4 ms·

Allergan Pulls a Fast One: Patents Transferred to Indian Tribe

69 points by QUFB 9y ago

dzdt 9y ago
When people complain about software patents, a typical response is "modern patent law really was designed for pharmaceuticals" and that the brokenness for software was more-or-less an accidental side effect. But stories like this make it seem doubtful that patent law makes that much sense in the drug industry either. I guess if this ploy works everyone will call it a loophole, not a design feature of the law. But still...
- dekhn 9y ago
  The problem is not with patent law here, it's sovereign immunity for tribes being used to protect IP after it's expired.
  - jasonmp85 9y ago
    The problem is also with patent law. (Intellectual) property is theft, etc.
  - mcguire 9y ago
    My understanding is that the patent hasn't expired, but is under threat from prior art. Transferring it to a tribe during the lawsuit sounds...risky, but I can see future IP using the approach from the start, like government contractors. On the other hand, it's a stinky loophole that might be shut down immediately. Probably not, though; there's money on both sides.
BearGoesChirp 9y ago
I wonder how Indian tribes will feel once people start voting to end any of the immunity that allows for these tricks?
- mcguire 9y ago
  Both the tribes and IP owners are going to be on the other side of that vote.
- SolarNet 9y ago
  That would probably be difficult. Ending their sovereignty is not a solution that's feasible (it would likely take a constitutional convention, and agreement from the tribes in question, else we would basically have just invaded them like Russia did with Ukraine). However preventing American companies from selling patents to them is pretty easy. To put it simply, the solution is not screwing around with the tribes' "immunity", it's regulating the industries. You are basically saying people should vote to annex the land of a people we basically already committed genocide against... do you really want to open that can of worms?
  - BearGoesChirp 9y ago
    >it's regulating the industries. This fixes only one of the problems caused by the immunity. >You are basically saying people should vote to annex the land of a people we basically already committed genocide against... do you really want to open that can of worms? Yes, I am suggesting that. The amount of corruption, abuse, and other problems are sufficient even before we get to legal abuses like this. And if we want to bring up past wrongs, that gets messy really fast. What tribe actually has a fair claim to the land they own that they didn't steal from some earlier tribe?
    - SolarNet 9y ago
      > This fixes only one of the problems caused by the immunity. Again, it's not immunity. It's sovereignty, which manifests as immunity (this distinction is important, it's like saying the problem is the smoke, and not the fire that causes it). The tribes are recognized as federal entities at the level of states. Any violation of that sovereignty has consequences. State universities and colleges for example own patents under similar laws. Also you probably can't strip their immunity without a constitutional convention and multiple 2/3 votes. Because it's sovereignty, it would be like voting whether California is still a state, or whether states can regulate the companies they incorporate. > And if we want to bring up past wrongs, that gets messy really fast. What tribe actually has a fair claim to the land they own that they didn't steal from some earlier tribe? Well often it isn't their ancestral land that they live on anymore anyway. But some tribal claims go back thousands of years one specific tribe near my hometown has been inhabiting the region for 8,000 years [0]. Not that I am claiming there was no violence, but there was a lasting culture, not unlike similar ancient city states, that stayed in the region. Our still existing government committed a genocide against these peoples. This isn't just about stealing their land, it's about breaking many many treaties, murdering them, sterilizing them, forcing them to abandon their culture, destroying their culture, and plenty of other terrible things. It's war taken to a different level. And you want to break another agreement through tyranny of the majority? Thank goodness it's way harder than that. If you really want to end corruption and abuse (of power; it's not like they are torturing anyone) around the tribes, convince them to trust us enough to give up those powers themselves. We have slowly been working on that trust in my hometown, it's a long road. Good luck. [0] https://en.wikipedia.org/wiki/Lower_Elwha_Klallam_Tribe https://en.wikipedia.org/wiki/Lower_Elwha_Klallam_Tribe
defen 9y ago
In principle (ignoring whether it's a good strategy) could the tribe simply keep all the money? So the choice is, make $15 million per year until 2024, and possibly more from other deals (but other tribes are going to get into this and start a race to the bottom) OR make $1 billion per year until 2024, and no one else will ever make this deal with you.
- S_A_P 9y ago
  The way I read this is that Allergan is making a lump sum payment, and then ongoing annual royalties beyond that. That makes sense to me, as the money is coming from the sales of Restasis at inflated/uncompetitive pricing.
- flachsechs 9y ago
  the tribe doesn't have the ability to manufacture, market, and distribute the drug. the best they could do is sell the patent back to a competitor. which is doable, but probably expensive, because allergan would stop at nothing to re-gain that patent (i.e. lawyers).
ShakataGaNai 9y ago
I really hope that the USPTO says something akin to "You cannot transfer US patents to any other country or sovereignty. As such we're taking your 'transfer' as having abandoned the patent in question. This decision is final." Punch em in the nose just once and that'll teach em to be much more careful about being scum.
- djrogers 9y ago
  That would entail the USPTO making up new law on the spot, which it can't do. Not to mention the fallout for multi-national companies, or US companies legitimately selling patents to foreign entities. This is a problem for Congress to solve - they created the mess with bad laws, now they need to fix them.
  - bradleyjg 9y ago
    I wouldn't put the blame on Congress for passing a "bad law" for this one. The Hatch-Waxman Act predates Seminole Tribe of Fla. v. Florida and its clear statement rule by more than a decade. And it's been more than 20 years since that case and apparently the evil geniuses at Allergan's law firm are the first to notice how the two combine to create this loophole.
spodek 9y ago
Patents are government granted monopolies. When you create monopolies on intangibilities, you get results like this, where monopoly owners do what they can to keep and extend their monopolies, as the framers of the Constitution anticipated. The problem is beyond one company's or sovereign nation's actions. What they're doing is likely legal, which suggests the law is the problem. The problem is a system that creates monopolies out of ideas, enforced by law.
stablemap 9y ago
Some earlier discussion on an article in the Times: https://news.ycombinator.com/item?id=15206796 https://news.ycombinator.com/item?id=15206796

69 points by QUFB 9y ago

dzdt 9y ago

When people complain about software patents, a typical response is "modern patent law really was designed for pharmaceuticals" and that the brokenness for software was more-or-less an accidental side effect. But stories like this make it seem doubtful that patent law makes that much sense in the drug industry either. I guess if this ploy works everyone will call it a loophole, not a design feature of the law. But still...

dekhn 9y ago
The problem is not with patent law here, it's sovereign immunity for tribes being used to protect IP after it's expired.
- jasonmp85 9y ago
  The problem is also with patent law. (Intellectual) property is theft, etc.
- mcguire 9y ago
  My understanding is that the patent hasn't expired, but is under threat from prior art. Transferring it to a tribe during the lawsuit sounds...risky, but I can see future IP using the approach from the start, like government contractors. On the other hand, it's a stinky loophole that might be shut down immediately. Probably not, though; there's money on both sides.

BearGoesChirp 9y ago

I wonder how Indian tribes will feel once people start voting to end any of the immunity that allows for these tricks?

mcguire 9y ago
Both the tribes and IP owners are going to be on the other side of that vote.
SolarNet 9y ago
That would probably be difficult. Ending their sovereignty is not a solution that's feasible (it would likely take a constitutional convention, and agreement from the tribes in question, else we would basically have just invaded them like Russia did with Ukraine). However preventing American companies from selling patents to them is pretty easy. To put it simply, the solution is not screwing around with the tribes' "immunity", it's regulating the industries. You are basically saying people should vote to annex the land of a people we basically already committed genocide against... do you really want to open that can of worms?
- BearGoesChirp 9y ago
  >it's regulating the industries. This fixes only one of the problems caused by the immunity. >You are basically saying people should vote to annex the land of a people we basically already committed genocide against... do you really want to open that can of worms? Yes, I am suggesting that. The amount of corruption, abuse, and other problems are sufficient even before we get to legal abuses like this. And if we want to bring up past wrongs, that gets messy really fast. What tribe actually has a fair claim to the land they own that they didn't steal from some earlier tribe?
  - SolarNet 9y ago
    > This fixes only one of the problems caused by the immunity. Again, it's not immunity. It's sovereignty, which manifests as immunity (this distinction is important, it's like saying the problem is the smoke, and not the fire that causes it). The tribes are recognized as federal entities at the level of states. Any violation of that sovereignty has consequences. State universities and colleges for example own patents under similar laws. Also you probably can't strip their immunity without a constitutional convention and multiple 2/3 votes. Because it's sovereignty, it would be like voting whether California is still a state, or whether states can regulate the companies they incorporate. > And if we want to bring up past wrongs, that gets messy really fast. What tribe actually has a fair claim to the land they own that they didn't steal from some earlier tribe? Well often it isn't their ancestral land that they live on anymore anyway. But some tribal claims go back thousands of years one specific tribe near my hometown has been inhabiting the region for 8,000 years [0]. Not that I am claiming there was no violence, but there was a lasting culture, not unlike similar ancient city states, that stayed in the region. Our still existing government committed a genocide against these peoples. This isn't just about stealing their land, it's about breaking many many treaties, murdering them, sterilizing them, forcing them to abandon their culture, destroying their culture, and plenty of other terrible things. It's war taken to a different level. And you want to break another agreement through tyranny of the majority? Thank goodness it's way harder than that. If you really want to end corruption and abuse (of power; it's not like they are torturing anyone) around the tribes, convince them to trust us enough to give up those powers themselves. We have slowly been working on that trust in my hometown, it's a long road. Good luck. [0] https://en.wikipedia.org/wiki/Lower_Elwha_Klallam_Tribe https://en.wikipedia.org/wiki/Lower_Elwha_Klallam_Tribe

defen 9y ago

In principle (ignoring whether it's a good strategy) could the tribe simply keep all the money? So the choice is, make $15 million per year until 2024, and possibly more from other deals (but other tribes are going to get into this and start a race to the bottom) OR make $1 billion per year until 2024, and no one else will ever make this deal with you.

S_A_P 9y ago
The way I read this is that Allergan is making a lump sum payment, and then ongoing annual royalties beyond that. That makes sense to me, as the money is coming from the sales of Restasis at inflated/uncompetitive pricing.
flachsechs 9y ago
the tribe doesn't have the ability to manufacture, market, and distribute the drug. the best they could do is sell the patent back to a competitor. which is doable, but probably expensive, because allergan would stop at nothing to re-gain that patent (i.e. lawyers).

ShakataGaNai 9y ago

I really hope that the USPTO says something akin to "You cannot transfer US patents to any other country or sovereignty. As such we're taking your 'transfer' as having abandoned the patent in question. This decision is final." Punch em in the nose just once and that'll teach em to be much more careful about being scum.

djrogers 9y ago
That would entail the USPTO making up new law on the spot, which it can't do. Not to mention the fallout for multi-national companies, or US companies legitimately selling patents to foreign entities. This is a problem for Congress to solve - they created the mess with bad laws, now they need to fix them.
- bradleyjg 9y ago
  I wouldn't put the blame on Congress for passing a "bad law" for this one. The Hatch-Waxman Act predates Seminole Tribe of Fla. v. Florida and its clear statement rule by more than a decade. And it's been more than 20 years since that case and apparently the evil geniuses at Allergan's law firm are the first to notice how the two combine to create this loophole.

spodek 9y ago

Patents are government granted monopolies. When you create monopolies on intangibilities, you get results like this, where monopoly owners do what they can to keep and extend their monopolies, as the framers of the Constitution anticipated. The problem is beyond one company's or sovereign nation's actions. What they're doing is likely legal, which suggests the law is the problem. The problem is a system that creates monopolies out of ideas, enforced by law.

stablemap 9y ago

Some earlier discussion on an article in the Times: https://news.ycombinator.com/item?id=15206796 https://news.ycombinator.com/item?id=15206796