By Jan Wolfe and Michael Erman
(Reuters) - A U.S. judge on Monday invalidated patents on Allergan Plc's dry-eye medicine Restasis on grounds that the patents cover ideas that are obvious, sending shares of the pharmaceutical company down 3.5 percent.
Judge William Bryson issued the ruling in federal court in Marshall, Texas, in a longstanding dispute between Allergan and generic drugmakers Mylan NV, Teva Pharmaceutical Industries Ltd and Akorn Inc.
Bryson said a group of patents Allergan obtained on Restasis, which are set to expire in 2024, should not have been granted because they describe methods of treatment that were obvious in light of earlier patents granted to the company.
Allergan said it was disappointed and plans an appeal of the ruling, which would enable the generic drug companies to sell their own versions of Restasis.
The drug generated around $1.5 billion in sales for Allergan last year and accounted for more than 10 percent of the company's revenue.
Bryson also criticized Allergan's recent deal to transfer the patents to a Native American tribe, which the company has said was an effort to protect them from administrative review by the U.S. Patent and Trademark Office, not challenges in federal court.
"What Allergan seeks is the right to continue to enjoy the considerable benefits of the U.S. patent system without accepting the limits that Congress has placed on those benefits," Bryson wrote of the deal.
U.S. lawmakers from both political parties have criticized the drugmaker's maneuver. Democratic U.S. Senator Claire McCaskill drafted a bill in response to the move and a U.S. House of Representatives committee is investigating the deal.
Allergan said on Sept. 8 that it transferred the patents to New York's Saint Regis Mohawk Tribe, which agreed to exclusively license them back to the company in exchange for ongoing payments. The tribe and Allergan argue that the patents are not subject to the patent office's review because of the tribe's sovereign immunity.
Bryson said he believed Allergan's deal with the tribe was a "ploy" and that he had "serious concerns" about its legitimacy.
After the ruling, Allergan's stock price dropped as much as 6.5 percent to a session low of $192.22. It later pared losses to close at $198.41, down 3.5 percent.
Wells Fargo analyst David Maris said he believes the ruling had largely already been priced in to the company's shares as Allergan's market value has dropped around $9 billion since early September due in part to worries about the Restasis patents.
He also said he does not expect a generic version of the drug to launch until 2019, because an appeal could take 12 to 18 months and none of the generic drugmakers currently have an approved version ready to launch.
(Reporting by Jan Wolfe and Michael Erman in New York; Editing by David Gregorio and Matthew Lewis)