September 8, 2017 / 6:45 PM / 2 years ago

Allergan pays Mohawk Tribe to protect patents from challenges

Sept 8 (Reuters) - Allergan Plc will transfer to the Saint Regis Mohawk Tribe rights to its blockbuster Restasis dry-eye treatment, the drugmaker said on Friday, in an unusual deal to protect it from patent challenges.

The tribe, which has sovereign immunity from such challenges, will receive a one-time payment of $13.75 million and annual royalties of around $15 million under the arrangement proposed by the St. Regis, Allergan said in a statement.

Sales of Restasis, which totaled over $1.5 billion last year, account for about 15 percent of Allergan’s profits, according to AllianceBernstein.

Allergan said it entered into the deal after reviewing recent case law showing it was harder to challenge patents held by certain entities.

These include a February ruling by the U.S. Patent and Trademark Office’s trial and appeal board that patents owned by the University of Florida could not be challenged by Medtronic Plc’s Covidien unit because the university enjoyed sovereign immunity.

A different panel of patent and trial appeal board judges reached a similar conclusion in May in a dispute over patents owned by the University of Maryland. Those rulings will be appealed the U.S. Court of Appeals for the Federal Circuit.

Allergan said the patent agreement had no impact on litigation involving applications for generic versions of Restasis which recently went to trial in Federal District Court in Marshall, Texas.

According to the company, the six transferred patents are due to expire in August 2024. (Reporting by Deena Beasley; Editing by Richard Chang)

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