Last month, we dipped into the eye-opening matter of companies warding off future challenges to their patents by shielding themselves with Native American tribes’ sovereign immunity. Specifically, a partnership between the drug company Allergen, which makes Restasis among other drugs, and the St. Regis Mohawk Tribe. Now, a non-practicing entity (NPE) is using the another tribe’s sovereign immunity to go after mighty Apple.
Per Ars Technica, earlier this year, a Texas company named Prowire LLC filed a lawsuit in Delaware against Apple, claiming the company’s iPad 4 infringes on its patent. During the legal wrangling over venue, the patent was transferred to a North Dakota firm, MEC Resources LLC, owned by the Mandan, Hidatsa, and Arikara Nation, also known as the Three Affiliated Tribes. The case was eventually transferred to North Dakota as well.
As with its earlier reporting on the Allergen-St. Regis Mohawk Tribe partnership, Ars uses the Prowire-Three Affiliated Tribes partnership to dig deeper into the strategy of using Native American tribes’ sovereign immunity to avoid an “inter partes review” (IPR).
The IPR process is usually faster as well as cheaper than a district court trial — hundreds of thousands of dollars compared to millions. Says Ars, this makes IPR “loved by tech companies, who are often patent defendants, and hated by the drug companies, who are usually asserting their patents against generic competitors.” Again, with sovereign immunity in place, an NPE doesn’t have to worry about an IPR.
But hiding behind Native American legal rights wasn’t an effective strategy for either some payday loan companies in California hoping to avoid state lending laws or a tribal gaming authority employee trying to protect himself from a lawsuit.
These sovereign immunity fails, says Ars, gives Josh Landau, a patent reform lobbyist for the Computer and Communications Industry Association, hope that the Patent Trial and Appeals Board (PTAB) is skeptical of this strategy.
“There are real problems that can occur if sovereign immunity can be bought and sold in this way.”
Sen. Claire McCaskill (D-Mo.) agreed. Ars reports that the senator recently introduced a bill that would put an end to Allergan’s strategy even before the PTAB can review it.
Ars quotes the senator from her recent statement before a pharmaceutical group:
“This is one of the most brazen and absurd loopholes I’ve ever seen, and it should be illegal.”
The federal judge presiding over the case agreed.
Ars just reported that U.S. Circuit Judge William Bryson ruled that the Allergan patents protecting Restasis are “invalid due to obviousness.” This ruling, says Ars, could have wide effects on the sovereign immunity strategy.