Allergan's tribal licensing deal, opposed by tech giants, gets appeals court scrutiny

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Allergan attorneys said Congress should fix the law if it feels the company's tribal licensing arrangement is inappropriate, but several other companies opposed the strategy. (Pixabay)

Allergan attracted a wide range of opposition with its Saint Regis Mohawk Tribe licensing deal last year, and now, the unique patent strategy is under the lens at the U.S. Court of Appeals for the Federal Circuit.  

At arguments on Monday, judges scrutinized the arrangement in which Allergan sent $13.75 million and Restasis patents to the tribe, only to license them back. The idea was to apply tribal sovereign immunity to protect against an inter partes review at the U.S. Patent and Trademark Office. 

Allergan defended itself by blaming a "flawed" patent review system that forces drugmakers to defend their intellectual property at federal courts and at the PTO. Those arguments failed to garner any sympathy from some members of Congress, generic drugmakers and others.

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In amicus briefs for the case, the Association for Accessible Medicines and several tech companies lambasted the move. In its filing, AAM attorneys wrote (PDF) that the deal is "unprecedented" and, if it holds up to scrutiny, stands to "harm not only the patent system but the health care system as well." 

RELATED: Allergan's much-maligned tribal licensing deal wins reprieve at appeals court 

Tech companies including Microsoft, plus a group that represents companies such as Amazon, Facebook and Google, also opposed the deal. In its brief, Microsoft lawyers said IPRs are a way for the PTO to correct its own mistakes, and that sovereign immunity doesn't apply. The company also said the deal is unenforceable under federal law. 

For their part, Allergan lawyers said the groups operated within the law and that Congress should fix the issue if it deems such deals inappropriate, according to Bloomberg.

“It is Congress’s job to change it if they don’t like the system," attorney Jonathan Massey said, as quoted by the news service.

The PTO originally allowed Restasis inter partes reviews to proceed despite the deal, but soon after, a federal appeals court put the case on hold pending an appeal. According to Bloomberg, the judges are expected to decide quickly in the case.  

RELATED: In a blow for pharma, Supreme Court upholds the hated IPR patent challenge 

Allergan entered its licensing deal in September and ran into immediate pushback, even if some industry watchers thought the move was brilliant and likely to spread. Since then, a federal judge in a patent case against Mylan invalidated Restasis' patents, opening the prospect of generic competition this year. Allergan executives have said they're expecting competition by July.

In April, the Supreme Court upheld the constitutionality of inter partes reviews after years of arguments by pharma that the system puts them at an unfair disadvantage. After that decision and another by the Supreme Court, a PhRMA spokesperson said it's "clear there are problems with the IPR process that need to be addressed."