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Are Patent Infringement Battles Becoming Murky In The US?

20 Dec, 2017
Are Patent Infringment Battles Becoming Murky In The US1

Companies like Apple make headlines every year for their innovations. However, of late, they have been in the news for trying to silently register their patents or from accusations of rampant patent infringements against them by smaller firms. Most times the cases are proven baseless, with the ‘patent trolls’ seeking to make big money off the established innovators who settle out of court to negate bad press and long drawn frivolous court battles. However, some of the recent cases filed against the giant show that the “patent trolls“ are adapting a new strategy thereby using a minor flaw in the law to a major advantage.

Prowire LLC, a Texas based company filed a case against Apple in Delaware court claiming that Apple has used its technology in iPad 4. Delaware has got an uncanny reputation of favoring the ‘little guys’ fighting the giants. Apple wanted the case to be transferred to California but before that could happen Prowire turned the table by handing over the patent to MEC Resource, a company in North Dakota owned by North American tribe.

But why are they transferring the patents to native American tribes?

Sovereign immunity is a concept that descends from the idea that you cannot summon a king or other monarch into court. In US law, and is in the 11th Amendment to the US Constitution, preventing states from being sued in federal court without the state’s consent.

It is a trial procedure to check the patentability of one or more claims in a patent to check how valid the patents are and it is a great way out of the long drawn legal battles for the big companies who have to confront numerous patent trolls each year. This law, however, has one shortcoming that came to the forefront when Allergan CEO Brent Saunders struck a $13.75 million deal with the Saint Regis Mohawk Tribe to transfer patents of the eye drug Restasis. The loophole of the “sovereign immunity”. People who fall under this category can’t be challenged with Inter Partes Reviews (IPR’s) and as one can guess North American also enjoy “sovereign immunity”. So by transferring the patents to the tribe, Allergan is trying to save the drug from generic competition before its patents run out in 2024.

Of late, not only Apple, Amazon and Microsoft have also been sued by a native American tribe and a small computer company claiming that the giants are violating the patents relating to supercomputer technology. The suits were filed in federal district court in Virginia by the Saint Regis Mohawk Tribe and SRC Labs. SRC has transferred the patents under focus to the tribe in August.

This loophole is becoming a headache for the big companies. The patent trolls are using the yardstick of “sovereign immunity” to save their spurious patents from IPR’s. The shell company holds the patent of the “patent troll” in lieu of monetary benefits, in addition to the licensing fees as long as the patent is valid. Unfortunately this trend is being exported for the wrong reasons, making it difficult for innovation to exist, let alone prolifer as the ‘patent trolls’ taking advantage of the unsuspecting tribes who are now being labeled as “patent aggressors”.

Some counter measures have already been pondered on. Sen. Claire McCaskill (D-Mo.) has introduced a bill to overcome this loophole waiting for the Patent Trial and Appeals Board to approve it. McCaskill’s bill states that “an Indian tribe may not assert sovereign immunity as a defense” in an inter partes review of patents. Hopefully with this the abuse of the patent system may be curbed and the firms can go back to focusing on innovation and not bleed energy in protecting that is rightfully theirs.