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`A Native American Tribe, a Drugmaker and an Unusual Patent Plan - Bloomberg
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`September 8, 2017, 9:53 AM PDT
`Updated on September 8, 2017, 12:22 PM PDT
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`Allergan Plc <https://www.bloomberg.com/quote/AGN:US> has found an unusual
`way to shield one of its blockbuster drugs from generic competition.
`
`The drug giant, which is defending its intellectual property on multiple fronts,
`said it will transfer the rights to Restasis to the Saint Regis Mohawk Tribe, in a
`move designed to quash challenges filed at the U.S. patent office by rival
`drugmakers. The medication, a treatment for chronic dry eye, brought in $1.49
`billion in sales last year.
`
`The pact, which will entitle the upstate New York tribe to a one-time $13.75
`million payment and $15 million a year in royalties, could open up a new way for
`drugmakers to head off challenges to patents backing billions of dollars a year in
`sales.
`
`Several top drugmakers have recently reported slowing sales and shrinking
`profits due to the loss of exclusivity for top-selling medications, and the Trump
`administration has said it wants to drive down drug prices. At the same time,
`attacks on drug patents have been made easier under the patent office’s recently
`created fast-track legal review process.
`
`By moving key patents to a sovereign Native American group, Allergan says it
`may be able to protect itself.
`
`“I would expect it creates a playbook for other cases down the road both for us
`and for others,” said Bob Bailey, Allergan’s chief legal officer.
`MYLAN - EXHIBIT 1155
`Mylan Pharmaceuticals Inc. et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131, -01132
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`A Native American Tribe, a Drugmaker and an Unusual Patent Plan - Bloomberg
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`Shares of Allergan, which is based in the U.S., rose 1.8 percent to $232.13 at 2:24
`p.m. in New York.
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`Allergan said it had been approached by the tribe with what it called a
`“sophisticated opportunity to strengthen the defense” of Restatis’s patents,
`which have been challenged under a process called inter partes review, or IPR.
`
`The tribe, which is a sovereign government entity, says that it is shielded from
`civil legal challenges over patents. State and foreign governments can’t be sued
`or subjected to federal government action except in certain circumstances.
`
`“We are impressed with the tribe’s thoughtful and enterprising approach, which
`will allow them to achieve their goals of self-reliance and help them address the
`most urgent needs in their community,” Bailey said in a statement.
`
`Mylan NV has filed petitions with the patent office to challenge Allergan’s
`patents under the IPR process. The agency previously determined that Mylan
`has established a “reasonable likelihood” of winning its arguments that the
`patents are invalid, though a hearing on the case is scheduled for next week in
`Alexandria, Virginia.
`
`Drugmakers have long railed against the IPR process, which enables challenges
`before the Patent Trial and Appeal Board, because it means they have to defend
`their patents against assaults in two different forums. They have to win in both
`the court and before the agency.
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`Some legal experts were skeptical that the accord would withstand scrutiny.
`
`“It seems highly suspicious. They’ll have to tread a very careful line with that
`one,” said Brad Wright, a patent lawyer with Banner & Witcoff in Washington
`who specializes in cases before the agency.
`
`The patent board recently ruled in two cases that state-university-owned patents
`aren’t subject to the review process because states have sovereign immunity. In
`those cases, the university was the original owner of the patents.
`
`The board will have to take a close look at the agreement with the tribe. It may
`decide that Allergan retains enough control over the patents, such as its ability
`to use them in district court, that the transfer is a “sham transfer of assets,”
`Wright said.
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`A Native American Tribe, a Drugmaker and an Unusual Patent Plan - Bloomberg
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`Mike Fuller, chair of the biotechnology practice group at law firm Knobbe
`Martens, said that patent officials could find that the tribe can’t step into the
`middle of an ongoing review.
`
`“I don’t know that it’s going to work, honestly,” he said.
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`By transferring ownership to the tribe, Allergan can try to limit its legal battle to
`the courts, where it’s harder to invalidate patents because of a more stringent
`legal standard.
`
`“The way I think about this is what we’re doing here today is to really allow
`Allergan to focus the defense of the Retstasis patent in the federal court system
`and avoid the double jeopardy of the IPR system,” Allergan Chief Executive
`Officer Brent Saunders said in an interview.
`
`Last week, a trial was held in a federal court dispute where Allergan is seeking to
`prevent generic drugmakers from selling their copycat drugs until the
`company’s patents expire. The judge in that case has ordered additional legal
`arguments to be submitted by Sept. 20.
`
`Success for Allergan’s deal with the Saint Regis Mohawk Tribe would open a
`whole host of questions for the patent-review process, which was set up under a
`2011 law. Tech companies are the biggest users of the system, intended as a
`lower-cost way to resolve patent disputes.
`
`“If they can do it, other drugmakers can do it, and not just other drugmakers but
`other companies,” said Wright, the patent lawyer. “It’s a massive loophole and
`you could drive a Mack truck through that.”
`
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