Trials@uspto.gov Paper 20
`Tel: 571-272-7822
`
`Entered: July 28, 2015
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`PAR PHARMACEUTICAL, INC. and AMNEAL PHARMACEUTICALS,
`LLC,
`Petitioners,
`
`v.
`
`JAZZ PHARMACEUTICALS, INC.,
`Patent Owner.
`_____________
`
`Case IPR2015-00551 (Patent 8,457,988 B1)
`Case IPR2015-00554 (Patent 7,668,730 B2)1
`
`______________
`
`Before JACQUELINE WRIGHT BONILLA, SUSAN L.C. MITCHELL,
`and BRIAN P. MURPHY, Administrative Patent Judges.
`
`
`MURPHY, Administrative Patent Judge.
`
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`
`1 This Decision addresses common issues raised in both cases. The patents
`at issue in Case IPR2015-00551 and Case IPR2015-00554 are related, and
`the arguments by Petitioners and Patent Owner are largely the same in each
`case. Therefore, we issue one Decision to be entered in each case. The
`parties are not authorized to use this caption without prior authorization of
`the Board.
`
`
`
`Page 1 of 47
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`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
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`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`
`INTRODUCTION
`
`I.
`
`Par Pharmaceutical, Inc. (“Par Inc.”), and Amneal Pharmaceuticals,
`
`LLC (“Amneal”) (together, “Petitioner”) filed a Petition requesting an inter
`
`partes review of claims 1–11 (all claims) of U.S. Patent No. 7,668,730 B2
`
`(Ex. 1001, “the ’730 patent”). Paper 1 (“Petition” or “Pet.”). Jazz
`
`Pharmaceuticals, Inc. (“Patent Owner”) filed a Preliminary Response to the
`
`Petition. Paper 10 (“Prelim. Resp.”). Petitioner also filed a Petition
`
`requesting an inter partes review of claims 1–15 (all claims) of U.S. Patent
`
`No. 8,457,988 B1 (“the ’988 patent”). IPR2015-00551, Paper 1 (“the ’551
`
`Petition” or “’551 Pet.”). Patent Owner filed a Preliminary Response to the
`
`Petition. IPR2015-00551, Paper 9 (“’551 Prelim. Resp.”). Because the
`
`challenged claims in these two cases are very similar, with the exception of
`
`preambles, we consider the two cases together in this Decision. For clarity
`
`and expediency, we treat IPR2015-00554 as representative of both cases.
`
`We have statutory authority under 35 U.S.C. § 314(a), which provides that
`
`an inter partes review may not be instituted “unless . . . there is a reasonable
`
`likelihood that the petitioner would prevail with respect to at least 1 of the
`
`claims challenged in the petition.”
`
`Petitioner challenges claims 1–11 of the ’730 patent as unpatentable
`
`under 35 U.S.C. § 103(a). Pet. 11–12.2 Based on the information presented
`
`in the Petition and Preliminary Response, we are persuaded there is a
`
`reasonable likelihood Petitioner would prevail with respect to the claims
`
`
`2 As noted above, for clarity and expediency, we treat IPR2015-00554 as
`representative of both cases. All citations are to IPR2015-00554 unless
`otherwise noted. Petitioner also challenges claims 1–15 of the ’988 patent as
`unpatentable under 35 U.S.C. § 103(a). ’551 Pet. 2.
`
`
`
`2
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`Page 2 of 47
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`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
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`

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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`challenged in the Petition and the ’551 Petition. Therefore, we institute inter
`
`partes review of claims 1–11 of the ’730 patent and claims 1–15 of the ’988
`
`patent.
`
`A. Related Proceedings
`
`The parties identify the following as related district court proceedings
`
`regarding the ’730 patent: Jazz Pharmaceuticals, Inc. v. Roxane
`
`Laboratories, Inc., 2:10-cv-6108 (D.N.J.); Jazz Pharmaceuticals, Inc. v.
`
`Amneal Pharmaceuticals, LLC, 2:13-cv-391(consolidated) (D.N.J.); Jazz
`
`Pharmaceuticals, Inc. v. Ranbaxy Laboratories Ltd., 2:14-cv-4467 (D.N.J.);
`
`and Jazz Pharmaceuticals, Inc. v. Watson Laboratories, Inc., 2:14-cv-7757
`
`(D.N.J). Pet. 58; Paper 8, 1. Patent Owner identifies two other district court
`
`proceedings concerning patents related to the ’730 patent: Jazz
`
`Pharmaceuticals, Inc. v. Amneal Pharmaceuticals, LLC, 2:14-cv-3235
`
`(D.N.J.) and Jazz Pharmaceuticals, Inc. v. Par Pharmaceutical, Inc., 2:14-
`
`cv-5139 (D.N.J.). Paper 8, 2.
`
`The parties identify the following as petitions for inter partes review
`
`of patents related to the ’730 patent: IPR2015-00545 (Patent 8,589,182);
`
`IPR2015-00546 (Patent 7,765,106); IPR2015-00547 (Patent 7,765,107);
`
`IPR2015-00548 (Patent 7,895,059); and IPR2015-00551 (Patent 8,457,988.
`
`Pet. 58–59; Paper 8, 2. The parties also identify the following as petitions
`
`for covered business method patent review regarding the ’730 patent and
`
`related patents: CBM2014-00149 (Patent 7,895,059); CBM2014-00150
`
`(Patent 8,457,988); CBM2014-00151 (the ’730 patent); CBM2014-00153
`
`(Patent 8,589,182); CBM2014-00161 (Patent 7,765,106); and CBM2014-
`
`00175 (Patent 7,765,107). Pet. 58; Paper 8, 2–3.
`
`
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`3
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`Page 3 of 47
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`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
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`

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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`We note that the Board has denied institution in all six of the above-
`
`mentioned CBM cases. In addition, a different petitioner has filed a Petition
`
`for inter partes review of related U.S. Patent No. 7,895,059 in IPR2015-
`
`01018.
`
`Patent Owner identifies the following pending U.S. patent
`
`applications claiming priority benefit from U.S. Patent Application No.
`
`10/322,348—the application from which the ’730 patent issued: U.S. Patent
`
`Application No. 14/196,603, filed March 4, 2014; U.S. Patent Application
`
`No. 14/219,904, filed March 19, 2014; and U.S. Patent Application No.
`
`14/219,941, filed March 19, 2014. Paper 8, 3.
`
`B. Proposed Grounds of Unpatentability
`
`Petitioner advances two grounds of unpatentability under 35 U.S.C.
`
`§ 103(a) in relation to all challenged claims in the ’730 patent and the ’988
`
`patent (IPR2015-00551): 3
`
`
`3 Petitioner advances additional grounds of unpatentability for obviousness
`of claims 2 and 10 of the ’988 patent, addressed separately below in Section
`II. G.
`
`
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`4
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`Page 4 of 47
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`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
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`

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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`Reference[s]
`
`Advisory Committee Art (Exs. 1003–
`1006), including FDA Advisory
`Committee Transcript and Slides (Ex.
`1003),4 Preclinical Safety Review (Ex.
`1004),5 Briefing Booklet (Ex. 1005),6 and
`Xyrem Video and Transcript (Ex. 1006)7
`
`Talk About Sleep (Ex.1033)8 in view of
`Honigfeld (Ex. 1034),9 Elsayed (Ex.
`1035),10 and Lilly (Ex. 1010)11
`
`Statutory
`Basis
`
`Challenged
`Claims
`
`§ 103(a)
`
`1–11 of the
`’730 patent
`
`
`
`§ 103(a)
`
`Same as above
`
`
`4 FDA Peripheral & Central Nervous System Drugs Advisory Committee,
`Transcript and Slides (“Advisory Committee Transcript and Slides”) (July
`13, 2001) (Ex. 1003).
`5
` FDA Peripheral & Central Nervous System Drugs Advisory Committee,
`Briefing Information, Division of Neuropharmacological Drug Products
`Preliminary Clinical Safety Review of NDA 21-196 (“Preclinical Safety
`Review”) (July 13, 2001) (Ex. 1004).
`6 FDA Peripheral & Central Nervous System Drugs Advisory Committee,
`Briefing Information, Briefing Booklet (“Briefing Booklet”) (July 13, 2001)
`(Ex. 1005).
`7 FDA Peripheral & Central Nervous System Drugs Advisory Committee,
`Briefing Information, Xyrem Prescription and Distribution Process Video
`and Transcript (“Xyrem Video and Transcript”) (July 13, 2001) (Ex. 1006).
`8 Talk About Sleep, “An Interview with Orphan Medical about Xyrem®,”
`available at http://www.talkaboutsleep.com/an-interview-with-orphan-
`medical-about-xyrem/ (“Talk About Sleep”) (Feb. 12, 2001) (Ex. 1033).
`9 Honigfeld et al., “Reducing Clozapine-Related Morbidity and Mortality: 5
`Years of Experience with the Clozaril National Registry,” J. Clin. Psych. 59
`(suppl. 3): 3–7 (1998) (“Honigfeld”) (Ex. 1034).
`10 Elsayed et al., U.S. Patent No. 6,045,501, filed Aug. 28, 1998, issued
`Apr. 4, 2000 (“Elsayed”) (Ex. 1035).
`11 Lilly et al., U.S. Patent Appl. Pub. No. 2004/0176985, filed Mar. 18,
`2004, published Sept. 9, 2004 (“Lilly”) (Ex. 1010).
`
`
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`In addition, Petitioner supports its challenges in each case with a
`
`Declaration by Robert J. Valuck, Ph.D., R.Ph. (“Valuck Decl.”) (Ex. 1007).
`
`C. The ’730 Patent
`
`The ’730 patent, titled “Sensitive Drug Distribution System and
`
`Method,” issued February 23, 2010 from an application filed December 17,
`
`2002. Ex. 1001.12 The ’730 patent is directed to a method for controlling
`
`access to a sensitive prescription drug prone to potential abuse or diversion,
`
`by utilizing a central pharmacy and database to track all prescriptions for the
`
`sensitive drug. Id. at Abstract, 1:38–42. Information regarding all
`
`physicians authorized to prescribe the drug and all patients receiving the
`
`drug is maintained in the database. Id. Abuses are identified by monitoring
`
`the database for prescription patterns by physicians and prescriptions
`
`obtained by patients. Id. at Abstract, 1:42–44.
`
`Figures 2A, 2B, and 2C comprise flow charts representing “an initial
`
`prescription order entry process for a sensitive drug.” Id. at 4:7–8. In
`
`overview, a physician submits prescriber, patient, and prescription
`
`information for the sensitive drug to a pharmacy team, which enters the
`
`information into a computer database. Id. at 4:7–25, Fig. 2A (steps 202–
`
`210). The pharmacy team then engages in “intake reimbursement” (Fig.
`
`2A), which includes verification of insurance coverage or the patient’s
`
`willingness and ability to pay for the prescription drug. Id. at 4:26–28.
`
`Steps 226–230, 234–238 of Figure 2A are reproduced below:
`
`
`12 The ’730 patent issued from patent application US 10/322,348 (“the ’348
`application”). Ex. 1001.
`
`
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`6
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`
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`Figure 2A, above, depicts steps for verifying insurance coverage or
`
`ability to pay. Id. at 2:22–24, 4:45–61. The “pharmacy” workflow also
`
`includes verification of the prescribing physician’s credentials. Id. at 5:9–
`
`26, Fig. 2B (steps 274–280). Filling the prescription includes confirming the
`
`patient has read educational materials regarding the sensitive drug,
`
`confirming the patient’s receipt of the sensitive drug, and daily cycle
`
`counting and inventory reconciliation. Id. at 5:27–67. Steps 240, 242, 246,
`
`and 258–266 of Figure 2C, are reproduced below.
`
`
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`7
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`. . .
`
`
`
`
`
`Figure 2C, above, depicts a portion of a prescription fulfillment flow
`
`diagram. Id. at Fig. 2C. The “CHiPS” system, referenced in steps 260 and
`
`266, is an application database “used to maintain a record of a client home
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`
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`infusion program (CHIP) for Xyrem®.”13 Id. at 4:28–33. If a patient
`
`requests an early prescription refill, for example, the pharmacist generates a
`
`report evaluating “the patient’s compliance with therapy or possible product
`
`diversion, misuse or over-use.” Id. at 6:33–38, Fig. 4B (step 436).
`
`D. Illustrative Claim
`
`The ’730 patent contains multiple independent claims (1, 2, and 7–11)
`
`and several dependent claims (3–6), of which claim 1 is illustrative and
`
`reproduced below:
`
`The invention claimed is:
`
`1. A computerized method of distributing a prescription
`drug under exclusive control of an exclusive central pharmacy,
`the method comprising:
`
`receiving in a computer processor all prescription requests,
`for any and all patients being prescribed the prescription drug,
`only at the exclusive central pharmacy from any and all medical
`doctors allowed to prescribe the prescription drug, the prescription
`requests containing information identifying patients, the prescription
`drug, and various credentials of the any and all medical doctors;
`
`requiring entering of the information into an exclusive
`computer database associated with the exclusive central
`pharmacy for analysis of potential abuse situations, such
`that all prescriptions for the prescription drug are processed
`only by the exclusive central pharmacy using
`only the exclusive computer database;
`
`checking with the computer processor the credentials of
`the any and all doctors to determine the eligibility of the
`doctors to prescribe the prescription drug;
`
`
`13 Xyrem® is the brand name for gamma hydroxy butyrate (“GBH”),
`indicated for the treatment of cataplexy (excessive daytime sleepiness) in
`narcoleptic patients. Ex. 1001, 3:14–19. Xyrem® is a sensitive prescription
`drug prone to potential abuse or diversion. Id.
`
`
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`9
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
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`confirming with a patient that educational material has
`been read prior to shipping the prescription drug;
`
`checking the exclusive computer database for potential
`abuse of the prescription drug;
`
`mailing the prescription drug to the patient only if no
`potential abuse is found by the patient to whom the
`prescription drug is prescribed and the doctor prescribing
`the prescription drug;
`
`confirming receipt by the patient of the prescription drug;
`and
`
`generating with the computer processor periodic reports
`via the exclusive computer database to evaluate potential
`diversion patterns.14
`
`II. ANALYSIS
`
`A. Real-Parties-in-Interest
`
`Patent Owner asserts that the Petition incorrectly identifies Amneal
`
`and Par Inc. as the only real parties-in-interest. Prelim. Resp. 9. Patent
`
`Owner argues that to comply with statutory requirements under 35 U.S.C.
`
`§ 312(a)(2), the Petition also should have identified all parent companies of
`
`Par Inc., i.e., Par Pharmaceutical Companies, Inc. (“Par Co.”), Par
`
`Pharmaceutical Holdings, Inc. (“Par Holdings”), Sky Growth Intermediate
`
`
`14 The preamble of the independent claims in the ’988 patent recites a
`“method of treatment of a narcoleptic patient . . . while controlling potential
`misuse, abuse or diversion of said prescription drug, comprising.” IPR2015-
`00551 Ex. 1001, 8:38–40. The method steps recited in the independent
`claims of the ’988 patent are very similar to the method steps recited in the
`independent claims of the ’730 patent, such that the analysis concerning
`claim construction and the grounds is similar.
`
`
`
`10
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`Holdings I Corporation (“Sky I”), and Sky Growth Intermediate Holdings II
`
`Corporation (“Sky II”), collectively “Par parents” or “parent” companies.
`
`Id. at 9–23. Patent Owner contends that because the Petition fails to name
`
`all real parties-in-interest, the Petition’s filing date should be vacated. Id. at
`
`9, 21. Patent Owner requests, therefore, that we dismiss the Petition as
`
`untimely under 35 U.S.C. § 315(b), which states that we may not institute an
`
`inter partes review if the Petition is filed more than one year after the
`
`Petitioner or any real party-in-interest is served with a complaint alleging
`
`infringement of the patent. Id. at 9, 22–23.
`
`1. Patent Owner’s Contentions
`
`Patent Owner asserts, in particular, that “Par Inc.’s parent companies
`
`exercise control over Par Inc.’s business, including control over this IPR
`
`proceeding.” Id. at 9, 11–20. Patent Owner contends the evidence
`
`establishes that Par Inc. and its parent companies do not maintain well-
`
`defined corporate boundaries and act as a single unit, controlled by a single
`
`master. Id. at 12–16. Patent Owner points to financial disclosure documents
`
`indicating that Par Inc. and its parents refer to themselves and act
`
`collectively as “we,” that the companies undertake acquisitions as a single
`
`unit, and that the companies operate from a single website that does not
`
`differentiate among them. Id. at 13–15 (citing Ex. 2016, 8–9, 12, 38–40; Ex.
`
`2015, 5, 207, 209, 224; Ex. 2019); id. at 19–20 (citing Ex. 2015, 122, 127;
`
`Ex. 2016, 33, 36). Patent Owner provides further evidence that Par
`
`Holdings has “no independent operations or material assets other than [Par
`
`Holdings’] ownership of equity interest in [its] subsidiaries,” and depends on
`
`its subsidiaries “to distribute funds to use so that [Par Holdings] may pay
`
`[its] obligations and expenses.” Id. at 15, 19 (citing Ex. 2015, 45; see also id.
`
`
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`

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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`at 51 (“[O]ur ability to pay dividends . . . will be dependent upon cash
`
`dividends and distributions or other transfer from our subsidiaries, including
`
`from [Par Inc.]”)).
`
`Patent Owner also cites evidence indicating that Par Inc. and its parent
`
`companies share the same corporate officers, and that Par Holdings and Par
`
`Inc. share the same principal place of business. Id. at 15, 16 (citing Ex.
`
`2020; Ex. 2015, 13, 133, 143, 154, 55; Ex. 2021, 28; Paper 3, 2). Patent
`
`Owner further contends that an in-house attorney participating in this case is
`
`employed by Par Co., not Par Inc., as evidenced by a printed page from
`
`LinkedIn, and that Par Inc.’s outside counsel in this IPR proceeding also acts
`
`as outside counsel for Par Co. in unrelated district court litigation. Id. at 20
`
`(citing Ex. 2025; Ex. 2026, 16; Ex. 2027, 19).
`
`Patent Owner argues that because “Par Inc. and its parent companies
`
`blur the lines of corporate separation, such that the entities operate as a
`
`single unit,” “[e]ach has the ability to control (and does control) this IPR.”
`
`Id. at 16.
`
`2. Petitioner’s Response
`
`In its response addressing the real-parties-in-interest (“RPI”) issue
`
`(Paper 12, “Pet. RPI Resp.”), Petitioner relies on the Declaration of Mr.
`
`Barry Gilman, Deputy General Counsel and Secretary for Par Inc. (Ex. 1040
`
`¶ 1). Petitioner confirms that Par Inc. is a wholly-owned subsidiary of a
`
`series of holding companies, i.e., the Par parents discussed above. Pet. RPI
`
`Resp. 2 (citing Ex. 1040 ¶¶ 2). Petitioner states that Par Inc. makes, sells,
`
`and distributes pharmaceuticals, and that Par Inc. prepared and filed the
`
`abbreviated new drug application (“ANDA”) for a generic form of Xyrem
`
`that led to the co-pending district court action filed by Patent Owner against
`
`
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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`Par Inc. Id. at 2–3 (citing Ex. 1040 ¶¶ 2–5). By contrast, the Par parents “do
`
`not conduct any such operations.” Id. at 2 (citing Ex. 1040 ¶¶ 2–4).
`
`Consistently, Patent Owner has not sued any of Par Inc.’s parent companies
`
`for infringement of the challenged patent. Id. at 3–4 (citing Ex. 1040 ¶ 6);
`
`Ex. 1026).
`
`In response to Patent Owner’s contention that Par Inc. and its parent
`
`companies “hold themselves out as a single unit” based on statements in
`
`financial disclosure documents, Petitioner argues that “using these generic
`
`descriptors in such documents is commonplace.” Id. at 5 (quoting Prelim.
`
`Resp. 13). In addition, even assuming Par Inc. and its parents act as a single
`
`unit, Petitioner argues that such parent/subsidiary relationships are
`
`inadequate to show sufficient opportunity to control this IPR proceeding. Id.
`
`at 6. Petitioner contends that Par Inc. was the only party responsible for
`
`directing, controlling, and funding the preparation and filing of the Petition,
`
`and none of the Par parents participated in any of those activities. Id. at 4
`
`(citing Ex. 1040 ¶ 6), 7 (citing Ex. 1040 ¶ 7). According to Petitioner, the
`
`“opportunity for control was simply not present.” Id. at 7.
`
`3. Analysis
`
`A patent owner challenging a petitioner’s RPI disclosure must provide
`
`sufficient evidence to show the disclosure is inadequate. Intellectual
`
`Ventures Mgmt., LLC v. Xilinx, Inc., Case IPR2012-00018, slip op. at 3
`
`(PTAB Jan. 24, 2013) (Paper 12). When a patent owner provides sufficient
`
`evidence prior to institution that reasonably brings into question the
`
`accuracy of a petitioner’s identification of real parties-in-interest, the overall
`
`burden remains with the petitioner to establish that it has complied with the
`
`statutory requirement to identify all real parties-in-interest. Zerto, Inc. v.
`
`
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`13
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`Patent Owner Horizon Ex. 2002
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`

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`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
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`EMC Corp., Case IPR2014-01254, slip op. at 6–7 (PTAB Feb 12, 2015)
`
`(Paper 32).
`
`The RPI requirement exists to ensure that a non-party is not “litigating
`
`through a proxy.” See Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc.,
`
`Case IPR2014-01288, slip op. at 12 (PTAB Feb. 20, 2015) (Paper 13). The
`
`RPI analysis, moreover, is an inquiry into the “relationship between a party
`
`and a proceeding;” not “the relationship between parties.” Id. at 11. Thus,
`
`our focus “is on the degree of control the nonparty could exert over the inter
`
`partes review, not the petitioner.” Id.
`
`As stated in the Office Patent Trial Practice Guide, whether a party
`
`who is not a named participant in a given proceeding is a “real party-in-
`
`interest” to that proceeding “is a highly fact-dependent question.” 77 Fed.
`
`Reg. 48,756, 48,759 (Aug. 14, 2012) (Trial Practice Guide). There is no
`
`“bright line test.” Id. Considerations may include whether a non-party
`
`“funds and directs and controls” an IPR petition or proceeding; the non-
`
`party’s relationship with the petitioner; the non-party’s relationship to the
`
`petition itself, including the nature and/or degree of involvement in the
`
`filing; and the nature of the entity filing the petition. Id. at 48,760. A party
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`does not become a “real party-in-interest” merely through association with
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`another party in an endeavor unrelated to the AIA proceeding. Id.
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`A non-party’s participation with a petitioner may be overt or covert,
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`and the evidence may be direct or circumstantial, but the evidence as a
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`whole must show that the non-party possessed effective control over the
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`inter partes review (“IPR”) proceeding. Zoll Lifecor Corp. v. Philips Elec.
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`N. Am. Corp., Case IPR2013-00609, slip op. at 10 (PTAB Mar. 20, 2014)
`
`(Paper 15).
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`
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`14
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`Page 14 of 47
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`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
`
`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`With regard to the funding, direction, and control of the Petition and
`
`this IPR proceeding, we begin with Petitioner’s evidence that Par Inc.: (i) is
`
`the only operating company among the asserted real parties-in-interest; (ii)
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`“solely prepared and filed” the ANDA that precipitated the co-pending
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`patent infringement action filed by Patent Owner against Par Inc.; (iii) was
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`“the sole Par entity responsible for directing, controlling, and funding” the
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`preparation and filing of the Petition in this IPR proceeding; and (iv) “was
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`the only Par entity that paid any filing or legal fees associated with . . . the
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`instant Petitions.” Pet. RPI Resp. 2–4, 7 (citing Ex. 1040 ¶¶ 2–7). Evidence
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`also indicates that none of the Par parents “participated in the decision to
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`file” the Petition or “exercise[d] any control over the filing or content” of the
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`Petition. Id. at 7 (citing Ex. 1040 ¶ 7). The evidence further indicates that
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`Patent Owner has not filed suit alleging infringement of the challenged
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`patent against any of the Par parents and that none of the Par parents has
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`intervened in the co-pending patent infringement action or sought a
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`declaratory judgment of invalidity of the challenged patent. Id. at 7–8
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`(citing Ex. 1040 ¶ 8). Patent Owner does not cite contradictory or
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`inconsistent evidence. Papers 17, 18, Patent Owner Reply to Pet. RPI Resp.
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`(“PO RPI Reply”) 1–5.
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`With regard to the relationship among Par Inc. and the Par parents, we
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`accept Patent Owner’s evidence that Par Inc. and its parents, in certain
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`capacities, act as a single unit. Such a parent-subsidiary relationship where
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`“it is difficult for both insiders and outsiders to determine precisely where
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`one ends and another begins,” however, is only one factor that weighs in
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`favor of finding a parent company to be a real party-in-interest. Atlanta Gas
`
`Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453, slip op.
`
`
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`15
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`Page 15 of 47
`
`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
`
`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`at 11 (PTAB January 6, 2015) (Paper 88). Petitioner, moreover, provides
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`evidence establishing that all Par parent companies are non-operational
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`holding companies that do not engage in the manufacture, distribution, or
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`sale of drugs. Ex. 1040 ¶¶ 2–4, 8.
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`The evidence also indicates that the holding companies do not
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`generate any revenues themselves (outside of revenues generated by Par
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`Inc.), nor have legal departments of their own. Ex. 2033 (deposition
`
`transcript of Mr. Gilman), 52:16–53:3, 39:2–8, 40:11–18; see also Prelim.
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`Resp. 15 (noting that Par Holdings describes itself publicly as having “no
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`independent operations or material assets other than our ownership of equity
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`interest in our subsidiaries”), 18 (stating that Par Holdings admits that it
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`“will depend on our subsidiaries to distribute funds” to pay dividends); PO
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`RPI Reply 4 (stating that “Mr. Gilman admitted the Par Parents do not have
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`independent legal departments”).
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`Thus, this case is distinguishable from other cases where the Board
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`has found that “Petitioner’s actions have blurred sufficiently the lines of
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`corporate separation with its parent, [] such that [the parent] could have
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`controlled the filing and participation of the IPRs.” Zoll Lifecor Corp. v.
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`Philips Elec. N. Am. Corp., Case IPR2013-00606, slip op. at 10 (PTAB Mar.
`
`20, 2014) (Paper 13) (“Zoll”). For example, in Zoll, the absence of
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`Petitioner’s management team and presence of the parent company’s
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`management team at a relevant, court-ordered mediation “suggest[ed] an
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`involved and controlling parent corporation representing the unified interests
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`of itself and Petitioner.” Id. In other words, evidence in Zoll indicated that
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`the parent company exerted control over the inter partes review.
`
`
`
`16
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`Page 16 of 47
`
`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
`
`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`Here, in contrast to Zoll, the evidence indicates that Par Inc. calls the
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`shots as it pertains to the inter partes review and related litigations. If
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`anything, Par Inc. (rather than any parent) represents its own interests in this
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`IPR proceeding, even though those interests may inure, ultimately, to the
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`benefit of one or more of its parent companies. The evidence here indicates
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`that no parent company has the ability (e.g., via a legal department or
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`operations) to exert control over the IPR. Cf. GEA Process Eng’g. Inc. v.
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`Steuben Foods, Inc., Case IPR2014-00041 (PTAB Feb. 11, 2015) (Paper
`
`140) (finding a nonparty that paid petitioner’s legal fees for an IPR to be a
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`real party-in-interest).
`
`In Atlanta Gas, a panel of the Board addressed whether a parent
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`“holding company that . . . conducts substantially all of its operations
`
`through its subsidiaries” was a real party-in-interest. Atlanta Gas, Case
`
`IPR2013-00453, slip op. at 2–3, 9 (Paper 88). In that case, however, a sister
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`subsidiary company provided support services, such as legal services, to
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`subsidiaries of the parent, such as the petitioner. Id. at 2–3. In addition, a
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`corporate officer of the petitioner (and parent and other subsidiaries)
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`engaged in negotiations regarding indemnification on behalf of the parent
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`company and its subsidiaries, and worked with counsel for the parent
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`company when preparing for a deposition in the IPR. Id. at 3–6, 9–10. It
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`also was unclear who paid the filing fees and legal expenses associated with
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`the proceeding. Id. at 10–11. The panel found “the demonstrated
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`participation of officers and employees of [the parent] and [sister subsidiary]
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`and the lack of clarity over who actually financed filing fees and attorney
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`costs” to be significant when determining that the parent should have been
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`named as a real party-in-interest. Id. at 12–13.
`
`
`
`17
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`Page 17 of 47
`
`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
`
`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`In Zerto, evidence indicated a parent and wholly own subsidiary had
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`“not maintained well-defined corporate boundaries,” and it was again
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`“unclear who paid the filing fees and legal expenses” associated with the
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`IPR. Zerto, Inc. v. EMC Corp., Case IPR2014-01254, slip op. at 13 (PTAB
`
`Feb 12, 2015) (Paper 32). Moreover, evidence in that case included an inter-
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`company agreement with an indemnification clause indicating that the parent
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`would pay expenses for any action brought against the petitioner, as well as
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`equivocal testimony by the CEO of both companies on the issue of which
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`company controlled or funded the proceeding. Id. at 11–13; see also
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`Galderma S.A. v. Allergan Industrie, SAS, Case IPR2014-01422, slip op. at
`
`12, 8–13 (PTAB Mar. 5, 2015) (Paper 14) (stating that “historical evidence
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`for a pattern of control by” the parent over a subsidiary distributor acquired
`
`by the parent indicated that the parent had effective control over the
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`subsidiary).
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`Here, by contrast, the evidence indicates that Petitioner Par Inc. is the
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`only Par company with a legal department and the only Par company paying
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`relevant legal fees and expenses, such as those associated with this
`
`proceeding. Prelim. Resp. 15 (citing Ex. 2015, 45); PO RPI Reply, 4 (citing
`
`Ex. 2033, 52:16–53:3); Ex. 1040 ¶¶ 4, 7. Again, the evidence indicates that
`
`no parent company of Par Inc. has had the ability (e.g., via a legal
`
`department or operations) to control this IPR proceeding. Moreover, there is
`
`insufficient evidence that Par Inc. has acted as a proxy for any Par parent in
`
`this proceeding. See TRW Automotive U.S., LLC, v. Magna Elect. Inc., Case
`
`IPR2014-01346, slip op. at 8 (PTAB Feb. 20, 2015) (Paper 7) (citing RPX
`
`Corp. v. Virnetx, Inc., Case IPR2014-00171, slip op. at 6–10 (PTAB June
`
`23, 2014) (Paper 49)).
`
`
`
`18
`
`Page 18 of 47
`
`Patent Owner Horizon Ex. 2002
`Par Pharm. v. Horizon (fka Hyperion)
`IPR2015-01117, IPR2015-01127
`
`

`
`IPR2015-00551 (Patent 8,457,988 B1)
`IPR2015-00554 (Patent 7,668,730 B2)
`
`As noted in TRW Automotive, evidence that a parent “ʻconduct[s]
`
`substantially all of [its] operations through subsidiaries’ [] is not persuasive
`
`or sufficient evidence by itself to establish ʻan involved and controlling
`
`parent corporation representing the unified interests of itself and
`
`Petitioner.’” TRW Automotive, Case IPR2014-01