On Friday, pharmaceutical giant Allergan Plc said it was transferring intellectual property for one of its blockbuster drugs to Saint Regis Mohawk Tribe, to avoid the attacks on the patents protecting the medicine.
For the Native American tribe, it represents a new revenue stream which could turn into more in the future.
Dale White the general counsel for Saint Regis said the options beyond casinos are little so this opportunity is attractive, due to there being a large amount of unmet needs across the community.
The tribe will be paid $13.75 million per the agreement, plus annual revenues of $15 million, according to information released by Allergan.
Nationwide there are just over 13,000 members of the Saint Regis Mohawk Tribe, and they own a piece of land that is 36-square miles in upstate New York
One of the tribe’s main sources of revenue is its Akwesasne Mohawk Casino Resort, which is open 24 hours per day, has 1,600 slots, 30 gaming tables and a separate poker room.
Allergan’s interest is simple. The tribe has sovereignty, which sets it apart from certain legal proceedings like expedited patent reviews. It will represent a tiny legal island that is guarding Allergan’s valuable intellectual property.
One of the patents of Allergan for Restasis has come under attack on two sides. Moving the patent rights might shield Allergan on one side. In 2016, the drug, which is a treatment for chronic dry eye, generated sales of $1.49 billion.
Shares of U.S. based Allergan were up 2.5% in Friday trading.
The strategy has its legal basis. Recently the Patent Trial and Appeal Board ruled in a pair of cases that patents that are state university owned are not subject to review process due to states having sovereign immunity. However, in those two cases, the university was the patents’ original owner.
Allergan said it was approached by the tribe who outlined an opportunity to strengthen the defense of its patents for Restasis, which have been challenged under inter partes review (IPR).
The review allows challenges in front of the patent board, but it means they must defend their patents in two separate forums – in court and in front of the agency.
Mylan filed petitions challenging the patents of Allergan under the process of IPR, and by transferring the tribe ownership of the patents; Allergan can attempt to limit its battle in court, where patents are harder to invalidate due to a legal standard that is more stringent.