Judge wants to know if Allergan’s tribal patent deal is a “sham”

Allergan tries to avoid Patent Office review, but a courtroom reckoning awaits.

The six patents protect the blockbuster drug Restasis, a treatment for dry eyes that earns $1.5 billion in annual revenue. Generic drug companies have challenged the Restasis patents through both IPRs and federal court litigation. Allergan agreed to pay the St. Regis Mohawk tribe $15 million annually as long as the patents are alive, because the company believes that the tribe will be immune to IPR under a legal principle known as sovereign immunity.

Allergan’s tactic has come under fire from the tech sector, from Congress, and perhaps soon from a federal judge.

The Restasis patents were the subject of a federal lawsuit long before Allergan made a deal with the St. Regis Mohawk Tribe. Both Teva Pharmaceuticals and Mylan Pharmaceuticals filed applications challenging Allergan patents back in 2015, announcing their intention of making generic versions of the drug. Teva and Mylan were promptly sued (PDF) by Allergan the following month in the Eastern District of Texas.

The legal battle between Allergan, Teva, Mylan, and two other generic drugmakers came to a head in August 2017, when a week-long bench trial was overseen by US Circuit Judge William Bryson. (Bryson, an appeals court judge at the US Court of Appeals for the Federal Circuit, was sitting by designation in the Eastern District; this is a common practice for appeals judges to gain trial experience.) Final briefs were filed in the case on September 20, and Bryson has yet to render a decision about whether or not Allergan’s patents are valid and infringed.

On September 8, the same day that Allergan made its deal with the St. Regis tribe public, it filed a letter (PDF) in Bryson’s court telling the judge what had happened. The letter, by Allegan’s outside counsel at Fish & Richardson, reads:

Dear Judge Bryson,

This morning, Allergan assigned its rights in a number of patents, including the patents-in-suit, to the Saint Regis Mohawk Tribe. Allergan now has an exclusive license to the patents-in-suit. Allergan does not anticipate that this assignment will have any impact on the litigation or the issues before the Court, other than it expects to join the Tribe as a co-plaintiff in due course. If the Court has any questions or concerns, we are available to discuss them at the Court’s convenience.

Turns out Bryson has a lot of questions about the deal. On Friday, he published an order noting that the Tribe still hasn’t filed a motion to join the case, even though it has been a month since Allergan revealed the deal.

“The time for the Court to issue its findings of fact and conclusions of law in this case is forthcoming, and the Court needs to know whether the Tribe should be a co-plaintiff or not,” wrote Bryson.

The judge ordered Allergan to provide all documents relating to the patent assignment and ordered both sides to file briefs addressing the question of “whether the Tribe should be joined as a co-plaintiff in this action, or whether the assignment of the patents to the Tribe should be disregarded as a sham.”

Those briefs are due this Friday, October 13. In a brief (PDF) filed Monday, Allergan has said it will make its argument to bring the St. Regis tribe into the case as a plaintiff by that date. The drug company also argues that it shouldn’t get dragged into additional discovery on this side issue.

“Defendants assert that Allergan’s assignment of the patents-in-suit to the Tribe is a ‘sham,’ but have provided no authority or other basis to support this assertion,” write Allergan lawyers. They argue that the whole issue of the tribe’s sovereign immunity isn’t relevant to the lawsuit in any case, since “the Tribe will not be asserting sovereign immunity in this case.”