Native American tribe sues Amazon and Microsoft over patents

The St. Regis Mohawk Tribe has filed patent lawsuits against Amazon (PDF) and Microsoft, using patents it acquired from a company called SRC Labs, according to reports in Reuters and CNBC.

SRC Labs, a holding company, is a co-plaintiff in today's lawsuit. The lawsuits against Amazon and Microsoft are the second and third lawsuits filed by patent-holding companies working together with Native American tribes. Patent-holding companies, sometimes derided in the tech industry as "patent trolls," produce no goods or services and make their revenue from filing lawsuits.

At least two patent-holding companies have chosen to give their patents to Native American tribes, seeking to benefit from tribal "sovereign immunity" that could avoid certain types of patent reviews at the US Patent Office.

SRC Labs was founded in 1996 to continue the "legacy of innovation" of Seymour R. Cray, who died that same year. Cray was a pioneer in large-scale computer systems and established the operating company Cray Inc. Today SRC Labs' website doesn't advertise products, just dozens of patents, organized by year.

The patent-holding company is following in the footsteps of Allergan, a drug company that gave six patents covering its $1.5 billion eye medication Restasis to the St. Regis tribe last month. Allergan lawyers are seeking to shut down an inter partes review of the patents taking place at the Patent Trial and Appeals Board, by claiming the patents now benefit from tribal sovereign immunity. The move by Allergan may be a moot point, because the drug company just lost its patents in district court.

However, the strategy practiced by Allergan and its affiliated lawyers is catching on quickly. Today's lawsuit is the second time that a patent-holding company has teamed up with a Native American tribe to sue a technology company. MEC Resources, a company wholly owned by the Mandan, Hidatsa, and Arikara Nation, sued Apple last month, seeking to get patent royalties on the iPad 4.

Sovereign advantages

Some patent holders are clearly eager to apply sovereign immunity to their patents, but it isn't yet clear how well the strategy will work. The single federal judge who has weighed in on the issue did so earlier this week, expressing "serious concerns" about a strategy to essentially "rent" sovereign immunity.

If it does work, the advantages could be considerable. State universities have a different form of sovereign immunity, and in at least two cases, universities have stopped patent reviews from moving forward at the Patent Trial and Appeals Board. Public universities also have a big advantage in federal court, because potential defendants can't file a declaratory judgment lawsuit against them to challenge their patents. In other words, they have to wait to be sued before they can fight back. This effectively gives universities the ability to choose when and where to fight patent battles.

Unlike the sovereign immunity granted to state universities, however, Native American sovereign immunity can be altered or revoked by Congress. Sen. Claire McCaskill (D-Mo.), who has called Allergan's St. Regis deal a "brazen and absurd" loophole, has introduced a bill to do just that.

Allergan agreed to pay the St. Regis Tribe $13.5 million up front for the patent deal and $15 million per year as long as the patents stayed valid. It isn't clear exactly what kind of compensation St. Regis is getting from the SRC Labs deal, but the Tribe's FAQ on its patent deals says the litigation is all being handled on a contingent-fee basis. That means money from settlements or damages will be split between the law firm and the Tribe, with SRC Labs likely getting a cut as well.

Supercomputer Patents

The SRC Labs / St. Regis lawsuit asserts that the following six patents are infringed by Microsoft: US Patent Nos. 6,076,152; 6,247,110; 6,434,687; 7,225,324; 7,421,524; and 7,620,800. They relate generally to large multi-processor computer systems and re-configurable processors. All list Jon Huppenthal, co-founder and CEO of SRC Computers, as an inventor.

Amazon was sued using the '687, '324, and '800 patents, all linked above, as well as US Patent Nos. 7,149,867 and 9,153,311. The two patents asserted solely against Amazon have different inventors but also originated at SRC Computers.

The complaints, which were filed in federal court in Virginia, aren't yet available from the courts database. Ars will update this post when they become available.

Update 10/19: The SRC Labs lawsuit against Amazon (PDF) has been made available.

Inventor Huppenthal didn't respond to a request for comment about the case, and an e-mail to SRC Labs bounced back as undeliverable. The company's phone number and website registration information is obscured by a privacy service.

Attorneys representing the tribe, from the firm Shore Chan DePumpo LLP, didn't immediately respond to a request for comment.