American Indians and Apple: Patent Trolls Sink Lower

Software Patent Troll (Not to Scale)

Patent Troll (Not to Scale)

A consortium of American Indian tribes is suing Apple for patent infringement. That’s different. It’s unusual to see Amerinds in any kind of intellectual property case, let along a claim on technology patent. What’s going on?

It’s patent trolls again. The damn things are harder to kill than an infestation of termites.

Readers may recall that patent trolls took a major hit when the courts affirmed inter partes review. Readers may recall that a company called Personal Audio appealed to the US Court of Appeals for the Federal Circuit, which affirmed the April 2015 inter partes review (IPR) ruling.  So there was a court-approved process that allows anyone to challenge a patent’s validity at the US Patent and Trademark Office, an administrative process instead of litigation. No more trials in patent trolls favorite friendly forum, the Eastern District of Texas. No more trials, period.

Unless the patent troll has sovereign immunity.

Sovereign immunity is an English legal doctrine that says kings cannot be sued without their consent. In the nuted States, the doctrine applies to states, counties, cities and the federal government. If you can sue the government, it’s because they have waived sovereign immunity.

Sovereign immunity applies to Indian tribes and Alaska Natives.

The patent trolls, as cynical a bunch of money grubbers as you could ever fear to meet, figured that Indian tribes (1) were financially desperate enough to listen to the trolls, and (2) might be able to get away with avoiding the inter partes review process by claiming sovereign immunity.

They were right about the first. MEC Resources is wholly owned by the Mandan, Hidatsa, and Arikara Nation, also known as the Three Affiliated Tribes. In March, a Texas company named Prowire LLC filed a lawsuit (PDF) against Apple in Delaware federal court, claiming that the iPad 4 infringed on its US Patent No. 6,137,390. Prowire apparently assigned its disputed patent to MEC Resources.

Similarly, the New York-based St. Regis Mohawk Tribe disclosed that it was given a set of valuable patents belonging to the drug company Allergan. In return for the Mohawks holding on to those patents, which were licensed back to Allergan, the company would pay the tribe an annual royalty of $15 million, as long as the patents remained valid.

So the patent trolls found financially desperate Indian tribes. Will sovereign immunity work?

The St. Regis Mohawk tribe has is already asking that the inter partes review filing against Allergan’s patents be thrown out on the basis that the tribe is a sovereign government and therefore qualifies for immunity. So it has already started.

This isn’t the first time that a bottom-feeding business has tried allying itself with American Indians to try and avoid laws. In California, a group of payday loan companies tried to avoid state lending laws by affiliating with the Miami Tribe of Oklahoma and the Santee Sioux Nation of Nebraska. They then tried to use the tribes’ sovereign immunity to avoid the lending laws. The scheme didn’t work. in 2016, the California Supreme Court bpunced the claims, finding “scant evidence that either tribe actually controls, oversees, or significantly benefits from the underlying business operations of the online lenders.”

But that was state law. This is federal law. WC agrees with columnist Derek Lowe that “‘The validity of your patents is subject to review, unless you pay off some Indian tribe’ does not seem like a good way to run an intellectual property system.” And thinks that the federal courts will agree as well. Artifice rarely plays well in federal court.

WC fears it will leave some lawyers rich and some Tribes holding big bills and attorney fee awards. Not for the first time. Or the last.