October 11, 2017 / 7:06 PM / 2 years ago

Texas judge poised to decide if Allergan patent deal with Mohawks was a sham

(Reuters) - Last month, in the midst of post-trial briefing in Allergan’s patent suit against generic drug makers that want to begin selling a version of Allergan’s dry eye medication Restasis, Allergan sent a one-paragraph letter to U.S. District Judge William Bryson of Marshall, Texas. Allergan informed the judge that it had just assigned its rights to the patents at issue in the case to the Saint Regis Mohawk Tribe, which, in turn, had granted Allergan an exclusive license to the patents. Allergan assured Judge Bryson that it did not expect its deal with the tribe to affect the Texas case, except for a routine motion for the tribe to join as plaintiff.

But now that seemingly routine procedural issue - adding the tribe as a plaintiff in the Texas case – has escalated into a test of the legitimacy of a patent litigation tactic that is as creative as it is controversial. Allergan’s deal with the tribe won’t determine whether Judge Bryson deems six Restasis patents valid; that evidence was already before the judge when Allergan assigned its patents to the Saint Regis Mohawk tribe. The Texas judge will, however, decide if Allergan’s agreement was merely a sham to allow the drug company to evade a challenge to its patents in a completely different forum.

Allergan’s agreement with the tribe, according to an Oct. 10 filing in the Texas case, specifically requires the Saint Regis Mohawks to assert their sovereign immunity in a challenge to the validity of the Restasis patents at the U.S. Patent Trial and Appeal Board. The PTAB challenge, filed by the generic drug maker Mylan, parallels the patent litigation before Judge Bryson in federal court in Texas, except that the Texas case has already been tried and the PTAB case has not.

True to its agreement with Allergan, the tribe moved last month to dismiss Mylan’s case at the PTAB, citing its sovereign immunity. If Allergan’s strategy succeeds, the PTAB will never hear Mylan’s challenge.

As my colleague Jan Wolfe has reported, Allergan’s sovereign immunity play has created a bit of an uproar in Congress, which is worried that other brand-name drug makers will copy Allergan’s agreement with Native American tribes in order to ward off competition from generic drug companies.

Mylan has been fulminating about Allergan’s deal with the Saint Regis Mohawks from almost the moment it was announced. On Sept. 11, three days after Allergan informed Judge Bryson about the assignment and licensing agreement, Mylan’s lawyers at Wilson Sonsini Goodrich & Rosati filed a response calling Allergan’s deal a “desperate tactic,” a “transparent, last-minute attempt to shield the patents-in-suit from inevitable cancellation” and an abuse of Native American sovereignty.

Mylan refused, according to Allergan, to consent to the tribe’s joinder in the Texas case. Allergan claimed in an Oct. 9 filing that its lawyers asked Mylan to allow the tribe to be added as a plaintiff, promising Mylan that the tribe would not assert its sovereign immunity in the Texas litigation. After Allergan provided Mylan with a draft motion outlining its argument that, under the Federal Rules of Civil Procedure, the tribe is now an interested party, Mylan said it would oppose joinder because it could not determine whether the assignment and licensing agreement was a sham.

Judge Bryson, meanwhile, was itchy to decide the merits of the case. With no joinder motion on the docket, he issued an order on Oct. 6 that directed Allergan to file documents from its deal with the Saint Regis Mohawks and both sides to brief the questions 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.”

In a flurry of filings after the judge’s order last week, Mylan asked for additional discovery from Allergan and Allergan claimed Mylan was fishing to defend its unsupported assertion of a sham. In a second order on Oct. 10, Judge Bryson denied Mylan’s motion to take depositions, although he directed Allergan to provide Mylan with all of the documents it had filed with him. Briefs are due Friday.

You may be wondering, as I did, why Mylan is so adamantly opposed to the tribe’s addition as a plaintiff in the Texas case. Allergan has promised, after all, that the tribe will not attempt to hijack the case by claiming sovereign immunity. And some commenters have suggested that if the Saint Regis Mohawks join the Texas case, Mylan can tell the PTAB that the tribe waived its sovereign immunity. If that’s true, shouldn’t Mylan be eager for the tribe to jump into the Texas case?

I emailed Mylan’s lawyers at Wilson Sonsini and Allergan’s counsel at Fish & Richardson, none of whom got back to me. But the tribe’s lawyer, Michael Shore of Shore Chan DePumpo, told me Mylan has nothing to gain, and potentially a lot to lose, if Judge Bryson allows his clients to come in as plaintiffs in the Texas case. According to Shore, Mylan can’t claim the tribe waived sovereign immunity at the PTAB by joining a case in federal court under the Federal U.S. Circuit Court of Appeals’ 2006 decision in Tegic Communications v. Board of Regents of the University of Texas  – a case Shore knows well because he won it. “I made that law, I know that law,” Shore said. “Waiver of sovereign immunity is not an issue.”

Judge Bryson’s evaluation of the deal between Allergan and the tribe, however, could influence the PTAB’s consideration of the tribe’s motion to dismiss Mylan’s challenge, Shore said. If the Texas judge agrees to join the tribe in the case before him, Shore said, “it kills any chance Mylan has to convince the PTAB the agreement is a sham.”

Mylan, of course, is hoping Judge Bryson concludes the agreement was a sham transaction so it can use that holding at the PTAB. I asked Shore whether he read Bryson’s Oct. 6 order as an indication that the judge doubts the legitimacy of the tribe’s assignment and licensing deal with Allergan. As you would expect, he said no. The judge just wants to make sure everyone with an interest in the case is a party before he issues findings.

“It’s as simple as that,” Shore said.

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