exela v kappos, transcript of oral argument on defendants' motion for reconsideration
DESCRIPTION
Transcript of oral argument on defendants' motion for reconsideration of district court's decision denying PTO's motion to dismiss under statute of limitations. This is the oral argument on the motion that resulted in the decision and order on December 21, 2012, dismissing the case.TRANSCRIPT
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UNITED STATES DISTRICT COURTEASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
EXELA PHARMA SCIENCES, LLC, )ET AL. )
)VS. ) 1:12-CV-469
)) ALEXANDRIA, VIRGINIA) NOVEMBER 30, 2012
DAVID J. KAPPOS, ET AL. ))
_______________________________)
_______________________________________________________________
TRANSCRIPT OF MOTION FOR RECONSIDERATIONBEFORE THE HONORABLE LIAM O'GRADYUNITED STATES DISTRICT JUDGE
_______________________________________________________________
Proceedings reported by stenotype, transcript produced by
Julie A. Goodwin.
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A P P E A R A N C E S
FOR THE PLAINTIFF:EXELA PHARMA SCIENCES, LLCBy: MR. CLARENCE EDWARD POLK, JR.11710 Plaza America DriveSuite 2000Reston, Virginia [email protected]
FOR THE DEFENDANT:UNITED STATES ATTORNEY'S OFFICEBy: MR. STEPHEN J. OBERMEIERAssistant U.S. Attorney2100 Jamieson AvenueAlexandria, Virginia [email protected]
FOR THE INTERVENORS:LATHAM & WATKINS LLPBy: MR. MARC ZUBICK233 South Wacker DriveSuite 5800Chicago, Illinois [email protected] for Cadence Pharmaceuticals, Inc.
HOLLAND & KNIGHT LLPBy: MR. CHARLES A. WEISS31 West 52nd StreetNew York, New York [email protected] for SCR Pharmatop
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A P P E A R A N C E S
OFFICIAL U.S. COURT REPORTER:MS. JULIE A. GOODWIN, CSRUnited States District Court401 Courthouse SquareTenth FloorAlexandria, Virginia [email protected]
ALSO PRESENT:JAMIE SIMPSONSYDNEY JOHNSON
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(NOVEMBER 30, 2012, 11:10 A.M., OPEN COURT.)
COURTROOM DEPUTY: Civil Action 1:12-CV-469, Exela
Pharma Sciences, LLC, et al. Versus David J. Kappos, et al.
Counsel, please identify yourselves for the record.
MR. POLK: Edward Polk for Exela.
THE COURT: Good morning, Mr. Polk.
MR. POLK: Good morning, Judge O'Grady.
MR. OBERMEIER: Good morning, Your Honor. Steve
Obermeier for the agency. With me is agency counsel Jamie
Simpson and Sydney Johnson.
THE COURT: All right. Good morning to each of you.
All right. This comes on a motion to reconsider in
light of a Fourth Circuit case that was decided by Judge Motz
and some fellow members of the Fourth Circuit. And in light of
that decision, the request is made to reconsider my earlier
ruling.
I've looked at the pleadings again. I've looked at
my earlier ruling. I've closely reviewed the Hire Order versus
Marianos decision, and why don't I hear from Mr. Polk first.
And tell me why I'm not bound by Hire Order and its
fairly broad implication to the facts of our own case.
MR. POLK: Thank you, Your Honor. The -- just one
second.
As before Your Honor, I have just a handout that I
think that would be helpful for the Court to --
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THE COURT: All right.
MR. POLK: -- to follow the argument today.
Thank you very much.
And, Your Honor, if you could at least turn to
page 1 where I talk about the governing law there.
THE COURT: Uh-huh.
MR. POLK: The substantive law for this case,
certainly as this Court is aware, is set forth in Section
371(d), which does not have any statute of limitations tied to
it, so by default we have to go to Section 2401(a) which says
that every action is going to be barred unless it's brought
within six years after the right of action accrues.
And certainly if you go down to Section 702, that
right of action that's talked about in Section 2401(a), is the
right of action that's provided under the APA Section 702.
This is a person adversely affected or agreed by agency action
is entitled to judicial review.
Now, one thing that's important and also in --
because this is, again, just an issue of statutory
interpretation when you look at the limitations period. And
we -- I cite a case here, Crown Coat, which they explain
that you -- when you look at this accrual issue, the Court
certainly has to look at it in light of this underlying purpose
of the statute. And I think it's fairly clear if you look at
Section 371(d), it's aimed at protecting the public from the
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unwarranted recapture of information that has gone abandoned.
So I think that has to be taken into account with the accrual
decision.
Certainly if you look after Aristocrat, we can't
bring that now to district court litigation, so the only place
that we can actually bring that claim is here because there's
no other remedy at law so that has to be brought here under the
APA. So that is also where you have to look at part of the
accrual decision itself. And so even -- even beyond that,
certainly that policy objected that -- that Supreme Court talks
about in Crown Coat, it's just law when it says to begin with.
If you look at the -- our second page of the case
handout, and we start talking about the -- there is a -- and
this is what the Court cited in its original decision. There
is a standard rule that applies to every single federal statute
of limitations. That's without exception unless Congress steps
in and says otherwise. And I'll get to that in just a second.
So, you have this standard rule, and these cases I
cite are from the Supreme Court and the Fourth Circuit well
before Hire Order on pages 2 and 3. I think that's pretty
clear.
So you have a standard rule. And again, these are
the cases that's -- that are in the Court's original opinion.
And if you go back and take the time to read these case, which
I can promise you I have, the inquiry that the Court looks at
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is at what point could this person walk into the courtroom and
file a civil action. That's what the inquiry is.
THE COURT: How is that different from Hire Order?
MR. POLK: Hire Order is --
THE COURT: The IRS puts a regulation in place.
They -- you know, Hire Order comes along, you know, five years
later, seven years later, whatever, and says, Well, this --
this stinks. I don't like this. I'm brand new to the game and
this needs to change.
And the Fourth Circuit says, Sorry, you've got to
have a cutoff. And it's six years, and it's six years from the
agency action. And I'm -- you know, it doesn't matter when you
came along and when you joined the party, you're stuck with six
years.
MR. POLK: Hire Order doesn't quite go that far, Your
Honor. Hire Order, if you go back and look at what it says, if
you turn to page 6 of the handout that I've given you, Hire
Order --
THE COURT: Well, tell me where Hire Order doesn't say
that.
MR. POLK: Hire Order says, When, as here -- and I'll
get it from here -- When, as here, plaintiffs bring a facial
challenge --
THE COURT: Uh-huh.
MR. POLK: And that's what this law is about. Hire
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Order is about a facial challenge. And does Hire Order say
anything new? Absolutely not. And that's why I wanted you to
turn -- if you look at page 6 of our case handout.
What did the Supreme Court say in 1997? Such
facial challenges are generally ripe the moment the challenged
regulation or ordinance is passed. That's exactly what Hire
Order said.
And why is that? Because it still doesn't get you
away from that ripeness or that injury. Because when you bring
a facial challenge, you are saying that there is no
application that this could ever apply. I don't care what
situation you bring it to, it is always going to be invalid.
That's not what we're bringing.
And in that situation, Hire Order didn't change
anything. It's always been, you have six years to bring that
action.
If you look -- if you look at Hire Order, Hire
Order cites Wind River, and Wind River is probably the best
decision cited in your case, in your opinion, and it goes
through why there's a distinction between these faci -- what
they call in their procedural or policy-based facial challenge.
When it comes to really going into substance where you're
arguing that the policy or the -- the regulation itself is
ultra vires.
And so if you look at that, that is the big
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distinction between the two because at that point in time -- if
we were bringing a facial challenge --
THE COURT: Well, they say you are bringing a facial
challenge and that you're dressing it up, but the reality is
that this is nothing more than a facial challenge.
MR. POLK: Your Honor, the law is -- I mean, it's
crystal clear on what a facial challenge is. It means that I
have alleged that there's no circumstance at all that this
would be valid. And certainly if you turn to -- turn to page 8
in the handout that I've given you, and I've put an example in
here where the regulation may exactly -- may actually apply.
If you look at 35 U.S.C. 111(a)(4), it gives the
director authority to revive an application under either
standard, be it unavoidable or unintentional.
So for that situation if they wanted to use
1.137(b), perfectly fine. I don't see any issue with that
whatsoever. That's not what we've alleged. And again, the
law -- if this is a dispute on whether what's a facial
challenge, the law is clear there. We have to be saying that
there's nothing that we can possibly do in any situation where
this rule would be valid. That was the continuation rules.
That was the challenge that was made to the PTO's continuation
rules.
They didn't say, well, if you apply it to
international applications it's no good. If you apply it to
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domestic it's not good. They said in every application, this
is no good. That's a facial challenge.
There's nothing in our complaint, nothing in our
complaint that calls this a facial challenge. I can call an
elephant a snake, it doesn't make it one. So there's nothing
in our complaint that makes this a facial challenge. Sure,
certainly that's what they allege, but the law does not support
that in any way, shape, or form.
THE COURT: Okay.
MR. POLK: And so if you go back to, again, the -- the
basic here accrual, when does that happen? Every statute of
limitation it says it accrues at the time you can step in the
courtroom and file a lawsuit.
Now, their argument that they're saying, Well, in
your decision you looked at the injury, but also in the case
law it talks about ripeness. Same thing. I think that's what
we kind of focused more on when we had a ripe claim to actually
be able to bring the cause of action.
And if you look at page 3 of our handout, we cite
our cases there where certainly long before Hire Order ripeness
was a consideration in the accrual decisions in the Supreme
Court as well as in the Fourth Circuit. If you look at Bay
Area Laundry, they talk about this ripeness, and we cite that.
Turn to page 4, Bay Area, the part I've
highlighted: A cause of action does not ripen until the
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circumstance here; therefore, the Court is saying it doesn't
accrue.
Look at what the Fourth Circuit said in Franks
versus Ross, United States versus Minor, Franks versus Ross
says a cause of action accrues for purposes of the statute of
limitation when it's sufficiently ripe to maintain the suit on
it. So Hire Order says nothing different than that had been
the law forever. You still have to look back at when is your
cause ripe, that I can come in here and actually file a
lawsuit.
If it's a facial challenge -- and again, this is
explained very well in Wind River -- you have to bring that
within six years from when their agency issues a regulation.
That's the Supreme Court case we cite in here.
If we were bringing a facial challenge, then
certainly it would be barred, but we are not bringing a facial
challenge. And to look at our complaint and say that we are,
it's just -- it's saying something in our complaint it doesn't
really say.
So -- and so now you're left with the situation
where their basic argument is our claim accrued in 2003, and it
expired in 2009. And what did the Supreme Court and the Fourth
Circuit call that? Is that's an odd result, that Congress is
going to have to tell us that you want to have have happened in
the statute itself. That's in the cases that we cite.
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I believe that's page -- yes, page 5 of the handout
that I've given Your Honor. It goes through a number of
Supreme Court and Fourth Circuit cases that say, If you're
going to have the result where the statute of limitations
starts ticking before you can actually come in and file a
lawsuit, Congress has to be the one to say that in the statute
itself because otherwise you're now deviating from standard
rule, and I believe it was Bay Area where -- where the Supreme
Court said, when Congress passes legislation, it passes it with
the understanding that it's going to be applicable -- what's
going to apply to this is a standard rule. And if we're going
to deviate from that, then that has to come from Congress in
the text of the statute.
Now, PTO has never even asserted, let alone
explain, how Exela could have brought the cause of action in
2003. There's nothing in the language of the 371(d) that says
we now because of that we want to start the limitations period
at a time other than the standard rule. It's not in 371(d);
it's not in 2401(a) that says anything about this case. And if
you look at Hire Order, Hire Order didn't even address 371(d),
so how could it have found an exception for 371(d) in the -- to
what Congress intended for the limitations to apply.
So, I mean, you're basically trying to put a square
peg into a round hole when it comes to Hire Order because it
doesn't fit the facts of this case. And still, Hire Order does
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not divorce itself from when you can bring an action because
that at the end of the day is the fundamental inquiry that you
have to look at: When can I step in this courtroom and bring
an action.
Facial challenges, again, PTO rules are the perfect
example. I believe it was GSKE -- GSK that filed that, if I'm
not mistaken. The rule hadn't been applied to them. Nothing
had been done. But they're able to come into this courtroom
and bring a lawsuit. Why? Because they were bringing a facial
challenge.
After that six-year period, you no longer -- you're
not barred from bringing a challenge. You can't bring a facial
challenge. You now at that point have to wait until the
statute itself or something, or something you've been -- if you
go back to the language of Section 702, after that initial
six-year period, you're going to have to wait until something
has adversely affected you to bring that -- that APA action in
the Court.
So, facial challenge have no issue with Hire Order.
The substantive or as-applied challenge that we're bringing
here, completely different. Hire Order does not address it.
And since Hire Order -- I mean, it's pretty clear
it says it's limited to facial challenges. That's what it
says. It says when as here, you're involved in a facial
challenge. That's what it says. So anything you want to
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interpret from that case relating to a substantive or
as-applied challenge has to be nothing beyond pure
un-nonbinding dicta because that wasn't the issue with the
Court, that the Court was facing.
THE COURT: All right.
MR. POLK: Thank you very much.
MR. OBERMEIER: Excuse me. Good morning, Your Honor.
Before I respond, I thing we missed some introductions here. I
apologize for that. Counsel for intervenors is here as well.
Counsel Marc Zubick and Charles Weiss are here. And if it
pleases the Court, they'd like a couple of minutes to respond
as well, if the Court deems it necessary.
THE COURT: Certainly.
MR. OBERMEIER: In responding to counsel's argument,
Your Honor, I think -- I think you hit the nail on the head
right at the beginning that Hire Order addresses a broad enough
situation to encompass what is happening right here. And
despite all the case law that's being thrown around and packets
of case law that was -- a packet that was provided here, it
doesn't change the fact that the issue here is simple. What
starts the -- the statute of limitations, is it the date of
final agency action or the date of injury? And Hire Order,
they plainly held that it's the date of final agency action
regardless of the date of injury. And as --
THE COURT: Well, but, you know, they do identify it
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as a facial challenge, and they state that the -- you know,
plaintiff has conceded that he's making a facial challenge,
and, you know, it's a three-page decision. It doesn't spend a
long time talking about facial challenges versus applied --
as-applied challenges, and it doesn't -- it's not a whole lot
of substance there. It's a very focused decision on a, you
know, limited set of facts.
MR. OBERMEIER: I don't disagree that it's a short
opinion and that it's directed to purely facial challenges. I
mean, that's -- it is what it says in the opinion. But I -- as
our briefing says, and I think it's worth rehashing, there are
several responses to that.
First of all, the appellants in Hire Order raised
the exact same arguments as Exela is raising here citing the
exact same cases. They said that an agency action doesn't
accrue until the date of injury or when it becomes ripe or
however you want to say that, and they said that it would be
absurd to hold otherwise. Nevertheless, the appellants in Hire
Order, they challenge a 1969 revenue ruling about -- that
affects federal firearms licensees. They don't become federal
firearms licensees until 2008, so there's no way their action
accrued in the way Mr. Polk is explaining how actions accrue
until 2008, yet the Court said that that argument utterly fails
and then it says that none of the case law which they cite --
and the Court cites Franklin. It cites Bay Area. It cites
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Crown Coat -- none of that case law supports that position.
So, Hire Order does address the arguments raised here and
rejects them.
With regard to whether facial challenges are
somehow unique from what happened here, several responses to
that. First of all, counsel is arguing here -- and he says in
his brief and it's underlined -- that the distinction between
facial and as applied here is crucial, yet there's very little
explanation for why that's the case, other than to cite some
case law that says a cause of action -- or I should say
actually, an interesting complainant has a legally cognizable
injury the moment the agency issues a rule.
Well, that couldn't possibly have been the case for
the appellant in Hire Order because like we -- I just said,
they didn't become federal firearms licensees until 2008, so --
so that doesn't apply. Also, Hire Order made no indication
that -- that the date of injury -- or excuse me, that because
facial challenges accrue from an injury standpoint, that
they -- that that's why that action was untimely. They were
very clear. They said it's the date of final agency action.
Final agency action was promulgation on the regulation. That
was -- the action was beyond six years, untimely.
So -- and then finally, as Your Honor pointed out,
this is not an as-applied challenge in that the rules here
weren't applied to plaintiffs.
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Now, this has a couple of implications. First of
all, plaintiffs' contention that his complaint can't be read to
raise a facial challenge, I mean, the complaint itself says
count four, unlawful rules and regulations. They're
challenging rules and regulations. I don't know how that
couldn't be considered facial, just reading it on its face.
And Your Honor addressed facial challenge in -- in your first
opinion.
But also, the key about it never being applied to
plaintiffs', the reasons that that's key is because just like
the appellants in Hire Order, the agency action was decoupled
or divorced from the injury. And so standing, finality,
timeliness, these are distinct concepts.
So in this case Hire Order is saying what's key for
timeliness purposes is final agency action, regardless of a
date of injury. And also in terms of how you would
characterize their challenge, because it was not applied to
plaintiffs, what they're really saying is they're challenging a
rule as applied to all -- as applied to all PCT applicants.
And what they're really saying is it wasn't applied to us, but
the way it was applied to intervenors, or I should say
Pharmatop, is they interpreted the line correctly, and any
person in the position of Pharmatop should have gotten an
unavoidable standard, not an unintentional standard.
So, I'm not going to argue that they're not
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challenging that 1.137(b) isn't applicable in all circumstances
because it isn't what they're arguing, but they're still
challenging a rule facially in the sense that they're not
challenging it in the way that it applies to them specifically.
I'm sorry, Your Honor. I just want to make sure
I'm responding to everything.
THE COURT: Okay. Take your time.
MR. OBERMEIER: And really, Your Honor, I mean,
counsel has provided a -- like I said a packet of cases, and I
looked through it quickly. And I think we went through pages 1
through 5 or something. None of those cases are APA cases.
And it's crucial because for two reasons: A, if you don't have
an APA case, you're not addressing the -- the interest in
finality, which is really what timeliness is about. And B,
the -- so the logic of decoupling finality from injury is not
implicated in those cases.
And frankly, if you are actually raising a true
as-applied challenge such that the injury resulted from the
actual application of the regulation to the party, then all
that case law about accrual and injury would apply right here
as well. The distinction here is that injury has been separate
from filing since the action that came after Hire Order said
that doesn't make it timely.
THE COURT: Okay.
MR. OBERMEIER: If Your Honor has any further
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questions, I would be happy to answer them.
THE COURT: I don't. Thank you.
Do either of the intervenors want to take a moment?
MR. ZUBICK: Yes, Your Honor. Thank you.
THE COURT: All right.
MR. ZUBICK: I apologize for missing the introduction,
but I'm Marc Zubick. I'm here for Cadence Pharmaceuticals.
THE COURT: All right.
THE REPORTER: Can you spell your last name?
MR. ZUBICK: My last name is Z, like zebra, U-B, like
boy, I-C-K.
THE REPORTER: Thank you.
MR. ZUBICK: Your Honor, I'll be pretty brief. I
think Mr. Obermeier did a great job in addressing most of the
issues.
I just want to follow up on the facial versus
as-applied distinction.
THE COURT: Uh-huh.
MR. ZUBICK: Cadence will use this as a facial
challenge. There was a lot of discussion as to whether facial
challenge needs to necessarily say that there's no permissible
application of the rule. Well, we think that is the case here.
It can be subdivided.
Mr. Polk made distinction between PCT applications
and non-PCT applications. But what he's saying -- I think Mr.
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Obermeier mentioned this -- is that every single PCT
application would be invalid if addressed under this rule.
That, to me, is facial.
There have been a couple other -- other statements
that we -- that tell us, inform us, what makes a challenge
facial. The Federal Circuit in 2008 in a case called Preminger
v. Secretary of Veterans Affairs, which is 517 F.3d 1299,
wrote: A facial challenge to a statute of regulation is
independent of the individual bringing the complaint and the
circumstances surrounding his or her challenge. Indeed, a
facial challenge may be brought without a record or any facts
at all. In contrast, an as-applied challenge is specific to
the facts of the particular individual involved in the suit.
When that statement from the Federal Circuit
combines with Exela's summary judgment brief, it's very clear
to Cadence that this is a facial challenge. The summary
judgment brief discusses two things: The rule and the statute.
There's no discussion about whether Pharmatop could have met
the standard, whether Pharmatop did meet the standard, the
unintentional standard, the unavoidable standard. What it
talks about is the fact that, according to Exela, Rule 1.137(b)
goes further than the congressional mandate. That is a facial
challenge.
The other thing we know about facial challenge is,
is if you bring a successful facial challenge, the rule doesn't
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stand. If you're to say an as-applied challenge, then the
Court would say, well this rule was applied improperly,
vis-à-vis this particular party. That's not what Exela is
asking for.
Exela, I have no doubt, would be very happy if you
said, Okay, this was applied incorrectly to Pharmatop. It
invalidated the patent. There's nothing more.
But that isn't really what's going on here. They
want you to change the rule. They want the rule to say, it
cannot be applied to PCT applications. That is a facial
challenge.
Very briefly, I want to address the fact that in
these pleadings there's a lot of discussion of fairness and
whether Exela is being foreclosed here from having a chance
to -- to have its day in court. It's not easy to sue the
Government, and Congress created very strict limitations in
methods of doing so.
In this case, the rule has never been applied to
Exela. It was applied to Pharmatop. And the statute of
limitations has passed.
And certainly if there's any issue of fairness,
it's as to patent applicants and licensees, whoever lied on
congressional methods of challenging patents, never lied on
patent office procedure. And the idea that now you can
challenge too late tens of thousands of patents that have
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issued according to statutes and rules, that would be the
unfair result.
Thank you, Your Honor.
THE COURT: All right. Thank you, Mr. Zubick.
MR. POLK: Your Honor, if I may just --
THE COURT: Well, let's have our other intervenor.
MR. WEISS: Thank you, Your Honor. I'm Charles Weiss,
W-E-I-S-S, from Holland & Knight, and I represent defendant
intervenor Pharmatop who is the owner of the patent at issue
here. Thank you, Your Honor, for indulging a moment of
argument.
I want to respond to Exela's point about the policy
of the Patent Act in Section 371, which is where counsel began
his argument.
THE COURT: Uh-huh.
MR. WEISS: And there was a statement to the effect
that that purpose of that is to prevent the recapture of
subject matter that has entered the public domain by virtue of
an application having been abandoned.
Now, that is in fact right into the teeth of the
Aristocrat case. The Aristocrat case says that in an
infringement action, the challenge that Exela is making here
cannot be asserted as a defense of invalidity. And as the
Federal Circuit explained in that case, to allow that challenge
to be brought would be contrary to Section 282 of the Patent
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Act, Title 35, where Congress limits the challenges to patent
validity for substantive grounds of patentability:
Anticipation, obviousness, prior art, the 102, 103 invalidity
grounds in 112 that Your Honor, of course, is familiar with.
The argument that 371 is part of that is absolutely
foreclosed by Aristocrat in the case where it would matter
most, which is in the infringement case.
Now, as to the argument that this produces an odd
result, there are, as counsel indicated -- there's times when
you cannot get judicial review of an agency action for a
variety of reasons. And I would pose the question, is the odd
result that a challenge based on this kind of procedure cannot
be brought in the action where it matters most, infringement
action, by the accused infringer, but instead will spawn
collateral litigation in every patent case in this courthouse
against the PTO. And if we are looking at odd results, I would
respectfully submit that that would be a much odder result than
the proposition that alleged irregularity in the application of
a rule or the promulgation of a rule, or interlocutory actions
during prosecution cannot be challenged. And that is where we
live with Aristocrat. Right or wrong, that is the
determination of policy as expressed by the Federal Circuit.
So unless the Court has any questions, I would end
it there.
THE COURT: I don't. Thank you.
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MR. WEISS: Thank you, Your Honor.
THE COURT: Mr. Polk.
MR. POLK: Thank you, Your Honor. Just a couple of
quick points.
I think if you wanted to really understand why -- I
mean, Hire Order is just limited to facial challenges, need to
look at the cases that it distinguishes, because the cases it
distinguishes, Wind River, a whole host of other -- or it cites
Wind River. But it distinguishes a lot of the other cases on
the sole ground, it says, because they do not bring a facial
challenge as it is brought here.
Now you do -- Your Honor was correct. You do have
to go back and look at some of the other opinions to really get
some meaning to this case, and I think it was the District
Court opinion where they said that the line was, Well, the only
thing that's being challenged here are the rules themselves,
and that was -- and that's where you go back and look at Hire
Order.
We're not just challenging the rule itself here,
and I think this gets to my second point where Mr. Zubick --
and I think Exela might need to pay him for his legal services
because I thought he did a very good job for us of arguing what
the difference between the facial and as-applied challenge is,
because if you look at it, what he said was in a facial
challenge what's going to happen, you're asking that the rule
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be stricken, continuation rules, ask that the rule be stricken.
Exela has never asked that 1.137 be stricken. We
said, PTO, you need to use the right rule, and that right rule
is 1.137(a) because that is what is consistent with the
statute. That's the rule that you have to use.
So if this Court --
THE COURT: Well, why isn't that -- why isn't he right
that your --
MR. POLK: We're not asking --
THE COURT: You are. You're asking that it not be
applied, and there's certain segment of cases where it is being
applied.
MR. POLK: No. In that situation, it would be that
you're asking that the rule be struck in its entirety. No one
can ever -- you cannot use that rule ever again. That's a
facial challenge.
Think of the continuation rules --
THE COURT: You're saying if -- you should be stricken
just for some circumstances. Is that what you're saying?
MR. POLK: I'm just -- yeah, as applied in this
specific group of cases you can't do that.
Think of the continuation rules. Again, I keep
going back to that because it's in the patent context.
Everyone is familiar with that. They didn't say, well, some of
these rules are good, and you can use them in certain circum --
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they were stricken in their entirety. That is a facial
challenge.
The rule itself, everything is gone. We've never
said that. We -- our -- our complaint says, You used the wrong
rule here. So in these circumstances, you have to use the
right rule.
You have to use a rule -- I don't care what rule
you use because -- well, we've got to understand, PTO never
implemented any rule in conjunction with 371(d). They just
went back to their catchall provisions 1.137(a) and (b).
We're just saying, Look, you need to use the right
rule that's consistent with the statute, not this other one.
That is not a facial challenge. That just is not what the --
what the law says.
THE COURT: And your argument about Aristocrat,
including 371?
MR. POLK: Your Honor, we've -- again, I didn't -- I
thought we were talking about Hire Order today, but -- so
again, we've been down that road with Aristocrat.
THE COURT: Yes.
MR. POLK: I remember going back to our arguments that
we said there. Aristocrat, if you look at that -- get my old
memory back from what we said there.
THE COURT: Yeah.
MR. POLK: If you look at that, it's -- in the context
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of this suit, the APA provides you no guidance. And we went
through our brief of all the issue with Aristocrat where the
Court during the oral argument whose question, Well, how can
you have an APA claim when the Government is not here? That
was the issue.
And so, again, we'll rest on our brief that we said
before, we think that has already been treaded, and we think
that's pretty clear.
One other thing again counsel said, Well, you know,
Polk hasn't cited. And that's not true. Wind River is an APA
case, but -- as this Court cited in its decision -- but it
said, Polk hasn't cited any cases dealing with the APA.
So in other words, what he's arguing, as we've said
before, he has to be arguing that in APA cases there is an
exception to the general rule of the standard rule that applies
to all of the statute of limitations. He's got to be arguing
there's some exception that applies in APA cases.
And the Supreme Court is one hundred percent
crystal clear on this point: If there is an exception, it has
to come from Congress, not Hire Order. And it has to be
something in the statute that supports not applying the general
rule in this case. That's what the Supreme Court case --
that's what the Supreme Court and the decisions of this Court
say.
And finally what -- what I'll rest on, if you look
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at Hire Order, if it relates to anything, it relates to
paragraph E of our complaint which says -- which deals with
that. Hire Order does not address any other substantive,
anything else that's in our complaint. It's a very narrow --
if it addressed anything at all, it's exceptionally narrow and
provides no basis to -- to dismiss the entire suit.
Again, I thank you very much for your time, Your
Honor, and appreciate your consideration.
THE COURT: All right. Thank you.
All right. Well, we'll look at it a little bit
further. I appreciate the argument. And clearly there's
tension between the APA regulations and some of the lower court
cases. And Hire Order is the latest one, you know, and Wind
River clearly was a case that I looked at pretty closely.
The -- you-all, you know, whether you call it fairness or
opportunity to grieve injuries, you know, the Court obviously
is always concerned.
This Court is always concerned with precluding
somebody from having their day in court, and I think that could
be seen in my earlier opinion. And, you know, Hire Order is
focused and quite powerful in its ruling, and certainly the
judges -- Judge Motz has seen a few of these cases in her day,
and her decision deserves close attention.
So we'll continue to look at this a little bit
longer, and we'll get you out a ruling as soon as we can. I
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appreciate the arguments today and also the briefing and much
appreciate it.
All right. Thank you-all. Have a good weekend.
VOICES: Thank you, Your Honor.
(PROCEEDINGS CONCLUDED AT 11:44 A.M.)
UNITED STATES DISTRICT COURT )EASTERN DISTRICT OF VIRGINIA )
I, JULIE A. GOODWIN, Official Court Reporter forthe United States District Court, Eastern District of Virginia,do hereby certify that the foregoing is a correct transcriptfrom the record of proceedings in the above matter, to the bestof my ability.
I further certify that I am neither counsel for,related to, nor employed by any of the parties to the action inwhich this proceeding was taken, and further that I am notfinancially nor otherwise interested in the outcome of theaction.
Certified to by me this 6TH day of DECEMBER, 2012.
__/s/___________________________JULIE A. GOODWIN, RPRCSR #5221Official U.S. Court Reporter401 Courthouse SquareTenth FloorAlexandria, Virginia 22314