Chillin'Competition

The pharmaceutical industry has always liked to emphasize the innovation factor, often to argue that any loss of income would result in less R&D.

The extent to which that may be true is the subject of incandescent debates (remember, for example, the late AG Ruiz-Jarabo’s views in Lélos that this was a “misleading” argument “aimed only at seducing public opinion”).

But what is undeniable is that the industry is at the avant-garde of legal innovation. Already in my very first post on this blog (just realized it’s been 8 years, to the day, already!) I already made a comment abut this (resorting to the traps set for the Roadrunner as the image). Here is a new, and delicious, chapter to that story:

Allergan was the target of patent challenges on the part of generic drugmakers; these challenges took place both before US federal courts and via the IPR (inter partes review) system. Allegan came to realize that certain entities (like Native American Tribes or public universities) enjoy sovereign immunity from challenges under the IPR system (“sovereign immunity”, codified in the 11^th Amendment of the Constitution, implied that entities assimilated to sovereign rules –like monarchs- and arms of the state could not be sued without their consent).

So in order to fend off all IPR challenges, Allegan had an idea: transfer its patent rights to the Mohawk tribe, which would then license them back to Allergan (we discussed on this blog a similar –albeit much less creative- arrangement). The end-result is that Allergan pays a few million to shield its patents from a certain kind of challenge. To be sure, this had happened before with universities. But involving Native American Tribes adds a nice twist to it. As one would expect, this strategy is now extending to other fields, and Apple has already been sued by the so-called Three Affiliated Tribes.

Some US Senators have claimed that this strategy was “blatantly anticompetitive”. Others argue, however, that the patent rights continue to face challenge in federal courts and that the Mohawk deal cannot protect the patent against those; the argument would therefore be that the deal only helps the company avoid a “double jeopardy situation” created by an imperfect legal system. The Mohawk tribe has issued a Q&A document about its new patent business availabe here.

Queries:

-Under EU Law, would this by a “by object” or “by effect” restriction? What does “experience and economyc analysis” tell us about transferring IPRs to Native American Tribes?

Is this case more similar to:

a) the Lithuanian Railways case discussed in Pablo’s last post (a case that has remarkably led my co-blogger to defend a Commission decision and to label the case as one of the most straightforward ever)?

b) ITT Promedia and AstraZeneca (instances where companies were accused of gaming the legal system to obtain an advantage)?

c) Pseudo-assignments of IPRs to patent trolls?

c bis) the Microsoft-Nokia deal (again also discussed on the blog) and which triggered no action on the part of competition authorities?

d) pay-for-delay arrangements (also discussed at length on this blog)? Btw, last week I read and graded a very good BSC master thesis by Anne Robert from Sidley which somehow managed to bring together pay-for-delay and Game of Thrones; Allergan does at least not have a monopoly over creativeness…