I don’t know enough about patents, or Native American tribes, or the 11th Amendment to write a truly educational post on these topics, but I do know about Unintended Consequences. Let me set the scene: Our law allows researchers and developers to protect their inventions through patents, which grant exclusive use of the idea for some number of years. This protection is intended to allow those who worked to develop the product time to recoup their expenses, which can be in the neighborhood of millions and billions of dollars, and decades of work. Patents are granted on the basis of an invention or idea being useful, novel, and non-obvious. Allergan has one such patent on Restasis, an eye drop that helps with a dry eye condition. The patent is due to run out in 2024.

A few years ago in 2011, the America Invents Act established an executive branch board (Patent Trial and Appeal Board – PTAB) to help adjudicate challenges to patents. This was supposedly intended to be used by those who wanted to enter the market with a particular product but were barred from doing so because someone else was (unjustifiably) sitting on a patent for that product. The unproductive patent owner, like a hedge fund, would use the patent to sue other honest producers effectively jacking up the whole process of invention. The PTAB was an avenue, besides the courts, where inventors could challenge sham patents. Unfortunately, no one thought this system would be abused, but it has been. It has since been used by generic pharmaceutical companies to challenge big dogs like Allegan in order to try to get their share of the market.

The key problem is that the 2011 law which sought to make it easier to challenge dubious patents also made it easier to challenge valid ones.  Ironically, in an effort to prevent trolling, the 2011 law created a group of reverse-patent trolls: generic drugmakers seeking to undermine legitimate patents already subject to adjudication by the courts.

Allegan fought back – in a brilliant partnership with the St. Regis Mohawk Tribe in upstate New York. Native American tribes enjoy sovereign immunity under the 11th Amendment. Similar to a state, a tribe may not be sued without its consent, unless it is violating the Constitution. So Allegan “sold” the patent to the tribe, putting a stop to the ability to sue on the patent. Allegan did this based on lawsuits that were dismissed on the basis of sovereign immunity. It’s not a loophole – it’s just a creative use of the law. But this creative use of the law was necessitated by the clunky implementation of a “new” adjudicating executive branch board, the PTAB – which itself threw a wrench in the whole patent challenge system previously adjudicated in the federal courts.