I don’t know enough about patents, or Native American tribes, or the 11th Amendment to write a truly educational post on these topics, but I do know about Unintended Consequences. Let me set the scene: Our law allows researchers and developers to protect their inventions through patents, which grant exclusive use of the idea for some number of years. This protection is intended to allow those who worked to develop the product time to recoup their expenses, which can be in the neighborhood of millions and billions of dollars, and decades of work. Patents are granted on the basis of an invention or idea being useful, novel, and non-obvious. Allergan has one such patent on Restasis, an eye drop that helps with a dry eye condition. The patent is due to run out in 2024.

A few years ago in 2011, the America Invents Act established an executive branch board (Patent Trial and Appeal Board – PTAB) to help adjudicate challenges to patents. This was supposedly intended to be used by those who wanted to enter the market with a particular product but were barred from doing so because someone else was (unjustifiably) sitting on a patent for that product. The unproductive patent owner, like a hedge fund, would use the patent to sue other honest producers effectively jacking up the whole process of invention. The PTAB was an avenue, besides the courts, where inventors could challenge sham patents. Unfortunately, no one thought this system would be abused, but it has been. It has since been used by generic pharmaceutical companies to challenge big dogs like Allegan in order to try to get their share of the market.

The key problem is that the 2011 law which sought to make it easier to challenge dubious patents also made it easier to challenge valid ones.  Ironically, in an effort to prevent trolling, the 2011 law created a group of reverse-patent trolls: generic drugmakers seeking to undermine legitimate patents already subject to adjudication by the courts.

Allegan fought back – in a brilliant partnership with the St. Regis Mohawk Tribe in upstate New York. Native American tribes enjoy sovereign immunity under the 11th Amendment. Similar to a state, a tribe may not be sued without its consent, unless it is violating the Constitution. So Allegan “sold” the patent to the tribe, putting a stop to the ability to sue on the patent. Allegan did this based on lawsuits that were dismissed on the basis of sovereign immunity. It’s not a loophole – it’s just a creative use of the law. But this creative use of the law was necessitated by the clunky implementation of a “new” adjudicating executive branch board, the PTAB – which itself threw a wrench in the whole patent challenge system previously adjudicated in the federal courts.

So now to the part about the beloved senator, Claire McCaskill. She has introduced a new piece of legislation to combat the “problem” of the “sham” sale to the Tribe. Her legislation intends to strip the Tribe of its ability to assert sovereign immunity in a case like this – defending a patent. The bill will not affect any other entity that may claim sovereign immunity – like a state university. People are saying McCaskill is racist for bringing forth this legislation and singling out the Tribe. On first blush, I wouldn’t play the racist card – it is really just McCaskill trying to get something done for her big money donors. But when you look to see who is going to be disadvantaged by this, and it turns out to be one of the most maligned and forgotten minority groups in America, then yes, McCaskill is kicking the brown people in the ‘nads. The Tribe licensed back the patents to Allegan, and is benefitting from this deal through royalties of $15 million per year. If there’s any group that needs that kind of money, it is a Native American tribe and the reservation. But McCaskill, in her own unique condescending way, responded:

“Congress never imagined tribes would allow themselves to be used by pharmaceutical companies to avoid challenges to patents, and this bill will shut the practice down before others follow suit.”

Clothed in an air of paternalism, McCaskill reveals how little she thinks of the tribes, and that, my friends, is racism. Poor things, they don’t know when they’re being taken advantage of. Well, I think they’ve learned by now what that looks like Senator, and they know to defend themselves when some high and mighty lady like you tells them she knows what’s good for them.

I hope the tribe wins. They have filed a motion to dismiss the challenges to the patents based on sovereign immunity – a basis for the dismissal of other similar suits. The St. Regis Mohawk Tribe happens to sit near three superfund sites (hazmat areas) and currently survive through profits from their casino. They have been trapped in a not so desirable existence, an existence truly beholden to the government, and look what it’s done for them. Making a deal to hold a patent and collect royalties seems like a pretty savvy move at this point. Now, there are several arguments against tribes even having sovereign immunity, but the current state of the law says they do. Whether that should be changed is another issue entirely.

Apparently the Tribe owns some technology patents too. It is suing Amazon and Microsoft.

Missouri senator Claire McCaskill has introduced a bill to ban attempts to take advantage of tribal sovereignty.

She said: ‘This is one of the most brazen and absurd loopholes I’ve ever seen, and it should be illegal.’

The tribe says that its partnerships on high-tech patents are vital to its plans to diversify its economy, after its traditional income from running casinos stagnated.

But this whole issue could have been avoided if lawmakers weren’t so dumb (and maybe have ulterior motives). First, creating a whole new layer of bureaucracy in the PTAB was just wrong. It added to the problem and literally gave a whole new avenue of attack to those who would abuse the system. Now there is more legislation being introduced to fix the problem the PTAB has created. This is the STRONGER Act (Support Technology and Research for Our Nation’s Growth and Economic Resilience Patents Act of 2017) (ugh, that sounds like a winner).

Second, they likely should have looked to current patent-granting rules in order to find where they could be strengthened so these hedge funds and others could not sit and be unproductive on their patents (the STRONGER Act may accomplish this, but it’s too bad we’ve had six years of a jacked system). It seems like requiring a patent owner to produce something in a certain amount of time could be a good way to ensure that the wheels of invention keep turning. There may be plenty of other ways to fix the previous system without adding to the bureaucracy, and whenever Congress has a path to doing that, they ought to take it.