The market fails without altering sovereign immunity.
Cheng and Lee 18 – J.D. from Yale Law School (2018).
Cecilia Cheng and Theodore T. Lee, “When Patents are Sovereigns: The Competitive Harms of Leasing Tribal Immunity,” The Yale Law Journal, 03-02-2018, https://www.yalelawjournal.org/forum/when-patents-are-sovereigns
Moreover, if this practice becomes commonplace, generic companies may be less likely to compete ex ante, because the litigation costs for challenging even weak patents would significantly increase. Even if tribal immunity is only successfully exercised in PTAB proceedings, generic companies whose expected benefit of challenging the IP falls between the costs of PTAB proceedings and full litigation would no longer have an incentive to dispute the patents. This outcome would undermine the specific incentives that the AIA IPR process is meant to create: a more streamlined, easier way of challenging patents without going through full litigation.
Allergan’s actions—and others that may follow—therefore have the potential to harm competition and consumers by significantly reducing the number of patent adjudications.