US jurisdiction report: Powwows for patent owners

It has been years since indigenous tribes located in North America, commonly referred to as Native Americans, have been participants in a war involving the US government. However, a new and very different type of intellectual property-related war is currently brewing and it involves, of all things, US patents that have been granted.

In much the same way that tribes have historically gathered in ceremonial powwows to dance, sing, and form new friendships, they have recently been joined in new powwows by clever patent owners seeking new “patent partners” to insulate the validity of their US patents from attack.

How in the world, one might ask, would such seemingly disparate interests be able to find common ground? The answer lies with Native American tribes’ “sovereign immunity”, enjoyed under a US Constitutional legal doctrine whereby the states of the US as well as Native American tribal governments enjoy immunity from lawsuits. This has been seen in disputes involving tribal casinos. Sovereign immunity includes lawsuits based upon causes of action arising under torts. Patent infringement disputes arise under the laws of torts.

Owners of US patents whose validity is under attack are looking at the possibility of transferring title or ownership of their patents to one or more tribes which enjoy sovereign immunity. This transfer, they believe, will serve to deprive the US Patent Trial and Appeal Board (PTAB) of jurisdiction to review, for example, the validity of patents. The PTAB has received many petitions from parties seeking to invalidate patents based, for example, upon prior art.

The question of jurisdiction

Six patents covering pharma company Allergan’s dry eye treatment, marketed under the trademark Restasis, were transferred in September 2017 to the Saint Regis Mohawk Tribe, in an effort to deprive the PTAB of jurisdiction. These patent rights were then leased back to Allergan. This enabled the Mohawk tribe to argue that since the Restasis patents that it now owns are immune from inter partes review by the PTAB, the PTAB must dismiss any and all reviews of these patents being sought by generic drug makers Mylan, Teva Pharmaceuticals USA, and Akorn.

In November, the PTAB requested amicus filings on this question of whether it lacks jurisdiction to review the validity of patents.

Allergan did not fare well in an Eastern District of Texas district court, where Judge William Bryson invalidated four key Restasis patents. This district court decision, if upheld on appeal, will doom these patents and render moot activity at the PTAB.

In another US patent dispute, a company named Prowire brought a patent infringement lawsuit against Apple, alleging that Apple’s fourth generation iPad infringes a patent covering a type of electrical circuitry. Thereafter, Prowire transferred this patent to an entity known as MEC Resources, based in North Dakota. MEC has indicated that it is affiliated with the Native American Mandan, Hidatsa and Arikara Nation tribes of North Dakota, which are located on a reservation known as Fort Berthold.

Apple has filed a petition with the PTAB challenging the validity of this, based upon prior art. MEC is able to move for dismissal of the invalidity petition, claiming that the PTAB has no jurisdiction to review the validity of this patent, based upon sovereign immunity.

This tribal immunity tactic is under attack. Past efforts to change immunity laws have not been successful. Some consider it a type of sham or loophole in the law. In fact, it has caused the US Congress lawmakers to schedule a hearing on the issue and there is a movement in Congress to create legislation that will severely limit its use. Congress does possess the ultimate plenary power over tribes, which enables it not only to limit sovereign immunity but also to abolish it, and federal courts have historically given greater deference to Congress on tribal matters than on other subjects.