News

Allergan’s patent shield – The (Native) American dream?

05.10.17

In an unprecedented move, leading global pharmaceutical company Allergan appears to have handed six of its US patents covering its blockbuster dry eye drug Restasis® to the Native American St. Regis Mohawk Tribe in Northern New York. The Tribe has granted exclusive licenses in the patents back to Allergan. The deal will provide the Tribe with $13.75 million up-front and annual royalties of up to $15 million.

Allergan may have made the move in an attempt to evade challenges from competitors at the Patent Trial and Appeal Board (PTAB) in a process called "inter partes review" (IPR), authorised by the 2011 America Invents Act. While invalidating a patent in court typically costs millions of dollars, invalidating via IPR costs the relative bargain of a few hundred thousand dollars. The Tribe is able to dismiss the ongoing Restasis® patents IPRs based on its “sovereign immunity” status, which bars lawsuits against certain types of government entities. While this provision was intended to apply to US states, Native American tribes enjoy the same immunity.

Although creating what may seem like a significant dent in Allergan’s accounts, annual sales of Restasis® are approximately $1.5 billion. With the patents covering Restasis® not due to expire until 2024, this multi-million dollar outlay in exchange for extra protection could turn out to be a shrewd piece of business.

Implications?

Not surprisingly, the news about the deal has generated a huge amount of interest in relation to the Tribe and other entities which are able to provide the same protection. Although state-owned university patents are known to be immune to IPRs under the concept of sovereign immunity, this is the first type of agreement that has employed a Native American tribe in an attempt to shield a company’s patents.

If the arrangement succeeds in evading IPRs, will others look to mimic it? Could this lead to fewer generics entering the market?  Will "patent trolls" be the next targets for these tribes? More importantly, rather than whether or not this arrangement will successfully allow Allergan to avoid IPRs against these patents, most are arguing whether or not it should. There are no such loopholes allowing for this type of protection in the UK or Europe.  It will be interesting to see what comments or actions, if any, are made about this tactic by the US regulatory agencies…

For more information on this, please contact Gavin Wai, Kristina Cornish or your usual Kilburn & Strode advisor.