Amicus Brief Advocating Against Tribal Sovereign Immunity Filed in PTAB Proceedings

Madison Building USPTOIn response to a hotly contested series of patent litigations and PTAB proceedings involving Restatis®,  the patent owner Allergan, Inc. (“Allergan”) made a eleventh hour assignment of its patents (with an accompanying license back) to the St. Regis Mohawk Tribe (“the Tribe”).  As a result of this transaction, the Tribe asserted Tribal Sovereign Immunity before the PTAB and filed a motion to dismiss.

Thereafter, in the federal litigation in the Eastern District of Texas, Judge Bryson found the asserted claims of the patents to be invalid.  Although the sovereign immunity issue was not at issue in that case, the court considered the validity of the transaction for purposes of joinder, and criticized the transaction as being like “sham transactions, such as abusive tax shelters.”   Nonetheless, the PTAB proceedings continued.

On November 3, 2017, the PTAB invited Amicus Curiae to submit briefs to address the novel issue being raised by the Tribe’s Motion to Dismiss on the grounds of Tribal Sovereign Immunity.   In response, Askeladden LLC submitted an amicus brief.  In this submission, Amicus Curiae Askeladden LLC advocated against the motion to dismiss based on the following grounds:

  1. The motion of the St. Regis Mohawk Tribe (“the Tribe”) is based on the misplaced theory that Tribal Sovereign Immunity is applicable to administrative proceedings before the PTAB.  While the Supreme Court has repeatedly confirmed that, as a matter of judicial construct, Native American Tribes (like the Tribe) can be immune from “suits” in a court absent abrogation or waiver (see Paper 81, at 8), such immunity does not extend to all government action.  See, e.g., Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 755 (1998).  In this regard, a PTAB proceeding is not a “suit” in court, but instead an administrative proceeding in which the Office (through the PTAB) takes “a second look at an earlier administrative grant of a patent.”  Cuozzo Speed Techs. v. Lee, 136 S. Ct. 2131, 2144 (2016) (“Cuozzo”).  As such, like other administrative actions in which States or Federal Agencies (like the Federal Power Commission) may regulate rights or responsibilities of Tribes with respect to off-reservation activities, a PTAB proceeding is one of the “other mechanisms” available to the Government to resolve questions of patent validity as the administrative authority granting the patent in the first instance.  Cf. Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024, 2028 (2014).
  2. Even if the Tribe cannot be compelled to participate in this proceeding, the PTAB retains authority to adjudicate the validity of patents under review.  Indeed, there is no requirement under the AIA that a patent owner participate in a proceeding in order for it to proceedSee 35 U.S.C. §§ 311–319.
  3. There is no dispute that the PTAB has had jurisdiction over the patents-at-issue in, and the parties to, these proceedings from the moment that the Petitions were filed and at the time that the Decisions on Institution issued.  Thus, irrespective of whether notions of Tribal Sovereign Immunity are applicable, the subsequent transaction by the Patent Owner and the Tribe cannot and should not be entitled to divest the PTAB of its rights and duty to complete these proceedingsCf. Cuozzo, 136 S. Ct. at 2144.
  4. To the extent that the PTAB concludes, like Judge Bryson postulated in the co-pending district court proceeding, that the transaction assigning Allergan’s patents to the Tribe with a license back to the original patent owner is nothing more than a sham (Ex. 1163, at 4), the motion should be denied.  This Office has a duty to “protect the public’s ‘paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.’” Cuozzo, 136 S. Ct. at 2144–45 (quoting Precision Instr. Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806 (1945)), and this inter partes review (“IPR”) is an “efficient system for challenging patents that should not have issued.”  Cuozzo, 136 S. Ct. at 2144–45 (quoting H.R. Rep. No. 112-98, at 39–40 (2011)).  Consistent with the Court’s guidance that collusive agreements cannot (and should not) divest a court of jurisdiction, the agreements here should not divest the PTAB of its jurisdiction to complete the task it has rightfully begun.

The following is an excerpt from the Brief addressing Point 1 above:

  1. Notions of Tribal Sovereign Immunity Do Not Apply to Administrative Proceedings Like This One

The Tribe’s motion is premised on the proposition that “The Tribe Possesses Immunity from Suit.” (Paper 81, at 8).  However, the Tribe fails to acknowledge that sovereign immunity granted to Native American tribes is limited, and does not always extend to administrative proceedings, like IPRs before the PTAB.

Native American tribes are “‘domestic dependent nations’” that exercise “inherent sovereign authority.”  Bay Mills, 134 S. Ct. at 2030.  Among the core aspects of sovereignty that tribes possess—subject to congressional action—is the “common-law immunity from suit traditionally enjoyed by sovereign powers.”  Id.  Such immunity is found “in an agreement, express or implied between the two sovereigns, or in the voluntary decision of the second [sovereign] to respect the dignity of the first [sovereign] as a matter of comity.”  Nevada v. Hall, 440 U.S. 410, 416 (1979).  The doctrine of Tribal Sovereign Immunity developed on a “slender reed” from a “passing reference to immunity” to become “an explicit holding that tribes had immunity from suit.”  Kiowa, 523 U.S. at 757.  “As sovereigns or quasi sovereigns, the Indian Nations enjoyed immunity ‘from judicial attack’ absent consent to be sued.”  Id.

As recognized in Cuozzo, an IPR is an administrative process held before the U.S. Patent and Trademark Office, an administrative agency, and not a law suit held in a Court.  136 S. Ct. at 2137–38.  As such, traditional concerns regarding sovereign immunity, which focus on immunity from suit in a court, do not come into play. Bay Mills, 134 S. Ct. at 2030–31 (tribal sovereign immunity applies to “any suit against a tribe absent congressional authorization (or a waiver)”).

In Kiowa, the Court explained:

We have recognized that a State may have authority to tax or regulate tribal activities occurring within the State but outside Indian country.  . . . however, [that] is not to say that a tribe no longer enjoys immunity from suit.  In Potawatomi, for example, we reaffirmed that while Oklahoma may tax cigarette sales by a Tribe’s store to nonmembers, the Tribe enjoys immunity from a suit to collect unpaid state taxes.  [Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, 510 (1991)].  There is a difference between the right to demand compliance with state laws and the means available to enforce them.  See id., at 514.

523 U.S. at 755.  Thus, Kiowa recognizes a distinction between passing a law which may govern off-reservation activities of a tribe (e.g., a tax on the sale of cigarettes or granting or revoking a license or a patent) and the ability to enforce in courts those laws.  Indeed, this distinction was further recognized in Michigan v. Bay Mills, where the Court recognized that even if sovereign immunity barred a lawsuit by the state of Michigan against a tribe, “Michigan must therefore resort to other mechanisms, . . . to resolve this dispute.”  134 S. Ct. at 2028 (emphasis added).  One such mechanism authorized by the Court was that “Michigan could, in the first instance, deny a license to [the identified tribe] for an off-reservation casino.”  Id. at 2035.  For example, other Federal Agencies, such as the Federal Communications Committee (“FCC”), have exercised their power to regulate the continuation of previously issued licenses, even when the licensee is a tribe.  See, e.g., In re Confederated Tribes and Bands of the Yakama Nation, (F.C.C. Aug. 10, 2016); In re Business Council of the N. Arapaho Tribe, (F.C.C. Mar. 10, 2014).

An IPR—a PTAB proceeding to take a second look at its earlier grant of a patent—is one these “other mechanisms” authorized by Bay Mills to be used against Native American Tribes. Specifically, an IPR is more akin to a state imposing a tax or granting or revoking a license, than it is to a lawsuit seeking to enforce those tax laws or impose penalties for unlicensed activities.  Cf. Potawatomi, 498 U.S. at 512 (“Although the doctrine of tribal sovereign immunity applies to the Potawatomis, that doctrine does not excuse a tribe from all obligations to assist in the collection of validly imposed state sales taxes.”).

Amicus notes that while Federal Maritime Commission v. S.C. State Ports Authority, 535 U.S. 743 (2002) (“FMC”) is instructive, it is distinguishable.  In FMC, a State run entity asserted sovereign immunity as a defense against litigation before an independent agency, the Federal Maritime Commission.  In finding that Eleventh Amendment State Sovereign Immunity principles were applicable to that proceeding, FMC relied upon, inter alia, the bargain reached between the States in the constitutional convention to arrive at the Eleventh Amendment (a factor not at play in the case of Tribal Sovereign Immunity, which is merely grounded in comity).  Compare FMC, 535 U.S. at 751–52, with Bay Mills, 134 S. Ct. at 2031.

A factor behind the FMC Court’s decision was the “interest in protecting States’ dignity,” explaining that “[p]rivate suits against nonconsenting States . . . present ‘the indignity of subjecting a State to the coercive process of judicial tribunals at the instance of private parties,’ regardless of the forum.”  FMC, 535 U.S. at 751 (quoting In re Ayers, 123 U.S. 443, 505 (1887)) (emphasis in original).  The Court noted that—rather than subjecting sovereign states to this indignity of being sued by private parties—private parties could obtain the same relief sought in the FMC proceedings by bringing their complaints to the FMC directly, and urging the FMC to bring a suit in district court.  535 U.S. at 768 & n.19.  No similar procedure exists here for patents.

As the Court recognized in Cuozzo, an IPR is an administrative proceeding that simply entails “a second look at an earlier administrative grant of a patent.”  Cuozzo, 136 S. Ct. at 2144.  Also unlike FMC, a PTAB proceeding does not result in a litigation-like remedy.  Rather, it is intended to be an “efficient system for challenging patents that should not have issued.”  H.R. Rep. No. 112-98, at 39–40 (2011) (quoted by Cuozzo, 136 S. Ct. at 2144 (“the purpose of the proceeding is not quite the same as the purpose of district court litigation”)).  As discussed further below, the Cuozzo Court explained how, in many ways, “inter partes review is less like a judicial proceeding and more like a specialized agency proceeding.”  Cuozzo, 136 S. Ct. at 2143.  For example, the private parties that initiate IPRs need not stay in the proceedings, and the Patent Office (i.e., the U.S. Government) exercises discretion over institution and is permitted to intervene in any appeal of an IPR proceeding.  Cuozzo, 136 S. Ct. at 2140 (citing 35 U.S.C. § 314(a)); 35 U.S.C. § 143.

Furthermore, prior panel decisions holding that a state may assert Eleventh Amendment sovereign immunity are inapplicable here.  See, e.g., Reactive Surfaces Ltd., LLP v. Toyota Motor Corp. No. IPR2016-1914, Paper 36 (P.T.A.B. July 13, 2017).  Those decisions turned on the notion that IPRs are the type of proceeding from which the Framers of the Constitution would have thought the states possessed immunity.  However, “the immunity possessed by Indian tribes is not coextensive with that of the States,” Kiowa, 523 U.S. at 755–56, since it evolved out of judicial doctrine rather than the Eleventh Amendment.  Thus, the Board should not extend these prior decisions to include Tribal Sovereign Immunity.

The Author

Charles R. Macedo

Charles R. Macedo is a Partner at Amster, Rothstein & Ebenstein LLP, where he advises and litigates in all areas of intellectual property law, including patent, trademark and copyright law, with a special emphasis in complex litigation. He also assists clients in obtaining, maintaining and enforcing patent and trademark portfolios. He has successfully recovered domain names registered to others using clients’ trademarks.
Mr. Macedo is also the author of the book, The Corporate Insider’s Guide to U.S. Patent Practice, originally published by Oxford University Press.

For more information or to contact Mr. Macedo, please visit his Firm Profile Page.

Charles R. Macedo

Mark Berkowitz is Senior Counsel with Amster, Rothstein & Ebbenstein. His practice focuses on all aspects of intellectual property, with an emphasis on patent litigation. He litigates patents covering a wide variety of technologies including consumer electronics, semiconductors, e-commerce, power distribution and medical devices. He has assisted in all phases of patent cases from pre-suit investigations through appeal, including discovery, Markman briefing and dispositive motions.

For more information or to contact Mr. Berkowitz, please visit his Firm Profile Page.

Charles R. Macedo

Sandra Hudak is an Associate with Amster Rothstein & Ebenstein LLP. Ms. Hudak works in all areas of intellectual property law, including patents, trademarks, copyrights, and unfair competition. She has been involved in numerous ARE litigation matters with responsibilities including developing strategies and defenses, analyzing prior art, managing document review, and drafting motions and pleadings. Her areas of focus in patent law include subject matter eligibility under 35 U.S.C. § 101, invalidity based on prior knowledge or use, and divided infringement. She prepares and prosecutes patent applications in a wide range of technologies, including financial services, internet marketing, consumer products, and therapeutic agents. She also assists clients in post-grant proceedings before the U.S. Patent and Trademark Office, such as, inter partes reviews and covered business method reviews.

For more information or to contact Ms. Hudak, please visit her Firm Profile Page.

Charles R. Macedo

Jim Howard is Associate General Counsel of Askeladden L.L.C., where he supports all of Askeladden’s Patent Quality Initiative efforts, and Vice President and Associate General Counsel of The Clearing House Payments Company. Before joining The Clearing House, Jim was in private practice where he represented a variety of companies, including technology and financial services companies, in patent litigation and patent prosecution matters.

Askeladden is an education, information and advocacy organization with the goal of improving the understanding, use and reliability of patents in financial services and other industries. As part of its Patent Quality Initiative, Askeladden strives to promote better patents and patent holder behaviors by regularly filing amicus briefs, Inter Partes Reviews (IPRs) and engaging in educational activities.

Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of Read more.

Discuss this

There are currently 3 Comments comments.

  1. Joachim Martillo December 8, 2017 11:14 am

    I read the brief. It convinced me that the PTAB has no authority to decide the issue of tribal sovereign immunity and should dismiss without prejudice. (I may have written that incorrectly because IANAL.)

    At sometime in the future Congress may address the issue of tribal sovereign immunity in an IPR.

    Possibly also because IANAL, I don’t understand the relevance of Tennessee Student Assistance Corp v. Hood, 541 U.S. 440 (2004). The PTAB is an administrative court unlike bankruptcy court — is that relevant?

    Also, does the PTAB have jurisdiction of the res (i.e., the patent) or over the possibility of administrative error in the allowance of the patent?

    I ask this question because I don’t see how the PTAB could have the ability to invalidate a patent allowed in the result of a 35 USC 145 proceeding because invalidating such a patent would be tantamount to the overturning of a decision of an Article III court by an administrative agency.

    I thought the US system gave Article III courts the ability to review actions of an administrative agency and not vice versa.

  2. angry dude December 8, 2017 11:33 am

    So from now on should every independent inventor in US assign his/her patents to some native tribe to save his/her patents from the same agency that issued them in the first place ?
    what a farce

  3. Joachim Martillo December 8, 2017 12:14 pm

    angry dude@2. Your conclusion is logical, and I have to agree that it is a farce.