A Mohawk tribe in the state of New York is at the heart of a curious patent law. Companies sell their patents to the Native American tribe and pay for their own exclusive use. Allergan made the beginning, now Microsoft and Amazon are suffering.
Tribal sovereignty offers patent protection
Native American tribes enjoy a high degree of legal autonomy in American law. In this field of law, patent rights cannot be revoked by special courts. In addition, Native American tribes in the United States enjoy immunity from patent litigation.
Native American tribe sued Microsoft and Amazon
The hardware company SRC Labs had transferred about 40 patents to the Native American tribe in August of this year. It is piquant that these patents are, according to the U. S. American television broadcaster CNBC was about to lose its protection status, classified as trivial patents, i. e. patents that are only granted a low level of invention. SRC Labs is a manufacturer of reconfigurable computers and a provider of servers, workstations and embedded systems.
However, these patents are now protected by the Native American tribe and are even being used for an active lawsuit against Microsoft and Amazon. Last Wednesday, the Mohawk tribe and SRC filed a lawsuit against Amazon against both patent infringements at the Federal Supreme Court in Virginia. com Inc. and Microsoft Corp. The technology companies are said to have used SRC patents for years without appropriate licensing. The Native American tribe is now demanding lost royalties and damages. Microsoft or Amazon could pre-empt this lawsuit by requesting that the patents be revoked.
De facto, however, the sovereign immunity of the Native American tribe means that SRC Labs and the Mohawk tribe can prevent Microsoft and Amazon from countersuing for patents. Allergan cannot loose the patent protection of its medicines as long as their patents are owned by American Indians.
Native American tribe offers a loophole in patent law
A few weeks ago, the Irish pharmaceutical company Allergan sold the patents on the drug Restasis to the Mohawk tribe to prevent the patents from being invalidated. We have already reported on this Allergan case. The deal’s lucrative for the Native American tribe. Allergan transferred all patents for his important ophthalmic restasis to the clan. The agreement will grant the Mohawks a first payment of $13.75 million from next year. The tribe will lease the patents back to Allergan exclusively and will receive $15 million in annual royalties as long as the patents remain valid. This may be very short, because a few days ago the Indian deal with Allergan was temporarily stopped. A federal court in Texas annulled these patents on 16 October 2017. Allergan plans to appeal.
Patent loophole meets political resistance
Due to its relevance for the entire pharmaceutical industry and now also for international companies, the Mohawk tribe model is making waves in the American Senate as well. Sherrod Brown, Senator of the Democrats of Ohio, has sharply criticized the patent agreement between the American pharmaceutical company Allergan and the Mohawk tribe. On 5 October, a senator joined the critics. Claire McCaskill, Senator of Missouri, presented a bill banning attempts to exploit tribal sovereignty.
All in all, this latest deal between Mohawks and SRC Labs could be interpreted as a case of patent trolls: SRC Labs granted patents with a low level of invention to the Native American tribe and immediately prepared the lawsuit filings. Patent trolls are owner of often questionable patents, which do not produce their own products and try to collect money with sometimes far-fetched arguments. They are threatening the companies with lawsuits for patent infringement.
Until then, the Mohawk tribe would like to benefit from its special status. The tribe announced that they would shortly conclude another patent agreement with a company.
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