'Sham' or legit? Texas judge set to weigh in on Allergan's tribal patent deal

Judge William Bryson will decide whether the tribe should be added as a co-plaintiff in a federal patent case.

Marking the latest twist in a bitter Restasis patent fight, Mylan and other generic drugmakers urged a Texas judge to decide that Allergan's patent deal with the Saint Regis Mohawk Tribe is a "sham."

With Judge William Bryson set to decide whether the tribe should be added as a co-plaintiff in a federal patent case, the epicenter of the controversy over that licensing deal has moved for now to Bryson's court. His decision could have implications beyond the court fight, influencing a separate review at the U.S. Patent and Trademark Office—the very patent challenge that inspired Allergan's decision to make a deal with the tribe in the first place.

Last month, Allergan said it had handed over its Restasis patents—which, if upheld, protect the blockbuster drug from generic competition until 2024—to the tribe, agreeing to pay $13.75 million up front and up to $15 million per year to license them back. In return, the tribe claimed sovereign immunity from the inter partes review challenge initiated by Mylan at the PTO. 

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In a filing Friday, Allergan officially moved to have the tribe added as a co-plaintiff in the separate federal court case, which has already been tried in court and is awaiting a decision from Bryson. On the same day, its opponents hit out at the Restasis patent license, saying the tribe doesn't belong in their case.

After considering all of the filings, Bryson decided he could rule on the issue without further arguments. A hearing "is not necessary at this time," he wrote in an order, adding that the court will address the issue in "due course."

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In their filing Friday, the generics companies said the tribal licensing deal is a "sham" and "an example of the oft-condemned practice of trying to extend tribal sovereign immunity to nontribal entities."

Another point advanced by the drugmakers: The tribe did not pay anything to license the patent rights.

"A notable feature of this purported assignment is that payment went the wrong way: Allergan paid $13.75 million to the tribe rather than demanding payment in exchange for its patents covering" a drug that has been a commercial success, the companies argued.

Further, Allergan "holds all substantial rights in the patents" even after the deal, the generic drugmakers say. They strongly believe the tribe should stay out of the federal court case. 

But Allergan rejected the notion that the deal was a "sham." The company argued in its own filing that the agreement was a "legitimate arm’s-length transaction ... supported by good and valuable consideration."

Because the tribe now owns the patents, it's entitled to be a co-plaintiff in the case, Allergan maintains. 

Allergan's case in Texas is against three generics makers: Mylan, Teva and Akorn. The branded drugmaker recently settled with Famy Care and Pfizer's InnoPharma, allowing those generic companies to launch Restasis copycats in 2024. 

Speaking with Reuters, the tribe's lawyer Michael Shore said the court's decision could play into the PTO's review of arguments in the IPR process. He told the news service that, if Judge Bryson agrees to add the tribe as a co-plaintiff, “it kills any chance Mylan has to convince the PTAB the agreement is a sham.”  

Allergan's tribal licensing deal has attracted plenty of criticism from rival companies and in Congress. So far, some lawmakers have called for a probe, others started one and Sen. Claire McCaskill introduced a bill aimed at stopping the practice before other drugmakers give it a try.