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Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
DOCKET NO.: 0106847-00184US1 Filed on behalf of Covidien LP By: David Cavanaugh, Reg. No. 36,476
Mary Sooter, Reg. No. 71,022 Natalie Pous, Reg. No. 62,191 Wilmer Cutler Pickering Hale and Dorr LLP 1875 Pennsylvania Ave., NW Washington, DC 20006 Tel: (202) 663-6000
UNITED STATES PATENT AND TRADEMARK OFFICE ____________
BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________
COVIDIEN LP, Petitioner,
v. UNIVERSITY OF FLORIDA RESEARCH FOUNDATION INCORPORATED,
Patent Owner. ____________
Cases
IPR2016-01274 (U.S. Patent No. 7,062,251 B2) IPR2016-01275 (U.S. Patent No. 7,062,251 B2) IPR2016-012761 (U.S. Patent No. 7,062,251 B2)
____________
PETITIONER’S OPPOSITION TO PATENT OWNER’S MOTION TO DISMISS PETITIONS FOR INTER PARTES REVIEW CHALLENGING
CLAIMS OF U.S. PATENT NO. 7,062,251 IN CASES IPR2016-01274, IPR2016-01275,
AND IPR2016-01276 1 Pursuant to the Board’s authorization, Petitioner files a single Opposition in all
proceedings using a caption referring to all proceedings.
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
- i -
TABLE OF CONTENTS
TABLE OF AUTHORITIES .................................................................................... ii
INTRODUCTION ..................................................................................................... 1
ARGUMENT ............................................................................................................. 2
I. SOVEREIGN IMMUNITY DOES NOT BAR IPR PROCEEDINGS. ............................................................................................. 2
A. Every Patent Owner Takes A Patent Subject To IPR Proceedings, Which Are A Necessary And Appropriate Mechanism For Regulating Government-Issued Patent Rights. .................................................................................................... 2
B. IPRs Are Not Adjudications Against A State To Which Sovereign Immunity Applies. ............................................................... 5
C. FMC Is Inapposite. ................................................................................ 7
D. Meaningful Differences Between IPR Proceedings And Civil Litigation Render Sovereign Immunity Inapplicable. ........................................................................................ 10
E. Immunizing Patents Owned By Alleged State Entities From IPR Proceedings Would Have Harmful And Far-Reaching Consequences. ..................................................................... 15
II. ALTERNATIVELY, UFRF HAS NOT PROVEN ITS ENTITLEMENT TO SOVEREIGN IMMUNITY. ...................................... 17
CONCLUSION ........................................................................................................ 20
TABLE OF EXHIBITS
CERTIFICATE OF SERVICE
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
- ii -
TABLE OF AUTHORITIES
Page(s) CASES
Abusaid v. Hillsborough County Board of Cty. Commissioners, 405 F.3d 1298 (11th Cir. 2005) ............................................................................ 18
Connecticut Department of Environmental Protection v. Occupational Safety & Health Administration, 356 F.3d 226 (2d Cir. 2004) ....................... 9
Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) ...................passim
Duke v. Grady Municipal Schools, 127 F.3d 972 (10th Cir. 1997) ......................... 18
Estate of Lagano v. Bergen County Prosecutor’s Office, 769 F.3d 850 (3d Cir. 2014) ................................................................................................. 18
Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) ..............................................................passim
Gayler v. Wilder, 51 U.S. (10 How.) 477 (1850) ...................................................... 3
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989) ............................................. 5
Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30 (1994) .......................... 19
Hudson v. City of New Orleans, 174 F.3d 677 (5th Cir. 1999) ............................... 18
In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015), aff’d 136 S. Ct. 2131 (2016) ................................................................. 6
Kappos v. Hyatt, 132 S. Ct. 1690 (2012) ................................................................... 3
Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391 (1979) .............................................................................................. 19
Leitner v. Westchester Community College, 779 F.3d 130 (2d Cir. 2015) .............................................................................................................. 18
Magnolia Marine Transportation Co. v. Oklahoma, 366 F.3d 1153 (10th Cir. 2004) ............................................................................................... 8
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
- iii -
MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015), petition for cert. filed (Apr. 29, 2016) (No. 15-1330) .................. 4
Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91 (2011) .................................. 15
Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) ................................ 3, 4
Peirick v. Indiana University-Purdue University Indianapolis Athletics Department, 510 F.3d 681 (7th Cir. 2007) ..................................... 18
Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806 (1945) ............................................................ 16
Regents of University of California v. Doe, 519 U.S. 425 (1997) ..................... 17, 19
Rosario v. Am. Corrective Counseling Servs., Inc., 506 F.3d 1039 (11th Cir. 2007) ............................................................................................. 18
Savage v. Glendale Union High School, District No. 205, 343 F.3d 1036 (9th Cir. 2003) ...................................................................................... 18
Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964) ........................................ 3
Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) ......................... 9
Tennessee v. United States Department of Transportation, 326 F.3d 729 (6th Cir. 2003) .......................................................................................... 9
Vas-Cath, Inc. v. Curators of University of Missouri, 473 F.3d 1376 (Fed. Cir. 2007) .............................................................................................. 14
CONSTITUTIONS, STATUTES, RULES, AND REGULATIONS
U.S. Const., Amend. XI ............................................................................................. 5
35 U.S.C. § 2(a) ......................................................................................................... 3
35 U.S.C. § 101 ...................................................................................................... 1, 3
35 U.S.C. § 131 .......................................................................................................... 3
35 U.S.C. § 303(a) ..................................................................................................... 7
35 U.S.C. § 311 ............................................................................................ 1, 4, 6, 15
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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35 U.S.C. § 312 ...................................................................................................... 1, 4
35 U.S.C. § 313 ...................................................................................................... 1, 4
35 U.S.C. § 314 ...................................................................................................... 1, 4
35 U.S.C. § 314(a) ............................................................................................... 6, 15
35 U.S.C. § 315 ...................................................................................................... 1, 4
35 U.S.C. § 316 ...................................................................................................... 1, 4
35 U.S.C. § 316(a)(5) ............................................................................................... 14
35 U.S.C. § 316(d) ................................................................................................... 12
35 U.S.C. § 316(e) ................................................................................................... 15
35 U.S.C. § 317 ...................................................................................................... 1, 4
35 U.S.C. § 317(a) ............................................................................................... 6, 16
35 U.S.C. § 319 ...................................................................................................... 1, 4
37 C.F.R. § 42.20(c) ................................................................................................. 17
37 C.F.R. § 42.51 ..................................................................................................... 14
37 C.F.R. § 42.74 ....................................................................................................... 7
37 C.F.R. § 42.120(a) ............................................................................................... 12
OTHER AUTHORITIES
157 Cong. Rec. S5326 (daily ed. Sept. 6, 2011) (statement of Sen. Leahy on AIA) ............................................................................................... 16
H.R. Rep. No. 98 Pt. 1, 112th Cong., 1st. Sess. 45, 48 (2011) ................................ 16
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
1
INTRODUCTION
University of Florida Research Foundation’s (“UFRF’s”) alleged sovereign
immunity is irrelevant to the Board’s ability to review U.S. Patent No. 7,062,251.
A patentee takes a patent “subject to the conditions and requirements of [the Patent
Act],” 35 U.S.C. § 101, and Congress has determined that those conditions and
requirements include inter partes review (“IPR”) proceedings. See 35 U.S.C. §§
311-319. IPRs are simply a mechanism for the Patent Office to take “a second
look at an earlier administrative grant of a patent”—a federally-issued property
right that would not exist but for the statutory provisions in the Patent Act. Cuozzo
Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016). Further, an IPR is not a
suit against a state, and therefore the Eleventh Amendment does not apply. For
these reasons, Federal Maritime Commission v. South Carolina State Ports
Authority, 535 U.S. 743 (2002) (“FMC”), is inapplicable to IPRs.
Even if FMC’s analysis were applied to IPRs, however, sovereign immunity
would not prevent the Board from reviewing state-owned patents. An IPR is not
an adjudication of a claim in which a private party seeks relief from a state entity,
and IPRs do not “bear a remarkably strong resemblance to civil litigation in federal
courts.” Id. at 757. On the contrary, an IPR is a governmental review of a
government-issued property grant; it introduces no risk of state liability and poses
no threat to a state’s dignity.
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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If, however, the Board finds that sovereign immunity is relevant to IPRs, it
should not prevent review in this instance, because UFRF has not carried its
burden to establish that it is a state entity. UFRF failed to present evidence
sufficient to establish that it meets two key factors of the sovereign immunity
analysis—whether it receives funding from the State of Florida and whether that
State would be liable for any judgments against UFRF.
For these reasons, the Board should deny UFRF’s motion.
ARGUMENT
I. SOVEREIGN IMMUNITY DOES NOT BAR IPR PROCEEDINGS.
Sovereign immunity has no applicability to IPRs. A patent owner takes a
patent subject to the Patent Office’s authority to review that property grant. And
far from strongly resembling civil litigation by a private party in federal court,
IPRs are administrative proceedings that allow the Patent Office to simply revisit
its earlier administrative grant of a patent right. The identity of the patent owner is
irrelevant.
A. Every Patent Owner Takes A Patent Subject To IPR Proceedings, Which Are A Necessary And Appropriate Mechanism For Regulating Government-Issued Patent Rights.
UFRF asks the Patent Office to find that, even though the Patent Office has
authority to issue a patent, it has no authority to reconsider that decision where the
patent is held by a state entity. This is contrary to common sense and to the Patent
Act itself. A person may obtain a patent for “any new and useful process, machine,
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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manufacture, or composition of matter, or any new and useful improvement
thereof.” 35 U.S.C. § 101. But the patent monopoly comes with strings
attached—it is expressly “subject to the conditions and requirements of [the Patent
Act].” Id.
To that end, the Patent Act charges the Patent Office with “the granting and
issuing of patents,” 35 U.S.C. § 2(a), and, as courts have long recognized, the
Office possesses “special expertise in evaluating patent applications,” Kappos v.
Hyatt, 132 S. Ct. 1690, 1700 (2012). The Office may issue a patent only if “it
appears that the applicant is entitled to a patent” under standards defined by federal
law. 35 U.S.C. § 131. A patent is, therefore, “created by the act of Congress; and
no rights can be acquired in it unless authorized by statute, and in the manner the
statute prescribes.” Gayler v. Wilder, 51 U.S. (10 How.) 477, 494 (1850); see also
Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 n.5 (1964) (A patent
“exist[s] only by virtue of statute.”). As such, a patent grant is not a private right,
but rather a public right subject to any and all statutory conditions. See Patlex
Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985) (“[T]he grant of a valid
patent is primarily a public concern . . . [and] a patent is a right that can only be
conferred by the government.”); EX-1017, Br. for Federal Respondent at 9, MCM
Portfolio LLC v. Hewlett-Packard Co., No. 15-1330 (U.S.) (“Patents are
quintessential public rights.”).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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The Patent Act provides that, just as the Patent Office may grant a patent, it
may also reconsider that decision via the IPR process. See 35 U.S.C. §§ 311-319.
The Patent Office has been performing such reconsideration for decades without
any suggestion that this authority would be limited by sovereign immunity. See,
e.g., MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1289 (Fed. Cir.
2015) (noting that Congress granted the Patent Office “the authority to correct or
cancel an issued patent” by “creating the ex parte reexamination proceeding in
1980; the inter partes reexamination procedure in 1999; and inter partes review,
post-grant review, and Covered Business Method patent review in 2011”), petition
for cert. filed (Apr. 29, 2016) (No. 15-1330).
The Patent Office’s ability to review patents it issued is unremarkable—“[i]t
would be odd indeed if Congress could not authorize the [Patent Office] to
reconsider its own decisions.” Id. at 1291. This reconsideration serves the
“important public purpose” of “correct[ing] the agency’s own errors in issuing
patents in the first place.” Id. at 1290. In fact, the Patent Office is obligated to
“remedy defective governmental (not private) action, and if need be [] remove
patents that should never have been granted.” Patlex, 758 F.2d at 604; see also
MCM Portfolio LLC, 812 F.3d at 1289 (because patent rights are public rights,
“their validity is susceptible to review by an administrative agency”). Indeed,
reviewing patents to ensure that they were properly issued is “closely integrated”
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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into the “public regulatory scheme” of patent issuance, and is “a matter appropriate
for agency resolution.” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 54 (1989)
(citation omitted).
Thus, reconsideration by the Patent Office—authorized in the statutory
definition of the patent grant itself—is entirely appropriate regardless of the
identity of the patent owner. The fact that the patent owner purports to be a state
entity does not render its patent rights unassailable by the very agency that granted
those rights.
B. IPRs Are Not Adjudications Against A State To Which Sovereign Immunity Applies.
Sovereign immunity is irrelevant to IPRs for an additional reason—the
Eleventh Amendment protects state entities only from suits or adjudications
“commenced or prosecuted against” the state. U.S. Const., Amend. XI. IPRs are
not adjudications of claims by one party “against” another party. Instead, they are
directed to the patent itself. The Patent Act provides, in relevant part:
(a) In General. Subject to the provisions of this chapter, a person
who is not the owner of a patent may file with the Office a petition to
institute an inter partes review of the patent. …
(b) Scope. A petitioner in an inter partes review may request to
cancel as unpatentable 1 or more claims of a patent only on a ground
that could be raised under section 102 or 103 and only on the basis of
prior art consisting of patents or printed publications.
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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35 U.S.C. § 311 (emphases added). As the statute reflects, an IPR is not an
adjudication of a private claim against, or an effort to obtain relief from, the patent
owner. A patent owner can never be subject to a monetary judgment in an IPR
proceeding. Rather, an IPR petitioner simply requests that the Patent Office
reevaluate its earlier administrative grant of a federal patent monopoly. See
Cuozzo, 136 S. Ct. at 2136 (An IPR “allows a third party to ask the U.S. Patent and
Trademark Office to reexamine the claims in an already-issued patent and to
cancel any claim that the agency finds to be unpatentable in light of prior art.”).
That IPRs do not involve the adjudication of claims by one party against
another is further confirmed by the fact that the third-party petitioner is not a
necessary party to the proceeding. The Patent Office may continue an IPR without
the third-party petitioner’s participation, which is precisely what occurred in
Cuozzo. See In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1272 (Fed. Cir.
2015) (noting that petitioner’s motion to withdraw was granted), aff’d, 136 S. Ct.
2131 (2016); see also 35 U.S.C. § 317(a) (“If no petitioner remains in the inter
partes review, the Office may terminate the review or proceed to a final written
decision under section 318(a).” (emphasis added)).
Unlike litigation where a plaintiff may institute a lawsuit simply by filing a
complaint, in an IPR it is the Patent Office—and not the third-party petitioner—
that decides whether to institute the proceedings. See 35 U.S.C. § 314(a) (The
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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Patent Office may institute an IPR if “there is a reasonable likelihood that the
petitioner would prevail with respect to at least 1 of the claims challenged in the
petition.”). Irrespective of the petitioner’s ongoing involvement in the proceeding,
the Patent Office “may independently determine any question of jurisdiction,
patentability, or Office practice.” 37 C.F.R. § 42.74 (addressing settlement of
parties); see also 35 U.S.C. § 303(a) (“On his own initiative, and [at] any time, the
Director may determine whether a substantial new question of patentability is
raised by patents and publications discovered by him or cited under the provisions
of section 301 or 302.”). It is undisputed that sovereign immunity does not apply
where the federal government is the acting party; a state entity cannot use its
sovereignty to prevent the federal government from bringing an action against it.
See FMC, 535 U.S. at 752 (noting that “States … consent[ed] to suits brought by
sister States or by the Federal Government” (emphasis added)). In short, IPRs are
proceedings in which the Patent Office examines the validity of a patent. They are
not proceedings meant to resolve claims of one party against another.
C. FMC Is Inapposite.
UFRF relies heavily on FMC, which analyzes the circumstances in which
sovereign immunity precludes certain federal administrative adjudications against
state parties. FMC is inapplicable here, for the reasons discussed above, but even
if it applied, the nature of IPRs distinguishes them from the administrative
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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proceedings at issue there. FMC did not involve a request for reconsideration of a
prior agency determination or a determination of the scope of any federally-granted
property right. Rather, in FMC, the Court considered the specific question whether
sovereign immunity insulated a state agency from a suit in which a private party
sought relief, including monetary damages. See FMC, 535 U.S. at 747. In that
case, a shipping company filed a complaint with the FMC seeking compensatory
damages (including attorneys’ fees) from, and injunctive relief against, the South
Carolina State Ports Authority. Id. at 748-749. In affirming that sovereign
immunity precluded the proceeding, the Supreme Court held that “[g]iven both
th[e] interest in protecting states’ dignity and the strong similarities between FMC
proceedings and civil litigation, ... state sovereign immunity bars the FMC from
adjudicating complaints filed by a private party against a nonconsenting State.”
Id. at 760 (emphases added). The Supreme Court’s ruling in FMC was thus
narrowly cabined to administrative proceedings—like those before the FMC—
involving adjudications of private party claims against a state entity.2 2 Courts have recognized the narrow applicability of FMC, interpreting FMC to
permit proceedings involving state entities where the proceeding is not akin to a
private lawsuit against a state. See Magnolia Marine Transp. Co. v. Oklahoma,
366 F.3d 1153, 1158 (10th Cir. 2004) (sovereign immunity does not apply to
petition filed by shipowner seeking limitation of liability under admiralty law
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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Unlike the proceeding in FMC, an IPR is an opportunity for the Patent
Office to reevaluate the validity of the patent right that it previously granted; the
Office need not exercise jurisdiction over the patent owner to determine the
correctness of the patent grant. Rather, if an IPR is analogous to any type of
proceeding, it is analogous to in rem actions in which jurisdiction of the
adjudicating court or agency is predicated on the property such that the owner’s
sovereign immunity is irrelevant. See Tennessee Student Assistance Corp. v.
Hood, 541 U.S. 440, 446-447 (2004) (collecting in rem cases showing sovereign
immunity does not bar bankruptcy proceeding).
The Supreme Court in Hood rejected a state’s argument that Eleventh
Amendment immunity blocked a claim in bankruptcy court for discharge of state- because such action is not a “suit against the state”); Tennessee v. U.S. Dep’t of
Transp., 326 F.3d 729, 736 (6th Cir. 2003) (preemption determination in the U.S.
Department of Transportation not barred by sovereign immunity where the
proceeding did not resemble an Article III adjudication and the agency’s order
would not “result in an order of enforcement against a state”); Connecticut Dep’t of
Envtl. Prot. v. OSHA, 356 F.3d 226, 233 (2d Cir. 2004) (OSHA’s investigation of a
whistleblower complaint not barred by sovereign immunity where the state was not
“required to defend itself in an adversarial proceeding against a private party
before an impartial federal officer”).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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owned debt, and its reasoning applies equally here. Hood explained that the
discharge of debt owned by a state entity is an in rem proceeding, as jurisdiction of
bankruptcy courts in such discharge actions is over a debtor’s property, not over
the person owning an interest in the property. Id. at 441. Distinguishing such
actions from suits against a state, the Court explained that “[a] debtor does not seek
monetary damages or any affirmative relief from a State by seeking to discharge a
debt; nor does he subject an unwilling State to a coercive judicial process. He
seeks only a discharge of his debts.” Id. at 450 (emphasis added). Finally, the
Court ruled that such a proceeding does not affront the state’s dignity, and FMC
did not apply, because the bankruptcy court exercises jurisdiction over the property
and not over the state. Id. at 452-453.
Likewise, an IPR is not a suit against a state, and subjecting a patent to post-
issuance review does not affront a state’s dignity. An IPR is merely an opportunity
for the federal government to reevaluate the validity of a patent; the Patent Office
need not exercise jurisdiction over the patent owner. The identity of the patent
owner is irrelevant; it has no bearing on whether the patent was improvidently
granted. Indeed, allowing sovereign immunity to block review of invalid patents,
as UFRF requests, would be an affront to the Patent Office and to the public.
D. Meaningful Differences Between IPR Proceedings And Civil Litigation Render Sovereign Immunity Inapplicable.
Further, unlike the adjudication at issue in FMC, IPR proceedings do not
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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“bear a remarkably strong resemblance to civil litigation in federal courts.” FMC,
535 U.S. at 757. The Supreme Court recently determined in Cuozzo that IPR
proceedings are not quasi-judicial proceedings.3 136 S. Ct. at 2144 (“[T]he
purpose of the [IPR] proceeding is not quite the same as the purpose of district
court litigation…. The name and accompanying procedures suggest that the
proceeding offers a second look at an earlier administrative grant of a patent.”).
In Cuozzo, the Court considered whether the Patent Office was within its
rulemaking authority in requiring use of the broadest reasonable interpretation
standard in IPRs, despite a different standard being applied in judicial proceedings.
The Court’s consideration of that question turned, in large part, on whether IPRs
more closely resemble judicial proceedings or Patent Office proceedings. In
concluding that IPRs are not quasi-judicial, id., the Court noted that challenges to
patent validity in federal court and IPR proceedings are separate and distinct
“tracks,” id. at 2146. An IPR, the Court explained, is a “specialized agency
proceeding” that differs from civil litigation in significant ways. Id. at 2143.
First, the remedies available in IPRs and district court litigation are 3 UFRF’s citations to IPRs being “adjudicative” ignore the bigger picture. See
IPR2016-01274, Paper No. 12, at 4-5. As described both above and below,
whether sovereign immunity is relevant to a proceeding does not turn on how that
proceeding is labelled, but rather its substance.
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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different. The only remedy in an IPR is cancellation of claims. Unlike the
proceedings at issue in FMC, there is no possibility of monetary or injunctive relief
against a state entity.
Second, there is no personal jurisdiction requirement over the patent
owner—whether an IPR proceeds does not turn on whether the patent owner is
available or responds. 37 C.F.R. § 42.120(a) (“A patent owner may file a response
to the petition…” (emphasis added)). As discussed above (supra pp. 5-7), that is
because the focus in an IPR is not on any purported wrongdoing by or liability of
any party, but instead on the decision of the Patent Office to issue the patent in the
first place.
Third, unlike civil litigation and in recognition of the strong public interest
in preventing unwarranted monopolies, IPRs may be requested by any person,
regardless of whether they have any stake in the outcome of the proceeding. See
Cuozzo, 136 S. Ct. at 2143-2144 (“Parties that initiate the proceeding need not
have a concrete stake in the outcome; indeed, they may lack constitutional
standing.”).
Fourth, IPRs, like initial patent examinations, afford a patent owner the
opportunity to amend its claims in light of rejections or arguments raised by the
petitioner. 35 U.S.C. § 316(d); see Cuozzo, 136 S. Ct. at 2145. In district court
litigation, patent claims are fixed, and the only question on validity is whether the
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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claims are patentable. The patent owner’s ability to amend its claims—an
opportunity not available in district court—confirms that IPRS do not resemble
litigation, but instead constitute a part of the Patent Office’s administrative
oversight of the validity of patents. This ability to amend is also consistent with
Congress’ intent that, like other post-grant administrative proceedings, IPRs serve
as a vehicle for any party, other than the patent owner, to present information to the
Patent Office regarding patentability of issued claims. Then, the Patent Office may
re-evaluate, and in some cases adjust, the scope of the federally sanctioned
monopoly. This is not a forum for adjudication of claims by one party against
another.
Fifth, the discovery rights and obligations in IPRs are different from those in
civil litigation (and in FMC). Unlike in FMC, where “discovery [in the FMC] …
largely mirror[ed] that in federal civil litigation,” 535 U.S. 744, discovery in IPRs
is limited.4 While discovery in civil litigation is relatively broad, discovery in IPRs
(absent agreement or motion) is limited to (1) mandatory initial disclosures; (2) the 4 See EX-1016, Message From Administrative Patent Judges Jacqueline Bonilla
and Sheridan Snedden: Routine and Additional Discovery in AIA Trial
Proceedings: What Is the Difference?, Sept. 30, 2014, available at
https://www.uspto.gov/blog/aia/entry/message_from_administrative_patent_judges
(last visited Sept. 26, 2016).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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exhibits cited; (3) cross-examination of affidavit testimony; and (4) relevant
information regarding inconsistent positions taken by a party, which must be
served on the other party. 37 C.F.R. § 42.51. Moreover, a party’s motion for
additional discovery will be granted only upon a showing that granting such a
request is in the “interest of justice.” 35 U.S.C. § 316(a)(5); Garmin Int’l Inc. v.
Cuozzo Speed Techs. LLC, IPR2012-00001, Paper No. 26 at 6-7; see also id. at
Paper No. 20, 2-3 (outlining a five-factor test).5
Sixth, IPRs and district court proceedings are subject to different standards
of proof. In an IPR proceeding, the presumption of validity does not apply, and the
petitioner—or the Patent Office if the petitioner is not participating—need only
establish unpatentability “by a preponderance of the evidence.” 35 U.S.C. § 5 Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007),
is not on point. Vas-Cath did not hold that sovereign immunity applies to Patent
Office proceedings. Instead, Vas-Cath confirmed that sovereign immunity does
not bar an appeal of an interference proceeding. And to the extent UFRF reads
Vas-Cath to imply that sovereign immunity applies to interferences, those
proceedings are fundamentally different from IPRs. Id. at 1382 (“PTO
interferences involve adverse parties, examination and cross-examination by
deposition of witnesses, production of documentary evidence, findings by an
impartial federal adjudicator, and power to implement the decision”).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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316(e). District court proceedings impose a higher burden, requiring that invalidity
be proven by “clear and convincing evidence.” Microsoft Corp. v. i4i Ltd. P’ship,
564 U.S. 91, 95 (2011); Cuozzo, 136 S. Ct. at 2143.
Finally, the pleading standard in an IPR is higher than in civil litigation, and
the Patent Office determines whether to exercise its discretion to proceed. In an
IPR, a petitioner may bring prior art to the Patent Office’s attention by filing a
petition to institute an IPR including proposed grounds of unpatentability. 35
U.S.C. §§ 311, 314(a). Only if the Patent Office “determines that the information
presented in the petition” presents a “reasonable likelihood” of unpatentability may
the Board institute the proceedings. 35 U.S.C. § 314(a). In contrast, a plaintiff in
a judicial proceeding need only file a complaint stating a claim against a defendant,
and the case will proceed based on the plaintiff’s claims.
Thus, IPR proceedings—unlike the proceedings in FMC—bear little, much
less any strong, resemblance to civil litigation brought by a private plaintiff.
E. Immunizing Patents Owned By Alleged State Entities From IPR Proceedings Would Have Harmful And Far-Reaching Consequences.
A determination that sovereign immunity bars IPRs of state-owned patents
would place these patents off-limits for IPR challenges, doing great harm to the
patent system. First, such a holding would undermine the very purpose of post-
issuance review—to strengthen the patent system by “weed[ing] out recently
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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issued patents that should not have been issued in the first place.” See 157 Cong.
Rec. S5326 (daily ed. Sep. 6, 2011) (statement of Sen. Leahy on AIA); see also
H.R. Rep. No. 98 Pt. 1, 112th Cong., 1st. Sess. 45, 48 (2011) (IPRs provide “a
meaningful opportunity to improve patent quality and restore confidence in the
presumption of validity that comes with issued patents in court.”). UFRF’s
position would allow invalid patents to stand simply because they happen to be
assigned to a state entity. Irrespective of any role a third party may choose to play
in an IPR, the Patent Office has an independent duty to ensure the validity of
patents. See 35 U.S.C. § 317(a) (“If no petitioner remains in the inter partes
review, the Office may … proceed to a final written decision under section
318(a).”); see also Cuozzo, 136 S. Ct. at 2144 (IPR proceedings are designed to
“protect the public’s ‘paramount interest in seeing that patent monopolies ... are
kept within their legitimate scope.’” (quoting Precision Instrument Mfg. Co. v.
Automotive Maint. Mach. Co., 324 U.S. 806, 816 (1945))).
Second, allowing state entities to avoid IPRs would open the door for
precisely the type of activity the AIA was meant to curtail. Were the Board to hold
that a patent owned by a monetization foundation affiliated with a state university
was automatically insulated from IPR, entities whose patents are the subject of
review would seek to assign them to a state entity, perhaps in exchange for an
exclusive grant-back license. If the Patent Office’s reach were curtailed in this
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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way, the only challenge to patent validity would again be via lengthy district court
proceedings under the clear-and-convincing evidence standard—exactly the
situation Congress aimed to change.
Finally, as explained below (infra pp. 17-20), whether a purported state
entity is entitled to sovereign immunity is a fact-intensive inquiry requiring
consideration of several factors that bear on the entity’s relationship with the state.
The Patent Office is not designed to adjudicate such fact-intensive questions of
constitutional law. This is clearly not what Congress intended when it established
the Patent Office or created IPRs.
II. ALTERNATIVELY, UFRF HAS NOT PROVEN ITS ENTITLEMENT TO SOVEREIGN IMMUNITY.
Even were sovereign immunity available in IPRs, UFRF would not be
entitled to hide behind it. As the moving party, UFRF “has the burden of proof to
establish that it is entitled to the requested relief.” 37 C.F.R. § 42.20(c). UFRF
has not carried its burden to establish that it is an arm of the State of Florida.
“[T]he question whether a particular state agency … is … an arm of the
State, and therefore ‘one of the United States’ within the meaning of the Eleventh
Amendment, is a question of federal law.” Regents of Univ. of Cal. v. Doe, 519
U.S. 425, 430 429 n.5 (1997). In answering this question, federal courts have
articulated various frameworks, focusing on, for example, “(1) how state law
defines the entity; (2) what degree of control the state maintains over the entity; (3)
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the source of the entity’s funds; and (4) who bears financial responsibility for
judgments entered against the entity.” Abusaid v. Hillsborough County Bd. of Cty.
Comm’rs, 405 F.3d 1298, 1303 (11th Cir. 2005).6 Regardless of how the factors
are phrased, the most important factor is “who is responsible for judgments against
the entity.” Rosario v. Am. Corrective Counseling Servs., Inc., 506 F.3d 1039,
1046 (11th Cir. 2007); Savage v. Glendale Union High Sch., Dist. No. 205, 343
F.3d 1036, 1040-1041 (9th Cir. 2003) (“[W]hether a money judgment would be
satisfied out of state funds” is “the most important component in establishing
Eleventh Amendment immunity.”); Duke v. Grady Mun. Sch., 127 F.3d 972, 974
(10th Cir. 1997) (“The governmental entity is immune from suit if the money
judgment sought is to be satisfied out of the state treasury.”).
UFRF attempts to de-emphasize the importance of the financial relationship
between the state and the entity at issue by reciting factors from a Fourth Circuit
6 See also, e.g., Leitner v. Westchester Cmty. Coll., 779 F.3d 130, 135 (2d Cir.
2015) (two-factor test); Estate of Lagano v. Bergen Cty. Prosecutor’s Office, 769
F.3d 850, 857 (3d Cir. 2014) (three-factor test); Peirick v. Indiana Univ.-Purdue
Univ. Indianapolis Athletics Dep’t, 510 F.3d 681, 695-696 (7th Cir. 2007) (five-
factor test); Hudson v. City of New Orleans, 174 F.3d 677, 681 (5th Cir. 1999)
(six-factor test).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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decision from 1987 that minimize those financial factors.7 See IPR2016-01274,
Paper No. 12 at 12-13. That is likely because those financial responsibility factors
weigh against a finding of sovereign immunity for UFRF. Indeed, the only
evidence UFRF provides regarding its finances is a financial statement, which
UFRF uses to make a vague argument that “a judgment impacting UFRF’s
finances would necessarily impact the University of Florida.” Id. at 16. Even if
true, that would miss the point. Many indirect circumstances “impact” a state’s
finances. The relevant questions here are more specific: whether the State of
Florida provides funding to UFRF, and whether the State of Florida would be
liable for a judgment against UFRF. The Supreme Court has explained:
The proper focus is not on the use of profits or surplus, but rather is on
losses and debts. If the expenditures of the enterprise exceed receipts,
is the State in fact obligated to bear and pay the resulting indebtedness
of the enterprise? When the answer is “No”—both legally and
practically—then the Eleventh Amendment’s core concern is not
implicated.
Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30, 51 (1994).
7 UFRF also cites two Supreme Court decisions, neither of which provides the
factors as recited by UFRF. See IPR2016-01274, Paper No. 12 at 12-13 (citing
Regents of Univ. of Cal., 519 U.S. at 429-430 (1997); Lake Country Estates, Inc. v.
Tahoe Reg. Planning Agency, 440 U.S. 391, 401-402 (1979)).
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
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UFRF does not even attempt to answer those questions. UFRF’s entire
business is that of a technology licensor designed to monetize University of Florida
patents. See EX-2002 at 28-29 (Articles of Incorporation at 2-3). There is no
evidence in this record that the State of Florida provides monetary funding to
UFRF or that the State would be responsible for any financial judgments against
UFRF, a legal entity distinct from the University of Florida. In the absence of such
evidence on the most important inquiry in the sovereign immunity analysis, UFRF
cannot meet its burden to obtain dismissal of this proceeding.
CONCLUSION
UFRF’s motion to dismiss IPR Nos. 2016-01274, 2016-01275, 2016-01276
should be denied.
Respectfully Submitted,
/David L. Cavanaugh/
David Cavanaugh, Reg. No. 36,476 [email protected] Mary Sooter, Reg. No. 71,022 [email protected] Natalie Pous, Reg. No. 62,191 [email protected] Wilmer Cutler Pickering Hale and Dorr LLP 1875 Pennsylvania Ave., NW Washington, DC 20006 Tel: (202) 663-6000 Fax: (202) 663-6363
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
Table of Exhibits
Petitioner’s Exhibit No. Exhibit Name
1001 U.S. Patent No. 7,062,251 to Birkett et al. (“the ’251 patent”)
1002 Declaration of Dr. Dean F. Sittig (“Sittig Decl.”)
1003 U.S. Patent No. 6,839,753 to Biondi and Fand (“Biondi”)
1004 WO Publication No. 01/06348 to Morales et al. (“Morales”)
1005 Gardner, Reed M., et al., Real Time Data Acquisition: Experience with the Medical Information Bus (MIB), Proceedings of the Annual Symposium on Computer Application in Medical Care, American Medical Informatics Association 813 (1991)
1006 Shabot, M. Michael, Standardized Acquisition of Bedside data: The IEEE P1073 Medical Information Bus, 6 International Journal of Clinical Monitoring and Computing 197 (1989)
1007 Eddleman, Donald W., et al., A Patient Monitoring System Designed as a Platform for Application Development, 7 International Journal of Clinical Monitoring and Computing 233 (1990)
1008 Drummond, Willa Hendricks, Dissertation, Database Design for Computerized Management of Time-Variant Clinical Information in Neonatal Intensive Care, The University of Utah (1999)
1009 Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191, 110 Stat. 1938 (1996)
1010 45 C.F.R. § 164.514 (2000)
1011 Bui, Alex AT, et al. An XML Gateway to Patient Data for Medical Research Applications, 980 Annals of the New York Academy of Sciences 236 (2002)
1012 August 22, 2005, Office Action, File History of U.S. Patent No. 7,062,251
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
Petitioner’s Exhibit No. Exhibit Name
1013 November 22, 2005, Amendment and Response to Office Action, File History of U.S. Patent No. 7,062,251
1014 U.S. Patent No. 5,579,775 to Dempsey et al. (“Dempsey”)
1015 U.S. Patent No. 6,322,502 to Schoenberg et al. (“Schoenberg”)
1016 Message From Administrative Patent Judges Jacqueline Bonilla and Sheridan Snedden: Routine and Additional Discovery in AIA Trial Proceedings: What Is the Difference?, Sep. 30, 2014, available at https://www.uspto.gov/blog/aia/entry/message_from_administrative_patent_judges (last visited Sept. 26, 2016)
1017 Br. for Federal Respondent, MCM Portfolio LLC v. Hewlett-Packard Co., No. 15-1330 (U.S.)
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss IPR2016-01274, IPR2016-01275, and IPR2016-01276
CERTIFICATE OF SERVICE
I hereby certify that on September 28, 2016, I caused a true and correct copy
of the foregoing materials:
Petitioner’s Opposition to Patent Owner’s Motion to Dismiss
Exhibits 1016 - 1017
to be served via electronic mail as agreed by the parties on the following attorneys
of record:
Richard F. Giunta, Registration No. 36,149 [email protected] Elisabeth H. Hunt, Registration No. 67,336 [email protected] Gerald B. Hrycyszyn, Registration No. 50,474 [email protected] WOLF, GREENFIELD & SACKS, P.C. 600 Atlantic Avenue Boston, MA 02210 Alfonso G. Chan, Registration No. 45,964 [email protected]
/Natalie Pous/ Natalie Pous Registration No. 62,191