petitioner’s opposition to patent owner’s motion to ... · pdf...

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.


- 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


- 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


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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


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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


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.


2

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,


3

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.”).


4

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”


5

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.


6

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


7

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


8

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


9

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”).


10

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


11

“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.


12

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


13

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).


14

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”).


15

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


16

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


17

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)


18

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).


19

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)).


20

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


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 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.)


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

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