More on Tribal Immunity: Is a Tribal-Owned Patent Immune from IPR Challenge?

US Law generally holds that Indian Tribes are “Sovereign Powers” that “possess immunity from suit,” although only “to the extent that Congress has not abrogated that immunity and the tribe has not clearly waived its immunity.”  Breakthrough Management Group, Inc. v. Chukchansi Gold Casino and Resort 629 F.3d 1173 (10th Cir. 2010), cert denied.  As the Supreme Court wrote, “without congressional authorization,” the “Indian Nations are exempt from suit.” United States v. United States Fidelity & Guaranty Co., 309 U.S., at 512 (1940).

Questions in patent law remain, primarily: (1) Does the exemption from suit extent to exemption from an administrative action to cancel a tribal owned patent?; and (2) by purchasing a patent does a Tribe implicitly waive sovereign immunity regarding validity challenges to the patent.

In 2006, an en banc Federal Circuit decided the somewhat parallel case of Intel v. CSIRO, holding that the Foreign Sovereign Immunities Act (FSIA) permitted suit against Australia’s national science agency based upon the agency’s commercial activity — attempting to licence its WIFI patents. The Statute provides that:

[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case … in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States. . . . Here, we are persuaded that these declaratory-judgment actions are “based on” CSIRO’s commercial acts of obtaining and asserting a United States patent.

My understanding is that FSIA does not apply directly to the Tribal immunity, which is judge-made-law.

 

72 thoughts on “More on Tribal Immunity: Is a Tribal-Owned Patent Immune from IPR Challenge?

  1. See, City of Sherrill v. Oneida Indian Nation of New York, 544 U.S. 197 (2005). Purchase of former Indian land by Oneida tribe did not restore sovereign rights to the purchased land. Held: Oneida Tribe had to pay property taxes (like the rest of New Yooorkers) to county govt. Its not too much of a skip to say the assignment of patent ownership does not convey sovereign rights or interests to the purchased property.

    1. Excellent post – thanks Joseph.

      I take it then that a purchase of property left the property as it was created, as opposed to infusing new aspects to the property based on the current owner….

  2. The AIA statute allows “a person who is not the owner of a patent” to file an IPR. Why is not “a person” [which has been held to include non-profit associations, corporations, stock-short-sellers, foreign individuals, and anyone else, irrespective of lack of standing] broad enough to constitute the requisite Congressional waver of this judicially-created [unlike state universities] immunity?

    1. Paul – I think that the judge-made law in this area is fairly murky, and so you could be correct — essentially depending upon what the Supreme Court says. However, I do think that your use of the term “congressional waiver” makes it seem like an easy thing to cancel sovereign immunity with a congressional nod. Rather, the few cases that I’ve read seem to require a more direct and pointed affirmative action by Congress to eliminate the immunity.

      1. Dennis, I don’t disagree, but if the asserted facts here ever get to the Supremes, will a scheme of immunity for a drug company from statutory challenges to its patents get the same level of deference to tribal rights and protections that far more sympathetic facts in those other cases did?

      2. I think that the judge-made law in this area is fairly murky

        Second time that you have merely said that.

        Do you have any examples? Is this not tied to a deeper Constitutional basis (as others have indicated)?

      3. The lens of “is this commerce” or not surely does not apply to vanilla contract claims and other aspects of tribal sovereignty, like you know….casinos and such.

        Sometimes when equity demands a result, the doctrines needed to support it will be found/manufactured/buffed to fit the need. In this instance, it’s plainly improper that sovereignty would be used as both sword and shield. If the patent can be enforced, it follows that it must also be subject to challenge.

        The courts will get there. How they get there is only mildly interesting.

        1. The courts will get there. How they get there is only mildly interesting.

          Rebuffed (naturally) with: The Ends do not justify the Means.

          Sometimes when equity demand…” – See Sir Thomas More and the mowing down of law to get to the devil…

  3. Funny thing is, what this literally does is give states, Indian tribes, and foreign countries who own patents the protection of an Article 3 court trial (with jury if so desired, no less) being denied to ordinary US citizens by the AIA.  

    1. I do not think that saying such actually gets you to the point of being “done with it.”

      Saying such actually brings about the direct confrontation as to whether or not patents are property (and inure other Constitutional protections of property at the time of grant).

      Would love to see a direct answer as to that point (I mean, one that respects how the patent system was initially put together, along with the LONG history of the Supreme Court stating that patents are property; thus extinguishing the Big Corp Efficient Infringer mantra that patents are “public rights.”

  4. The Supreme Court in Mowry v. Whitney, 81 U.S. 434 (1872) held that (like in England) on the government may sue to invalidate a patent.

    After the DJ Act, a party accused of infringement may sue for a DJ of invalidity that has the effect of cancellation due to collateral estoppel. But, absent some act by the title holder to accuse one of infringement, I think Mowry is still good law that only the government may sue. Moreover, after U.S. v. American Bell, the government cannot sue to invalidate a patent except where the patent is being used to justify monopolization. United States v. United States Gypsum Co., 333 U. S. 364, 387 (1948); accord, United States v. Glaxo Group Ltd., 410 US 52, 57-58 (1973).

    Obviously, to one who has standing because of an accusation of infringement, any or all of the above justify that party bringing either a DJ action or an IPR. But where the patent holder is quiet and is minding his or here own business, I will assume that the IPR statutes should be interpreted to be consistent. (Of course, we already know that the Federal Circuit has ruled that not only can parties without standing bring IPRs, they can defend IPRs in court. There can be no doubt that the Federal Circuit is once again off the reservation in this regard, IMHO.)

    Similarly, unless a party with sovereign immunity asserts its patents, its immunity should not be deemed waived.

    1. where the patent holder is quiet and is minding his or here own business

      LOL

      What?

      Patents don’t “mind their own business” any more than the speed limit sign “minds its own business.”

      1. MM, so you encourage short sellers filing IPRs? You encourage big companies filing and filing and filing again until they prevail?

    2. I will assume that the IPR statutes should be interpreted to be consistent.

      Why?

      You know that your assumption is false.

      Congress explicitly set the first stage of the IPR process in a forum that does not have a standing requirement.

      They could have chosen differently.

      They did not.

      1. anon, you keep saying this. I keep asking for some proof. All you cite in return is your own statements.

        In contrast, the entire statutory structure operates to protect patent owners from harassment and multiple lawsuits. It clearly was designed with accused infringers in mind as petitioners.

        Just for example, a patent owner is not bound by the decision of the PTAB until he or she has had an appeal. Thus the petitioners must have standing to be in federal court in order to complete the process they start by filing a petition.

        1. anon, you keep saying this. I keep asking for some proof. All you cite in return is your own statements.

          Not so, Ned, as I reference what Congress did – my words are not the source.

          In contrast, the entire statutory structure operates to protect patent owners from harassment and multiple lawsuits

          EXCEPT for the fact that Congress DID set up the IPR system to begin in a forum that does not require standing.

          This is a plain fact.

          Do you somehow doubt that plain fact?

          1. You have to be kidding anon. Congress bends over backwards to protect the patent owner from harassment and you say they intended harassment regardless solely because it chose an Article II venue?

            Still, the process does not complete until the courts approve. The PTAB’s decision does not itself cancel any claim. Viewed as a whole, the Federal Courts are involved in the cancellation process, and the PTAB is just the initial stage.

            1. Congress knows full well what it actually did, Ned.

              Somehow you cannot grasp the facts as they are, and seek to inject some odd type of “they must have intended standing” with ZERO backing for your view.

              Also, your now addition of “not complete until a court approves is simply wrong.

              The only time the court is involved is if the process happens to go there based on the CHOICE of the participants. There is ZERO sense of “it must go to the Article III forum to receive finalization.”

              If no one appeals the Article I portion of the process, that process IS complete.

              This is yet another factual item that your desire to have some other law in place (as opposed to what Congress actually did with the AIA) places your view as rather comical (and easily dismissed).

                1. The PTO cannot cancel a patent without a mandate of a court of law unless the patent owner chooses to abandon his defense.

                  You misstate – and overstate – the facts here Ned.

                  The PTO needs no mandate of a court of law for what Congress set up in the AIA.

                  This is a plain fact.

                  You continue to attempt to obfuscate about this plain fact.

                  Time for you to be inte11ectually honest and simply admit that what I state that Congress has done is completely accurate.

        2. “Thus the petitioners must have standing to be in federal court in order to complete the process they start by filing a petition.”

          Did you just make this up ? Are you aware the Fed Circuit recently decided exactly the opposite in Personal Audio?

          1. Yes I do, and that is a a shame.

            The court relied on cases involving certiorari from state courts. These cases are inapposite. The relevant cases involving Federal appeals requires standing of both parties at all times in a contested matter involving private rights.

            One more example where the Federal Circuit got it wrong. Perhaps someone will be so kind as to take this issue up to the Court’s boss that we can get this straighten out.

    1. Whether you pay taxes to the US or Ireland does not increase my own tax liability.

      You do understand what a patent is, right?

      1. PLEASE do not share your weakness of knowledge in yet another area, Malcolm – especially with a comment that intimates support for uber-wealthy corporate citizens.

  5. The second point: “2) by purchasing a patent does a Tribe implicitly waive sovereign immunity regarding validity challenges to the patent.” would introduce – seemingly out of thin air – a restriction nowhere found in patent law or any of the historical (and award winning for historical research) articles on the full alienability of the patent property that were in put in place at the beginning of this country.

    What possible reason could be offered such that an open market purchase of anything would incur any type of such waiver (especially an implicit waiver?

    Where exactly does this “question in patent law” come from, and who is asking such a question?

    Is this idle academic musings?

    An additional point:

    does not apply directly to the Tribal immunity, which is judge-made-law.

    Given the statements made in the other thread, is the controlling law actually “judge-made-law” or does the tie go to a stronger Constitutional basis?

    1. What possible reason could be offered such that an open market purchase of anything would incur any type of such waiver (especially an implicit waiver?

      Translation: “I was born yesterday and have spent the last 24 hours snorting George Washington’s remains.”

  6. I see a distinction between patents granted to an immune entity at the outset: the government, in that situation, could be said to know the benefit of the bargain it is striking. But in the case where a patent is later sold to a tribe, can it be said that the bargain was understood? Did the government understand that it would be issuing an asset immune from challenge? Does that make a difference? Should it?

    Suppose someone is alleged to have robbed a bank and bought a house with the assets. Suppose that person is sued by the bank, and the bank asks for the court to undo the purchase or put a lien on the house. Can the person pay money to the tribe to have it take ownership of the house, start paying rent to the tribe, and also claim the court can’t undo sale because of tribal sovereign immunity? I don’t know answer to this, and I’m not sure the analogy quite fits, but something about this sale seems off, and equitably it feels like tribe shouldn’t be able to shield house from suit.

    To me, if you buy property with knowledge of pending lawsuits, you cannot argue immunity to them. But I readily admit I have no background in sovereign immunity law, and I could be completely wrong.

    1. This is a good summary of the equitable issues and policy considerations, Jane.

      I also think Dennis nailed the key questions here:

      Questions in patent law remain, primarily: (1) Does the exemption from suit extent to exemption from an administrative action to cancel a tribal owned patent?; and (2) by purchasing a patent does a Tribe implicitly waive sovereign immunity regarding validity challenges to the patent.

      With regard to (1), I’m surprised that immunity from an inter parte validity challenge has not already been invoked and tested (and failed). Would an otherwise immune entity be considered to have it waived its immunity if it requests a reissue or ex parte re-exam?

    2. and I’m not sure the analogy quite fits

      It does not because no one is saying that the sale (in the patent scenario) has any taint to it (there is clear title in the sale of the item).

      This is reflected in the other thread with the counter point presented of “sham” to which my answer reflects the non-likelihood of the “sham” argument being sustainable.

      1. Why is there clear title in sale of patent but not in house? Remember, in my hypo there’s only an allegation that house was bought with proceeds of money that was ill-gotten.

        Assume there’s no proof beyond a reasonable doubt that money was stolen, but that there is clear and convincing, or perhaps a preponderance, of evidence showing theft – but no one has actually ruled on that yet. Now also assume there is clear and convincing evidence patent is invalid. What makes title to house not clear, but title to patent clear? (and I believe you believe patents have all the characteristics of private property, right?)

        As a different example, assume the patent was obtained through inequitable conduct – does this change your argument?

        1. Remember, in my hypo there’s only an allegation that house was bought with proceeds of money that was ill-gotten.

          First, I admit that I read more into your comment than your clarification provides.

          My bad.

          Second, the fact of whether or not clear title is involved IS important. A patent obtained through inequitable conduct colors the patent – and this is important – for whoever the subsequent owner may be.

          Think “in rem.”

    3. Pending lawsuits? Pending lawsuits?

      Come on now.

      The drug company is trying to prevent IPRs by generics or short sellers. They cannot sue in court due to lack of standing, and the PTO does not seem to have been able to figure out how to prevent them from filing an IPR petition.

      (I think the PTO could bar IPRs by parties who have no standing by rule because such a rule would be consistent with the entire statutory structure that is designed to prevent patent owner harassment, etc. Also see my post above about Mowry v. Whitney.)

          1. Generic companies are regularly sued by brand name companies, as is the case here.

            Allergan sued Teva for infringement of U.S. Pat. 8,629,111 (at issue here). Teva filed an IPR against U.S. Pat. 8,629,111.

            Allergan seems to be seeking to dismiss IPRs brought by a generic company it sued. Does Teva not have “standing”?

            1. Jane, it appears you’re confusing two different things.

              Teva has standing to request an IPR, as ANYONE has standing to request an IPR – there’s no “case or controversy” requirement for an IPR, the requestor just needs to identify the real party in interest.

              A declaratory judgment action before an Article III court, however, requires that there be a “case or controversy” between the parties in order for the court to have jurisdiction and for the plaintiff to have standing to bring the case. I personally can’t bring a DJ action against Allergan seeking a declaration of non-infringement/invalidity b/c not I haven’t been threatened with an infringement suit by Allergan (heck, I don’t even manufacture drugs). So there’s no case or controversy between Allergan and me. In theory, Teva could have brought such a DJ suit, had it been threatened by Allergan, but Allergan never threatened Teva with a suit over the patents, so no DJ action for Teva. And particularly relevant to your comment, the fact that Allergan often sues generic drug manufacturers does not create DJ standing for generic drug manufacturers.

              What happened here was that Teva filed an abbreivated new drug application (ANDA) with the FDA, in which it alleged that Allergan’s patents were invalid and/or not infringed. Under the Hatch-Waxman amendment, Allergan then sued Teva for infringement. The institution of that suit by Allergan gave Teva the opportunity to argue in court that the patent(s) is (are) invalid and/or not infringed. As that trial has already concluded, Teva has “had its day in court” on this matter.

              Note that ownership of a patent by an Indian tribe (or a State) doesn’t immunize that patent from attack in an Article III court in the context of an affirmative defense in an infringement suit.

              In parallel, in addition to its invalidity defense in court, Teva filed an IPR request at the PTO, effectively getting a second bite at the apple, since under current case law the PTO is not bound by a finding of “not invalid” by a court. And because the PTO applies a lower standard for invalidating claims than do courts, Teva’s chances at the PTO are probably better than in court in Marshall, TX.

              The question raised by the present assignments is not one of Teva’s standing to request an IPR – as I said, ANYONE has standing to request an IPR. The question raised is whether or not ownership of a patent by an Indian tribe immunizes that patent from a challenge before the PTAB in an IPR or PGR.

              1. Teva has standing to request an IPR, as ANYONE has standing to request an IPR – there’s no “case or controversy” requirement for an IPR, the requestor just needs to identify the real party in interest.

                Somehow, Ned continues to struggle with this basic fact….

              2. Dan – thanks. I actually quite understood. My question was directed at Ned, who claimed there wasn’t “standing.”

                Ned believes IPRs should have a standing requirement, and said that generics don’t have standing. But that is often not the case, as you point out. (Of course there are situations where generics haven’t been threatened, but that is not the point).

                Here, if IPRs had a “standing” requirement, Teva would meet it. I did not make a general comment about all generics, but rather the particular situation at issue here.

                1. Jane, then we agree that drug companies need to be protected from short sellers and generics who have not been accused of infringement.

                  Also, the patent owner needs to try validity just once where all generics are before the court. IPRs allow serial attacks, lower burdens of proof, BRI, no live testimony and a political court. Naturally, any drug company would be opposed to IPRs. It is a wonder that the AIA charge was lead by you know who, a GC of a major drug company.

          2. They have standing to initiate an ANDA proceeding, and then get sued for infringement. Would not the same apply under the AIA? I do not know the answer, but see little procedural difference.

            1. “They have standing to initiate an ANDA proceeding.” I need to unpack this.

              A generic company files their ANDA with the FDA. Accompanying that filing, the generic co. sends a notice to the patent owner and the owner of the NDA. That notice says one of four things, the fourth being the most frequent: that the patents listed in the orange book are invalid or not infringed. This is what is referred to as a Paragraph IV notice.

              Once the patent holder receives the Par IV notice, the patent owner then has 45 days to decide whether to file an infringement suit. Note that no generic product has been approved or is on the market. The case in controversy is a statutory act of infringement – that of the generic filing its ANDA application. (NB during that 45 days the patent owner typically asks for samples of the generic product so that it can assess whether that product actually falls within the scope of the orange book listed patents, and satisfy its Rule 11 obligations. Typically, however, the generic companies refuse to provide samples so the patent owners file their suit solely on the basis of the information contained in the applicants ANDA.)

              None of the above events occur with an IPR. A generic company has as much a right to file an IPR at any time against a pharmaceutical Orange book-listed patent as I do. There is no standing requirement for the IPR.

              1. xtian, “There is no standing requirement for an IPR.” I respectfully disagree for the reasons previously stated. An IPR is litigation between private parties to cancel a patent. The cancellation does not take effect until the Federal Circuit issues its mandate. This necessarily requires the presence of the petitioner in a court of law to complete the process.

                1. Ned – I agree. Final adjudication by the federal circuit requires standing, which is only found because one of the original parties before the IPR decided to appeal. However, anyone can file an IPR, and if neither party appeals (as stated by someone upthread), the IPR is finalized with the Federal Circuit standing requirement.

                  To say otherwise is just plane wrong.

                2. “The cancellation does not take effect until the Federal Circuit issues its mandate”

                  So if I follow this -if my patent is invalidated in an IPR proceeding, but don’t appeal, and the issue never gets before the Federal Circuit, my patent hasn’t been invalidated?

                  Who knew?

                3. xtian, the PTAB decision is by statute not effective to cancel a patent until all appeals are over. The patent owner has a right to appeal. If he does, and the petitioner has no standing, the Supreme Court simply vacates the lower court judgment in like circumstances. That is what should happen here.

                  This is not rocket science, xtian.

                  There is a law review article that actually advocates moving public interest litigation into agencies that groups without standing can challenge this or that so that if they win, they can appear in court at the appellate level without having ever had standing. The Supreme Court is quite aware of this transparent evasion of the separation of powers, and said so in ARASCO. That case, which is not even being followed by the Supreme Court, see Triplett, stands alone in not requiring standing by all parties in an appeal involving suits between private parties over private rights.

                4. xtian, “There is no standing requirement for an IPR.” I respectfully disagree for the reasons previously stated

                  As equally respectfully, your disagreement has NO basis in actual law.

                  Zero.

                  You can be as wrong as often as you want to be, Ned – but being wrong again and again and again will never change to somehow make you NOT wrong.

                  The cancellation does not take effect until the Federal Circuit issues its mandate

                  Also false. The effect is immediate** and only stayed (much like anything else) IF (and only if) an appeal is made.

                  No appeal – the immediate effect stands.

                  **(given the natural civil procedure rules on allowable time to appeal – but make no mistake, the action of the Article I forum is EVERY BIT as real and binding as ANY Article III lower court of first instance.

                5. You know, anon, I can cite you case after case and you will ignore that I did. Instead, you rely on your own prior remarks as authority for your current remarks.

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