The United States District Court for the Eastern District of Texas on October 16, 2017 ruled four Allergan patents relating to its blockbuster eye drug Restasis, as invalid. Allergan has said that it will appeal the decision. But another order may have a wider ripple effect which has raised questions about the company's decision to transfer the patents to a Native American tribe, to prolong the launch of Restasis generics.
Background
Restasis, a blockbuster product from Allergan, used for treatment of dry eyes, is an ophthalmic formulation of cyclosporine. The product is a valuable part of their portfolio (generates net revenues of more than a billion dollars per year); but it has been under threat from a patent challenge. Mylan and Teva are both trying to force the drug off patent before its appointed time which extends till about 2024. Last December, the US Patent Office granted an inter partes review of the relevant patents, a decision that did not go down well with Allergan and its investors.
About a month ago, Allergan agreed to transfer the patents on its blockbuster Restasis to the Saint Regis Mohawk Tribe, which has sovereign immunity and can protect them from challenges from generic competitors. As part of the agreement, the tribe received a one-time payment of $13.75 million and possible annual royalties of about $15 million annually as long as the patents were valid. After the transfer, lawyers representing Allergan and the tribe moved to dismiss an IPR against their patents on the grounds that the patents now enjoyed "sovereign immunity."
Allergan had made this unorthodox agreement to protect Restasis patents from challenges arising out of the U.S. Patent and Trade Office's inter partes review process, which is separate from any court decision.
Generic pharmaceutical company, Mylan, essentially called the move by Allergan a sham and said that it was merely an attempt to evade generic competition for a longer period of time.
Order
The United States District Court for the Eastern District of Texas issued a 135-page decision finding all asserted claims of the patents relating to Restasis® invalid, based on obviousness. The Court, recognizing that Allergan's patent protection for Restasis ended in 2014, concluded that "Allergan is not entitled to renewed patent rights for Restasis in the form of a second wave of patent protection." The invalidated patents are United States Patent Numbers 8,629,111; 8,648,048; 8,685,930 and 9,248,1911.
In another 11-page order, separate from the one invalidating the Restasis patents for obviousness, US Circuit Judge William Bryson wrote that the court "has serious concerns about the legitimacy of the tactic that Allergan and the Tribe have employed. The essence of the matter is this: Allergan purports to have sold the patents to the Tribe, but in reality it has paid the Tribe to allow Allergan to purchase—or perhaps more precisely, to rent—the Tribe's sovereign immunity in order to defeat the pending IPR proceedings in the PTO. This is not a situation in which the patentee was entitled to sovereign immunity in the first instance. Rather, Allergan, which does not enjoy sovereign immunity, has invoked the benefits of the patent system and has obtained valuable patent protection for its product, Restasis2.
"What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits through the administrative mechanism for canceling invalid patents," Bryson added.
Bryson also concluded that "Sovereign immunity should not be treated as a monetizable commodity that can be purchased by private entities as part of a scheme to evade their legal responsibility".
Case Reference: Case 2:15-cv-01455-WCB, ALLERGAN, INC., and THE SAINT REGIS MOHAWK TRIBE, (Plaintiffs) v. TEVA PHARMACEUTICALS USA, INC., et al., (Defendants)
Footnotes
1 http://www.ipwatchdog.com/wp-content/uploads/2017/10/523-Allergan-Opinion.pdf
2 http://www.ipwatchdog.com/wp-content/uploads/2017/10/522- http://www.ipwatchdog.com/wp-content/uploads/2017/10/522-Allergan-Joinder.pdf
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