UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CYANOTECH CORPORATION
`Petitioner
`v.
`THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS
`Patent Owner
`____________
`
`
`
`Case IPR2013-00401[1]
`
`Patent 5,527,533
`
`
`
`Before SCOTT E. KAMHOLZ, SHERIDAN K. SNEDDEN, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`____________
`
`
`
`PETITIONER’S REPLY TO PATENT OWNER’S OPPOSITION
`TO PETITIONER’S MOTION TO EXCLUDE EVIDENCE
`PURSUANT TO 37 C.F.R. § 42.64(c)
`
`____________
`
`
`
`Submitted: June 30, 2014
`
`
`[1] Consolidated with Case IPR2013-00404
`
`
`
`
`OCS-2367150
`
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CYANOTECH CORPORATION
`Petitioner
`v.
`THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS
`Patent Owner
`____________
`
`
`
`Case IPR2013-00401[1]
`
`Patent 5,527,533
`
`
`
`Before SCOTT E. KAMHOLZ, SHERIDAN K. SNEDDEN, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`____________
`
`
`
`PETITIONER’S REPLY TO PATENT OWNER’S OPPOSITION
`TO PETITIONER’S MOTION TO EXCLUDE EVIDENCE
`PURSUANT TO 37 C.F.R. § 42.64(c)
`
`____________
`
`
`
`Submitted: June 30, 2014
`
`
`[1] Consolidated with Case IPR2013-00404
`
`
`
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`In Paper No. 42, Patent Owner (“PO”) offered four licensing agreements (Ex.
`
`2033-2036 and Ex. 2043) in support of its argument (Paper 32, at 49) that the
`
`challenged claims are not obvious because of the “strong licensing history” of the
`
`patent in issue. In Paper No. 47, Cyanotech Corporation (“Petitioner”) moved to
`
`exclude PO's Exhibits 2033-2036 because the agreements were not actually
`
`sublicenses of U.S. Patent No. 5,527,533 (the ‘533 patent), but licenses of
`
`trademarks, manufacturing rights, and formulation rights of PO’s licensee
`
`/sublicensor (“Valensa”), which do not purport to license any claims of that patent
`
`and are therefore not indicia of any third parties’ commercial valuation of any
`
`patent claims, let alone the challenged claims.
`
`The proffered agreements also provide for either zero or token royalties
`
`($1,000 in one instance), which is hardly probative evidence of any significant
`
`industry valuation of the licensed IP, let alone the actual claims of the patent in suit.
`
`Moreover, PO never quantified the value of the only other consideration in the
`
`licenses, an exclusive supply agreement, by providing any evidence that any sales
`
`of any products were actually ever made under the proffered agreements.
`
`In Paper No. 50, PO opposed Petitioner’s Motion to Exclude Evidence and
`
`submitted as Supplemental Evidence a license agreement between Valensa and
`
`Swanson Health Products, Inc. (Ex. 2043), an amendment to which had been
`
`previously submitted by PO (Ex. 2036, adding product use and trademark rights
`
`1
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`for Valensa’s Cran-Gyn DDSTM urinary tract healthcare product). Ex. 2043, like
`
`the previously submitted Ex. 2034, is identified as a “Product Use and Trademark
`
`License,” not a patent license. It grants “trademark rights,” “advertising rights,”
`
`“Product-related trade secrets and know-how,” and rights to manufacturing
`
`“Product I,” which is defined as “Valensa’s Zanthin® brand of Astaxanthin.”
`
`(Ex. 2043 at 1, and Exhibit A)
`
`In Paper No. 50, PO asserts that the following is a grant of rights in the
`
`challenged claims of the ‘533 patent:
`
`“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)
`
`Exs. 2033-2036 and 2043 do not identify any such “eye health issues” or
`
`how they are “related” to the ‘533 patent; do not identify any method of use of a
`
`formulation; do not identify any claims of the ‘533 patent; do not identify any
`
`retinal diseases or conditions; and do not contain any of the words “damage”,
`
`“injury”, “disease”, “degeneration”, “suffering”, “treating”, “retina”, or “retinal.”
`
`Without any indicated nexus to the actual claims of the ‘533 patent and without any (or
`
`token) license fees or royalty payments to Valensa, Exs. 2033-2036 and 2043 are only
`
`2
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`agreements for the exclusive supply of astaxanthin to licensee in exchange for use of
`
`Valensa’s trademarks and know-how, none of which has any bearing on any issue in this
`
`proceeding.
`
`If PO had actually licensed claims of the ‘533 patent, it would have created
`
`exposure to enforcement actions by the Federal Drug Administration (“FDA”).
`
`Valensa’s “eye health” dietary supplement licensees sell products with FDA
`
`“structure/function” claims and Valensa’s Zanthin® trademark on the label. The
`
`Dietary Supplement Health and Education Act of 1994 ("DSHEA," 21 U.S.C. ch. 9
`
`§ 301 et seq.) requires the following disclaimer on dietary supplements that bear
`
`labels with “structure/function” claims, e.g., labels with “eye healthcare” claims:
`
`"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).
`
`All 27 claims of the ‘533 patent, including the 18 challenged claims,
`
`describe a “method of treating an individual” for specified diseases or conditions
`
`of the eye or central nervous system. Had Valensa actually licensed the ‘533
`
`patent, or any claims thereunder to the identified dietary supplement licensees with
`
`only structure/function claiming authority, it would have exposed itself and PO to
`
`vicarious liability for DSHEA violations, including exposure to the criminal
`
`enforcement powers of the FDA. It didn’t do that. On the contrary, Valensa
`
`3
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`licensed certain trademark and know-how rights concerning “eye health” issues,
`
`which are completely untethered to any claim of the ‘533 patent. Accordingly,
`
`these agreements have no probative value.
`
`The licensed uses granted by Valensa are not patent rights and, more
`
`specifically, are not ‘533 patent rights, because, inter alia, Valensa omitted or
`
`avoided any grant of rights to “a method of treating an individual,” as specifically
`
`required by each of the challenged claims.
`
`Under FRE 402, made applicable to the current proceedings by 37 C.F.R.
`
`§ 42.62, evidence must be relevant to be admissible. More particularly, “there
`
`must be a nexus between the merits of the claimed invention and the evidence of
`
`secondary considerations,” and “the burden of showing that there is a nexus lies
`
`with the patent owner.” (Nichia Corp. v. Emcore Corp., IPR2012-00005, slip. op.
`
`44, PTAB Feb. 11, 2014, Paper 68). The subject matter of the challenged claims,
`
`a method of treating individuals for degenerations, diseases, injuries, or neuronal
`
`conditions of the retina, is absent from all four licenses. Just as the words “treat,”
`
`“disease” and “retina” do not appear in Exs. 2033-2036 or 2043, the terms “eye
`
`healthcare” and “eye health” do not appear in the ‘533 patent. Patent Owner has
`
`failed to show that there is any nexus between the challenged patent claims and the
`
`“licensing history” it has proffered. Uses “related to a patent” are not licenses of
`
`“the patent” or “claims of the patent”.
`
`4
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`The Board has stated that “without a showing of nexus, ‘the mere existence
`
`of … licenses is insufficient to overcome the conclusion of obviousness’ when
`
`there is a strong ground of unpatentability based on obviousness.” (EMC Corp.,
`
`IPR2013-00082, slip. Op. 55 (quoting SIBIA Neurosciences, Inc. v. Cadus Pharm.
`
`Corp., 225 F.3d, 1349, 1358 (Fed. Cir. 2000)). Here, the proffered licenses do
`
`not license the challenged claims; they license non-patent rights, royalty free (or
`
`with a token royalty) and bind the licensee into an exclusive supply contract for
`
`astaxanthin in return for use of a licensed trademark and know-how. Moreover,
`
`no sales under those supply contracts were ever identified. The failure to identify
`
`any claimed rights under the ‘533 patent destroys any nexus between (i) Exs.
`
`2033-2036 and 2043 and (ii) the ‘533 patent. The failure to identify any sales
`
`made under the supply contracts leaves a $1,000 token royalty as the only evidence
`
`of industry valuation of any of the licensed IP and none at all of the actual patent
`
`claims at issue.
`
`Petitioner therefore respectfully moves the Board to exclude Exhibits
`
`2033-2036 and 2043 from the evidence in this proceeding as irrelevant under Rule
`
`402 FRE and as confusing and misleading under Rule 403 FRE. See also 37
`
`C.F.R. §§ 42.1(b) and 42.62, making those rules applicable to this proceeding.
`
`5
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`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`
`
`
`Respectfully submitted,
`
`
`
`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
`George E. Darby
`Reg. No. 44,053
`Counsel for Petitioner Cyanotech
`Corporation
`
`6
`
`OCS-2367150
`
`
`
`Ptr’s Reply to PO’s Opposition to Ptr’s Mtn to Exclude Evidence
`
`
`
`CERTIFICATE OF SERVICE
`
`Case IPR2013-00401
`Patent No. 5,527,533
`
`
`I hereby certify service of the foregoing Petitioner’s Reply to Patent
`
`Owner’s Opposition to Petitioner’s Motion to Exclude Evidence to the following
`
`counsel for patent owner on June 30, 2014 via email (pursuant to agreement
`
`between the parties):
`
`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)
`
`
`
`
`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
`
`
`
`
`
`
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