Protecting a drug patent by selling it to a Native American tribe | Hacker News Reader

Protecting a drug patent by selling it to a Native American tribe

nytimes.com

102 pointsmhb42 comments

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...

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.

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...

https://patentlyo.com/patent/2017/02/sovereign-university-ch...

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...

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.

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.

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?

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.

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

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.

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

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

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.

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.

That's $3884/head.

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.

...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?

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

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

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

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

You could say the same about any rent collector.

As a former landlord, I don't think this is an accurate comparison.

There are plenty of people who own the mineral rights to land that it applies to.

Yeah, residential real estate isn't the best example, but it's not as though there isn't any pure rent-seeking out there.

I would, if it was an interesting use case. You don't see people being handed $15m a year ("for free") every day.

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

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

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.

They are providing a different form of value is all

The commenter was just simplifying.

By "doing nothing" what they really meant was "by not doing all that much work".

Compared to people who, you know, actually do hard, serious work for (much less of) a living.

You might also look at "doing nothing" in a broader context of "doing nothing" in the face of the genocide that occurred to pave the way for the United States.

So, this is one of the small benefits they can enjoy as a result of not contesting the authority of the US government to occupy the USA.

A small benefit they can enjoy while providing an enourmous benefit for Allergan. Did Allergan experience a genocide too? Let's look at who has more to gain here.

Exactly.

And you are envious of the useful idiots instead of the corporation. That is thinking small...

Indeed. It's exactly this kind of "doing nothing" which makes the world turn on its axis, pretty much.

You are making some mental gymnastics to ignore the historical oppression and continuing fight for legal rights.

By your flawed logic, someone who inherits a building also have put no monetary investment on what they are renting. You might as well also say that holocaust survivors won the lottery, by that logic.

Indian tribes, and every minority that managed to gain any stop-gap benefit, have to invest a lot of effort and time in maintaining their immunity/rights/etc. And this obviously greedy move, make that work harder in the medium/long term for them and every other tribe. So in a way they are putting in a investment.

Rent collectors aren't equivocal.

But legislative and tax loopholes and corporate shelter nations/jurisdictions are.

Except landlords pay hundreds of thousands of dollars for a property and hope to make a profit from it. The renters could destory the place and pay nothing.

Or the landlord/owner could go bankrupt and own nothing because it is all shielded under a corporation... What is exactly your point?

If they go bankrupt they still lose their initial investment. That isn't shielded by anything.

Writing it off as a tax loss only covers a small percentage of the loss and assumes you have another gain to offset.

And the landlord can get insurance to protect from the renter destroying the place.

And require tenants to pay for their own insurance so that the landlord doesn't have to pay if anything happens to stuff the tenants own or if they cause large amounts of property damage.

It's venue/legal standing shopping. They are being paid to maintain their status and their solvency, and for the use of their standing.

I guess the next step for patent holders if this doesn't pan out is paying small countries to hold patents with their actual sovereign immunity instead of almost immunity.

On the other hand, maybe the patent itself can be sued a la civil forfeiture, which would make the standing of the patent holders irrelevant.

Hey, with the crackdown on tax avoidance, tax havens are in need of new revenue channels. It's not the worst idea in the world.

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

It's a gamble.

Reply on news.ycombinator.com