on the following grounds:
- The Tribe’s request is based on the misplaced theory that tribal sovereign immunity from suit is applicable to administrative proceedings before the PTAB. There is no dispute that, absent abrogation or waiver, Native American Tribes (like the Tribe) are generally immune from “suits” in federal or state court (see Red Br. at 13 (“a tribe is not subject to suit in federal or state court”) (emphasis added)). However, such immunity does not extend to all government action. See, e.g., Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 755 (1998) (“We have recognized that a State may have authority to tax or regulate tribal activities occurring within the State but outside Indian country . . . .”).
In this regard, a PTAB proceeding is not a suit in court, but instead an administrative proceeding in which the Patent Office (through the PTAB) takes “a second look at an earlier administrative grant of a patent.” Cuozzo, 136 S. Ct. at 2144 (2016); see also Oil States, slip op. at 7 (“[T]he decision to grant a patent is a matter involving public rights—specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO’s authority to conduct that reconsideration.”). Like other administrative actions in which States and Federal Agencies (e.g., the Federal Power Commission) may regulate rights or responsibilities of Tribes with respect to off-reservation activities, a PTAB proceeding is one of the “other mechanisms” available to the USPTO to resolve questions of patent validity as the administrative authority granting the patent in the first instance. Cf. Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024, 2028 (2014).Even if the Tribe cannot be compelled to participate in this proceeding, the PTAB retains authority to adjudicate the validity of patents under review. Indeed, there is no requirement under the AIA that a patent owner participate in a proceeding in order for it to proceed. See 35 U.S.C. §§ 311–319.
- Even if the Tribe cannot be compelled to participate in this proceeding, the PTAB retains authority to adjudicate the validity of patents under review. Indeed, there is no requirement under the AIA that a patent owner participate in an instituted proceeding in order for the PTAB to proceed. See 35 U.S.C. §§ 311–319. The Tribe does not dispute this point. (Red Br. at 27 (noting that “Board cited its ability to complete a case even if the patent owner fails to participate or even if the case is settled”)). Thus, the Board correctly held that it “does not exercise personal jurisdiction over the patent owner”—“[a]t most, the Board exercises jurisdiction over the challenged patent in an inter partes review proceeding.” (Appx16–17).
- Given that the PTAB has had jurisdiction over the challenged patents all along, the subsequent transaction by Allergan and the Tribe cannot and should not be entitled to divest the PTAB of its rights and duty to complete these proceedings. Cuozzo, 136 S. Ct. at 2144. This is true irrespective of whether notions of tribal sovereign immunity are applicable. The Patent Office has a duty to “protect the public’s ‘paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.’” Cuozzo, 136 S. Ct. at 2144–45 (quoting Precision Instr. Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945)), and inter partes review is an “efficient system for challenging patents that should not have issued.” Cuozzo, 136 S. Ct. at 2144–45 (quoting H.R. Rep. No. 112-98, at 39–40 (2011)). Consistent with the Court’s guidance, the agreements here should not divest the PTAB of its jurisdiction to complete the task it has rightfully begun, and the stay should be lifted promptly.
The following is an excerpt from the Brief addressing Points 1 and 2 above:
I. Notions of Tribal Sovereign Immunity Do Not Apply to Administrative Proceedings Like This One
The Tribe’s motion below was premised on the proposition that “The Tribe Possesses Immunity from Suit.” (Paper 81, at 8). On appeal, the Tribe repeats its argument that “a tribe is not subject to suit in federal or state court absent waiver or abrogation.” (Red Br. at 13 (emphasis added)). However, the Tribe fails to acknowledge that sovereign immunity granted to Native American tribes is limited, and does not extend to administrative proceedings, like inter partes reviews before the PTAB.
A. Tribal Immunity Does Not Extend to PTAB Proceedings
Native American tribes are “‘domestic dependent nations’” that exercise “inherent sovereign authority.” Bay Mills, 134 S. Ct. at 2030. Among the core aspects of sovereignty that tribes possess—subject to congressional action—is the “common-law immunity from suit traditionally enjoyed by sovereign powers.” Id. (emphasis added). Such immunity is found “in an agreement, express or implied between the two sovereigns, or in the voluntary decision of the second [sovereign] to respect the dignity of the first [sovereign] as a matter of comity.” Nevada v. Hall, 440 U.S. 410, 416 (1979). The doctrine of tribal sovereign immunity developed on a “slender reed” from a “passing reference to immunity” to become “an explicit holding that tribes had immunity from suit.” Kiowa, 523 U.S. at 757 (emphasis added). “As sovereigns or quasi sovereigns, the Indian Nations enjoyed immunity ‘from judicial attack’ absent consent to be sued.” Id. (emphasis added).
As recognized in Cuozzo, an inter partes review is an administrative process held before the U.S. Patent and Trademark Office, an administrative agency, and not a law suit held in a Court (or a “judicial attack”). 136 S. Ct. at 2137–38. As such, traditional concerns regarding sovereign immunity, which focus on immunity from suit in a court, do not come into play. This is because the Supreme Court recognizes a distinction between passing a law which may govern off-reservation activities of a tribe (e.g., taxing the sale of cigarettes, denying a casino license, or cancelling a patent) and the ability to enforce those laws in courts. Kiowa, 523 U.S. at 755 (“We have recognized that a State may have authority to tax or regulate tribal activities occurring within the State but outside Indian country . . . [,] however, [that] is not to say that a tribe no longer enjoys immunity from suit.”).
For example, in Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe the Supreme Court held that while a State (Oklahoma) may tax cigarette sales by a Tribe’s store to nonmembers, the Tribe enjoys immunity from a suit to collect unpaid state taxes. 498 U.S. 505, 510 (1991). In other words, there is a difference between the right to demand compliance with state laws and the means available to enforce them. See id. at 514.
This distinction was also recognized in Michigan v. Bay Mills, where the Supreme Court held that, even if sovereign immunity barred a lawsuit by the State of Michigan against a tribe, “Michigan must therefore resort to other mechanisms, . . . to resolve this dispute.” 134 S. Ct. at 2028 (emphasis added). One of “the panoply of tools Michigan can use to enforce its law on its own lands” was that “Michigan could, in the first instance, deny a license to [the identified tribe] for an off-reservation casino.” Id. at 2035.
Federal Agencies, such as the Federal Communications Committee (“FCC”), have exercised their power to regulate the continuation of previously issued licenses, even when the licensee is a tribe. See, e.g., In re Confederated Tribes and Bands of the Yakama Nation, 31 FCC Rcd. 8857, 8857 (F.C.C. Aug. 10, 2016); In re Business Council of the N. Arapaho Tribe, 29 FCC Rcd. 2650, 2650 (F.C.C. Mar. 10, 2014).
Askeladden respectfully submits that inter partes review is one these “other mechanisms” authorized by Potawatomi and Bay Mills to be used with Native American Tribes. Specifically, an inter partes review is more akin to a state imposing a tax or granting or revoking a franchise or license, than it is to a lawsuit seeking to enforce those tax laws or impose penalties for unlicensed activities. Cf. Potawatomi, 498 U.S. at 512 (“Although the doctrine of tribal sovereign immunity applies to the Potawatomis, that doctrine does not excuse a tribe from all obligations to assist in the collection of validly imposed state sales taxes.”), with Oil States, slip op. at 9 (“inter partes review involves the same interests as the determination to grant a patent in the first instance”).
An inter partes review is an administrative proceeding before an administrative agency—the Patent Office’s PTAB—to take a second look at the agency’s earlier grant of a patent. Contrary to Appellants’ contentions, (Red Br. 19–21), such proceedings cannot properly be characterized as “lawsuits.” As this Court has noted, although “[t]he PTO at times refers to the IPR proceedings as a ‘trial’[,] [v]ery seldom do IPR proceedings have the hallmarks of what is typically thought of as a trial.” Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d 1267, 1270 n.2 (Fed. Cir. 2017) (citation omitted). In this regard, “discovery is significantly restricted and live testimony is rarely allowed in IPR proceedings.” See Joanna Shepherd, Disrupting the Balance: The Conflict Between Hatch-Waxman and Inter Partes Review, 6 NYU J. INTELL. PROP. & ENT. L. 14, 37 (2016).
The Cuozzo court explained how, in many ways, “inter partes review is less like a judicial proceeding and more like a specialized agency proceeding.” Cuozzo, 136 S. Ct. at 2143. For example, the private parties that initiate inter partes reviews need not stay in the proceedings, and the Patent Office (i.e., the U.S. Government) exercises discretion over institution and is permitted to intervene in any appeal of an inter partes review proceeding. Cuozzo, 136 S. Ct. at 2140 (citing 35 U.S.C. § 314(a)); 35 U.S.C. § 143
B. The Tribe’s Patent Rights Are Subject to the Patent Office’s Jurisdiction
In Oil States, the Supreme Court reaffirmed that “Patent claims are granted subject to the qualification that the PTO has ‘the authority to reexamine—and perhaps cancel—a patent claim’ in an inter partes review.” Oil States, slip op. at 9 (quoting Cuozzo, 36 S. Ct. 2131, 2137). “Patents thus remain ‘subject to [the Board’s] authority’ to cancel outside of an Article III court.” Oil States, slip op. at 9 (quoting Crowell v. Benson, 285 U.S. 22, 50 (1932)).
Appellants rely heavily on Federal Maritime Commission v. S.C. State Ports Authority, 535 U.S. 743 (2002) (“FMC”) for the proposition that tribal immunity can be invoked in inter partes review proceedings. (See Red Br. at 21–24). While FMC is instructive, it is distinguishable. As discussed above, inter partes review proceedings do not have the hallmarks of a traditional lawsuit. This is in contrast to the particular type of administrative proceeding at issue in FMC:
FMC administrative proceedings bear a remarkably strong resemblance to civil litigation in federal courts. For example, the FMC’s Rules governing pleadings are quite similar to those found in the Federal Rules of Civil Procedure…. Not only are discovery procedures virtually indistinguishable, but the role of the ALJ, the impartial officer designated to hear a case … is similar to that of an Article III judge…. In fact, to the extent that situations arise in the course of FMC adjudications which are not covered by a specific Commission rule, the FMC’s own Rules of Practice and Procedure specifically provide that the Federal Rules of Civil Procedure will be followed to the extent that they are consistent with sound administrative practice.
FMC, 535 U.S. at 757-759 (emphasis added) (internal quotation marks and citations omitted).
Also unlike an FMC administrative proceeding, a PTAB proceeding does not result in a litigation-like remedy. In FMC, the Court noted that, in FMC proceedings, an Administrative Law Judge issues a decision that includes “relief,” such as “directing the payment of reparation to an aggrieved party” and “require[ing] the losing party to pay the prevailing party’s attorney’s fees.” FMC, 535 U.S. at 759. In contrast, the PTAB “does not make any binding determination regarding ‘the liability of [Patent Owner] to [Petitioner] under the law as defined.” Oil States, slip op. at 15–16. Rather, inter partes review is intended to be an “efficient system for challenging patents that should not have issued.” H.R. Rep. No. 112-98, at 39–40 (2011); see also Cuozzo, 136 S. Ct. at 2144 (“the purpose of the proceeding is not quite the same as the purpose of district court litigation”)).
As the Supreme Court recently reinforced, the PTAB does not exercise judicial power:
[The Supreme Court] has never adopted a ‘looks like’ test to determine if an adjudication has improperly occurred outside of an Article III court. The fact that an agency uses court-like procedures does not necessarily mean it is exercising judicial power…. Although inter partes review includes some of the features of adversarial litigation, it does not make any binding determination regarding ‘the liability of [Greene’s Energy] to [Oil States] under the law as defined.’ Crowell, 285 U.S., at 51. It remains a matter involving public rights, one ‘between the government and others, which from [its] nature do[es] not require judicial determination.’ Ex parte Bakelite Corp., 279 U.S., at 451.
Oil States, slip op. at 15–16 (emphasis added).
Further, in FMC, a State run entity asserted sovereign immunity as a defense against litigation before an independent agency, the Federal Maritime Commission. In finding that Eleventh Amendment State Sovereign Immunity principles were applicable to that proceeding, FMC relied upon, inter alia, the bargain reached between the States in the constitutional convention to arrive at the Eleventh Amendment (a factor not at play in the case of tribal sovereign immunity, which is merely grounded in comity). Compare FMC, 535 U.S. at 751–52, with Bay Mills, 134 S. Ct. at 2031.
Another factor behind the FMC Court’s decision was the “interest in protecting States’ dignity,” explaining that “[p]rivate suits against nonconsenting States . . . present ‘the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties,’ regardless of the forum.” FMC, 535 U.S. at 751 (quoting In re Ayers, 123 U.S. 443, 505 (1887)) (emphasis in original). The Court noted that—rather than subjecting sovereign states to this indignity of being sued by private parties—private parties could obtain the same relief sought in the FMC proceedings by bringing their complaints to the FMC directly, and urging the FMC to bring a suit in district court. 535 U.S. at 768 & n.19. No similar procedure exists here for patents.
Prior PTAB decisions holding that a state may assert Eleventh Amendment sovereign immunity are inapplicable here. See, e.g., Reactive Surfaces Ltd., LLP v. Toyota Motor Corp., No. IPR2016-1914 (PTAB July 13, 2017) (Paper 36). Those decisions turned on the notion that inter partes reviews are the type of proceeding from which the Framers of the Constitution would have thought the States possessed immunity. However, even if those decisions were correct, “the immunity possessed by Indian tribes is not coextensive with that of the States,” Kiowa, 523 U.S. at 755–56 [Three Affiliated Tribes of Fort Berthold Reservation v. Wold Eng’g, 476 U.S. 877, 890 (1986) (“Of course, because of the peculiar ‘quasi-sovereign’ status of the Indian tribes, the Tribe’s immunity is not congruent with that which the Federal Government, or the States, enjoy.”).], since it evolved out of judicial doctrine rather than the Eleventh Amendment. Thus, the Board correctly refused to extend these prior decisions to include tribal sovereign immunity. (Appx9; see also Paper 130, at 2–4).
II. The PTAB May Proceed Without a Patent Owner
An inter partes review proceeding is focused on the patent, not the patent owner. Indeed, the patent owner is not required to participate in the proceeding. As such, principles of immunity from suit are simply inapplicable. Cf. Cty. of Yakima v. Confederated Tribes and Brands of Yakima Nation, 502 U.S. 251, 264–65 (1992) (recognizing that taxation of fee-patented land under in rem jurisdiction could be exercised against land owned by a sovereign Native American tribe). Although the PTAB found “we need not characterize these proceedings as in rem in order to reach our conclusions here” (Appx17 n.6), to the extent this Court agrees that inter partes reviews are in rem proceedings, it may be otherwise dispositive. Cf. Upper Skagit Indian Tribe v. Lundgren, 138 S.Ct. 543 (Mem.) (2017) (currently pending on question whether “a court’s exercise of in rem jurisdiction overcome[s] the jurisdictional bar of tribal sovereign immunity when the tribe has not waived immunity and Congress has not unequivocally abrogated it.”).
While the AIA sets forth certain limits on what must be in a Petition (see, e.g., 35 U.S.C. § 312), who may file a Petition (see, e.g., 35 U.S.C. § 315), and even provides a patent owner a right (but not obligation) to respond to the Petition (see, e.g., 35 U.S.C. § 313), it does not require participation by a Patent Owner (or even the Petitioner) for the PTAB to complete its task (see, e.g., 35 U.S.C. § 317(a)). See, e.g., Cuozzo, 136 S. Ct. at 2144 (“challengers need not remain in the proceeding; rather that Patent Office may continue to conduct an inter partes review even after the adverse party has settled. § 317(a).”); Reactive Surfaces Ltd. v. Toyota Motor Corp., IPR2016-01914, slip op. at 17 (PTAB July 13, 2017) (Paper 36) (“We conclude that Patent Owner has not shown sufficiently that dismissal of the Regents from this proceeding requires termination of the proceeding as to the remaining patent owner, Toyota.”).
In Covidien LP v. University of Florida Research Foundation Inc., IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21) (Ex. 2095), another panel rejected the fact that an inter partes review is an in rem proceeding because the patent owner could be subject to an estoppel from an adverse judgment. However, the Supreme Court rejected that kind of analysis in Tennessee Student Assistance Corp v. Hood, 541 U.S. 440 (2004). Specifically, the Court found that sovereign immunity did not apply to a bankruptcy court’s in rem jurisdiction because “a nonparticipating creditor cannot be subjected to personal liability.” Id. at 447–48. This was true even though a discharge order would apply to a nonparticipating sovereign creditor. Thus, even though estoppel may apply to the patent holder, such estoppel is still not personal liability, and thus does not undermine this Board’s in rem jurisdiction over a patent.
To the contrary, as the Court recently recognized, an inter partes review “does not make any binding determination regarding ‘the liability of [Patent Owner] to [Petitioner] under the law as defined.’” Oil States, slip op. at 16 (quoting Crowell, 285 U.S. at 51).
Where, like the AIA, Congress adopts “a general statute in terms applying to all persons [it] includes Indians and their property interests.” Fed. Power Comm’n v. Tuscarora Indian Nation, 362 U.S. 99, 116 (1960) (“FPC”). FPC held “that Congress, by the broad general terms of § 21 of the Federal Power Act, has authorized the Federal Power Commission’s licensees to take lands owned by Indians, as well as those of all other citizens, when needed for a licensed project, upon the payment of just compensation . . . .” Id. at 123.
The PTAB correctly held that like FPC, “[h]ere Congress has enacted a generally applicable statute providing that any patent (regardless of ownership) is ‘subject to the conditions and requirements of (the Patent Act).’” Appx11 (quoting 35 U.S.C. § 101 and citing 35 U.S.C. § 261); see also Oil States, slip op. at 2. Indeed, the AIA allows any “person who is not a patent owner” to be a Petitioner (35 U.S.C. § 311(a))[Cuozzo, 136 S. Ct. at 2150 (“any third party can ask the agency to institute inter partes review of a claim”) (emphasis added); see also Oil States, slip op. at 2 (accord).], subject to meeting the other requirements of Sections 311–319, and offers no restriction on which Patent Owners are authorized to respond (35 U.S.C. § 313) or waive a right to respond (e.g., 37 C.F.R. § 42.107(a)). As the PTAB correctly stated “a patent owner’s participation is not required and inter partes reviews have proceeded to a final written decision under 35 U.S.C. § 318(a) even where the patent owner has chosen not to participate.” (Appx17 (citing Microsoft Corp. v. Global Techs., Inc., IPR2016-00663 (PTAB June 2, 2017) (Paper 35); Republic Gen. Ins. Group, Inc. v. Owner of U.S. Patent No. 6,519,581, IPR2015-01956, (PTAB Apr. 18, 2017) (Paper 39)). The Petitioner need not even have constitutional standing. Cuozzo, 136 S. Ct.. at 2143–44; see also 35 U.S.C. § 311(a) (“a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of a patent.”).