St. Regis Mohawks, BIO send letters to Senate Judiciary slamming the unfair playing field of IPRs at PTAB

U.S. CapitolOn Thursday, October 12th, a pair of letters addressed to the bipartisan leadership of the Senate Judiciary Committee were delivered in an attempt to inform Senators on that committee of various issues in play regarding the recent patent deal between multinational pharmaceutical firm Allergan and the sovereign St. Regis Mohawk Tribe. The two groups sending the letters represent stakeholders in the U.S. patent system coming from very different backgrounds who realize that there are fundamental flaws in the system created by inter partes review (IPR) proceedings which are carried out at the Patent Trial and Appeal Board (PTAB).

“Tekwanonhwerá:tons,” the Mohawk word for “Greetings,” begins the letter sent from the St. Regis tribe and addressed to Sen. Chuck Grassley (R-IA), chair of the Senate Judiciary Committee, and Dianne Feinstein (D-CA), the ranking Democrat on that committee. The tribe notes that its tribal territory resides in an economically depressed region located in northern New York State. Although tribally-owned entities in casino and television networks enable $52 million in salaries to 1,600 employed tribal members, healthcare costs have risen dramatically due in part to hazardous pollution from Superfund sites located upstream and upwind of the tribe’s territories; tribal members drank contaminated water for decades until the New York State Department of Health issued a warning in the 1990s. Further, gaming revenue from the Akwesasne Mohawk Casino have leveled off in recent years, forcing the St. Regis tribe to diversify investments. These factors made the new revenue stream available from the executive license with Allergan look like a very beneficial option to the tribe.

“The fact that we are being attacked for diversifying our economy and obtaining a revenue source that could remedy the current environmental disaster that is polluting our community and endangering our well-being, while also offsetting healthcare costs is, at best, another sad example of colonial paternalism,” the St. Regis letter reads. The tribe points out that many of the members of Congress who have ramped up their inquiries into the St. Regis/Allergan deal come from states where state entities own patents and would therefore have similar sovereign immunity protections in front of the PTAB. For example, the four states represented by Senators calling for a Senate Judiciary review of the deal collectively own more than 7,000 patents. State entities in Pennsylvania, the home state of Sen. Bob Casey (D-PA), currently own 3,686 patents, according to the St. Regis tribe. Ohio, represented by Sen. Sherrod Brown, includes state entities holding a total of 2,267 patents. Similar stories play out in Connecticut, home of Sen. Richard Blumenthal (D-CT) (1,066 patents), and New Hampshire, home of Sen. Maggie Hassan (D-NH) (257 patents).

Along with maintaining parity between tribal governments and state and public universities, the St. Regis tribe asks the Senate Judiciary leadership to protect a revenue stream that offsets budget shortfalls for housing, education, healthcare, eldercare and more. The tribe is also hoping that the committee will gain a greater understanding of the role the tribe is playing. Far from being a shell company, the tribe notes that it has created an Office of Technology Research and Patents to actively protect the tribe’s intellectual property. As for the argument that the tribe’s ownership of the patents will delay generic drugs in the marketplace, the tribe notes that its own rising healthcare costs means that it’s not in the tribe’s interest to delay generics from the marketplace. “To suggest the Tribe would engage in price-gouging or hinder access to medicine is a complete opposition of the core values of the Tribe and its own financial interest,” the St. Regis letter reads.

The St. Regis tribe also calls on the Senate Judiciary Committee to recognize that the current system involving IPRs at the PTAB is not working as intended. Although the PTAB was established in response to concerns over patentability in the high-tech sector, pharmaceutical companies are greatly impacted by the ability to “answer shop” among patent challengers seeking a declaration of invalidity outside of district court. “For Orange Book-listed patent owners, IPR proceedings allow repetitive attacks on patents, lack finality and due process, and use legal standards that are systematically unfavorable to patentees,” the St. Regis tribe writes. While federal district courts invalidate about 28 percent of challenged patents, the tribe notes that 76 percent of patents challenged through IPRs are invalidated, although it bears adding that more than 90 percent of challenged patents end up defective after being challenged at PTAB. The tribe also cites the fact that the constitutionality of the entire PTAB is currently under review after the U.S. Supreme Court granted writ to take up Oil States Energy Services, LLC v. Greene’s Energy Group, LLC.

St. Regis is not the only sovereign tribe to oppose Congressional inquiries into the sovereign immunity issue. Also on October 12th, a resolution was adopted by the Indian leadership organization United Southern and Eastern Tribes (USET) to take all steps necessary to oppose Congressional abrogation of tribal sovereign immunity and maintain parity with state sovereign immunity in any future amendments of the America Invents Act (AIA).

On the same day that the St. Regis letter was sent to Senate Judiciary leadership, the Biotechnology Innovation Organization (BIO) also sent a letter to Sens. Grassley and Feinstein on the patent licensing agreement between Allergan and the St. Regis tribe. The world’s largest biotechnology trade organization representing more than 1,100 medical field entities, BIO voiced similar concerns over how IPRs at PTAB have strayed from their original intent. “IPR as it exists today, is undercutting the patent system’s intended incentives for innovation by serving as an open-ended and duplicative forum for a new class of ‘patent trolls’ that is introducing significant business uncertainty and cost,” BIO’s letter reads.

Like the St. Regis tribe, BIO argued that the IPR process lacks finality and due process for the patent owner and BIO repeats the “answer shopping” charge raised by the tribe. The IPR process further tilts the playing field towards generic drugmakers in a way that goes beyond the scheme contemplated by Congress in passing the Hatch-Waxman Act in 1984 to provide a pathway for expedited approval of generic drugs. “If timed strategically, this parallel IPR proceeding can be used as a hedge against the results of the district court litigation,” BIO notes. “If the federal court determines the innovator’s patent to be valid, the IPR may still produce the opposite result.” While BIO takes no official position on the sovereign immunity argument presented by the St. Regis tribe, it did acknowledge that sovereign immunity is not a new issue in the patent system. “State-owned patents have been part of the Hatch-Waxman system for decades, and we are aware of no instance where sovereign immunity has ever interfered with or delayed resolution of innovator-generic patent disputes in federal court,” BIO argues.

At the PTAB, the panel of administrative patent judges (APJs) sitting on the IPR trial reviewing the validity of the patent now owned by the St. Regis tribe issued an order on October 4th that denied a motion filed by petitioner Mylan to produce additional discovery in the case. The judge also dismissed without prejudice a motion by Allergan to withdraw from the IPR as a real party in interest.

The order from the PTAB APJs stem from a conference call on September 26th involving counsel representing petitioner Mylan, patent owner St. Regis Mohawk Tribe and patent licensee Allergan. A transcript of the conference call shows that counsel representing Mylan sought additional discovery to produce documents including a short form agreement filed by the St. Regis tribe in order to determine “who actually owns the rights, holds the rights and whether the agreements are valid.” Once again, counsel representing Mylan referred to the patent deal between the St. Regis tribe and Allergan as a “sham” transaction. Mylan argued discovery was necessary to determine if the tribe was the actual patent owner or whether Allergan had retained enough rights in the patents so that the tribe is not a necessary party.

“Before the panel takes into account what they heard as being in any way factual or truthfully, it is not,” said Michael Shore, partner at Shore Chan DePumpo LLP serving as counsel representing St. Regis in the IPR. Quickly, the conversation moves back to Mylan’s counsel, Richard Torczon of Wilson Sonsini Goodrich & Rosati, to keep up the allegations that there must be some information in documents yet to be produced that nulled St. Regis’ claims as patent owner. “We believe that it is almost unbelievable that there aren’t additional side agreements and that those side agreements would tend to show things like additional license-back provisions or things to that effect,” Torczon said.

“This is a fishing expedition, and it is a fishing expedition that goes far beyond establishing whether the Tribe is sovereign, we all know it is, and whether or not sovereign immunity applies to PTAB proceedings, which we already know they do,” Shore said. Chris Evans, another Shore Chan partner representing St. Regis, noted that the case cited by Torczon in support of additional discovery on tribal sovereign immunity matters, Finn v. Great Plains Lending, was directed at jurisdictional discovery, which was not the kind of discovery Mylan was seeking in this case.

Before ending the conference call, the PTAB panel asked St. Regis’ counsel whether they would be okay with filing opposition in the event that the court did grant the motion for additional discovery. Shore declined, stating that the proposed 48-hour time window for filing such opposition was too small a window and instead wanted the typical 15-day window for responding to motions. “We are a very busy law firm and we do not have the ability to drop everything we are doing and be a slave to what Mylan wants us to do on 48 hours notice,” he said.

Much of the reasoning behind the patent deal between Allergan and the St. Regis tribe is outlined in an op-ed published by The Wall Street Journal on October 8th. The piece, authored by Allergan CEO and chairman Brent Saunders, notes that while generic competition is good for the marketplace, the effects of IPRs on pharmaceutical patents threatens the “social contract” Allergan has with its patients as patent protections are stripped, leaving Allergan and others without the significant resources to commit to research and development of new drugs. Saunders identifies “reverse trolls,” hedge funds and others using the PTAB to extort from drugmakers.

“The IPR system is discouraging biopharmaceutical innovation and putting new medicines in jeopardy, along with the jobs they support and the lives they save. Without the stability and predictability provided by strong patent protection, innovation will suffer. That means patients will suffer.”


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Join the Discussion

22 comments so far.

  • [Avatar for Anon]
    October 23, 2017 07:31 am

    Confused Pharmacist,

    Your cryptic reply, not addressing any points appears to be some type of sour grapes name calling.

    Please either address the points or concede to the fact that you lack ability to do so.

    I asked that you think carefully and it appears that you have opted for the opposite.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 21, 2017 12:38 pm

    Nice courtier’s reply.

  • [Avatar for Anon]
    October 21, 2017 10:20 am

    t’s racist to call it racist (i.e. calling something like affirmative action “racist” is itself racist because it fails to acknowledge why AA is needed in the first place

    I could not disagree with you more.

    Affirmative Action IS racist – by definition. It simply matters not at all why one is engaging in racist behavior, and any such “justifications” cannot change the nature of the action itself.

    Your attempt fails to understand the basis of the term itself and would seek to combat “evil” with the very “evil” itself.

    This is NOT an issue-framing way of “maintaining white supremeacy” as you allege.

    THAT alleging is itself a sign of racism.

    It IS – to use perhaps a phrase that might offend – calling a spade a spade.

    That you reference Lochner, and recognize it as it being considered one of the worst decisions of the Supreme Court ever – and yet fail to see that MY position is anti-Lochner, while your position falls to the Lochner camp only tells me that you have not yet thought through these things at a critical level.

    I know this area of law extremely well, and this is one of my “hot-button” topics, so I suggest that you think carefully in formulating your response.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 20, 2017 09:23 pm

    Furthermore, it’s not “racist” as you say. If anything, it’s racist to call it racist (i.e. calling something like affirmative action “racist” is itself racist because it fails to acknowledge why AA is needed in the first place; i.e. saying anti-racist is code word for “anti-white” is itself racist because it frames the issue in a way that maintains white supremeacy).

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 20, 2017 07:53 pm


    There was a time when “freedom to contract” was revered. It was the Lochner era. It’s considered one of the worst decisions of the Supreme Court ever (dare I say bigly):

  • [Avatar for Tiburon]
    October 17, 2017 12:50 pm

    JPM – Google employing 75k is not nothing. Further, the top-5 corporations by mkt cap today are all tech – Google is just one of many. Further, your last link is to an article on tech employing 6.7million. Nothing to sneeze at. You need to come up with a lot of inventors to offset the risk of upsetting the AIA apple cart.

    Your comment on healthcare is just grasping at trying to make some kind of an argument. The strength of patent system does not have major influence on healthcare. Stronger patents will not lead to increase in healthcare employment.

    Google’s $100b cash reserves isn’t something you should be happy about. For one, it illustrates that software industry is bigly important, and for another it can be dipped into to keep AIA in place if not further progress it.

  • [Avatar for Anon]
    October 17, 2017 12:16 pm


    I fully concede that it’s paternalistic. I see no issue in that if the aim is to protect them from exploitation. It seems that’s where we disagree.

    You not seeing the fault in paternalism “protecting” them given the other parts of my post only confirms that you are NOT thinking critically here.

    You have your view quite outside of the reality of who is engaging and why they are engaging.

    I am not ready to call that “racist,” but it is a telling factor that you believe that freedom to contract “needs” to be so constrained because of the mere feeling that “some group” is being exploited.

    If in fact you want to point to actual exploitation, and want THAT exploitation remedied – you first need to make the case that whatever you think is “exploitation” is in fact exploitation as well as establishing some legally cognizable foundation for curbing the freedom to contract based (apparently) solely on a “tribal” designation.

  • [Avatar for JPM]
    October 17, 2017 11:19 am

    @10 Tiburon,

    You’re drinking too much Northern California Kool-Aid. Software companies haven’t really created that many jobs commensurate with the profits that they pull in. For example, Google only employs ~75,000 people. They’re also sitting on ~100B in cash on the balance sheet. When are they going to invest that cash in creating more jobs? They look like cash hoarders to me. Even Peter Thiel said Google is absolutely horrible at re-investing capital. The Obama Administration idolized the tech industry during his term mostly because he couldn’t raise money from Wall Street to get re-elected.

    The healthcare industry actually creates a lot more jobs (~12 million jobs) than the tech industry with ~6 million.,%22sort%22:%22asc%22%7D

  • [Avatar for Gene Quinn]
    Gene Quinn
    October 17, 2017 11:18 am

    Confused Pharmacist-

    Everything the district court said on sovereign immunity is irrelevant dicta. It was not raised as a defense. He also acknowledged that the transaction will probably be dispositive at the USPTO. As explained in the decision, there was consideration for the transaction. Although Judge Bryson didn’t want to admit it, that makes the transaction valid and not a sham. That is why he allowed the Tribe to be joined. So while the popular media will miss the importance of his separate opinion, it actually lays out the reasoning as to why the transaction is legitimate and claims of sovereign immunity should work at the PTO — assuming the PTAB follows the law, which they do not always do. See:

  • [Avatar for Dozens]
    October 17, 2017 10:43 am

    The St. Regis Mohawks (SRMs) are playing a dangerous game here. I am a little bit surprised to see the USET cheering them on. I guess that they do not see what a danger the SRMs’ gambit is to the whole system of sovereign immunity for native tribes.

    U.S. courts have long recognized that native tribes are pre-Constitutional sovereigns that enjoy limited sovereign immunity, but this immunity (unlike the immunity enjoyed by the states) has *always* been within the plenary control of Congress. Congress can abrogate the immunity of tribes by a simple act of law (unlike the constitutional amendment that would be necessary to constrain states’ immunity).

    So long as native tribes use their immunity simply to vindicate their own rights as sovereigns, nobody will much object to their exercise of sovereign immunity. The SRMs, however, are—in effect—renting their sovereign immunity to private entities that are *clearly* not themselves sovereigns. The SRMs are like pitchmen on the boardwalk shouting “get your sovereign immunity here! You want to do something legally skeevy, but are worried about getting sued? For just $10 thousand, we can sell you a ‘get out of court free’ card! Step right up…”

    If the SRMs are allowed to get away with this, essentially all private tort causes of action will become null. Anyone who wants to commit a tort need only figure out the amount of money that the tort is worth, and then negotiate with a sovereign tribe to share the profits from the tort, so that the bad actor might be allowed to shelter under the tribe’s immunity.

    For this reason, Congress *cannot* permit tribes to sell their immunity like a commodity. If the SRMs continue in this gambit, Congress will be left with no alternative but to constrain sovereign immunity of tribes. USET and other tribal conferences should see where this is headed and try to exert influence on SRM to cut it out. It will not end well for native tribes if this gambit is pursued or expanded.

  • [Avatar for Dozens]
    October 17, 2017 10:30 am

    “[I]f IPRs are kept around, the stupid university exception to IPRs should go too.”

    Because the exception for state universities rests on the XI amendment, it would take more than an act of Congress to get rid of it. You would need to amend the Constitution. Good luck with that.

    I suppose that Congress could amend the patent laws to permit state universities to acquire patents, but not to enforce them. That is to say, the patent would only become enforceable once it was fully assigned away to some non-university entity. That would not end the sovereign immunity protection that state universities enjoy from IPRs, but it would ensure that such sovereign immunity would never come into play with regard to any commercially important patents.

  • [Avatar for Tiburon]
    October 17, 2017 10:18 am

    Paul Morinville – doesn’t matter who holds the patents, what matters are incentives. Software corporations have created a lot of jobs – high paying at that. While an entire patent industry has developed that does not create jobs (except for lawyers). Congress has recognized that (see AIA) and will continue. Sovereign immunity negates the spirit of the AIA and hence why it will be stopped.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 17, 2017 10:06 am

    Fresh News:

    The patents were declared invalid:

    In a separate order, the judge allowed the tribe to be joined as a party, but expressed serious reservations about it:

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 17, 2017 09:56 am

    I fully concede that it’s paternalistic. I see no issue in that if the aim is to protect them from exploitation. It seems that’s where we disagree.

  • [Avatar for Anon]
    October 17, 2017 12:00 am

    You say “companies that use as if the American Indian tribe needs some paternalistic protection.

    Last I checked, not only did they enter the deal of their own free will, they actually courted such deals.

    Maybe you want to check yourself there before jumping on the bandwagon.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    October 16, 2017 10:52 pm


    I don’t think that Tiburon is racist against Native Americans. I think he’s just being critical of companies that use Native American sovereignty. Hence the “trick.” Key distinction there…

  • [Avatar for Anon]
    October 16, 2017 03:32 pm

    The logic it stands on is much flimsier than any supreme court decision regarding patents.

    Without more, your very statement is far too flimsy to hold water.

    The concept of the government itself is one of limited government, of which, sovereignty (and especially sovereignty of States) was critical at the formation of this country.

    I am not sure that your statement appreciates the very thing that it seeks to address.

  • [Avatar for 32ff23f32f]
    October 16, 2017 01:19 pm

    Fixing the IPR process, or getting rid of it altogether, would be very bad for the St. Regis tribe. They need IPRs to exist, and they need the process to be threatening enough to a patent owner that a patent owner would pay millions to avoid one. Not sure where they are coming from with these letters. And if IPRs are kept around, the stupid university exception to IPRs should go too.

    Sovereign immunity as it currently exists is largely a judicially created concept that extends way beyond the language of the eleventh amendment. The logic it stands on is much flimsier than any supreme court decision regarding patents.

  • [Avatar for Anon]
    October 16, 2017 01:01 pm

    I think the key to Tiburon’s position is:

    employing high salary software engineers and contributing with corporate and payroll taxes

    Of course, this says nothing of actual innovation, and says even less of those self-same corporations eventual ability to outsource even those same “high salary” jobs, as well as those self-same corporations ever present efforts to minimize corporate and payroll taxes.

    I do not think it is an accident that Tiburon is long on sound bytes and short on actual understanding here. He reminds me of the long line of anti-software patent mouthpieces that make it a habit to intrude into discussions here without really advancing any conversations.

  • [Avatar for Paul Morinville]
    Paul Morinville
    October 16, 2017 12:42 pm

    Tiburon, “sneaky tricks”. That statement is blatantly racist. It directly implies that native Americans are sneaky trick players, much like the steriotypes used in the racist westerns of the 1950s.

    Your blatant racism aside, tribes are sovereign. There is no trick to that. It was not snuck into the treaties. It was the agreement to end wars.

    Perhaps your anti-inventor, anti-startup, anti-American view is clouding you ability to process facts.

  • [Avatar for Tiburon]
    October 15, 2017 06:57 pm

    Stop getting your hopes up. As long as corporations are employing high salary software engineers and contributing with corporate and payroll taxes, Congress will not allow sneaky tricks like sovereign immunity to work for long.

  • [Avatar for JPM]
    October 15, 2017 03:17 pm

    Great article.

    Happy to hear that the ~80% kill rate has been brought to the politicians attention and that the new PTAB patent trolls are being exposed. Unified Patents is the most prevalent PTAB troll, they shake patent owners down for free licenses in exchange for settling the IPRs that they file.

    Let’s hope that the PTAB gets shutdown.