As readers of this blog are aware, there has been a great deal of publicity generated by the recent patent sale and assignment by Allergan to the St. Regis Mohawk Tribe. A transaction ostensibly targeting the America Invents Act and designed to avoid the “killing fields” of the Patent Trial and Appeals Board (PTAB). The irony should not go unnoticed that Native Americans who historically had their property and rights taken away by egregious and discriminatory action by the United States government, are now the very same people rescuing inventors who are today losing their property and rights to egregious and discriminatory action by the very same government. Indian tribes are acquiring patents and using tribal sovereign immunity to preclude unjustified takings of patents by the discriminatory and corrupt PTAB, thus saving inventors from losing their private property rights.
Yet, this emerging business model by Native American tribes has proven to be controversial, with critics even going so far as to allege these are sham transactions. But interestingly, these very same critics didn’t seem to have any problem when the University of Florida (a public university of the state of Florida) asserted its sovereign immunity to preclude PTAB review of university-owned patents. Why is it now alleged that Native American tribes who are doing the very same thing – using their sovereign immunity to preclude PTAB review of their intellectual property – are engaging in inappropriate or fraudulent behavior or somehow gaming the system?
Tribes are sovereign in a similar way that states are sovereign, but there are important differences. Tribal lands are held in trust by the federal government and thus cannot be collateralized for investment and development, and tribes do not have a tax base to speak of. So by treaty the majority of funding that runs tribal governments and supports their native members comes from the federal government. This federal funding and other programs are intended to help the tribes become economically independent. With these funds and programs, a few tribes have been able to start tribal businesses owned by the tribe to create an economic engine that can at least partially support the tribe. Overall, these tribal businesses are successful at bringing economic development and jobs to Indian Reservations.
Most people only know about the casinos and tax free cigarette shops, but tribal businesses go far beyond those stereotypical businesses. Tribal businesses are involved in many sectors including electronics, oil & gas, manufacturing, distribution, logistics and much more. Many employ not only natives on the reservation but others across the country. Tribal businesses contribute millions of dollars to the economies of reservations and of the US. States, on the other hand, get their funding by taxing their people and some even attempt to tax the tribes in one way or another.
I met recently with one such tribal enterprise in North Dakota, Mandaree Enterprises LLC, which is owned by the Three Affiliated Tribes of the Fort Berthold reservation, in order to gain a better understanding of tribal sovereign immunity in the context of intellectual property. Based on my discussions with the folks at Mandaree Enterprises, set forth below is an overview of how patent owners can partner with Native American tribes to create a level playing field with infringers while possibly avoiding the anti-inventor/anti-patent PTAB. It should be noted upfront that I’m not an attorney so you should seek your own independent legal advice and not rely on this article which is not intended to offer legal advice or substitute for obtaining the advice of legal counsel. Also, this article (due to space constraints) is necessarily incomplete in that it focuses on only one aspect of this type of structure, but there are many other benefits of teaming up with a tribe.
In general, a sovereign cannot be sued unless they submit to the authority and jurisdiction of the court. For example, you cannot sue your state government for some wrong they committed against you unless the state has consented to such suit. Likewise, you cannot sue an American Indian tribe (or a commercial entity owned by such tribe) unless it has consented to such suit. In other words, both states and American Indian tribes enjoy sovereign immunity meaning that before a suit can proceed, there must be consent to the suit or a waiver of this immunity which subjects the sovereign to the authority of the court in which they are being sued.
This means that an infringer cannot file a declaratory judgement (commonly, called a “DJ Action”) against a tribe asking a court to find that they do not infringe a tribal owned patent or that the patent at issue is invalid. As a practical matter, a DJ Action starts a patent infringement suit whether you are prepared for it or not. In the same way, a party cannot file or maintain a petition for inter partes review (or covered business method review or post-grant review) unless the sovereign submits to the authority of the PTAB.
This sovereign power creates a favorable environment in which your patent may be licensed without risking millions of dollars in legal costs and losing years of your patent’s enforceable life, and importantly, without burdening the courts with unnecessary litigation when things can be settled out of court.
Under the present system we have today in the United States and under current law, if you contact an entity with evidence of their infringement and to discuss the possibility of licensing your patent, you are putting yourself at risk of having a DJ Action filed against you. That means the infringer can force you into a court of their choosing (which I bet won’t be the EDTX) half way across the country in San Jose, CA or Wilmington, Delaware. So, before you contact an infringer to discuss licensing your patent, you better have a few million dollars tucked away for legal fees and expenses to defend against the inevitable DJ Action and be fully prepared to go to court. If you are lucky enough to avoid a DJ Action, and thanks to the grossly unfair American Invents Act which gave rise to the anti-patent PTAB, an accused infringer can always file an unlimited number of petitions for PTAB review of your patent. As a practical matter, this means a potential outlay of hundreds of thousands (or even millions) of dollars for legal fees and expenses to defend your patent at the PTAB while locking up your patents (district courts routinely stay parallel district court proceedings while PTAB review and the subsequent Federal Circuit appeal are on-going) from anywhere from three to five years (or more). Of course, the PTAB is so popular with infringers because over 90% of patent claims that are subjected to the PTAB review are invalidated which renders such claims worthless for purposes of licensing. Even worse, if an infringer doesn’t want to appear like they are bullying an independent (i.e. small) inventor, they can hire a third party mercenary to file petitions for review at the PTAB which allows the infringer to remain anonymous while the inventor is forced to spend hundreds of thousands of dollars (or more depending upon the number of petitions filed against the patent) at the PTAB while losing years off the patent’s enforceable life.
Native American tribal sovereign immunity thwarts both of these dilatory infringer tactics and repositions the negotiation to where it needs to be – outside of the courthouse. The tribe can inform detailed information to the infringer of their infringement and offer to enter into licensing negotiations without fear of being subjected to a DJ Action. Thus, the tribe can inform the infringer of their infringement and unless the tribe sues the infringer, the infringer will not be able to play the litigious gamesmanship or file the unending and procedurally unfair PTAB procedures. In sum, sovereign immunity equalizes the bargaining power between the inventor and the infringer and sets the negotiation table fairly.
Working with an American Indian tribe also precludes some of the scorched earth litigation tactics (including, often arguably frivolous claims) that infringers often use in an effort to drown a patent owner in litigation costs. For example, it is not unheard of for an infringer to launch an attack (either through a DJ action or through petitions for review at the PTAB) on other patents owned by the inventor holder that are not related to case against the infringer. This course of action is designed to burden the inventor with rapidly rising legal costs that can deplete all of theirs funds, thus forcing capitulation or licensing terms favorable to the infringer. Sovereign immunity thwarts these types of ancillary attacks because they are not available to infringers who are in litigation a sovereign.
Isn’t it paradoxical that Native Americans who suffered so many injustices by losing their cultural identity, property and much more are the very same people that could bring about an end to the injustices being perpetrated against American inventors and their property rights by the current patent system in this country?
But back to my initial question: Why are so many critics calling this arrangement a sham?
Senator McCaskill (D-MO) seems to think that Indian Tribes asserting sovereign immunity is a sham and she has introduced legislation that would end tribal sovereignty as it applies to patent ownership. This raises a real and serious question: Why should a university be allowed sovereign immunity while denying sovereign immunity to a Indian tribes? Why should it be illegal for Native American tribes to participate in commerce as sovereign nations just as we agreed to in hundreds of treaties — the same treaties we have so often broken to the peril of Native Americans.
If the tribes offer a way to make patent licensing more efficient, more productive, and more fair, and that also alleviates the courts of their already overworked dockets, why not allow it? Why not go the other way and eliminate the PTAB and restrict DJ actions? All of the very positive benefits that tribal sovereign immunity creates for inventors and small entities aside, it immeasurably helps down-trodden American Indian tribes develop their economies without taxing already poor and underprivileged Native Americans or burdening the federal government by paying subsidies.
Are critics decrying partnering with American Indian tribes because it increases the chances that an inventor will achieve a reasonable outcome and return for the hard work and investment that went into their invention? Or are critics alleging it is a sham because infringers can no longer use all of the frivolous and unfair tools at their disposal in litigation?
Or is the real reason that it is an American Indian tribe?
Join the Discussion
71 comments so far.
AnonOctober 23, 2017 07:42 am
Gene @ 67 (and anyone else wondering about the examiners union),
There is a recent thread at that other blog in which there is an exchange between several (at least vocal) examiners and an “anon.”
A quip about the river Nile comes to mind, as pointing out that a union exists and should be a main driver to obtain metrics that might reflect the actual job of examination is attacked by examiners who seem to see their job only in view of the “easy” metrics.
How pervasive this rot (examiners not understanding that the metrics of the job is not the job) is, well, perhaps that is the better question.
DamienOctober 16, 2017 09:57 am
@Josh “In almost every case they are overruling the examiners on the same or cumulative prior art. Because that is their charter.” LOL… nope. Would love to see the statistics supporting this…
Of course the Examiners dont get it… they dont want to make it seem as though the Office is granting invalid patents. So we continue to live this legal fiction, the fiction that 20 hours of research at the Office is sufficient for finding and evaluating all relevant prior art… its not. It never will be… and until we accept that this reality of the patent office, there will always be a disconnect.
BemusedOctober 14, 2017 03:44 pm
Josh: That is a fascinating and informative post on how the PTO examining corps feels about the PTAB. I remember bringing up that issue a few years ago to a PTO registered attorney (that the examining corps would be outraged at the high kill rate by the PTAB) and was told that the examining corps wouldn’t really care since they would likely view the PTAB as nothing more than another layer of review against the issuance of invalid patents.
I’m glad to hear that the examining corps apparently has pride in their work and is bristling at how the absurdly high PTAB is invalidation rates.
I know we have PTO examiners that read this blog and their additional commentary on this issue would be interesting to read.
Josh MaloneOctober 14, 2017 12:10 am
You are right Gene. Every quarter I attend or watch the PPAC (Patent Public Advisory Committee) presentation and the PTO presents a 90-95% compliance rate! They say that means their crack-shot Training Quality Assurance Specialists look at the allowances and find them 90-95% in accordance with the statutes – §101/102/103/112. The PTO is tongue-tied when asked why the PTAB rates it closer to 10% compliance.
The elephant in the room is there is one division of the PTO that is fighting the other division. The division that supports the charter of the patent office to promote progress in the useful arts is the step-child. The division that is set on destroying start-ups gets all the funding and all the support of the Director and Department of Justice (re: Oil States).
I truly hope Mr. Iancu and Mr. Francisco will make the reconciliation of these divisions a priority.
Gene QuinnOctober 13, 2017 11:45 pm
I think the evidence is the PTO doesn’t consider what the PTAB is doing as correcting mistakes. They say examination quality is very high and examiners are doing great jobs.
Either examiners are doing a great job and the PTAB is ridiculously overactive, or the PTAB is doing a great job and examination quality is horrible. You can’t have it both ways.
If over 90% of commercially valuable patents have mistakes identified by the PTAB that would seem to mean that examiners are incompetent or the PTAB is acting in an egregious manner. As long as the PTO continues to say that examination quality is extremely high that has to be viewed as an admission that the PTAB is the bad actor.
Why the examiner union hasn’t taken an aggressive position against the PTAB is beyond me.
Josh MaloneOctober 13, 2017 06:29 pm
Damien – when we protested the PTAB our interaction with the examiners was informative. About 50% had never even heard of the PTAB. About 30% thought they only dealt with appeals of final rejections. The 20% that understood that the PTAB was undoing their work vehemently disagreed with them and approved of our message. It is a myth that the PTAB is catching and correcting mistakes. In almost every case they are overruling the examiners on the same or cumulative prior art. Because that is their charter.
Gene, maybe you could run a survey to find out if the SPE’s and TQAS’s agree that these are mistakes?
BemusedOctober 13, 2017 11:15 am
Damien, everyone is entitled to their opinion. No matter how stupid, ignorant, self-serving or simply wrong. You are a perfect example of that.
DamienOctober 13, 2017 10:10 am
@Bemused lol… You and your clients are going to be boohooing for a while because its not goin anywhere. I hope you advised them as such and didnt mislead them attempting to suggest that everyone who has a different opinion is absolutely clueless and ignorant…. yawn.
Paul MorinvilleOctober 12, 2017 08:20 pm
lenehey, You need to read some history. Your legal educations and presumably, your technical education did not expose you to nearly enough historical facts.
You show your deeply seated doltishness with this statement: “the explosion of growth in the technology sector led to the patent troll phenomenon”.
Perhaps, I am wrong. You may not be a dolt. It is a possibility that you are simply dishonest. But in either case, Eli Whitney was, by your definition, a patent troll. Indeed, he licensed his patent on the Cotton Gin to the scoundrels who stole it from him. It took about 60 litigation in Georgia and many years of his life, but the thieves finally started paying up. He didn’t make much money, but he did win.
You see, son, the patent system was designed to license patents. It always has and it always will.
There is another thing about inventors you do not understand, because, well, you are a dolt. Inventors don’t quit. If it takes a lifetime, they just flat don’t let big multinational thieving tech corporations get away with it. It’s in the blood. And, of course, that means we will win and your gravy train will be derailed. I guarantee it… that is my personal guarantee.
leneheyOctober 12, 2017 07:38 pm
Paul Morinville: “No dog? That’s funny. You are the dog.”
Hahaha… I’m not the dog. My company has filed fewer than 10 or 15 IPRs over the last few years. They are expensive (though of course much cheaper than litigation), and as Damien mentioned, we generally file them only if we expect success. Even in the claims that were found patentable, we forced patent owner to take positions that compromised their case for infringement. Honestly, I’m not much involved in the IPR filings, focusing primarily on my patent filing tasks.
@Damien, everything you said is correct. I’ll add that the USPTO had a tough time rejecting patent applications from the mid 1990s to around 2005-2010. The law is written such that an applicant is *entitled* to a patent unless the PTO can *prove* they are not. This put the PTO and examiners in a tough position because they did not have access to good prior art searching tools as most of the good art for tech inventions was non-patent literature. If they could not find the prior art, then they were forced to grant the patent. Software patents exploded during that time because there was suddenly a whole new technology and communication platform, the world-wide web, on which you could do all sorts of interesting things, and everything you could imagine doing was considered patentable. Under /State Street/ there was no legal reason to deny software patents (this is pre-/Bilski/, pre-/Alice/, etc.). The result of this perfect storm was a ton of super broad invalid patents. The super broad patents and the explosion of growth in the technology sector led to the patent troll phenomenon, which in turn led to the need for something like an IPR process.
BemusedOctober 12, 2017 07:37 pm
[email protected]: “They refuse to consider that the 80% number could easily be explained by the fact that IPRs are more likely to be brought against a patent that is likely invalid than against a patent that is likely valid. Because of this, there is not an equal distribution of possible valid vs possible invalid… that sample will necessarily include more “likely invalid” patents than “likely valid” since one that is likely valid probably would not have instituted an IPR in the first place.”
You are absolutely clueless. Ask companies and individuals like Uniloc, Parallel Networks, Advanced Media Networks and Josh Malone about your statement.
Each of these entities/inventor have patents that survived multiple reexaminations and/or inter partes review and these very same patents were subsequently subjected to petitions for inter partes review. Some petitions were denied; some petitions were granted (many times on the same art that had been submitted – and rejected – in previous PTO/PTAB reviews).
Your BS rhetoric reminds me of Darrell Issa.
DamienOctober 12, 2017 06:28 pm
@jenr “Congress never imagined tribes would be smart enough to think outside the box for a business solution…..”,
Nice made up quote… Care to explain your proliferation of misleading information? Lol…
DamienOctober 12, 2017 04:34 pm
@lenehey “Last time I checked, filing an IPR wasn’t cheap and conferred no advantage on the petitioner other than saving the petitioner money” These people are convinced that since the PTAB has an 80% kill rate, that somehow necessarily means that the process favors IPR petitioners and therefore that its unfair. They simply ignore that it also just could mean its fair but that 80% of the patents involved in IPRs were IN FACT not valid.
They refuse to consider that the 80% number could easily be explained by the fact that IPRs are more likely to be brought against a patent that is likely invalid than against a patent that is likely valid. Because of this, there is not an equal distribution of possible valid vs possible invalid… that sample will necessarily include more “likely invalid” patents than “likely valid” since one that is likely valid probably would not have instituted an IPR in the first place.
They also ignore that IPRs involve MANY MANY MANY MANY (x 10 more manys) more hours of prior art search and many many etc more references. Since these reviews are far more exhaustive than any examiner could do during an application, it again IS NOT SURPRISING, that a large number of these patents are found invalid. They simply have a much larger volume to look at.
The question shouldnt be whats the rate that patents are being found invalid… but rather, if an examiner was given the same info (and time) as considered in the IPR would the examiner have come to a different result…
If, given all the references considered of those 80%, the examiner would have not granted a patent, then there is nothing unfair about it…. The only thing that was unfair in this case was that this person had a government monopoly for years when they should not have had one… The exact problem IPRs are meant to address.
Paul MorinvilleOctober 12, 2017 03:31 pm
Lenehey, “I have no dog in this fight. I work for a multibillion dollar high tech company” No dog? That’s funny. You are the dog.
JenROctober 11, 2017 08:11 pm
I believe this is an avenue that might level the patent field a little and see nothing illegal about this loophole (regardless what Senator McCaskill thinks…). I disagree with McCaskill legislation to prevent native tribes from using this business approach but yet is completely ok with letting states and states universities using the sovereign immunity approach
Senator McCaskill comment which has been quoted in numerous news outlet is really bias and she might as well had said “Congress never imagined tribes would be smart enough to think outside the box for a business solution…..”, “…however, states and states universities we give our full support for using the sovereign immunity defense”.
As a inventor and patent holder, I hope this levels the playing field somewhat and puts the “big boys” on noticed that they can’t use the PTAB/IPR forever.
BemusedOctober 11, 2017 04:04 pm
[email protected]: “Last time I checked, filing an IPR wasn’t cheap and conferred no advantage on the petitioner other than saving the petitioner money it would otherwise have to spend defending itself in court. The patent owner loses no money other than the cost of defending the patent (which they would have had to do anyway in court)…”
Your ignorance is breath-taking. I’ll attempt to curb my derision and assume the best – that you’re either woefully ignorant or incapable of understanding the patent system as it exists today.
leneheyOctober 11, 2017 03:15 pm
@Damien: “‘The idea that it is “racist” to restrict tribes’ ability to profit by shielding others’ patents from IPR is ridiculous.’ YEAH! Exactly… ‘It is more racist to let them continue doing so.” Eh… cmon… lets just stick to neither being racist since neither in fact is racist.'”
Yeah. you’re right.
leneheyOctober 11, 2017 03:11 pm
@ xtian, for the record I have zero relationship with PatentsProgress.org. I am not sure I ever visited that site until you mentioned it today, and I certainly did not copy any material from them. If you think I did, then they must be a pretty smart bunch!
@Paul Morinville: I have no dog in this fight. I work for a multibillion dollar high tech company (opinions I expressed are my own) and I will happily continue filing patent applications and obtaining valid and enforceable patents with the IPR just as I had for over a decade prior to the IPR.
JPR: “So far all it [IPR] has done is transfer wealth from inventors, startups and other patent owners to companies who file IPRs.”
? How’s that? Last time I checked, filing an IPR wasn’t cheap and conferred no advantage on the petitioner other than saving the petitioner money it would otherwise have to spend defending itself in court. The patent owner loses no money other than the cost of defending the patent (which they would have had to do anyway in court) and nuisance royalties they might otherwise have gotten from some of their targets. In what way, though, is any of that a transfer of wealth from the inventor/startup/troll to the petitioner?
Gene QuinnOctober 10, 2017 05:10 pm
I don’t see anything in the Pending queue or anything other than spam in the spam folder. Not sure what happened to your comment if it did not go live. Perhaps it is a firewall cache issue? I just cleared the cache. Do you see it now?
Also, are you using an iPad or iPhone? I’ve noticed (for reasons I can’t explain) that browsers on those devices hold on to old cached versions much longer than other browsers.
damienOctober 10, 2017 04:31 pm
ignore 1200, that copied in from something else I was working on and didnt notice it.
DamienOctober 10, 2017 04:30 pm
@JPM As I explained… the mischaracterization is tht you are taking a group of 1200 patents and trying to suggest that since 80% of those particular (not random) patents were found invalid, that suggests (or you think I think it suggests) that therefore 80% of ALL patents are invalid.
Statistics dont work like that… it is mischaracterizing the context of those stats to suggest that a trend in one particular group correlates to a trend in a much much larger group. ESPECIALLY if that group is not a random selection.
“Allergan is working with the Mohawks because it is the only way for Allergan to have their patents tested in a real courtroom” Right… that is to say to avoid IPR. Defendants are working with Conress because it is the only way for Defendant to have Allergans patents tested… AT ALL.
xtianOctober 10, 2017 04:19 pm
@Gene – I wrote a response to [email protected] to call out the errors in the article cited by [email protected] It is being reviewed?
DamienOctober 10, 2017 04:18 pm
@xtian again, I dont know. Im not even sure I disagree with you that they dont have the authority, it might be a federal court issue.
“Then if decided that immunity doesn’t apply, it gets bounced back to the PTAB?” Very likely the play… at least until another piece of legislation removing SI from Indian tribes in patent cases eventually passes, which it will. (i do agree that mccaskill’s is not the best bill, but a similar bill will eventually result absent some crazy SC decision in Oil and others.)
DamienOctober 10, 2017 04:15 pm
Above instead of “clearly invalid” it would be more appropriate example if the patent was “arguably invalid”.
In the arguably invalid case, there will never be any frivolous protection since the question of validity is not clear… But the problem is that the same barrier of 500,000 exists… So the defendant doesnt get to use his best defense… quite literally “denies them access to the federal court system and a jury” to make the arguably reasonable claim that the patent is invalid.
xtianOctober 10, 2017 04:15 pm
@[email protected] “the issue is whether that sovereign immunity can be used to block PTAB proceedings” Yes – What authority was given to unelected PTAB adjudicators (I do not dignify them with the title of Judge) in an Article I administrative proceeding that allows them to rule on this non-patent issue?
How can they even hear the issue presented to them? Should not this issue go to Federal Court? Then if decided that immunity doesn’t apply, it gets bounced back to the PTAB?
DamienOctober 10, 2017 03:47 pm
@JPM “No one is protected by a high legal fee cost barrier.” lol, hilarious… the point is that the person who wishes to show that a patent is invalid will choose NOT TO DO IT because it costs half a million dollars.
So not sure how frivolous claim protection protects against that since the result is that no litigation (at least towards invalidity) occurs because it is too expensive. If it costs 500,000 to invalidate a patent, and someone comes to you with a clearly invalid patent but asks for a license for only $150,000. The only economically reasonable play there is to license, even though it is invalid simply because the cost to defend through invalidity is much higher than the license.
Since this math occurs in EVERY suit brought under the patent, the only time that the person would risk their patent even seeing invalidity arguments is if a defendant has deep enough pockets and a big enough chip on their shoulder to fight back.
“The PTAB needs to be shutdown it is a grossly unfair system to patent owners that denies them access to the federal court system and a jury.” Again…. So?
“So far all it has done is transfer wealth from inventors, startups and other patent owners to companies who file IPRs.” Right…. but if those inventors startups ect are operating on invalid patents, then they really shouldnt have that wealth to begin with right?
JPMOctober 10, 2017 03:25 pm
No one is protected by a high legal fee cost barrier. Legal fee arbitrage is not a profitable litigation strategy post Octane (Octane Fitness, LLC v. ICON Health & Fitness, Inc). No sane patent owner or law firm will litigate a patent through frivolous lawsuits with the risk of legal fees being shifted to the losing party, which is what Octane has made prevalent. Courts have been shifting fees on both law firms and patent owners.
The PTAB needs to be shutdown it is a grossly unfair system to patent owners that denies them access to the federal court system and a jury.
The PTAB was designed, bought and paid for by the infringer lobby and worst of all it kills patents at an ~80% + rate. It is a symbol of crony capitalism.
So far all it has done is transfer wealth from inventors, startups and other patent owners to companies who file IPRs. Most filers of IPRs are large corporations, not small businesses and every day americans. The PTAB is not there to protect small businesses or every day Americans. Large corporations hide behind that excuse that the PTAB protects small businesses from “patent trolls”
How many small businesses are sued for patent infringement vs large corporations? Do you have data? Guaranteed that a small business has been sued very few times and the companies who are frequently sued are large corporations, who normally are serial efficient infringers.
Paul F. MorganOctober 10, 2017 02:44 pm
If anyone really thought a major pharmaceutical company was really really handing over legal control and enforcement of its valuable patents to a native american tribe, they have missed the latest news: This novel game may be up soon. The judge in the Allergan v. Teva E.D.TX patent suit [William Bryson] has specifically asked if the deal “should be disregarded as a sham” if Allergan does not answer by 10/13/17 if the Saint Regis Mohawk Tribe will join the suit as a co-plaintiff, as it had said it would a month ago. If they do so they will waive sovereign immunity.
Allergen has argued that dismissing the IPR case using the tribe’s sovereign immunity had nothing to do with the federal case. But as I had noted earlier, the Fed. Cir. does not allow sole, rather than joint, suing on a patent without full ownership control, nor does an IPR allow undisclosed real parties in interest or their privies, and one party dropping out of an IPR does not automatically end them.
It is further reported that Michael Shore, an attorney with the firm Shore Chan DePumpo, arranged the partnership between the tribe and Allergan, and argues that participation in one forum does not waive immunity in another. It will be interesting to see the legal arguments for that, and it any case it does not solve the absence of a necessary party in the D.C. proceeding.
DamienOctober 10, 2017 02:28 pm
@xtian 38 Presumably they would be acting under authority of the AIA. Congress has the power to make federal courts and assign them subject matter jurisdiction, so long as it does not conflate with the SC’s exclusive SMJ. Which section exactly? Not sure that would need a bit of looking.
There is no doubt that the tribes do possess sovereign immunity.. the issue is whether that sovereign immunity can be used to block PTAB proceedings. Notably, the sovereign immunity of states similarly is not absolute. Many different avenues have allowed states to be sued in federal court when they have asserted sovereign immunity. Likewise,iIts not very likely that tribal immunity will be ruled as absolute and some form of excuse will be purposed to do away with sovereign immunity with respect to patent proceedings.
DamienOctober 10, 2017 02:01 pm
@Paul Morinville “You are concerned that your gravy train is coming to an end.” He says, while defending an entity that has been collecting licenses on an invalid patent…
DamienOctober 10, 2017 01:56 pm
I know it wasnt… hence me calling you out. And by “lifts” you mean quotes and cites to… lol
“The costs savings are based on assumptions that are not well reasoned or supported.” Which assumptions are not well reasoned or supported?
Paul MorinvilleOctober 10, 2017 01:55 pm
Lenehey, The “dead weight cost” is that no licenses were paid due to the unconstitutional taking of property from the small and voiceless. What that actually represents is a dead weight loss to inventors and startups and a dead weight gain to infringers. That adds up to a dead weight loss of new US jobs and formerly US technologies to china.
You are concerned that your gravy train is coming to an end. So you complain with fake numbers and outright lies.
xtianOctober 10, 2017 01:54 pm
I have asked this of the blogsphere before, but have not received an answer.
Under what authority (subject matter jurisdiction) will the board be acting under to adjudicate whether the tribe’s sovereign immunity claim is an appropriate shield to the IPR?
Does introduction of the bill serve as a tacit admission that the Tribe does have sovereign immunity or that the PTAB doesn’t have the authority to answer the above question?
xtianOctober 10, 2017 01:52 pm
@Damien 36. Plagiarize wasn’t the appropriate term. I was trying to elicit a response. lenehey “cites” to the arstechnica website, which lifts from an article posted on Patent Progress.org. I followed the trail of the citation to see what type of authority was behind it. My opinion, the article holds no water, but will be elevated in status by those with an agenda.
The costs savings are based on assumptions that are not well reasoned or supported.
DamienOctober 10, 2017 01:45 pm
@xtian Which article did he Plagiarize?
xtianOctober 10, 2017 01:37 pm
You might either want to cite to the “Patent Progress.org” site or disclose your relationship with that site. The author may come after your for plagiarism.
BTW – the author is Joshua Landau. Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues. Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.
Per CCIA website: CCIA is an international not-for-profit membership organization dedicated to innovation and enhancing society’s access to information and communications. CCIA promotes open markets, open systems, open networks and full, fair and open competition in the computer, telecommunications and Internet industries.
If you showed me Mr. Landau’s background and affiliation, I probably could have written the conclusion to his article ahead of time for him.
DamienOctober 10, 2017 12:18 pm
“The idea that it is “racist” to restrict tribes’ ability to profit by shielding others’ patents from IPR is ridiculous. ” YEAH! Exactly… “It is more racist to let them continue doing so.” Eh… cmon… lets just stick to neither being racist since neither in fact is racist.
leneheyOctober 10, 2017 12:05 pm
JPM: “there is no need for the PTAB, it is a scam.”
Wrong. There is no alternative system for protecting regular Americans, large and small businesses from the damage caused by invalid patents in the hands of aggressive patent trolls. It is estimated* that IPRs have prevented $2.31 billion deadweight losses in the U.S. economy in litigation fees ALONE — not counting nuisance patent settlement fees that many businesses pay because the fees are too expensive.
Allergan is only afraid of PTAB because they KNOW their patents are vulnerable. By transferring their patents to an Indian tribe, they are merely placing their patents in “intensive care” to prolong their life a few more years that it will take to kill them in court. In those few years, they can collect tens of millions, if not hundreds of millions of dollars in profit that they are not entitled to because their patents are invalid. This is incredibly damaging to individuals who have to pay exorbitant fees for drugs they need. This drives up medical costs including yours and mine, through increased insurance costs. This affects EVERYONE.
The idea that it is “racist” to restrict tribes’ ability to profit by shielding others’ patents from IPR is ridiculous. Tribes have a privileged status as sovereign entities in the United States. It is not racist to limit their ability to profit at the expense of the public at large is not racist. It is more racist to let them continue doing so.
damienOctober 10, 2017 11:59 am
However, I will certainly concede there are issues with the PTAB and how they rule. But I think its disingenuous to claim that the only solution is to throw it out and go back to the status quo which similarly blocks people from asserting their invalidity contentions to a jury, but by cost rather than law.
DamienOctober 10, 2017 11:50 am
Of course patent owners think its not needed lol… They want to remain protected behind the arbitrarily high barrier to entry of the cost of district court. Thats LITERALLY the entire reason for the PTAB in the first place. Its like you are blissfully ignoring the state of patent law and are OK with people using litigation costs as a strategy.
“it is denying inventors and other patent owners like Allergan access to a trial by jury in the federal circuit court system.” So? They dont have a right to a trial by jury…
“Companies and inventors who hold valuable IP” Great… what do you say about the ones who hold IP that is invalid but has brought them value?
If their patent is invalid…. do you think they should keep it? Ignore how it was judged invalid…
JPMOctober 10, 2017 11:42 am
That is what the federal circuit court and a jury is for. The federal circuit and juries have been hearing patent cases for many years, much longer than the PTAB. The federal circuit court is better off determining if a patent is infringed, valid or not valid.
There is no need for the PTAB, it is a scam. The PTAB needs to be shut down as it is denying inventors and other patent owners like Allergan access to a trial by jury in the federal circuit court system.
This arrangement Allergan has with the Mohawks shows how broken the PTAB is. Companies and inventors who hold valuable IP want their patents tested in a real courtroom in front of a federal judge and a jury, not the PTAB.
JPMOctober 10, 2017 11:26 am
There is no mischaracterization of the statistics, take a look at the following article with data from LexMachina. You yourself are mischaracterizing the statistics if you are comparing a number of patents killed vs the total amount of patents ever issued by the USPTO, which is what I am assuming you are thinking as you said a number of patents the PTAB killed are very small.
The facts are, Google and the infringer lobby designed the America Invents Act law, which created the PTAB. Large tech co’s wrote the law, designed the PTAB and Google’s former lawyer Michelle Lee became the USPTO director to setup and operate the PTAB during the Obama years – crony capitalism at its finest.
Allergan is working with the Mohawks because it is the only way for Allergan to have their patents tested in a real courtroom – federal court, in front of a federal judge and a jury.
The PTAB is a new experiment; most of the judges are former lawyers who represented a lot of the infringers in the past, for example a former attorney for Apple, Stacy Beth Margolies, is a PTAB judge (See: http://ipwatchdog.com/2017/05/07/more-conflicts-interest-surface-second-ptab-judge/id=83012/)
The PTAB has been around roughly for 5 years and has done a lot of damage. It needs to be shut down as it is denying inventors and other patent owners from accessing a federal judge and jury.
DamienOctober 10, 2017 10:45 am
If the government mistakenly sent you a check for $1million dollars that you never had a reason to receive… Do you get to keep the money because of the government’s mistake?
A bad patent is one that, for whatever reason, was granted by the USPTO even though there exist in fact prior art that if considered by examiner would have prevented the patent from being granted OR the patent claims an unpatentable abstract idea.
In other words, patents that should never have been granted. Some complain about the 80% ptab kill rate but again thats not surprising… An IPR or any PTAB normally has hundreds of thousands of dollars to millions of dollars of resources attempting to find prior art. So I dont understand what is surprising to you that these cases tend to side on being cancelled… they have the ability to search and analyze probably 20x the references… some portion of those will read on granted patents and result in cancellation. Does that mean the uspto did a bad job? Not necessarily… it just did what it could do in the limited time they spend examining a patent.
The patent office spends MAYBE 30 hours in total reviewing any patent before granting it and that 30 hours is somehow supposed to represent a complete and exhaustive look at the prior art. Its a legal fiction. Its simple… some patents get granted because the examiner simply didnt have the resources to find the art. Then when that patent is put against people with LOTS of time and money, it becomes very easy to find that art…
If the art exists… you never should have received a patent… period. Of course the patent owner is upset, and in many ways he should be, but to go on living the legal fiction that a granted patent represents a 100% risk free, government “right”… is nonsense.
JPMOctober 10, 2017 10:26 am
Explain to us here, what is a “bad patent” ?
Gene QuinnOctober 10, 2017 10:26 am
Dmien (or Damien)-
Not sure what it is that you are complaining about. All of your comments have been posted. The one comment where you changed the spelling of your name and used a different e-mail address was held in moderation until I approved it. Not discrimination, so you can stop with the conspiracy theories. Even though you’ve been wrong about everything you said so far your comments have been allowed.
DamienOctober 10, 2017 09:13 am
“giving Native Americans rights and obligations equal to those of non Native American Americans is discriminatory.” lol what are you even saying? Its discrimination to give them the same rights? So you agree then that granting Indian Tribes sovereign immunity was the exact form of discrimination thats being claimed here…
BennyOctober 10, 2017 05:44 am
It’s very simple – giving Native Americans rights and obligations equal to those of non Native American Americans is discriminatory.
But all is not lost, Depending on the tribe – and this one is not equal across the board – your children may become members of a tribe if you marry a Native American, and can also enjoy discrimination. You will need a CDIB (It really is a thing – look that one up and then lecture me about racism).
DamienOctober 10, 2017 01:00 am
Total mischaracterization of statistics… just because 80% of the VERY SMALL number of patents challenged at PTAB are cancelled doesnt suggest that 80% of all patents follow the same pattern. Again… the patents brought before PTAB are not an evenly distributed set… To conflate the two statistics as if they are correlated is ingenuous.
“Why would you expect the majority of these commercially viable patents to be killed?” Simple… because they never should have been granted in the first place. Whatever % of issued patents it is that are bad… the ones brought in PTAB are a small sample of that set. Some of those patents ended up being commercially viable… cool beans. That doesnt make them valid.
What % of issued patents do you think are invalid?
“You are no doubt a stooge of the Google anti inventor lobby.” lol
Paul MorinvilleOctober 9, 2017 09:32 pm
Damien, You say “Thats because the vast majority of patents that enter the IPR system are bad patents… so its not surprising that the kill rate is that high.” So you believe that when the PTO’s examination corps issues a commercially viable patent they are wrong more that 80% of the time (the real number is 92%) and the PTAB is just cleaning things up?
You go on “The sample of patents entering that system is not a equally distributed sample…. So we wouldnt expect there to be equal numbers of patents saved vs killed… we would expect the majority to be killed.” The only patents going into the PTAB are those that are commercially viable and infringed. These are not the other >95% that never amount to anything. These are the top 3%. Those that matter. Why would you expect the majority of these commercially viable patents to be killed?
You are no doubt a stooge of the Google anti inventor lobby. You like others with your fake arguments fail to rationally evaluate the facts and then you draw fake conclusions and repeat them incessantly in an effort to make them true.
If this were my blog, I would block you. But since it is not, enjoy your Google lobby money. It is stolen from real people who are losing their rights so that people like you get to spend it.
DamienOctober 9, 2017 08:38 pm
JPM ” It kills patents at an approx 80% + rate and stops inventors from accessing the federal court system with a real judge and a jury.” Thats because the vast majority of patents that enter the IPR system are bad patents… so its not surprising that the kill rate is that high. The sample of patents entering that system is not a equally distributed sample…. So we wouldnt expect there to be equal numbers of patents saved vs killed… we would expect the majority to be killed.
Im aware there are issues with the PTAB, IPR process but I just cant sit back and read multiple articles being published suggesting that attempts to remove their SI is based on the government being unduly discriminatory towards Indians or that its “because theya re indian”. The implication from these articles is that the law is somehow unjust because it singles out Indians… Well then I expect that these same people support the quashing of the original grants of SI since those laws single out Indians in the exact same way.
Im guessing they dont support that…. could it be because they really dont care about the Indian’s “discrimination” interest here as much as they are attempting to suggest? Nope… They just want protection from IPR… Thats it. They are USING the indians to further their own interests due to a loophole.
DamienOctober 9, 2017 08:28 pm
Ignore the above post, once I posted it the page refreshed and I was able to see all of my previous comments. Not sure why they werent showing up for me when I went to post that but they dont seem to be deleted so I retract that.
DmienOctober 9, 2017 08:12 pm
What a surprise…. all discussion countering creator’s view is removed. yawn… Im an african american…. is it because IPWD discriminates against african americans? They deleted an AA’s post…. must be, based on their arguments.
DamienOctober 9, 2017 07:48 pm
Not sure what is difficult about the question…. How can it be that a law or treaty that singles out Indian tribes to remove sovereign immunity is discrininayory but a similar law or treaty that establishes SI is not…
Spoiler alert…. There is no difference
JPMOctober 9, 2017 07:43 pm
First, the Mohawk Tribe is not doing this to avoid federal court.
They’re trying to avoid the PTAB, which is NOT federal court. The PTAB is not even a legitimate court. It is a fake court set up by the infringer lobby and Michelle Lee a former Google attorney who took over the USPTO during the Obama years.
Are you not familiar with out corrupt the PTAB is? It kills patents at an approx 80% + rate and stops inventors from accessing the federal court system with a real judge and a jury.
Judge Rich’s GhostOctober 9, 2017 07:18 pm
It’s not a “racist” bill because it puts the Indian tribes on equal footing with everyone else in the United States, as it should be.
Paul MorinvilleOctober 9, 2017 07:14 pm
Damien, the law establishing sovereign immunity is based on treaties between the US government and Indian tribes. Changing that again breaks a treaty. Actually it breaks hundreds of treaties. We have broken those treaties before. Perhaps you may think we should break them again. The funny thing is that when they are broken, the government always takes and the tribes always lose.
DamienOctober 9, 2017 07:05 pm
Its very simple… If mccaskills law is discriminatory taking away sovereign immunity then how come the law establishing their immunity is not also discriminatory?
Gene QuinnOctober 9, 2017 06:27 pm
Interesting… So you won’t admit that you are wrong so you try and twist the questions. I’ll take your twist as admitting that you are wrong since you are and there is no defense. Particularly when you change “Indian tribe” with “African American” to illustrate. To bad you aren’t confident enough to admit you are wrong.
Anyway, certainly a law giving Native American Indians sovereign immunity is discriminatory. By definition it is for the benefit of only one class.
You say “for the third time, not all laws that are facially discriminatory are in fact constitutionally discriminatory…”
You are the one trying to put words in my mouth, but it won’t work. Nice try. I know they teach that debate tactic. When you can’t win mischaracterize what the other person has said and then debate what you claim they said rather than what they actually said. But I never said McCaskill’s bill was unconstitutional. Nice try.
Now let’s see if you can keep up… please try… I’m getting tired of explaining the same thing to you over and over without any glimmer of comprehension on your part. I’ve said this is a stupid bill because it won’t do anything to stop claims of sovereign immunity, which is what she apparently doesn’t like unless she is some kind of anti-Indian racists. Other foreign governments can raise sovereign immunity, and states can as well. So it discriminates only against Indian tribes. That is what makes it stupid. Another reason it is stupid is because she has the prohibition apply only to IPR. If preventing Indians from claiming sovereign immunity is so important why wouldn’t she have prevented them from claiming sovereign immunity in a PGR and CBM challenge?
Please do try and keep up. If you aren’t going to admit you are wrong that doesn’t seem to be too much to ask.
DamienOctober 9, 2017 05:45 pm
So you agree then that the law establishing Tribal Sovereign Immunity is also discriminatory and thus is ignorant and stupid?
“It is still clearly discriminatory” RIGHT…. and for the third time, not all laws that are facially discriminatory are in fact constitutionally discriminatory which is what matters. Lots of laws are facially discriminatory… that doesnt make them bad.
Gene QuinnOctober 9, 2017 05:43 pm
One final thought…
Substantively the bill says: “Notwithstanding any other provision of law, an Indian tribe may not assert…”
I wonder whether you would consider the legislation racist and discriminatory if a bill were submitted that said:
“Notwithstanding any other provision of law, an African American may not assert…”
We all know if a bill said that an African American would be prevented from doing something that would be racists and whoever filed such a stupid, ignorant piece of legislation would be forced to resign. So the question being asked here is why isn’t that the case when it has to do with American Indians. It is still clearly discriminatory and absolutely based on race (despite your uninformed and vague protestations to the contrary).
DamienOctober 9, 2017 05:41 pm
Right but all legislation on the Indians singles out a particular race of people… Again you keep insinuating that there is something wrong with a law that only addresses particular people…
Strange… you arent claiming the law that established Tribal Sovereign Immunity as discriminatory even though it is exactly as discriminatory.
Gene QuinnOctober 9, 2017 05:37 pm
I never said the law was unconstitutional discriminatory.
It is, of course, clearly discriminatory on its face because it singles out a certain race of people— Native American Indians. No matter how much you are in denial about that won’t change the facts. No matter how much you disagree with me in vague terms can’t change the reality that Senator McCaskill has submitted a clearly discriminatory piece of legislation.
And of course it is based on race. It only affects Native American Indians.
You ask: “So please… present how its racist…”
I have, the fact that you choose to keep your head in the sand is YOUR problem. The legislation is only aimed at Native American Indians, which makes it racially discriminatory. It is a simply concept that I’d think intelligent people would be able to appreciate on its face. I guess I’m wrong. Again, I suppose the take away here is simple. If you have a D after your name it must be impossible to be racists. How ignorant!
DamienOctober 9, 2017 05:27 pm
“Saying it doesn’t make it true. What do you call a piece of legislation aimed only at Native American Indian Tribes?” A piece of legislation dealing with Indian Tribes lol…
Again, simply because the legislation directly concerns native americans DOES NOT IN ANY WAY mean that the legislation is based in racism… “By definition that is discrimination.” Right…. and discrimination and racism arent the same thing… furthermore just because a law is facially discriminatory DOES NOT mean it is unconstitutionally discriminatory.
So please… present how its racist… because a wise man once told me “Saying it doesn’t make it true.”
“No one is hiding their patents.” Sure… you’re only doing it to avoid being brought into federal court under our current patent structure but yeah its not hiding at all.
AnonOctober 9, 2017 04:59 pm
Aside from other comments, let me add a rejoinder to point 4 from Confused Pharmacist.
Any such policy reasons you indicate are addressed by current law (and protect much more than just patent deals). You appear to have been “sucked in” by the bandying about of the word “sham.”
As I posted on the first thread related to this storyline, “sham,” is a legal term of art and does not apply to the given situation.
If indeed there are “policy reasons,” the provided answer to those policy concerns here is simply not the appropriate way to address them.
Gene QuinnOctober 9, 2017 04:20 pm
The Saint Regis Mohawks have stated they will not assert sovereign immunity in federal district court. They will sue on the patents and they will defend the patents in federal district court. They are only asserting sovereign immunity at the PTAB.
Yes, states are entitled to sovereign immunity under the 11th Amendment. But if Senator McCaskill is so intellectually honest why didn’t she offer a Constitutional Amendment to abrogate state sovereign immunity?
If Senator McCaskill is so intellectually honest why didn’t she do something to prevent foreign sovereigns from asserting sovereign immunity at the PTAB? Why limit it to Native American Indians? The legislation is clearly discriminatory on its face. Furthermore, it is stupid. She specifically didn’t include PGR and CBM. It is clear she doesn’t know what she is doing.
Gene QuinnOctober 9, 2017 04:14 pm
You say: “where there is clearly no racism at all.”
Saying it doesn’t make it true. What do you call a piece of legislation aimed only at Native American Indian Tribes? That legislation exempts state universities and other sovereign governments around the world. It only applies to Native American Indians. By definition that is discrimination.
You say: “if you’re patent is that great, then there shouldnt be a need to hide it.”
No one is hiding their patents. The Indians Tribe has said they will gladly defend it in federal court. They simply won’t consent to a second bite at the apple.
MoocowOctober 9, 2017 03:37 pm
@ Confused at 2:
1. Correct – tribal sovereign immunity can be abrogated by Congress. But Congress hasn’t done so. And we shouldn’t assume Congress will just pass a quick piece of Indian legislation, such as McCaskill’s thoughtless bill.
2. The tribe doesn’t need immunity “granted” to it. It always was the tribe’s. It would have to have its immunity taken away. And yes, it looks really bad: “hey, we don’t like how that tribe uses its rights. Let’s take them away.”
3. The tribe would bring its infringement suit, if any, in federal court under federal patent law. And yes, by bringing the infringement suit they would waive sovereign immunity so that the infringer can mount a full and fair defense in federal court. But they don’t waive immunity against being dragged into a parallel administrative pseudo-trial in some other forum (the PTAB), where the patent will be evaluated under lower burdens of proof and a different claim interpretation. So accused infringers can still mount a full counterattack against the patent (in court). They just won’t get multiple bites.
4. I don’t understand the shell games/alter ego statement. The transactions are perfectly candid and precisely as transparent as those between state universities and their corporate licensees. So far as we can tell, nothing’s being hidden here.
5. “Finally this looks really bad, moral issues aside.” I’d really like to understand why you’re so outraged. Mylan (maker of the EpiPen, remember?) and Allergan have been in federal court litigation for years. The litigation is basically over and the federal court will soon decide whether the patents are valid or not. Do you really think Mylan is morally entitled to multiple opportunities to invalidate the patent, when Allergan has only one opportunity to prove that the patents are infringed? Why not let the federal court decide this and be done with it? Also, part of the moral equation: think for a moment what this could do for the tribe. $27 million is going to pay for housing, social services, create jobs, send their kids to college, you name it. Would you rather they rely on bingo parlors and tobacco? Would you rather give the money to Mylan?
Confused PharmacistOctober 9, 2017 01:50 pm
1. State sovereign immunity is protected by the 11th Amendment. Tribal sovereignty can be abrogated by Congress and has no 11th Amendment protection.
2. Even if a tribe was granted immunity from patent suits and IPRs, is there a Native American patent tribunal that can adjudicate claims? Even if there is one, it could not enforce it’s decrees beyond the borders of the tribal lands.
3. Patent suits can only be brought in federal courts, so which law would apply: Native American sovereign law or federal law? If federal law applies, then any infringement suit would waive sovereign immunity.
4. Notwithstanding the reasons outlined above, there are policy considerations, including shell games and masquerading using an alter ego.
5. Finally, this looks really bad, moral issues aside.
WadOctober 9, 2017 01:33 pm
Very good article, especially regarding the corruption that IS the ptab.
Where I have trouble is with the assumption of theft of the USA from the Natives! Was the world taken from the first, small group of inhabitants? No! This liberal meme just keeps getting repeated, trying to make it “truth”, it is not!
DmienOctober 9, 2017 12:35 pm
“Or is the real reason that it is an American Indian tribe?’ Cool… another unsupported assertion of racism where there is clearly no racism at all. Please stop posting nonsense.
“Or are critics alleging it is a sham because infringers can no longer use all of the frivolous and unfair tools at their disposal in litigation?” Its funny how plaintiffs tend to see things that are bad for them as frivolous and unfair… boo hoo, if you’re patent is that great, then there shouldnt be a need to hide it.
“This raises a real and serious question: Why should a university be allowed sovereign immunity while denying sovereign immunity to a Indian tribes?” A very serious question indeed, and one that is quite easily answered, one requires a change in law, the other requires a change in the Constitution.
AnonOctober 9, 2017 11:25 am
The simple reason for the difference in what Senator McCaskill is doing is that there IS a pre-existing difference between state immunity and tribal immunity.
Low hanging fruit (and political opportunism) explains the choice here.
I tend to doubt that Ms. McCaskill bothered too much with digging into the deeper issues.