Tribal 'Sovereign Immunity' Patent Protection Could Be Outlawed (arstechnica.com) 92
AnalogDiehard writes: The recent -- and questionable -- practice of technological and pharmaceutical companies selling their patents to U.S. native Indian tribes (where they enjoy "sovereign immunity" from the inter partes review (IPR) process of the PTO) and then the tribes licensing them back to the companies is drawing scrutiny from a federal court and has inspired a new U.S. bill outlawing the practice. The IPR process is a "fast track" (read: much less expensive) process through the PTO to review the validity of challenged patents -- it is loved by defendants and hated by patent holders. Not only has U.S. Circuit Judge William Bryson invalidated Allergan's pharmaceutical patents due to "obviousness," he is questioning the legitimacy of the sovereign immunity tactic. The judge was well aware that the tactic could endanger the IPR process, which was a central component of the America Invents Act of 2011, and writes that sovereign immunity "should not be treated as a monetizable commodity that can be purchased by private entities as part of a scheme to evade their legal responsibility." U.S. Senator Claire McCaskill (D-Mo.) -- no stranger to abuses of the patent system -- has introduced a bill that would outlaw the practice she describes as "one of the most brazen and absurd loopholes I've ever seen and it should be illegal." Sovereign immunity is not absolute and has been limited by Congress and the courts in the past. The bill would apply only to the IPR proceedings and not to patent disputes in federal courts.
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A predictable outcome (Score:3)
Anything of value is inherently monetizable, any time a law like this is passed - lessening the value of patents, except in certain circumstances, it would be very surprising if those circumstances were not monetized and exploited to preserve the existing value, or create new value, if that's a possibility.
Especially when dealing with entities with practically infinite resources, including legal teams larger than the Congress.
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I'm not sure why anyone concludes in general that more government rules would be an effective answer.
I am entirely unclear on your position. If someone abuses a set of rules, what is the problem with making a new rule or issuing a clarification to end the abuse?
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I don't know what's the problem with the patent system of the US, but you have a wall of text syndrome.
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Re: Yep - government rules encourage rent-seeking (Score:2)
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I'm not sure why anyone concludes in general that more government rules would be an effective answer.
I am entirely unclear on your position. If someone abuses a set of rules, what is the problem with making a new rule or issuing a clarification to end the abuse?
If a new rule is to be made, more thought should be put into it than the original rule that was evaded.
The tax laws are why so many corporations have billions of dollars in overseas tax haven. FOPA (1986) is why we are now talking about Bump Fire Stocks.
A rash decision could very well lead a situation that's worse than the one we're trying to correct.
LK
Government Healthcare (Score:2)
But hey, let's put that government in complete charge of health care. What could possibly go wrong?
As a member of the United States Air Force the government is in complete control of my healthcare, much more so than anyone under Obamacare. Guess what, turns out that the government can provide some pretty damn good healthcare.
Re: Government Healthcare (Score:2)
I spent a decade receiving my health care from the Air Force. Itâ(TM)s true that for some things itâ(TM)s very good. For other things, especially chronic problems, itâ(TM)s not. It would not translate all that well to the general population.
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I'm not sure why anyone concludes in general that more government rules would be an effective answer.
But hey, let's put that government in complete charge of health care. What could possibly go wrong?
You're not too smart I see. Alex Jones is calling. He wants you to drink some more lead to give you vitality and make you more of a sycophant.
Why is this even an issue? (Score:4, Insightful)
I know this is no Groklaw, but has anyone seen any layman accessible explanation for why the fact that the owner has sovereign immunity should make any difference in the challenge process of a US patent being enforced in the US? I mean you're not even *looking* at the owner at that point, it's all about the validity of the patent itself, right?
I would assume that if the Chinese, German, etc. government acquires a US patent, that patent is still subjected to US law, so what's the difference?
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I didn't read anything, and don't plan to. But maybe if an invention has a patent in another sovereign nation (Chinese patent something in China but want a US patent too), then they get fast-tracked because the thing is already partially vetted.
It's a poor excuse, but it wouldn't surprise me if that's what this is like.
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I didn't read anything, and don't plan to.
I stopped here. 100% agree
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One of the methods of challenging a patent (IPR) is unavailable in the case of sovereign immunity. So in that scenario you're looking at the owner from the get-go.
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You're sadly the most helpful reply so far, but are basically just restating the original post. Yes, there's a claim that IPR is somehow voided if the owner has sovereign immunity - but what is the legal basis of that claim?
here's your cite (from the IPR board) (Score:1)
The PTAB (the folks who do IPRs) themselves declared early this year https://www.law360.com/articles/885214/ptab-says-state-sovereign-immunity-applies-to-iprs [law360.com] that the IPR process cannot be used against a patent owner who has sovereign immunity.
It would certainly appear that Congress had no issues with the board's ruling until tribes tried to use it to their benefit.
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Thanks. That's at least a bit informative, though still really low on details. Man, I miss Groklaw.
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People forget patents are governed by treaty in order to be multi-national. So the mess lies in around sovereignty with a lack of treaty to cover patents. As everyone knows treaties between, the immigrant protestant United States of America and the original nations United States of America, are totally worthless and over ridden at whim for profit, so that lack of treaty brought about by the pointlessness of treaties, lead to the loop hole, that could be temporarily exploited. The solution, they are only nat
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"has anyone seen any layman accessible explanation for why the fact that the owner has sovereign immunity should make any difference in the challenge process of a US patent being enforced in the US?"
Indian territories are sovereign nations within the United States, and don't have to follow all of the Federal and State rules. If you trespass on Indian Land, they can simply make you disappear and the Feds can't do SHIT about it.
Re: Why is this even an issue? (Score:1)
This is total bs. The Indian nations are subject to federal law. They are sovereign over their land the way a city is sovereign within its boundaries. They are not a stand - alone nation within the borders of the USA.
A sovereign nation can issue passports. Tribal nations canâ(TM)t issue real passports.
Bottom line - they are enclaves created by the federal government.
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If it was a Tribal patent enforced on Tribal lands, that might be relevant. But we're discussing a US patent being enforced on US lands.
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Sovereign immunity applies, in limited form, to Native American tribes on reservations. Typically, state and local enforcement have no jurisdiction on tribal lands either.
I would assume that if the Chinese, German, etc. government acquires a US patent, that patent is still subjected to US law, so what's the difference?
Evidently, inter partes review is limited to US patent holders (whether real or incorporated), otherwise there would be nothing to report.
It's all new (Score:2)
So, the idea of "sovereign immunity" in the USA is found in the 11th Amendment which says:
"The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."
There was a recent ruling [patentlyo.com] that said this applies to the IPR process. This is all quite new, so there haven't been a lot of cases around it yet and this is the first time someone has
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You can't sue an entity with Sovereign immunity unless they consent to the suit. The IPR process is a preliminary patent action where a challenger sues the patent holder demanding an adjudication of whether the patent is valid. if the Defendant has sovereign immunity in theory you can't launch the suit. At least that's why Allergen sold the patents to the Tribe, to prevent people from challenging the patent. If the court allows the suit to go forward discovery will likely show the sale of the patent is a sh
Not just for patents (Score:2, Insightful)
We should have one set of rules that apply equally to everyone rather than separate rules for tribal organizations. It’s long past time.
This is what the patent trenches look like (Score:4, Insightful)
That went out the window ages ago, when Americans made treaties with the Original And Native Americans, then broke them.
Which isn't to say that this sort of shenanigan shall stand. But the problem isn't so much that tribes have special rules.
The problem is that the patent system is terminally broken. It's too easy to get bullshit patents and troll around with them. This gets expensive for the victims in a hurry. Defending against that was also too expensive. So instead of fixing the patent system, they fast-tracked the individual patent review process. So the trolls found a way to defend against fast-tracking patent review. So now instead of fixing the patent system we'll get a fix for the broken fix.
Bitching on the tribes for this is really not the most productive you could be doing.
Re:This is what the patent trenches look like (Score:5, Insightful)
I feel bad for the plight of Native Americans, but that doesn't mean that "Tribal Sovereignty" isn't a dubious concept with all kinds of negative externalities, like being used as a patent dodge.
I live in a state with a large Native population and a number of good-sized reservations and more often than not "Tribal Sovereignty" winds up causing more trouble than it seems worth.
It creates a bunch of law enforcement problems, as local police generally can't enforce the law on tribal lands, and as you might imagine this creates all manner of ill will with neighboring non-tribal residents. While on the surface it seems to be beneficial to the natives because they're not subject to racist rural cops, what ends up happening is that the tribal police wind up being the enforcement tool of the corrupt tribal leadership. And there's little accountability for the natives, either, since the usual political and justice hierarchies don't apply to the native police forces.
I also think it hobbles investment in tribal areas -- sovereignty winds up making it difficult to enforce contracts and collect debts incurred by tribes and tribal residents. People I know who have done business with tribal casinos have horror stories of not being paid for labor or materials and finding that it's a maze of federal laws and bureaucracy to deal with it in the Federal court system. And that's the *casinos*, the actual successful tribal industry which has positive cash flow and something of a reputation to consider.
Bottom line is I don't think the average Native American really gets much value for their tribal sovereignty. It's mostly used as a gimmick for tribes to make money by evading state regulations and as a kind of political prop by tribal officials to further the illusion of native independence.
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Without the immunity though the casinos and tobacco business (don't forget that makes them loads of cash too) could not exist. Many natives do get employment or other significant compensation as result of profits from those industries.
Its complex but its hard to argue that they should give up self governance; without first showing that the failures you mention are not really policy problems that could be address but necessary results that follow directly from their immunity.
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I feel bad for the plight of Native Americans, but that doesn't mean that "Tribal Sovereignty" isn't a dubious concept with all kinds of negative externalities, like being used as a patent dodge.
The point remains that the dodging is the problem, not the mechanics of the dodge. Therefore, the thing that needs fixing is the patent system, not the dodge vehicle.
In the same way any "fixes" to the tribal sovereignty thing in the name of fixing patents are no good to the tribes' plight either.
IOW fix the approach, as in, talk patents when we mean patents and talk tribal sovereignty when we want to talk about the tribes' plight. Mixing that up opportunistically just means fscking up, and don't do that, eh
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That's no different from before, except the badges and the cop cars. For members of the tribe it's still easier to get chummy with the tribe leaders than with the local state bigwigs or the DC scum. Not that I'm saying it's a good situation, just that while different it isn't necessarily worse for the tribespeople.
The problem is, though, it's like assuming someone is Italian they can get chummy with the mafia. When the tribal leadership is corrupt, they're a closed circle and being the same ethnic group doesn't get you anywhere. In fact, you're probably still better off as white because people might ask questions about what's going on if a white guy gets hassled on the reservation.
But if an Indian gets hassled? They've got nowhere to turn, except maybe by massively exposing themselves filing some kind of complaint
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So, what's ONE more time, eh?
Give some fire water, smoke a peace pipe, and get them to sign another dotted line.
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Didn't we conquer them enough? Let them have their sovereignty unless they want to give it up (though having them pay federal income taxes under that arrangement is a bit of a double standard).
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And because this is
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On the upside: No native tribe ever put Hillary or Trump up as candidates for election to any office.
Maybe not, but they're also US citizens with voting rights. So they're not exactly uninvolved either.
This is the biggest problem? (Score:3, Insightful)
Really? This is the biggest problem of the patent system, requiring an immediate legislative fix?
Re:This is the biggest problem? (Score:5, Insightful)
A) Who says you’re only allowed to work on one problem at a time? This is a simple problem with a simple fix. There’s no reason not to fix it immediately.
B) Considering this is the easiest way for a defendant to push back against a troll’s patent in order to get it invalidated, arguably, yes, this is one of the biggest issues, especially because it’s been happening more often.
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Nobody denied A, but is this loophole is being exploited by an army of patent trolls? This example (Allergan and the formulation patents for Restasis) was the first, to my knowledge, but I'm curious to know if there are legitimate patent trolls using this loophole.
Either this has gone under the radar for 5+ years (America Invents was passed in 2011), or Allergan was one of the first to find it. But you sort of made a fair point: it could be exploited by real patent trolls, so let's close it now.
(I don't con
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Re:This is the biggest problem? (Score:4, Insightful)
Re: This is the biggest problem? (Score:1)
If you're presented on massive problem requiring 5 years to fix, and one slightly less massive problem requiring 5 minutes to fix, which do you fix first?
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Re:This is the biggest problem? (Score:4, Informative)
It's not the biggest problem but it's a big fucking problem.
In 2011, this thing was legalized where patents no longer have to go through the already minimal review process, benefiting big pharmaceutical corporations. This is literally a constructed loophole.
So let's say your an inventor and you invented this thing, let's say a cure for cancer, and out of the goodness of your heart you release it to the world for free. A pharmaceutical company, through this process can take your cure, patent it and make sure everybody now has to pay them to be able to produce or use the cure.
In this case, the company patented cyclosporin, a drug you can easily produce from particular mold strains which has been in use since the early 1980's.
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I don't think you understand this "loophole". It's not about patenting something that someone else created, it's about delaying the invalidation of patents by forcing a process with a longer timeline.
The particular example is not about a patent for cyclosporin, it's about a patent for the formulation of Restasis, which contains cyclosporin.
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I don't think you know what Sovereign Immunity means. It means that even though you can force it in whatever process you want, they are Immune from the effects of the process. So if the USPTO says "it's invalid" the "Sovereign Immunity" clause means they can say "so what, you can't touch it".
And Restasis is eyedrops + cyclosporin. They also have eyedrops + hydrochloric acid, eyedrops + saline. Look at the ingredients, they aren't unique.
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Again, I assert that you are mistaken, or misunderstood my last comment.
The newer patents, that Allergan is arguing allow commercial exclusivity, will expire in a couple of years. After that, anyone can sell generic Restasis. It is not indefinite exclusivity from generic competition. In your example, with a cancer drug, the patent shouldn't be granted because the applicant is not the inventor, sovereign immunity or not. Likewise, the longer process to invalidate the patent will still exist and be applicable
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The case in question involves a product that generates over a billion dollars in annual revenue for Allergan. So it's not exactly the smallest case.
This is fair (Score:4, Insightful)
oops (Score:2)
posting to undo a miss-clicked mod.
Patent law is weird (Score:2)
Simple fix (Score:4, Interesting)
If a patent is licensed by an entity that is a former owner of the patent, then the patent may be challenged as if the license holder was the owner of the patent in all respects, including jurisdiction. Done. No more shenanigans of selling off patents only to re-license the code to avoid exposure.
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True, this would make things a bit more complex, although I'm sure legal wording could be added in to relate the corporate ownership of the new entity, etc. OR it could just be worded that if a patent is licensed to another entity that the patent can be disputed under the rules that would apply to the new entity, without any regard to if they had owned the patent prior or not. This would insure that the most lenient jurisdiction that the patent is licensed into can be used to dispute the patent as a whole
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I don't think sovereign immunity applies to corporations. The Indian tribe thing relied upon the tribes being exempt from certain provisions of federal law (the IPR in this case).
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And... Creating and controlling a new company is relatively simple. Create a company that is independent with a huge amount of starting debt. Then "invest" in this new company because you care. You give this new company all the starting capitol and require this company to come to you for future loans. The interest of the seed money and loan money would be much higher than a bank, but hey you are taking a huge risk. Since you are the primary investor, then you control the board, the leadership. But you ARE N
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You need to take out the 'former owner' provision (Score:2)
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If a patent is licensed by an entity that is a former owner of the patent, then the patent may be challenged as if the license holder was the owner of the patent in all respects, including jurisdiction. Done. No more shenanigans of selling off patents only to re-license the code to avoid exposure.
Step 1: Develop patent
Step 2: Transfer ownership of patent to holding company
Step 3: Use patent anyway
Step 4: Holding company sues original owner, offers to settle for previously agreed upon payment
Step 5: Profit!
Good (Score:1)
I hope that bill becomes law. This is just a variation on the "Double Irish" tax evasion scheme. Sell the intellectual property to a third party, who you essentially control, then have that third party license the patents back to you on very favorable terms. Wouldn't surprise me if the beancounters at Allergen were attempting to use this as some kind of tax write-off as well.
Allergen's method was either incredibly brazen or incredibly amateurish in how easy it is, even for the lay person, to see exactly wha
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It doesn't matter if the lay person sees it for what it is. Every day that generic competition for Restasis is delayed equals millions of dollars of revenue for Allergan. This is not about a perpetual monopoly on selling cyclosporin eye drops, it's about delaying generic competitors coming to market. It was never meant to be a winning strategy, only a delay tactic.
Prepare for the lawsuit from the tribes... (Score:1)
Any of the tribes that were benefiting from this will likely want to sue over this since this law would be eliminating their income. Don't know if they have a leg to stand on (legally speaking), but it seems a common outcome lately.
Don't like a law? Sue!
Invalidate the patents... and Reform the USPTO (Score:3)
Invalidate all patents transferred in this manner for their blatant attempt to circumvent the law. Patent and copyright reform are so far beyond due it is reaching absurdity.
We need to get back to the original intent of the law, which was that only the inventor (a person or persons) who made the creation own the patent, and make it non-transferable. If it is developed in the employ of a company, that company gets an unlimited license of the patent, but if that company goes bankrupt, the license is automatically null and void, and ownership reverts to the creator and either way, the patent expires in 7 years from the date of first commercial product sold with no extensions on the original patent. This drives patent holders to saturate the market with their product and keep prices reasonable, because after 7 years the cash cow dies and everyone can get in on the product which is always how it was meant to work.
Beyond that, all computer software patents need to be vaporized and software needs to be transferred to the purview of copyright, which is where it belonged all along. Getting patents for real world things done "with a computer" or "on the internet" is a sad joke whose punchline is your wallet...