
Protecting a drug patent by selling it to a Native American tribe - mhb
https://www.nytimes.com/2017/09/08/health/allergan-patent-tribe.html
======
monochromatic
One of the comments here[0] raises an excellent point:

>I don’t understand how this strategy would work.

>The PTAB decisions about state colleges/universities are based on Eleventh
Amendment immunity. On those cases, the IPR statute is trumped and cannot
impede on the states’ sovereign immunity under the 11th Amendment.

>But Native American tribes do not enjoy 11th Amendment immunity; their
immunity is a function of federal common law and Congress has near plenary
statutory authority over the tribes. Congressional statutes can abrogate or
supersede tribal immunity, without constitutional issues.

>Tribal immunity is more about immunity from the states over Native American
tribes, based on federal supremacy over Native American affairs.

>But AIA is federal. So the argument is simple; by enacting the AIA and
subjecting issued patents to AIA reviews, and not making any exception for
patents owned by Native American tribes, it abrogated any sovereign immunity
that may have applied.

>The patents obviously weren’t invented or originally prosecuted by the tribe;
given the fact that the immunity is federal common law and policy-based (and
not 11th Amendment-based), I can see that policy-based arguments about how
manipulative this is, will be very receptive.

[0][https://patentlyo.com/patent/2017/09/allergan-creating-
sover...](https://patentlyo.com/patent/2017/09/allergan-creating-
sovereign.html)

~~~
rayiner
It’s not a good argument. As the Supreme Court reaffirmed a couple of years
ago in _Bay Mills_ , while Congress can abrogate tribal immunity, the
intention to do so must be “unequivocal.” Congress does not need to make an
“exception” for Indian tribes in any specific law—tribal immunity is the
“background” against which all legislation is enacted.

~~~
nkurz
Here's a couple summaries of the January 2017 University of Florida Research
Foundation case:

[http://www.ipwatchdog.com/2017/03/16/ufrf-eleventh-
amendment...](http://www.ipwatchdog.com/2017/03/16/ufrf-eleventh-amendment-
defense-ptab-creates-ipr-immunity-iprs-public-universities/id=79341/)

[https://patentlyo.com/patent/2017/02/sovereign-university-
ch...](https://patentlyo.com/patent/2017/02/sovereign-university-
challenge.html)

And here's a later case involving the University of Maryland Baltimore where
the reasoning was reaffirmed:

[https://www.lexology.com/library/detail.aspx?g=e8a324fd-4be6...](https://www.lexology.com/library/detail.aspx?g=e8a324fd-4be6-4515-918e-77f35efac275)

I post this here as a response to 'rayiner' not because he can't find these
links on his own, but because I'd be interested in his opinion one of the
suggestions in that last Lexology link:

 _Third, public universities and hospital systems may see their research
sponsors begin to stop demanding full ownership of patents resulting from
sponsored research and /or clinical studies, in favor of a more natural joint
ownership structure. Presumably, since all owners of a patent are necessary
parties to an IPR (and district court litigation), even a private, for-profit
entity that is a joint owner of a patent with a public university or hospital
may be able to benefit from assertions of sovereign immunity in IPRs._

Does this multiple ownership theory of immunity make sense to you? Instead of
transferring the entire patent to a sovereign Indian nation, would it be
possible for them to make gift of some tiny percentage of ownership of the
patent, and still gain all the benefits of sovereign immunity?

I have to say, from the outside the whole thing seems like a farce. Regardless
of the form the review takes, Covidien's argument that a patent review is
directed against the patent, rather than the owner, sure makes intuitive
sense. It makes some sense that a sovereign state would be immune from charges
of infringement, but seems absurd to me that the US government would no longer
be allowed to review the claims of a patent because the ownership changed.

~~~
rayiner
It’s a wacky theory but it has legs. At the root is the question that is
currently before the Supreme Court in _Oil States_. Are patents private
property or public rights? If they are private property, then actions against
the property will generally be foreclosed by any immunity of the owner. It
hasn’t been addressed by the Supreme Court, but the Second Circuit has held,
for example, that states can’t get around tribal immunity by characterizing a
foreclosure action as an action against the property itself rather than the
tribal owner.

~~~
gcb0
Even if it works, a patent is to defend your exploitation of the product on
that market. If company A defends against company B patent claims, and
continue to produce the drug, what prevents company B, C, D and E from going
to other tribes, moving their disputed-but-dismissed-case patents there, and
start producing the drug too?

At this point, shouldn't we just ignore patents?

------
dagaci
While this is a nice outcome for the Tribes, and they probably need the extra
income. I can't help but believe that this is simply just another method by
which corporations are allowed to hold the people hostage, and increase
monopolistic powers.

Drugs companies in the US are so completely protected from any meaningful
international competition. And now even inside the US they are working on ways
to take this further.

Your healthcare cost so much because of nonsense like this! Its the people who
are getting Screwed again.

~~~
jjawssd
The particular tribe in question has become relegated to the status of what
Yuri Bezmenov calls "useful idiots." When the tribe is no longer useful they
will be disposed of.

[https://www.youtube.com/watch?v=K4kHiUAjTvQ](https://www.youtube.com/watch?v=K4kHiUAjTvQ)

------
protomyth
_A trial over the issue recently concluded in U.S. District Court in Texas and
a decision in that case has not yet been reached. The deal announced with the
Mohawk tribe will not have any bearing on the federal court case. If the
company loses that case, its patents would be invalidated regardless of the
deal with the tribe._

A court hack, not a guarantee to keep the patent.

------
cletus
So people seem aghast at this move e.g. Calls of "rent collecting" (which I
assume really means "rent seeking" [1]).

Michael Carrier (in the article) notes the tribe "played no part" in the
drug's development.

So the question that occurs to me is what about the tax arrangements made by
tech companies to "sell" patents to foreign entities and then lease back the
rights in what is transfer pricing [2] by any other name?

Those countries and entities played no part in that development either.

Not that I'm defending patents in general or in this case. I just wonder if
people view the situations similarly.

One claim by the company is clearly absurd, calling the patent review board
"double jeopardy". It's no mor doubl jeopardy than hearing a case in Federal
district and appellate courts is (yes, yes, I know appellate courts don't try
facts). The review process is meant to streamline th process and is simply the
first step in a judicial review process.

[1] [https://en.wikipedia.org/wiki/Rent-
seeking](https://en.wikipedia.org/wiki/Rent-seeking)

[2]
[https://en.wikipedia.org/wiki/Transfer_pricing](https://en.wikipedia.org/wiki/Transfer_pricing)

~~~
pkilgore
Your last paragraph sounds odd to an attorney... an appeal is essentially a
continuation of the same trial.

Really the big problem is that double Jeopardy is a criminal law concept, so
Saunders' argument makes no sense.

Civil litigation like patent litigation is subject only to the restrictions of
res judicata. If 300 million people want to challenge a patent 300 million
times, they can (assuming standing, jurisdiction, etc...).

But also, we've been reexamining patents forever, which is basically a slower
IPR with standard and process tilted in Patent Owner's favor. That could also
be done separate from, concurrent with or in addition to civil litigation.

I thought the Federal Circuit did a pretty good job on this issue, but then
again, their record in front of SCOTUS recently is just awful.

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leksak
I'm mostly surprised to read that this will be a much needed boost to their 50
million dollar annual budget when they are "only" 13000 people. How bad are
their margins on that casino? Or what else eats into that budget? My city has
a population of 120k (and that's tallying a lot of people that doesn't even
live near the place colloquially referred to as the city) and had an annual
budget of 125 million dollars (not in the US) and we have free health care,
subsidised public transportation and a whole slew of other nice benefits.

~~~
TazeTSchnitzel
That's $3884/head.

~~~
leksak
Compared to $1041/head ;) but maybe some stuff that we enjoy here is coming
out of the government coffers and not the city coffers although reading the
budget reports I've not found any substantial costs "left" out. Maybe they
shoulder more costs directly.

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devdoomari
...what if those tribe suddenly decide to revoke licenses to the original
patent owner? Or they suddenly decide to license to another entity for more
money?

~~~
monochromatic
I'm sure it's written as an irrevocable, exclusive license.

~~~
protomyth
It would also impact future profits in the same space. Absolutes tend to be
better for business than chaotic whim.

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amelius
Isn't this like "hacking" the justice system, and shouldn't it be punished
accordingly?

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charlesdm
That is one interesting revenue model. So these guys are basically given $15m
a year to do nothing?

~~~
senthil_rajasek
You could say the same about any rent collector.

~~~
prklmn
No you can't. How many rent collectors do you know have put no monetary
investment into what they're renting?

~~~
maxerickson
It happens often enough that there is a term for it -- slumlord.

~~~
prklmn
Even slumlords at some point in time had to buy their property. This tribe is
being paid up front to be transferred the patent, not the other way around.

~~~
pacaro
They are providing a different form of value is all

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a3n
IANAL, but it seems the initial transfer would be the "attack" against the
scheme.

It's a gamble.

