`_______________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
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`CYANOTECH CORPORATION
`Petitioner
`v.
`THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS
`Patent Owner
`____________
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`
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`Case IPR2013-00401[1]
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`Patent 5,527,533
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`
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`Before SCOTT E. KAMHOLZ, SHERIDAN K. SNEDDEN, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`____________
`
`
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`PETITIONER’S REPLY TO PATENT OWNER’S OPPOSITION
`TO PETITIONER’S MOTION TO EXCLUDE EVIDENCE
`PURSUANT TO 37 C.F.R. § 42.64(c)
`
`____________
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`
`
`Submitted: June 30, 2014
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`[1] Consolidated with Case IPR2013-00404
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`OCS-2367150
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`In Paper No. 42, Patent Owner (“PO”) offered four licensing agreements (Ex.
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`2033-2036 and Ex. 2043) in support of its argument (Paper 32, at 49) that the
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`challenged claims are not obvious because of the “strong licensing history” of the
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`patent in issue. In Paper No. 47, Cyanotech Corporation (“Petitioner”) moved to
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`exclude PO's Exhibits 2033-2036 because the agreements were not actually
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`sublicenses of U.S. Patent No. 5,527,533 (the ‘533 patent), but licenses of
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`trademarks, manufacturing rights, and formulation rights of PO’s licensee
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`/sublicensor (“Valensa”), which do not purport to license any claims of that patent
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`and are therefore not indicia of any third parties’ commercial valuation of any
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`patent claims, let alone the challenged claims.
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`The proffered agreements also provide for either zero or token royalties
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`($1,000 in one instance), which is hardly probative evidence of any significant
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`industry valuation of the licensed IP, let alone the actual claims of the patent in suit.
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`Moreover, PO never quantified the value of the only other consideration in the
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`licenses, an exclusive supply agreement, by providing any evidence that any sales
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`of any products were actually ever made under the proffered agreements.
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`In Paper No. 50, PO opposed Petitioner’s Motion to Exclude Evidence and
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`submitted as Supplemental Evidence a license agreement between Valensa and
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`Swanson Health Products, Inc. (Ex. 2043), an amendment to which had been
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`previously submitted by PO (Ex. 2036, adding product use and trademark rights
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`OCS-2367150
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`for Valensa’s Cran-Gyn DDSTM urinary tract healthcare product). Ex. 2043, like
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`the previously submitted Ex. 2034, is identified as a “Product Use and Trademark
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`License,” not a patent license. It grants “trademark rights,” “advertising rights,”
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`“Product-related trade secrets and know-how,” and rights to manufacturing
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`“Product I,” which is defined as “Valensa’s Zanthin® brand of Astaxanthin.”
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`(Ex. 2043 at 1, and Exhibit A)
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`In Paper No. 50, PO asserts that the following is a grant of rights in the
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`challenged claims of the ‘533 patent:
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`“Licensee agrees … that it will: Only use Product I provided solely by
`the Licensor and no other entity if the Licensee includes the use of at
`least Valensa’s Zanthin brand of Product I and its associated trademark
`contained in licensee’s eye healthcare products labeling for the
`management of eye health issues related to the claims of US 5527533,”
`(Ex. 2043, Section I(1)(b)(1)) (emphasis added)
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`Exs. 2033-2036 and 2043 do not identify any such “eye health issues” or
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`how they are “related” to the ‘533 patent; do not identify any method of use of a
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`formulation; do not identify any claims of the ‘533 patent; do not identify any
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`retinal diseases or conditions; and do not contain any of the words “damage”,
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`“injury”, “disease”, “degeneration”, “suffering”, “treating”, “retina”, or “retinal.”
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`Without any indicated nexus to the actual claims of the ‘533 patent and without any (or
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`token) license fees or royalty payments to Valensa, Exs. 2033-2036 and 2043 are only
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`2
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`OCS-2367150
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`agreements for the exclusive supply of astaxanthin to licensee in exchange for use of
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`Valensa’s trademarks and know-how, none of which has any bearing on any issue in this
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`proceeding.
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`If PO had actually licensed claims of the ‘533 patent, it would have created
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`exposure to enforcement actions by the Federal Drug Administration (“FDA”).
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`Valensa’s “eye health” dietary supplement licensees sell products with FDA
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`“structure/function” claims and Valensa’s Zanthin® trademark on the label. The
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`Dietary Supplement Health and Education Act of 1994 ("DSHEA," 21 U.S.C. ch. 9
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`§ 301 et seq.) requires the following disclaimer on dietary supplements that bear
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`labels with “structure/function” claims, e.g., labels with “eye healthcare” claims:
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`"This statement has not been evaluated by the Food and Drug
`Administration. This product is not intended to diagnose, treat, cure, or
`prevent any disease." (21 C.F.R. §101.93(c)(1), (emphasis added).
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`All 27 claims of the ‘533 patent, including the 18 challenged claims,
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`describe a “method of treating an individual” for specified diseases or conditions
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`of the eye or central nervous system. Had Valensa actually licensed the ‘533
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`patent, or any claims thereunder to the identified dietary supplement licensees with
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`only structure/function claiming authority, it would have exposed itself and PO to
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`vicarious liability for DSHEA violations, including exposure to the criminal
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`enforcement powers of the FDA. It didn’t do that. On the contrary, Valensa
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`OCS-2367150
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`licensed certain trademark and know-how rights concerning “eye health” issues,
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`which are completely untethered to any claim of the ‘533 patent. Accordingly,
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`these agreements have no probative value.
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`The licensed uses granted by Valensa are not patent rights and, more
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`specifically, are not ‘533 patent rights, because, inter alia, Valensa omitted or
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`avoided any grant of rights to “a method of treating an individual,” as specifically
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`required by each of the challenged claims.
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`Under FRE 402, made applicable to the current proceedings by 37 C.F.R.
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`§ 42.62, evidence must be relevant to be admissible. More particularly, “there
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`must be a nexus between the merits of the claimed invention and the evidence of
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`secondary considerations,” and “the burden of showing that there is a nexus lies
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`with the patent owner.” (Nichia Corp. v. Emcore Corp., IPR2012-00005, slip. op.
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`44, PTAB Feb. 11, 2014, Paper 68). The subject matter of the challenged claims,
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`a method of treating individuals for degenerations, diseases, injuries, or neuronal
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`conditions of the retina, is absent from all four licenses. Just as the words “treat,”
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`“disease” and “retina” do not appear in Exs. 2033-2036 or 2043, the terms “eye
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`healthcare” and “eye health” do not appear in the ‘533 patent. Patent Owner has
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`failed to show that there is any nexus between the challenged patent claims and the
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`“licensing history” it has proffered. Uses “related to a patent” are not licenses of
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`“the patent” or “claims of the patent”.
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`OCS-2367150
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`The Board has stated that “without a showing of nexus, ‘the mere existence
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`of … licenses is insufficient to overcome the conclusion of obviousness’ when
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`there is a strong ground of unpatentability based on obviousness.” (EMC Corp.,
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`IPR2013-00082, slip. Op. 55 (quoting SIBIA Neurosciences, Inc. v. Cadus Pharm.
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`Corp., 225 F.3d, 1349, 1358 (Fed. Cir. 2000)). Here, the proffered licenses do
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`not license the challenged claims; they license non-patent rights, royalty free (or
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`with a token royalty) and bind the licensee into an exclusive supply contract for
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`astaxanthin in return for use of a licensed trademark and know-how. Moreover,
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`no sales under those supply contracts were ever identified. The failure to identify
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`any claimed rights under the ‘533 patent destroys any nexus between (i) Exs.
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`2033-2036 and 2043 and (ii) the ‘533 patent. The failure to identify any sales
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`made under the supply contracts leaves a $1,000 token royalty as the only evidence
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`of industry valuation of any of the licensed IP and none at all of the actual patent
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`claims at issue.
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`Petitioner therefore respectfully moves the Board to exclude Exhibits
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`2033-2036 and 2043 from the evidence in this proceeding as irrelevant under Rule
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`402 FRE and as confusing and misleading under Rule 403 FRE. See also 37
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`C.F.R. §§ 42.1(b) and 42.62, making those rules applicable to this proceeding.
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`Case IPR2013-00401
`Patent No. 5,527,533
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`Respectfully submitted,
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`
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`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
`George E. Darby
`Reg. No. 44,053
`Counsel for Petitioner Cyanotech
`Corporation
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`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
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`CERTIFICATE OF SERVICE
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`Case IPR2013-00401
`Patent No. 5,527,533
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`I hereby certify service of the foregoing Petitioner’s Reply to Patent
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`Owner’s Opposition to Petitioner’s Motion to Exclude Evidence to the following
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`counsel for patent owner on June 30, 2014 via email (pursuant to agreement
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`between the parties):
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`Mark D. Schuman
`Iain A. McIntrye
`Todd S. Werner
`Peter M. Kohlhepp
`CARLSON CASPERS
`225 South Sixth Street, Suite 4200
`Minneapolis, MN 55402
`(mschuman@carlsoncaspers.com)
`(imcintyre@carlsoncaspers.com)
`(twerner@carlsoncaspers.com)
`(pkohlhepp@carlsoncaspers.com)
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`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
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