Page 1
`
`NEOCHORD,
`
`INC.,
`
`Petitioner,
`
`:
`
`Inter Partes
`
`Review
`
`N E O C H O R D , I N C . , :
` P e t i t i o n e r , : I n t e r P a r t e s
` : R e v i e w
` v . :
` :
`U N I V E R S I T Y O F :
`M A R Y L A N D , :
`B A L T I M O R E , : N o . I P R 2 0 1 6 - 0 0 2 0 8
` P a t e n t O w n e r . :
`
`UNIVERSITY OF
`
`MARYLAND,
`
`BALTIMORE,
`
`: NO.
`
`IPR20l6—00208
`
`Patent Owner.
`
` - - -
`
` T u e s d a y , F e b r u a r y 7 , 2 0 1 7
`
`Tuesday, February 7, 2017
`
` - - -
`
`Completely telephonic Inter Partes
`
` C o m p l e t e l y t e l e p h o n i c I n t e r P a r t e s
`R e v i e w , c o m m e n c e d a t 1 : 3 1 p . m . , o n t h e
`a b o v e d a t e , b e f o r e M a d e l i n a C o c c a , a
`C o u r t R e p o r t e r a n d N o t a r y P u b l i c .
`
`Review,
`
`commenced at 1:31 p.m.,
`
`on the
`
`above date, before Madelina Cocca,
`
`a
`
`Court Reporter and Notary Public.
`
` - - -
`
`MAGNA LEGAL SERVICES
`
` M A G N A L E G A L S E R V I C E S
` ( 8 6 6 ) 6 2 4 - 6 2 2 1
` w w w . M a g n a L S . c o m
`
`(866) 624-6221
`
`www.MagnaLS.com
`
`

`

`A P P E A R A N C E S :
`
`APPEARANCES:
`
`Page 2
`
` P A T T E R S O N , T H U E N T E , I P
` B Y : B R A D P E D E R S E N , E S Q U I R E
` B Y : C H A D W I C K M A N , E S Q U I R E
` 4 8 0 0 I D S C e n t e r
` 8 0 S o u t h 8 t h S t r e e t
` M i n n e a p o l i s , M i n n e s o t a 5 5 4 0 2
` 6 1 2 - 3 4 9 - 5 7 4 0
` ( V i a t e l e p h o n e )
` R e p r e s e n t i n g t h e P e t i t i o n e r
`
`PATTERSON, THUENTE,
`
`IP
`
`BY:
`
`BY:
`
`BRAD PEDERSEN, ESQUIRE
`
`CHAD WICKMAN, ESQUIRE
`
`4800 IDS Center
`
`80 South 8th Street
`
`Minneapolis, Minnesota 55402
`
`612-349-5740
`
`(Via telephone)
`
`Representing the Petitioner
`
` C O O L E Y L L P
` B Y : E R I K M I L C H , E S Q U I R E
` B Y : S C O T T T A L B O T , E S Q U I R E
` O n e F r e e d o m S q u a r e
` R e s t o n T o w n C e n t e r
` 1 1 9 5 1 F r e e d o m D r i v e
` R e s t o n , V i r g i n i a 2 0 1 9 0
` 7 0 3 - 4 5 6 - 8 0 0 0
` ( V i a t e l e p h o n e )
` R e p r e s e n t i n g t h e P a t e n t O w n e r
`
`COOLEY LLP
`
`BY:
`
`BY:
`
`ERIK MILCH, ESQUIRE
`
`SCOTT TALBOT, ESQUIRE
`
`One Freedom Square
`
`Reston Town Center
`
`11951 Freedom Drive
`
`Reston, Virginia 20190
`
`703-456-8000
`
`(Via telephone)
`
`Representing the Patent Owner
`
`PRESENT:
`
`A L S O P R E S E N T :
` J u d g e W o r t h
` J u d g e M e d l e y
` J u d g e F r a n k l i n
`
`Judge Worth
`
`Judge Medley
`
`Judge Franklin
`
`1
`2
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`3
`
`4
`
`5
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`6
`
`78
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`

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`JUDGE WORTH: First,
`
`let's
`
`Page 3
`
`take appearances.
`
`MR. MILCH: Erik Milch and
`
`Scott Talbot of Cooley for Patent
`
`Owner.
`
`MR. PEDERSEN:
`
`This is Brad
`
`Pedersen and Chad Wickman for the
`
`Petitioner.
`
`JUDGE WORTH: Okay.
`
`Before we get started,
`
`I
`
`Page 3
` J U D G E W O R T H : F i r s t , l e t ' s
` t a k e a p p e a r a n c e s .
` M R . M I L C H : E r i k M i l c h a n d
` S c o t t T a l b o t o f C o o l e y f o r P a t e n t
` O w n e r .
` M R . P E D E R S E N : T h i s i s B r a d
` P e d e r s e n a n d C h a d W i c k m a n f o r t h e
` P e t i t i o n e r .
` J U D G E W O R T H : O k a y .
` B e f o r e w e g e t s t a r t e d , I
` w o u l d s a y t h a t w e c a n h o l d o f f o n
` a n y m e r i t s d i s c u s s i o n , a t t h i s
` p o i n t .
` J u s t t o d i r e c t t h e
` c o n v e r s a t i o n , t h e p u r p o s e o f t h i s
` c a l l i s P a t e n t O w n e r h a s r e q u e s t e d
` a u t h o r i z a t i o n t o f i l e a m o t i o n o r
` f o r b r i e f i n g a n d s o , a t t h i s
` p o i n t , w e ' r e i n t e r e s t e d i n j u s t a n
` a u t h o r i z a t i o n a s p e c t , r a t h e r t h a n
` t h e b r i e f i n g a s p e c t .
` S o w e ' r e g o i n g t o s t a r t w i t h
` P a t e n t O w n e r , b u t t h e q u e s t i o n
` t h a t w e w a n t t o f o c u s o n r i g h t n o w
`
`point, we're interested in just an
`
`would say that we can hold off on
`
`any merits discussion, at
`
`this
`
`point.
`
`Just
`
`to direct
`
`the
`
`conversation,
`
`the purpose of this
`
`call
`
`is Patent Owner has requested
`
`authorization to file a motion or
`
`for briefing and so, at
`
`this
`
`authorization aspect,
`
`rather than
`
`the briefing aspect.
`
`So we're going to start with
`
`Patent Owner, but
`
`the question
`
`that we want
`
`to focus on right now
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`

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`Page 4
`
`is,
`
`is this a
`
`timely request, or
`
`is it too late or waived.
`
`So
`
`let's begin with Patent Owner.
`
`MR. MILCH:
`
`Thank you, Your
`
`Page 4
` i s , i s t h i s a t i m e l y r e q u e s t , o r
` i s i t t o o l a t e o r w a i v e d . S o
` l e t ' s b e g i n w i t h P a t e n t O w n e r .
` M R . M I L C H : T h a n k y o u , Y o u r
` H o n o r .
` S o t o t h e t i m i n g i s s u e , t h e
` S u p r e m e C o u r t s a i d t h a t S t a t e
` S o v e r e i g n I m m u n i t y c a n b e r a i s e d
` a t a n y t i m e d u r i n g a p r o c e e d i n g ,
` i n c l u d i n g o n a p p e a l . A c a s e
` t h a t ' s d i r e c t l y o n p o i n t i s
` C a l d e r o n v e r s u s A s h m u s , a n d t h e
` c i t e i s 5 2 3 U S 7 4 0 , 7 4 5 n o t e 2 .
` A l s o , t h e r e ' s t h e c a s e o f
` F l o r i d a D e p a r t m e n t o f S t a t e v e r s u s
` T r e a s u r e S a l v o r s , w h i c h i s 4 5 8 U S
` 6 7 0 6 8 3 , a n d t h a t c a s e , t h e
` F l o r i d a D e p a r t m e n t o f S t a t e c a s e ,
` g e t s t o t h e i s s u e t h a t w a s r a i s e d
` b y P e t i t i o n e r r e g a r d i n g t h e f a c t
` t h a t P a t e n t O w n e r h a s a l r e a d y
` r e s p o n d e d i n t h i s a c t i o n a n d
` e s s e n t i a l l y r a i s e d d e f e n s e s .
` T h e F l o r i d a D e p a r t m e n t o f
`
`Florida Department of State versus
`
`So to the timing issue,
`
`the
`
`Supreme Court said that State
`
`Sovereign Immunity can be raised
`
`at any time during a proceeding,
`
`including on appeal.
`
`A case
`
`that's directly on point
`
`is
`
`Calderon versus Ashmus, and the
`
`cite is 523 US 740,
`
`745 note 2.
`
`Also,
`
`there's the case of
`
`Treasure Salvors, which is 458 US
`
`670 683, and that case,
`
`the
`
`Florida Department of State case,
`
`gets to the issue that was raised
`
`by Petitioner regarding the fact
`
`that Patent Owner has already
`
`responded in this action and
`
`essentially raised defenses.
`
`The Florida Department of
`
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`Page 5
`
`State case, after the fact
`
`that
`
`defenses were offered, does not
`
`foreclose the 11th Amendment for
`
`protection from being considered.
`
`So we would submit
`
`that as far as
`
`timing is concerned,
`
`there is
`
`sufficient precedent
`
`to allow this
`
`to proceed.
`
`Given that
`
`this a
`
`jurisdictional
`
`issue,
`
`it can be
`
`raised at any time to the
`
`Page 5
` S t a t e c a s e , a f t e r t h e f a c t t h a t
` d e f e n s e s w e r e o f f e r e d , d o e s n o t
` f o r e c l o s e t h e 1 1 t h A m e n d m e n t f o r
` p r o t e c t i o n f r o m b e i n g c o n s i d e r e d .
` S o w e w o u l d s u b m i t t h a t a s f a r a s
` t i m i n g i s c o n c e r n e d , t h e r e i s
` s u f f i c i e n t p r e c e d e n t t o a l l o w t h i s
` t o p r o c e e d .
` G i v e n t h a t t h i s a
` j u r i s d i c t i o n a l i s s u e , i t c a n b e
` r a i s e d a t a n y t i m e t o t h e
` e x t e n t - - a n d I c a n p a u s e t h e r e i f
` y o u h a v e a n y q u e s t i o n s a b o u t t h e
` j u r i s d i c t i o n a l i s s u e , o r I c a n
` m o v e o n t o t h e w a i v e r i s s u e .
` J U D G E W O R T H : J u s t o n t h e
` f a c t s o f t h i s c a s e , w h y d i d P a t e n t
` O w n e r w a i t t o r a i s e t h i s i s s u e ?
` M R . M I L C H : Y o u r H o n o r ,
` g i v e n t h a t t h e C o v i d i e n c a s e c a m e
` o u t j u s t t w o w e e k s a g o , n o t e v e n
` t w o w e e k s a g o , t h e r e w a s n o
` p r e c e d e n t f o r t h e f a c t t h a t a n I P R
` p r o c e e d i n g w o u l d b e r e l e v a n t i n
`
`extent —— and I can pause there if
`
`you have any questions about
`
`the
`
`jurisdictional
`
`issue, or
`
`I can
`
`move on to the waiver
`
`issue.
`
`JUDGE WORTH:
`
`Just on the
`
`facts of this case, why did Patent
`
`Owner wait
`
`to raise this issue?
`
`MR. MILCH: Your Honor,
`
`given that
`
`the Covidien case came
`
`out
`
`just
`
`two weeks ago, not even
`
`two weeks ago,
`
`there was no
`
`precedent for the fact
`
`that an IPR
`
`proceeding would be relevant
`
`in
`
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`

`

`the context of
`
`the 11th Amendment
`
`Page 6
`
`And when that came out,
`
`Patent Owner raised this the
`
`following week;
`
`it was within
`
`three business days of
`
`that
`
`decision coming out.
`
`I'm not sure if we'd all
`
`agree, but perhaps we'd all agree
`
`that
`
`that was certainly an issue
`
`of first impression at
`
`the PTAB as
`
`to whether or not
`
`the 11th
`
`Amendment, State Sovereign
`
`Immunity Protection, applies in
`
`PTAB proceedings.
`
`JUDGE WORTH:
`
`So is the
`
`State Sovereign Immunity defense.
`
`Page 6
` t h e c o n t e x t o f t h e 1 1 t h A m e n d m e n t
` S t a t e S o v e r e i g n I m m u n i t y d e f e n s e .
` A n d w h e n t h a t c a m e o u t ,
` P a t e n t O w n e r r a i s e d t h i s t h e
` f o l l o w i n g w e e k ; i t w a s w i t h i n
` t h r e e b u s i n e s s d a y s o f t h a t
` d e c i s i o n c o m i n g o u t .
` I ' m n o t s u r e i f w e ' d a l l
` a g r e e , b u t p e r h a p s w e ' d a l l a g r e e
` t h a t t h a t w a s c e r t a i n l y a n i s s u e
` o f f i r s t i m p r e s s i o n a t t h e P T A B a s
` t o w h e t h e r o r n o t t h e 1 1 t h
` A m e n d m e n t , S t a t e S o v e r e i g n
` I m m u n i t y P r o t e c t i o n , a p p l i e s i n
` P T A B p r o c e e d i n g s .
` J U D G E W O R T H : S o i s t h e
` P a t e n t O w n e r r e l y i n g o n l y o n t h e
` C o v i d i e n c a s e ? I k n o w t h a t w e ' r e
` g o i n g t o g e t i n t o , s o r t o f , t h e
` m e r i t s a t a l a t e r p o i n t . I n o t h e r
` w o r d s , P a t e n t O w n e r - - P a t e n t
` O w n e r i s s a y i n g t h a t t h e i r r e a s o n
` i s b e c a u s e P a t e n t O w n e r w a s n o t
` a w a r e t h a t t h i s w a s p o s s i b l e
`
`Patent Owner relying only on the
`
`Covidien case?
`
`I know that we're
`
`going to get
`
`into, sort of,
`
`the
`
`merits at
`
`a later point.
`
`In other
`
`words, Patent Owner —— Patent
`
`Owner
`
`is saying that their reason
`
`is because Patent Owner was not
`
`aware that
`
`this was possible
`
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`

`Page 7
`
`beforehand?
`
`MR. MILCH: Right.
`
`There is no precedent for an
`
`11th Amendment defense in a PTAB
`
`coming out.
`
`JUDGE WORTH:
`
`And just
`
`to
`
`be, sort of, precise with our
`
`language,
`
`the Covidien case is not
`
`Board precedential,
`
`so there are
`
`certain opinions that are
`
`designated precedential or
`
`informative.
`
`action prior to this Covidien case
`
` b e f o r e h a n d ?
` M R . M I L C H : R i g h t .
` T h e r e i s n o p r e c e d e n t f o r a n
` 1 1 t h A m e n d m e n t d e f e n s e i n a P T A B
` a c t i o n p r i o r t o t h i s C o v i d i e n c a s e
` c o m i n g o u t .
` J U D G E W O R T H : A n d j u s t t o
` b e , s o r t o f , p r e c i s e w i t h o u r
` l a n g u a g e , t h e C o v i d i e n c a s e i s n o t
` B o a r d p r e c e d e n t i a l , s o t h e r e a r e
` c e r t a i n o p i n i o n s t h a t a r e
` d e s i g n a t e d p r e c e d e n t i a l o r
` i n f o r m a t i v e .
` T h e s t a t u s o f t h a t c a s e , a t
` t h i s p o i n t , i s a p a n e l d e c i s i o n ,
` s o i t d o e s n ' t h a v e a s p e c i a l
` d e s i g n a t i o n a s p r e c e d e n t i a l .
` M R . M I L C H : U n d e r s t o o d .
` J U D G E W O R T H : W e m a y g o b a c k
` a n d f o r t h , b u t l e t ' s g o t o
` P e t i t i o n e r r i g h t n o w .
` P e t i t i o n e r , h o w d o y o u
` r e s p o n d , j u s t o n t h i s i s s u e o f
` t i m e l i n e s s a t t h e B o a r d ?
`
`The status of
`
`that case, at
`
`this point,
`
`is a panel decision,
`
`so it doesn't have a special
`
`designation as precedential.
`
`MR. MILCH: Understood.
`
`JUDGE WORTH:
`
`We may go back
`
`and forth, but let's go to
`
`Petitioner right now.
`
`Petitioner,
`
`how do you
`
`respond,
`
`just on this issue of
`
`timeliness at
`
`the Board?
`
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`

`

`Page 8
`
`Page 8
`
`MR. PEDERSEN: Well,
`
`Petitioner, first, would look to
`
`the Board rules on the timeliness
`
`rather than necessarily running to
`
` M R . P E D E R S E N : W e l l ,
` P e t i t i o n e r , f i r s t , w o u l d l o o k t o
` t h e B o a r d r u l e s o n t h e t i m e l i n e s s
` r a t h e r t h a n n e c e s s a r i l y r u n n i n g t o
` t h e c a s e l a w .
` I n p a r t i c u l a r , t h e m o t i o n
` f o r r e l i e f h e r e u n d e r 4 2 . 2 0 A , t h e
` r e l i e f i n t h e C o v i d i e n c a s e i s
` d i s t i n g u i s h a b l e b e c a u s e t h e y m a d e
` a m o t i o n u n d e r 4 2 . 2 0 A a m o n t h
` b e f o r e t h e P a t e n t O w n e r ' s
` p r e l i m i n a r y r e s p o n s e .
` A s Y o u r H o n o r n o t e d ,
` C o v i d i e n i s n o t p r e c e d e n t i a l a n d ,
` t h e r e f o r e , i s n o t b a n n e d b e y o n d
` t h i s p a n e l . B u t i n P e t i t i o n e r ' s
` v i e w , t h e P a t e n t O w n e r ' s r e q u e s t
` m u s t b e c o n s i d e r e d a l a t e a c t i o n
` s u b j e c t t o r u l e 4 2 . 5 C . T h a t w o u l d
` r e q u i r e t h e P a t e n t O w n e r t o s h o w
` g o o d c a u s e , o r t h e c o n s i d e r a t i o n
` w o u l d b e i n t h e i n t e r e s t o f
` j u s t i c e , i n o r d e r t o e x c u s e t h e
` l a t e a c t i o n .
`
`the case law.
`
`In particular,
`
`the motion
`
`for relief here under 42.2OA,
`
`the
`
`relief in the Covidien case is
`
`distinguishable because they made
`
`a motion under 42.2OA a month
`
`before the Patent Owner's
`
`preliminary response.
`
`As Your Honor noted,
`
`Covidien is not precedential and,
`
`therefore,
`
`is not banned beyond
`
`this panel.
`
`But
`
`in Petitioner's
`
`view,
`
`the Patent Owner's request
`
`must be considered a
`
`late action
`
`subject
`
`to rule 42.5C.
`
`That would
`
`require the Patent Owner
`
`to show
`
`good cause, or
`
`the consideration
`
`would be in the interest of
`
`justice,
`
`in order to excuse the
`
`late action.
`
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`The Petitioner's position is
`
`Page 9
`
`that
`
`the Board has the authority
`
`under its rules to deny relief
`
`under 42.25B, where there is a
`
`delay in seeking relief.
`
`Obviously,
`
`the 11th
`
`Amendment has been around for a
`
`long time and the Doctrine of
`
`Sovereign Immunity has been the
`
`subject of numerous
`
`judicial
`
`Page 9
` T h e P e t i t i o n e r ' s p o s i t i o n i s
` t h a t t h e B o a r d h a s t h e a u t h o r i t y
` u n d e r i t s r u l e s t o d e n y r e l i e f
` u n d e r 4 2 . 2 5 B , w h e r e t h e r e i s a
` d e l a y i n s e e k i n g r e l i e f .
` O b v i o u s l y , t h e 1 1 t h
` A m e n d m e n t h a s b e e n a r o u n d f o r a
` l o n g t i m e a n d t h e D o c t r i n e o f
` S o v e r e i g n I m m u n i t y h a s b e e n t h e
` s u b j e c t o f n u m e r o u s j u d i c i a l
` d e c i s i o n s . S o t h e a v a i l a b i l i t y o f
` t h e D o c t r i n e t o a S t a t e a g e n c y i s
` s o m e t h i n g t h a t w o u l d b e
` w e l l - k n o w n .
` T h e f a c t t h a t C o v i d i e n m a y
` o r m a y n o t b e t h e f i r s t c a s e i n
` w h i c h t h i s i s s u e w a s r a i s e d
` d o e s n ' t m e a n t h a t t h e i s s u e c o u l d
` n o t h a v e b e e n r a i s e d o r t h a t t h e
` i s s u e w a s n o t s o m e t h i n g t h a t S t a t e
` a c t o r s h a v e a s s e r t e d a l l a l o n g .
` W i t h r e s p e c t t o t h e c a s e
` t h a t t h e P a t e n t O w n e r c i t e s , t h e
` C a l d e r o n c a s e , I ' m n o t s u r e t h a t
`
`issue was not something that State
`
`decisions.
`
`So the availability of
`
`the Doctrine to a State agency is
`
`something that would be
`
`well—known.
`
`The fact
`
`that Covidien may
`
`or may not be the first case in
`
`which this issue was raised
`
`doesn't mean that
`
`the issue could
`
`not have been raised or that
`
`the
`
`actors have asserted all along.
`
`With respect
`
`to the case
`
`that
`
`the Patent Owner cites,
`
`the
`
`Calderon case,
`
`I'm not sure that
`
`1
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`

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`the footnote that
`
`is cited
`
`Page 10
`
`Page 10
`
`supports the proposition for which
`
` t h e f o o t n o t e t h a t i s c i t e d
` s u p p o r t s t h e p r o p o s i t i o n f o r w h i c h
` t h e y ' r e c i t i n g t h a t S o v e r e i g n
` I m m u n i t y c a n b e r a i s e d a t a n y
` t i m e .
` T h e f o o t n o t e r e a d s , " W h i l e
` t h e 1 1 t h A m e n d m e n t i s
` j u r i s d i c t i o n a l i n t h e s e n s e t h a t
` i t i s a l i m i t a t i o n o n t h e F e d e r a l
` C o u r t ' s j u d i c i a l p o w e r a n d ,
` t h e r e f o r e , c a n b e r a i s e d a t a n y
` s t a t e i n t h e p r o c e e d i n g s , w e h a v e
` r e c o g n i z e d t h a t i t i s n o t
` c o e x t e n s i v e w i t h t h e l i m i t a t i o n s
` o n j u d i c i a l p o w e r i n A r t i c l e 3 . "
` S o I t h i n k t h a t t h e i s s u e o f
` t h e v i a b i l i t y o f r a i s i n g t h i s
` m o t i o n a t a n y t i m e a c t u a l l y g o e s
` b a c k t o t h e S u p r e m e C o u r t ' s
` d e c i s i o n i n C l a r k v e r s u s B e r n a r d
` i n 1 8 8 7 , w h i c h e s t a b l i s h e s t h e
` D o c t r i n e o f W a i v e r b y L i t i g a t i o n
` C o n d u c t .
` S o t h e f a c t t h a t t h e
`
`they're citing that Sovereign
`
`Immunity can be raised at any
`
`time.
`
`The footnote reads,
`
`"While
`
`the llth Amendment
`
`is
`
`jurisdictional
`
`in the sense that
`
`it
`
`is a
`
`limitation on the Federal
`
`Court's judicial power and,
`
`therefore, can be raised at any
`
`state in the proceedings, we have
`
`recognized that it is not
`
`coextensive with the limitations
`
`on judicial power
`
`in Article 3."
`
`So I
`
`think that
`
`the issue of
`
`the viability of raising this
`
`motion at any time actually goes
`
`back to the Supreme Court's
`
`decision in Clark versus Bernard
`
`in 1887, which establishes the
`
`Doctrine of Waiver by Litigation
`
`Conduct.
`
`So the fact
`
`that
`
`the
`
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`

`

`Page 11
`
`jurisdictional motion could be
`
`raised is an interesting
`
`proposition but, under the Board's
`
`rules,
`
`in order to get
`
`that
`
`issue
`
`before the Board properly,
`
`it is
`
`the Petitioner's position that
`
`the
`
`Patent Owner has to comply with
`
`42.5C.
`
`I haven't heard the
`
`showing of good cause yet
`
`from the
`
`Patent Owner.
`
`JUDGE WORTH: Before we go
`
`back to the Patent Owner,
`
`just on
`
`the case you cited, Clark v.
`
`Bernard, what was
`
`the Litigation
`
`Conduct
`
`there?
`
`I mean,
`
`there are
`
`cases that make a distinction
`
`Page 11
` j u r i s d i c t i o n a l m o t i o n c o u l d b e
` r a i s e d i s a n i n t e r e s t i n g
` p r o p o s i t i o n b u t , u n d e r t h e B o a r d ' s
` r u l e s , i n o r d e r t o g e t t h a t i s s u e
` b e f o r e t h e B o a r d p r o p e r l y , i t i s
` t h e P e t i t i o n e r ' s p o s i t i o n t h a t t h e
` P a t e n t O w n e r h a s t o c o m p l y w i t h
` 4 2 . 5 C . I h a v e n ' t h e a r d t h e
` s h o w i n g o f g o o d c a u s e y e t f r o m t h e
` P a t e n t O w n e r .
` J U D G E W O R T H : B e f o r e w e g o
` b a c k t o t h e P a t e n t O w n e r , j u s t o n
` t h e c a s e y o u c i t e d , C l a r k v .
` B e r n a r d , w h a t w a s t h e L i t i g a t i o n
` C o n d u c t t h e r e ? I m e a n , t h e r e a r e
` c a s e s t h a t m a k e a d i s t i n c t i o n
` b e t w e e n a S t a t e a c t i n g a s t h e
` c o m p l a i n a n t o r a S t a t e r e m o v i n g
` j u r i s d i c t i o n t o F e d e r a l C o u r t
` v e r s u s a S t a t e p a s s i v e l y b e i n g
` s u e d .
` S o a r e y o u c i t i n g a c a s e i n
` w h i c h t h e r e w a s p a s s i v e L i t i g a t i o n
` C o n d u c t o r a c t i v e L i t i g a t i o n
`
`which there was passive Litigation
`
`between a State acting as
`
`the
`
`complainant or
`
`a State removing
`
`jurisdiction to Federal Court
`
`versus a State passively being
`
`sued.
`
`So are you citing a case in
`
`Conduct or active Litigation
`
`1
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`

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`Page 12
`
`Page 12
`
`Conduct?
`
`MR. PEDERSEN:
`
`It was active
`
`Litigation Conduct
`
`in the sense
`
`that
`
`the Supreme Court held an
`
`involuntary appearance by the
`
`State, disposed of
`
`a demur, and
`
`conferred jurisdiction to
`
`adjudicate upon the rights of
`
`the
`
`State.
`
`And the Supreme Court
`
`distinguished an earlier case
`
`where the jurisdictional
`
`issue was
`
`raised earlier on,
`
`and the State
`
` C o n d u c t ?
` M R . P E D E R S E N : I t w a s a c t i v e
` L i t i g a t i o n C o n d u c t i n t h e s e n s e
` t h a t t h e S u p r e m e C o u r t h e l d a n
` i n v o l u n t a r y a p p e a r a n c e b y t h e
` S t a t e , d i s p o s e d o f a d e m u r , a n d
` c o n f e r r e d j u r i s d i c t i o n t o
` a d j u d i c a t e u p o n t h e r i g h t s o f t h e
` S t a t e .
` A n d t h e S u p r e m e C o u r t
` d i s t i n g u i s h e d a n e a r l i e r c a s e
` w h e r e t h e j u r i s d i c t i o n a l i s s u e w a s
` r a i s e d e a r l i e r o n , a n d t h e S t a t e
` h a d n o t p a r t i c i p a t e d b y w a y o f a
` d e m u r .
` J U D G E W O R T H : O k a y .
` L e t ' s h e a r f r o m P a t e n t
` O w n e r . H o w d o y o u r e s p o n d t o t h e
` P e t i t i o n e r ' s a r g u m e n t t h a t P a t e n t
` O w n e r h a s n o t s h o w n g o o d c a u s e o r
` t h a t t h e b r i e f i n g w o u l d b e a n y
` i n t e r e s t o f j u s t i c e ?
` M R . M I L C H : W e l l , Y o u r H o n o r
` - - s o r r y , t h i s i s E r i k M i l c h f o r
`
`had not participated by way of
`
`demur.
`
`JUDGE WORTH: Okay.
`
`Let's hear from Patent
`
`a
`
`Owner.
`
`How do you respond to the
`
`Petitioner's argument
`
`that Patent
`
`Owner has not
`
`shown good cause or
`
`that
`
`the briefing would be any
`
`interest of
`
`justice?
`
`MR. MILCH: Well, Your Honor
`
`—— sorry,
`
`this is Erik Milch for
`
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`Page 13
`
`Page 13
`
`Patent Owner.
`
`The reason that it's in the
`
`interest of
`
`justice is because of
`
`the llth Amendment of
`
`the
`
`Constitution.
`
`The Board can't
`
`abrogate the State's rights.
`
`As
`
`I mentioned,
`
`I did
`
`provide a couple of different
`
`cites for the proposition that
`
`State Sovereign Immunity can be
`
`raised at any time.
`
`At
`
`this
`
`point,
`
`this is during the
`
`proceeding.
`
`The proceeding is
`
`ongoing.
`
` P a t e n t O w n e r .
` T h e r e a s o n t h a t i t ' s i n t h e
` i n t e r e s t o f j u s t i c e i s b e c a u s e o f
` t h e 1 1 t h A m e n d m e n t o f t h e
` C o n s t i t u t i o n . T h e B o a r d c a n ' t
` a b r o g a t e t h e S t a t e ' s r i g h t s .
` A s I m e n t i o n e d , I d i d
` p r o v i d e a c o u p l e o f d i f f e r e n t
` c i t e s f o r t h e p r o p o s i t i o n t h a t
` S t a t e S o v e r e i g n I m m u n i t y c a n b e
` r a i s e d a t a n y t i m e . A t t h i s
` p o i n t , t h i s i s d u r i n g t h e
` p r o c e e d i n g . T h e p r o c e e d i n g i s
` o n g o i n g .
` T o a b r o g a t e t h e S t a t e ' s
` r i g h t s p e r f a i l u r e t o r a i s e t h e
` S t a t e S o v e r e i g n I m m u n i t y i s s u e a t
` a p a r t i c u l a r t i m e w o u l d r u n a f o u l
` o f t h e S u p r e m e C o u r t p r e c e d e n t .
` J U D G E W O R T H : S o a r e y o u
` r e l y i n g m o r e o n t h e i n t e r e s t o f
` j u s t i c e t h a n o n g o o d c a u s e ?
` M R . M I L C H : I t h i n k t h e y a r e
` e q u a l l y a p p l i c a b l e , b u t c e r t a i n l y
`
`equally applicable, but certainly
`
`To abrogate the State's
`
`rights per failure to raise the
`
`State Sovereign Immunity issue at
`
`a particular time would run afoul
`
`of
`
`the Supreme Court precedent.
`
`JUDGE WORTH:
`
`So are you
`
`relying more on the interest of
`
`justice than on good cause?
`
`MR. MILCH:
`
`I
`
`think they are
`
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`

`

`Page 14
`
`Page 14
`
`the interest of
`
`justice prong
`
`would prevail on its face.
`
`As far
`
`as good cause —— to the extent we
`
`relied on good cause,
`
`it would be
`
`in light of
`
`the recent Covidien
`
`decision, suggesting that
`
`the 11th
`
`Amendment applies in IPR
`
`proceedings.
`
`I
`
`think they are
`
`both applicable in this sense.
`
`JUDGE WORTH:
`
`Can Patent
`
` t h e i n t e r e s t o f j u s t i c e p r o n g
` w o u l d p r e v a i l o n i t s f a c e . A s f a r
` a s g o o d c a u s e - - t o t h e e x t e n t w e
` r e l i e d o n g o o d c a u s e , i t w o u l d b e
` i n l i g h t o f t h e r e c e n t C o v i d i e n
` d e c i s i o n , s u g g e s t i n g t h a t t h e 1 1 t h
` A m e n d m e n t a p p l i e s i n I P R
` p r o c e e d i n g s . I t h i n k t h e y a r e
` b o t h a p p l i c a b l e i n t h i s s e n s e .
` J U D G E W O R T H : C a n P a t e n t
` O w n e r a d d r e s s P e t i t i o n e r ' s p o i n t
` t h a t t h e L i t i g a t i o n C o n d u c t
` p a r t i c i p a t i o n b y P a t e n t O w n e r h a s
` c o n s t i t u t e d a w a i v e r o f t h e
` d e f e n s e ?
` M R . M I L C H : Y e s , Y o u r H o n o r .
` I t i s n o t a w a i v e r o f t h e
` d e f e n s e . I w i l l h a v e t o r e v i e w
` t h a t c a s e o n L i t i g a t i o n C o n d u c t
` t h a t P e t i t i o n e r h a s r a i s e d . B u t
` i n t h e s e n s e o f L i t i g a t i o n C o n d u c t
` g e n e r a l l y , a s Y o u r H o n o r p o i n t e d
` o u t , t h e r e a r e a l i n e o f c a s e s
` t h a t t a l k a b o u t t y p e s o f
`
`in the sense of Litigation Conduct
`
`Owner address Petitioner's point
`
`that
`
`the Litigation Conduct
`
`participation by Patent Owner has
`
`constituted a waiver of
`
`the
`
`defense?
`
`MR. MILCH: Yes, Your Honor.
`
`It
`
`is not
`
`a waiver of
`
`the
`
`defense.
`
`I will have to review
`
`that case on Litigation Conduct
`
`that Petitioner has raised.
`
`But
`
`generally,
`
`as Your Honor pointed
`
`out,
`
`there are a
`
`line of cases
`
`that
`
`talk about
`
`types of
`
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`Page 15
`
`Page 15
`
`Litigation Conduct
`
`that would
`
`amount
`
`to waiver and simply
`
`presenting a defense or,
`
`in this
`
`case, submitting a reply is not
`
`the sort of Litigation Conduct
`
`that amounts to a waiver. There's
`
`a test
`
`for waiver,
`
`and it's a
`
`stringent one.
`
`The Supreme Court has found
`
`waiver where the State voluntarily
`
` L i t i g a t i o n C o n d u c t t h a t w o u l d
` a m o u n t t o w a i v e r a n d s i m p l y
` p r e s e n t i n g a d e f e n s e o r , i n t h i s
` c a s e , s u b m i t t i n g a r e p l y i s n o t
` t h e s o r t o f L i t i g a t i o n C o n d u c t
` t h a t a m o u n t s t o a w a i v e r . T h e r e ' s
` a t e s t f o r w a i v e r , a n d i t ' s a
` s t r i n g e n t o n e .
` T h e S u p r e m e C o u r t h a s f o u n d
` w a i v e r w h e r e t h e S t a t e v o l u n t a r i l y
` i n v o k e s F e d e r a l C o u r t
` j u r i s d i c t i o n , o r i f t h e S t a t e
` m a k e s a c l e a r d e c l a r a t i o n t h a t i t
` a t t e n d s t o s u b m i t i t s e l f i n s u c h
` j u r i s d i c t i o n , a n d n e i t h e r o f t h o s e
` e l e m e n t s a r e m e t h e r e . A n d t h a t
` i f w e l o o k a t C o l l e g e S a v i n g s B a n k
` v e r s u s F l o r i d a P r e p a i d a n d t h a t ' s
` 5 2 7 U S 6 6 6 , t h e r e ' s b e e n n o - -
` J U D G E W O R T H : S o - -
` M R . M I L C H : S o r r y . G o
` a h e a d , Y o u r H o n o r .
` J U D G E W O R T H : P l e a s e .
` M R . M I L C H : I w a s j u s t
`
`invokes Federal Court
`
`jurisdiction, or if the State
`
`makes
`
`a clear declaration that
`
`it
`
`attends to submit itself in such
`
`jurisdiction, and neither of
`
`those
`
`elements are met here.
`
`And that
`
`if we
`
`look at College Savings Bank
`
`versus Florida Prepaid and that's
`
`527 US 666,
`
`there's been no --
`
`JUDGE WORTH:
`
`So --
`
`MR. MILCH:
`
`Sorry.
`
`Go
`
`ahead, Your Honor.
`
`JUDGE WORTH:
`
`Please.
`
`MR. MILCH:
`
`I was
`
`just
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
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`22
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`

`

`saying that
`
`there's been no other
`
`conduct
`
`that Petitioner has
`
`Page 16
`
`pointed to other than the
`
`submission of
`
`a response,
`
`the
`
`Patent Owner's response in this
`
`proceeding. There's been no
`
`constructive waiver,
`
`in any sense.
`
`JUDGE WORTH:
`
`Has Patent
`
`Owner
`
`looked into the law of
`
`the
`
`State of Maryland?
`
`For example,
`
`school boards.
`
`Is Patent Owner
`
`aware of any legislative
`
`abrogation?
`
`there's laws applicable to county
`
`Page 16
` s a y i n g t h a t t h e r e ' s b e e n n o o t h e r
` c o n d u c t t h a t P e t i t i o n e r h a s
` p o i n t e d t o o t h e r t h a n t h e
` s u b m i s s i o n o f a r e s p o n s e , t h e
` P a t e n t O w n e r ' s r e s p o n s e i n t h i s
` p r o c e e d i n g . T h e r e ' s b e e n n o
` c o n s t r u c t i v e w a i v e r , i n a n y s e n s e .
` J U D G E W O R T H : H a s P a t