U.S. Supreme Court rejects Allergan bid to use tribe to shield drug patents

The Allergan logo is seen in this photo illustration November 23, 2015. REUTERS/Thomas White/Illustration/File Photo

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday cast aside pharmaceutical company Allergan Plc’s unorthodox bid to shield patents from a federal administrative court’s review by transferring them to a Native American tribe.

The justices left in place a lower court ruling upholding the authority of a U.S. Patent and Trademark Office tribunal to decide the validity of patents covering Allergan’s dry eye drug Restasis, refusing to hear the company’s appeal. Allergan had argued that the tribe’s sovereign status under federal law made the patents immune from administrative review by the agency.

Generic drug company Mylan NV, seeking to sell its own lower-cost version of Restasis, in 2016 asked the agency’s Patent Trial and Appeal Board to invalidate the Allergan patents on the grounds that they described obvious ideas.

Allergan, which has its headquarters in Dublin, in September 2017 transferred the patents to New York’s Saint Regis Mohawk Tribe, which took legal ownership of the patents and then licensed them back to Allergan in exchange for ongoing payments.

Allergan said it was protecting itself from the patent court, which it called a flawed and biased forum. The company said it did not object to the validity of its patents being reviewed by federal judges but took issue with the administrative court.

U.S. lawmakers from both political parties have called Allergan’s deal with the tribe a sham.

The patent tribunal in February 2018 rejected Allergan’s maneuver, saying tribal sovereign immunity does not apply to its patent review proceedings. The U.S. Court of Appeals for the Federal Circuit, which specializes in patent law, affirmed that decision five months later.

Separate from the current court fight, the Restasis patents already have been invalidated. In October 2017, a federal judge in Texas took that step instead of waiting for the patent board to rule, a decision that was upheld on appeal. Mylan and Teva Pharmaceutical Industries Ltd have sought approval from U.S. regulators to sell generic versions of Restasis.

Reporting by Lawrence Hurley; Additional reporting by Jan Wolfe; Editing by Will Dunham