Posted on 25/9/2017

Prevent your drug patent from being revoked in the US – claim sovereign immunity

A groundbreaking deal between Allergan Plc and a Native American tribe could set a precedent for other drug companies.

A new trend appears to be emerging in the US which aims to prevent drug patents from being revoked, or even challenged, by the Patent Trial and Appeal Board – giving them to entities that can claim sovereign immunity from prosecution, in return for an exclusive licence back.

Sovereign immunity, (or crown immunity in monarchies), is a legal doctrine by which a sovereign, state or other protected group cannot commit a legal wrong and is immune from civil suit or criminal prosecution.

Allergan has recently transferred its patent on the dry-eye drug Restatsis® to the Mohawk tribe of Native Americans. In the deal, Allergan has paid the Mohawk tribe the sum of $13.75m to take ownership of the patent. In return, the Mohawk tribe will claim sovereign immunity from any challenge to the patent, and will licence the patent back to Allergan on an exclusive basis for $15m per year.

This move has created huge speculation that other drug companies will follow suit and start to transfer ownership of their most important patents to other entities able to claim sovereign immunity from prosecution.

This case is not the first time sovereign immunity has been used to prevent reviews by the Patent Trial and Appeal Board. Earlier this year, the University of Florida, which owned a patent being challenged through the Patent Trial and Appeal Board by the medical-device maker Covidien, successfully argued that the challenges should be dismissed because the University is part of the state of Florida and therefore entitled to sovereign immunity. The Mohawk Tribe and other Native American Tribes enjoy even greater sovereign immunity than states in the USA.

While this is an unusual tactic to attempt to prevent patent challenges, it doesn’t mean that US patents transferred to entities with sovereign immunity are exempt from revocation entirely; patents may still be challenged through the tried and tested process of the Federal Courts. This begs the question of why Allergan (and presumably other companies in the future) would go to the expense of transferring its patent, given that it ultimately won’t prevent revocation of an invalid patent through the courts. The answer is likely to be in timings; any delay in revocation of a patent for a block-busting drug will reap huge financial rewards, and so cutting off the potentially quicker revocation route of the Patent Trial and Appeal Board may be a lucrative move.

At the very least, the tactic used by Allegan removes the “double jeopardy” situation caused by co-pending Federal Court and Patent Trial and Appeal Board proceedings.

If you require further information about preventing your drug patent from being revoked or any other general advice, please do not hesitate to contact us and speak to one of our attorneys.

Wilson Gunn