UNITED STATES PATENT AND TRADEMARK OFFICE
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`Filed: July 13, 2015
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`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`COALITION FOR AFFORDABLE DRUGS II LLC.
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`Petitioner
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`v.
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`NPS PHARMACEUTICALS, INC.
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`Patent Owner
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`____________
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`Cases IPR2015-00990 and IPR2015-010931
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`Patent 7,056,886
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`____________
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`PATENT OWNER’S MOTION FOR REHEARING
`
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`1 Per the Board’s Order authorizing a motion for additional discovery (see, e.g.,
`IPR2015-00990, Paper 8, fn 1), the word-for-word identical paper is filed in each
`proceeding identified in the heading.
`
`
`
`
`
`Filed: July 13, 2015
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`COALITION FOR AFFORDABLE DRUGS II LLC.
`
`Petitioner
`
`v.
`
`NPS PHARMACEUTICALS, INC.
`
`Patent Owner
`
`____________
`
`Cases IPR2015-00990 and IPR2015-010931
`
`Patent 7,056,886
`
`____________
`
`PATENT OWNER’S MOTION FOR REHEARING
`
`
`1 Per the Board’s Order authorizing a motion for additional discovery (see, e.g.,
`IPR2015-00990, Paper 8, fn 1), the word-for-word identical paper is filed in each
`proceeding identified in the heading.
`
`
`
`
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`IPR2015-00990 and IPR2015-01093
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`I. INTRODUCTION AND RELIEF REQUESTED
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`Pursuant to 37 C.F.R. § 42.71(d), NPS Pharmaceuticals, Inc. (“NPS”)
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`requests rehearing of the July 2, 2015, Order Granting-in-Part Patent Owner’s
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`Motion for Additional Discovery Regarding Real Party-in-Interest 37 C.F.R. §
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`42.51(b)(2).
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`See Paper 14 (“Order”). Particularly, NPS requests
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`reconsideration/clarification of the term “control” as used in the Order expressly to
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`include “funding” by amending the Order to authorize discovery of “any
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`agreements, in the possession of Petitioner or any designated real party-in-interest ,
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`relating to the funding,
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` control or ability to control any aspect of the current
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`proceeding by a party not designated as Petitioner or a real party-in-interest in the
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`Petition. Such agreements include those indicating that any person or party (other
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`than Petitioner or designated real parties-in-interest) provided any funding (i)
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`directly or (ii) indirectly through another funding entity or person,
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` direction to, or
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`had the authority to provide direction to, Petitioner or its counsel in relation to this
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`proceeding, including persons or parties who reviewed, or were given the
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`opportunity to review, papers filed in this proceeding.”
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`Id. at 7 (underlining =
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`addition).
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`This Request is consistent with Zoll Lifecor Corp. v. Philips Electronics
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`North America Corp. See IPR2013-00609, Paper 15, 10 (PTAB March 20, 2014).
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`Furthermore, it is consistent with the legislative intent in establishing IPR
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`2
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`
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`IPR2015-00990 and IPR2015-01093
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`proceedings. The scope of the amended request is also conservative in light of the
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`non-speculative evidence of record that investors are specifically funding this IPR.
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`Finally, the amended discovery request serves the interests of justice. It is unfair
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`and unjust to reward the Petitioner ( i.e., the Coalition) for using a financial shell
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`game to hide the identities of those to whom IPR estoppel should apply. This is
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`also why the request should be met by all designated RPIs. The Board should also
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`consider the Coalition’s bad faith in abusing the IPR process.
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`II. ARGUMENT
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` The present case is not the typical IPR that was contemplated by Congress in
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`which a potential infringer seeks to invalidate a patent in order to resolve an
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`alleged infringement outside of district court litigation.
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`See Order, 4 (“. . .
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`Congress intended inter partes review to be a quick and cost-effective alternative
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`to litigation. See H. Rep. No. 112-98, at 45-48 (2011).”). The Coalition could
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`never have commenced a litigation involving the ‘866 patent; it would not have
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`standing. It does not manufacture, use, offer to sell, sell, or import any infringing
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`products or components of any infringing products and does not actively induce
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`anyone else to infringe. It never will. It is not using the IPR as an alternative to
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`litigation, as Congress intended. Rather, the Coalition is admittedly a nominal
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`petitioner for high net worth investors who profit by bringing IPRs and
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`manipulating stocks. Paper 9 (“Motion”), 4. All of these persons are intentionally
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`3
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`
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`IPR2015-00990 and IPR2015-01093
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`and purposefully availing themselves of this IPR proceeding. The way that these
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`investors control this IPR is with their money, which is why it is so necessary to
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`follow the money trail to determine who is “controlling” this IPR,
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`i.e., who all of
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`the real RPIs are. This is also why it is necessary that the term “control” in the
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`Order must be defined to include funding and documents possessed by all named
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`RPIs, not just the Coalition.
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`NPS believes that the Board overlooked the legal meaning and extent of the
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`term “control” in light of the unusual circumstances of this proceeding. See Order
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`at 7; see also Zoll, IPR2013-00609, Paper 15, 10 ( quoting Office Patent Trial
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`Practice Guide (“OPTPG”) (“‘Whether a party who is not a named participant in a
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`given proceeding nonetheless constitutes a ‘real party-in-interest’ . . . to that
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`proceeding is a highly fact-dependent question.’”); 77 Fed. Reg. 48,688, 48,759
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`(Aug. 14, 2012)). NPS also believes that the Board overlooked the extent to which
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`the Order will be rendered meaningless in the absence of clarifying language that
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`includes “funding.” See id. The unamended Order allows the Coalition
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`unilaterally to determine who has “control” (which is the issue in dispute) before
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`producing discovery to NPS. This is untenable, since the Coalition has already
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`incorrectly determined, in its own mind, this issue. The Coalition claims that it has
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`already named those in control – only HCM, Bass, nXnP, and Spangenberg. See
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`Pet., 3-4; Paper 11 (“Opposition”), 1. NPS disputes this with evidence tending to
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`4
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`
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`IPR2015-00990 and IPR2015-01093
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`show beyond speculation that something useful,
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`i.e., “‘favorable in substantive
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`value to a contention of the party moving for discovery,’ not just ‘relevant’ or
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`‘admissible,’” will be uncovered. John’s Lone Star Distribution, Inc. v. Thermolife
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`Int’l, LLC, IPR2014-01201, Paper 29, 4 (PTAB May 13, 2015) ( quoting Garmin,
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`IPR2012-00001, Paper 26, 7). That is why discovery was ordered in the first
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`place. If the Coalition is permitted to use the “control” criteria (scope and persons)
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`from its Petition for document production, the discovery process becomes self-
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`selective and will inherently exclude documents relating to the unnamed RPIs that
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`NPS has shown beyond speculation will be uncovered.
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`The Board has stated that “the ‘real party-in-interest’ is the party that desires
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`review of the patent.” Zoll, IPR2013-00609, Paper 15, 10 (emphasis in original)
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`(quoting 77 Fed. Reg. at 48,759). There is no doubt that those who specifically
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`fund an IPR, directly or indirectly, desire review of the patent. Here, these non-
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`party investors’ interests are more than simply aligned with those of the designated
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`RPIs; their interests are identical.
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`The Board in Zoll went even further though and held that “[f]actors for
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`determining actual control or the opportunity to control include the existence of a
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`financially controlling interest in the petitioner” and that “[t]he non-party’s
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`participation may be overt or covert . . . .”
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`Zoll, IPR2013-00609, Paper 15, 10.
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`NPS has shown beyond speculation that the Coalition was formed specifically to
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`5
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`
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`IPR2015-00990 and IPR2015-01093
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`bring the present Petition and that the money for the present Petition is being
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`provided by a network of IPR investors (which only culminates in, but is not
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`exclusively, the designated RPIs) for good reason – to profit handsomely by stock
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`manipulation. See Motion, 4; Ex. 2005. NPS has shown that the designated RPIs
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`and unnamed RPIs are related businesses with nearly identical management and
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`identical headquarters. See generally Motion, 5-9. NPS has shown that Bass has
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`sought and gotten investments in his network of hedge funds from persons for the
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`purpose funding this IPR. Motion, 4. For example, it has been publicly admitted
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`that Credes, the Coalition, and HCMF together execute/support a short activist
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`strategy through IPRs. Id. Credes and HCMF are “master funds” in “master
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`feeder” structures. Id. at 5-7. HOF has 18 investors.
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`Id. at 7. HCM manages
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`pooled investment vehicle assets.
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`Id. at 8. These facts constitute more than
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`speculation that the beneficial owners (including funding partners and investors) of
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`designated RPIs are also RPIs under Zoll.
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`Furthermore, during the May 29, 2015, telephone call with the Board,
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`Petitioner admitted that everyone trading with Bass (
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`i.e., the investors who NPS
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`claims are unnamed RPIs) would be estopped from future challenges to the NPS
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`patent because of their IPR funding activities. Petitioner argued that since estoppel
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`would necessarily apply to these funders, it was unnecessary to name them as RPIs
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`and, therefore, the requested discovery was unnecessary. The admission is exactly
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`6
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`
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`IPR2015-00990 and IPR2015-01093
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`why the present request for rehearing should be granted. NPS seeks to show that
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`these persons were not identified, and, therefore, the Petition does not meet the
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`statutory requirement and must be dismissed. 35 U.S.C. § 312(a)(2).
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`The amended discovery request meets the Garmin factors also. See Garmin
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`Int’l. v. Cuozzo Speed Techs. LLC , IPR2012-00001, Paper 26, 6-7 (PTAB, Mar. 5,
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`2013). As explained above, NPS is in possession of evidence tending to show
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`beyond speculation that something useful will be uncovered. The discovery does
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`not request litigation positions and underlying bases. The requested information is
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`not publicly available and, therefore, cannot be generated without discovery. The
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`discovery request instruction is not being amended; it is easily understandable.
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`The amended discovery request is not overly burdensome to answer. The added
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`language does not broaden the scope of what was already granted; it clarifies the
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`request so that there is no misunderstanding of what is to be produced. This will
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`avoid further Board intervention.
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`III. CONCLUSION
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`For the foregoing reasons, the Board should grant Patent Owner’s Request
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`for Rehearing and order Petitioner to produce the requested discovery.
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`Dated July 13, 2015
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` Respectfully submitted,
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` /s/ Joseph R. Robinson
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` Joseph R. Robinson, PTO Reg. No. 33,448
` Heather M. Ettinger, PTO Reg. No. 51,658
` Dustin B. Weeks, PTO Reg. No. 67,466
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`7
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`
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`IPR2015-00990 and IPR2015-01093
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a copy of the foregoing Patent
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`Owner’s Motion for Rehearing was served via electronic mail on July 13, 2015 on
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`attorney for Petitioner:
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`Jeffrey D. Blake, Esq.
`jblake@merchantgould.com
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` Respectfully submitted,
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`Dated: July 13, 2015 /s/ Dustin B. Weeks
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` Dustin B. Weeks, PTO Reg. No. 67,466
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