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Latest developments on whether the “litigation waiver” really dooms the Tribe’s assertion of sovereign immunity against the Restasis® IPRs

Zachary Silbersher

Allergan’s PTAB Restasis® fight continues, and a recent email tiff before the PTAB between the St. Regis Mohawk Tribe and Mylan has added a further wrinkle to this case.  As we previously blogged, a recent decision by the PTAB (between the University of Minnesota and Ericsson) held that a State’s sovereign immunity against an IPR is waived under the Eleventh Amendment where the State affirmatively asserts the challenged patent in litigation.  That decision appeared to potentially doom Allergan’s strategy of passing off its Restasis® patents to the Tribe to defend against the IPRs.  A recent email exchange between the Tribe and Mylan (the Petitioner in the pending Restasis® IPRs) at the PTAB suggests the University of Minnesota decision may not, in fact, be the nail in the coffin that Mylan had likely hoped.

On December 20, 2017, Mylan wrote (via email) to the Board to request permission to file the latest University of Minnesota decision as an exhibit.  Mylan noted that the decision offered the Board another basis to deny the Tribe’s pending motion to dismiss.  The Tribe quickly responded, and stated that Mylan had not previously argued “litigation waiver” as a basis to deny the Tribe’s motion to dismiss, and thus that argument was waived.  Mylan quickly retorted that it had, in fact, argued litigation waiver based upon the parallel district court case.  Mylan also pointed out that at least one amicus had levied the same argument.  The Tribe responded that, contrary to growing belief, Supreme Court precedent holds that the “litigation waiver” articulated in the University of Minnesota decision does not, in fact, apply to tribal sovereign immunity.  (The University of Minnesota decision, technically, applied to State sovereign immunity, which is derived from the Eleventh Amendment.  Tribal sovereign immunity, by contrast, is not derived from the Eleventh Amendment.)  The Tribe stated:

"[L]itigation waivers do not apply to sovereign tribes, even for compulsory counterclaims related to the same transaction. So unless the board is going to overrule – without the issue even being raised by a party – multiple federal circuit courts and the United States Supreme Court’s McClendon decision on tribal immunity from counterclaims, the analysis begins and ends with the latest pronouncement on the doctrine in Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1018 (9th Cir. 2016).

"To be clear, waiver was never raised by a party, and even it had been, it does not apply and cannot apply to sovereign tribes as a matter of well-settled law.  The briefing needs to end, a decision needs to be issued and this process needs to conclude."

The Bodi decision does confirm that State sovereign immunity and tribal sovereign immunity are not the same, and “parallels between the two are of limited utility.”  More to the point, Bodi holds that, “States can waive their Eleventh Amendment immunity through litigation conduct that would not effect a waiver of tribal sovereign immunity.”  Bodi goes further, “[b]y consenting to the court's jurisdiction to determine its own claims, however, a tribe does not automatically waive its immunity as to claims that could be asserted against it, even as to ‘related matters ... aris[ing] from the same set of underlying facts.’” (citing to McClendon v. United States, 885 F.2d 627, 630 (9th Cir. 1989)).

What does all this mean?  Tribal sovereign immunity is of a different nature and kind than State sovereign immunity.  Most importantly, the affirmative action of commencing a lawsuit does not necessarily act as a waiver of sovereign immunity in that suit—even against compulsory counterclaims, i.e., claims that must be brought by the defendant at risk of losing the right to claim them in the future.  Bodi, 832 F.3d at 1017.  This precedent drastically undercuts the applicability of the PTAB’s University of Minnesota decision to the question whether the Tribe’s motion to dismiss the Restatsis® IPRs should be granted.

On the other hand, despite the Tribe’s cavalier posturing before the PTAB, there is additional precedent suggesting that the Tribe’s immunity, in this case, may nevertheless have been waived.  A tribe’s sovereign immunity is not absolute.  In Quinault Indian Nation v. Pearson, No. 15-35263, No. 15-35267 (9th Cir. Aug. 17, 2017), the Court held that a tribe’s sovereign immunity “is not impenetrable and may be surrendered.” In certain instances, “the tribe’s actions and statements as well as the nature and bounds of the dispute that the tribe put before the court” may effect a limited waiver.

Did such a limited waiver occur in this case?  Potentially, yes.  The Restasis® IPRs are unique.  Even though litigation commenced by a tribe does not even constitute a waiver against compulsory counterclaims, the Tribe may have unequivocally expressed a waiver of the Restasis® IPRs.  Why?  Because the Tribe has already expressly and unequivocally waived its immunity with respect to the very claim at issue in the IPRs, namely, a validity challenge to the Restasis® patents. 

In the parallel district court action in the Eastern District of Texas, Allergan commenced a Hatch-Waxman case against the generics.  In that case, the generics argued that the Restasis® patents were invalid.  Allergan joined the Tribe to that case as a plaintiff, and the Tribe has affirmatively represented that it will not assert its immunity against that invalidity challenge.  Thus, although the Tribe may be right that the “litigation waiver” applicable to State sovereign immunity is not applicable tribal sovereign immunity, this case may be the exception that proves the rule.  The Tribe has already waived its immunity to the very same claim (a challenge to the invalidity of the Restasis® patents.)  That is a whole different ballgame than a typical compulsory counterclaim, which typically arises out of the same transaction and occurrence, but is not same claim consented to elsewhere.

Yes, there are differences.  The IPRs are occurring in a different forum from the district court invalidity challenge, and technically, the IPR validity challenge is subject to a different standard.  But the Tribe’s posturing that the “litigation waiver” applicable to States can never apply to tribes is not necessarily true.  And if the question is whether the Tribe has unequivocally expressed an intention to waive immunity against a challenge to the validity of the Restasis® patents at the PTAB, the fact is that it arguably it has—by selectively asserting immunity against a validity challenge to its patents at the PTAB, but refraining from asserting immunity against the very same challenge in the district court.  Another door that opens to another door.