`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`NEOCHORD, INC.
`
`Petitioner,
`v.
`UNIVERSITY OF MARYLAND, BALTIMORE
`
`Patent Owner.
`______________
`
`Case No.: IPR2016-00208
`Patent No. 7,635,386
`______________
`
`
`OPPOSITION TO PATENT OWNER’S
`MOTION TO DISMISS
`
`
`
`
`
`
`
`

`

`TABLE OF CONTENTS
`
` 
`TABLE OF AUTHORITIES .................................................................................... ii 
`Petitioner’s Updated Exhibit List as of March 2, 2017 ........................................... iv 
`I. 
`INTRODUCTION ........................................................................................... 1 
`II.  UMB HAS WAIVED SOVEREIGN IMMUNITY ........................................ 1 
`A.  Sovereign Immunity Is Not an Absolute Bar ................................................. 2 
`B.  Sovereign Immunity Is Waived by UMB’s Conduct in This IPR ................... 3 
`C.  Sovereign Immunity Is Expressly Waived for USPTO Proceedings by
`UMB’s License Agreement ............................................................................. 6 
`III.  COVIDIEN DOES NOT CONTROL .............................................................. 8 
`A.  Covidien Is Not Similar to This IPR ................................................................ 8 
`B.  Covidien is Not Binding on This IPR .............................................................. 9 
`IV.  COVIDIEN WAS WRONGLY DECIDED ................................................... 10 
`A.  Both the Motion and Covidien Ignore Supreme Court
`Precedent in Cuozzo ....................................................................................... 10 
`B.  Covidien Incorrectly Analyzes Supreme Court Precedent in Bankruptcy
`Cases that Exempt Sovereign Immunity ....................................................... 12 
`C.  Covidien Ignores the Second Sentence of Section 271(h) as a Basis for
`Statutory Abrogation ..................................................................................... 13 
`CONCLUSION .............................................................................................. 15 
`V. 
`CERTIFICATE OF COMPLIANCE WITH PAGE LIMITATIONS ..................... 16 
`CERTIFICATE OF SERVICE ................................................................................ 17 
`
`i
`
`
`
`
`
`
`
`

`

`TABLE OF AUTHORITIES
`
`
`
`
`A123 Systems v. Hydro-Quebec, 626 F.3d 1213 (Fed. Cir. 2010) ............................. 7
`Advanced Estimating Systems, Inc. v. Riney,
`30 F.3d 996, 999 (11th Cir. 1997) ........................................................................ 4
`
`Baum Research and Development Co., Inc. v. University of Massachusetts
`
`at Lowell, 503 F.3d 1367 (Fed. Cir. 2007) .......................................................... 7
`Biorad Laboratories, Inc. v. California Institute of Technology,
`
`IPR2015-00009, Paper 10 (Mar. 13, 2015) ......................................................... 2
`Central Virginia Community College v. Katz, 546 U.S. 346 (2006) ....................... 13
`Chevron North America, Inc. v. Milwaukee Electric Tool Corp.,
`
`IPR2015-00595, Paper 35, p. 4 (Nov. 13, 2015) ................................................. 9
`Clark v. Barnard, 108 U.S. 436 (1883) ..................................................................... 6
`Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,
`527 U.S. 627 (1999) ............................................................................................. 3
`
`Covidien v. Univ. of Fla. Research Found., Inc.,
`
`IPR2016-01274, Paper 21 (PTAB Jan. 25, 2017) .............................. 1, 4-5, 8-13
`Cuozzo Speed Tech. LLC. v. Lee, 136 S.Ct. 2131 (2016) .................................. 10-12
`Fed. Mar. Comm'n v. South Carolina State Ports Auth.,
`
`535 U.S. 743 (2002) ........................................................................................... 10
`Florida Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank,
`
`527 U.S. 627 (1999) ........................................................................................... 13
`Hill v. Blind Ind. and Services of Maryland, 179 F.3d. 754 (9th Cir. 1999) .......... 3-4
`Motorola Mobility LLC v. Arnouse, IPR2013-00010, Paper 30 (Apr. 9, 2013) ........ 2
`Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership,
`
`507 U.S. 380 (1993) ............................................................................................. 4
`
`
`
`ii
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`

`

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`
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`
`
`
`
`
`
`
`Page
`
`
`
`
`
`
`
`Case
`
`Reactive Surfaces LTD, LLP v. Toyota Motor Corp.,
`
`IPR2017-00572, Order, Paper No. 22 (Feb. 21, 2017) ........................................ 2
`Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) ................. 12-13
`University of Maryland Biotechnology Institute v. Presens Precision Sensing
` GMBH, Fed. Cir. Appeal Nos. 2016-2745 and 2017-1057 ................................. 8
`Wisconsin Dept. of Corr. v. Schacht, 524 U.S. 381 (1998) ....................................... 2
`
`
`
`Statues, Rules & Other Authorities
`
`35 U.S.C. § 271(h) ................................................................................................... 14
`37 C.F.R. § 42.20(c) ................................................................................................... 4
`37 C.F.R. § 42.25(c) ................................................................................................... 1
`Trial Practice Guidelines, Fed. Reg. Vol. 77, No. 157 (Aug. 14, 2012) .................. 2
`“How to Assert State Sovereign Immunity Under the Federal Rules of Civil
`Procedure,” Vanderbilt Law Review, Vol. 69:3:761 (2016) ...................................... 3
`
`
`
`iii
`
`

`

`Petitioner’s Updated Exhibit List as of March 2, 2017
`
`Exhibit #
`
`Name
`
`1001
`
`1002
`
`1003
`
`1004
`
`1005
`
`1006
`
`1007
`
`1008
`
`1009
`
`1010
`
`1011
`
`1012
`
`1013
`
`1014
`
`1015
`
`1016
`
`U.S. Patent No. 7,635,386 (the ‘386 Patent)
`
`Power of Attorney for Petitioner NeoChord, Inc.
`
`Prosecution History for the ‘386 Patent
`
`U.S. Patent No. 6,978,176 (Lattouf I)
`
`U.S. Patent No. 6,840,246 (Downing)
`
`U.S. Patent No. 8,465,500 (Speziali)
`
`U.S. Patent No. 7,871,433 to (Lattouf II)
`
`U.S. Publ. No. 2004/0044365 (Bachman)
`
`Cardiac valve surgery – the “French Correction” by Alain
`Carpentier, M.D., The Journal of Thoracic and
`Cardiovascular Surgery, Vol. 86, No. 3, September 1983
`(Carpentier)
`
`U.S. Patent No. 6,269,819 (Oz)
`
`Declaration of Dr. Lishan Aklog
`
`Dictionary definition for “inunction”
`
`PCT Publication No. WO 2006/078694 (Speziali)
`
`Provisional Application No. 60/645,677 (Speziali)
`
`File history for US 8,465,500 (Speziali)
`
`Petitioner’s Demonstratives for Oral Hearing
`
`
`
`iv
`
`

`

`
`
`
`
`1017
`
`1018
`
`1019
`
`1020
`
`1021
`
`1022
`
`Biorad Laboratories, Inc. v. California Institute of
`Technology, IPR2015-00009, Paper 10 (Mar. 13, 2015)
`
`Motorola Mobility LLC v. Arnouse, IPR2013-00010, Paper
`30 (Apr. 9, 2013)
`
`Reactive Surfaces LTD, LLP v. Toyota Motor Corp.,
`IPR2017-00572, Order, Paper No. 22 (Feb. 21, 2017)
`
`Note, “How to Assert State Sovereign Immunity Under the
`Federal Rules of Civil Procedure,” Vanderbilt Law Review,
`Vol. 69:3:761, pp. 780-88 (2016).
`
`University of Maryland Biotechnology Institute v. Presens
`Precision Sensing GMBH, Fed. Cir. Appeal Nos. 2016-
`2745 and 2017-1057, Opening Brief of Appellant, (January
`9, 2017)
`
`Covidien v. Univ. of Fla. Research Found., Inc., IPR2016-
`01274, Paper 21 (PTAB Jan. 25, 2017)
`
`v
`
`

`

`I.
`
`INTRODUCTION
`
`
`
`In its Motion to Dismiss (Motion), the University of Maryland Baltimore
`
`(UMB) argues that UMB is an arm of the State of Maryland and, based on the
`
`analysis of the panel in Covidien v. Univ. of Fla. Research Found., Inc., IPR2016-
`
`01274, Paper 21 (PTAB Jan. 25, 2017) (Covidien) Ex. 1022, that sovereign
`
`immunity under the Eleventh Amendment to the Constitution bars any Inter Partes
`
`Review (IPR) against UMB with respect to U.S. Patent No. 7,635,386 (the ’386
`
`Patent). The Motion should be denied because (i) UMB waived its right to assert
`
`sovereign immunity, (ii) Covidien does not control in this IPR, and (iii) Covidien
`
`was wrongly decided.
`
`II. UMB HAS WAIVED SOVEREIGN IMMUNITY
`
`
`
`Petitioner maintains that UMB has not established a sufficient reason why
`
`the evidence accompanying the Motion could not have been submitted earlier. 37
`
`C.F.R. § 42.25(c). Regardless of whether UMB has properly establish that it is an
`
`arm of the State of Maryland and the owner of record for the ‘386 Patent as of the
`
`filing of the Petition, UMB has waived its rights to assert sovereign immunity as a
`
`result of its voluntary participation in this IPR, its delay in the assertion and
`
`introduction of evidence of its claim of sovereign immunity, and its consent to
`
`USPTO jurisdiction over challenges to patentability in its License Agreement with
`
`Harpoon Medical, Inc. (Harpoon). Ex. 2015.
`
`
`
`1
`
`

`

`
`
`Petitioner further maintains that, as the exclusive licensee, Harpoon should
`
`be considered the real-party-in-interest and the “effective patentee” for purposes of
`
`this IPR. See, Trial Practice Guidelines, Fed. Reg. Vol. 77, No. 157 (Aug. 14,
`
`2012) at 48759; Biorad Laboratories, Inc. v. California Institute of Technology,
`
`IPR2015-00009, Paper 10 (Mar. 13, 2015), Ex. 1017, citing Motorola Mobility
`
`LLC v. Arnouse, IPR2013-00010, Paper 30 (Apr. 9, 2013), Ex. 1018. It is Harpoon
`
`that is paying for and controlling the defense of this IPR. Ex. 2015. Accordingly,
`
`UMB should not be considered an indispensible party to this proceeding. See,
`
`Reactive Surfaces LTD, LLP v. Toyota Motor Corp., IPR2017-00572, Order, Paper
`
`No. 22 (Feb. 21, 2017). Ex. 1019.
`
`A. Sovereign Immunity Is Not an Absolute Bar
`
`
`
`Sovereign immunity is not an absolute jurisdictional bar that immunizes any
`
`federal matter involving a state as UMB asserts. Motion, pp. 7-10. Sovereign
`
`immunity under the Eleventh Amendment is an immunity defense and, as such, it
`
`may be voluntarily waived by the state.
`
`The Eleventh Amendment, however, does not automatically destroy
`original jurisdiction. Rather, the Eleventh Amendment grants the State
`a legal power to assert a sovereign immunity defense should it choose
`to do so. The State can waive the defense. (citations omitted).
`Wisconsin Dept. of Corr. v. Schacht, 524 U.S. 381, 389 (1998).
`
`
`
`
`2
`
`

`

`B. Sovereign Immunity Is Waived by UMB’s Conduct in This IPR
`
`
`
`The ability to raise sovereign immunity at any time, including on appeal,
`
`does not preclude a finding that sovereign immunity has been waived by a state’s
`
`voluntary conduct during a proceeding. Coll. Sav. Bank v. Fla. Prepaid
`
`Postsecondary Educ. Expense Bd., 527 U.S. 666, 675-76 (1999) (College Savings).
`
`The propriety and timeliness of the assertion of sovereign immunity should be
`
`evaluated in a manner analogous to a Rule 12(b)(6) motion under the Federal Rules
`
`of Civil Procedure (FRCP). See, Note, “How to Assert State Sovereign Immunity
`
`Under the Federal Rules of Civil Procedure,” Vanderbilt Law Review, Vol.
`
`69:3:761, pp. 780-88 (2016). Ex.1020.
`
`In a case involving another Maryland agency, the Ninth Circuit carefully
`
`considered, and rejected, a belated claim of sovereign immunity that was not raised
`
`until the first day of trial.
`
`We see no valid reason why a party should belatedly be
`
`permitted to assert Eleventh Amendment immunity. A party knows
`whether it purports to be an “arm of the state,” and is capable of
`disclosing early in the proceedings whether it objects to having the
`matter heard in federal court. Timely disclosure provides fair warning
`to the plaintiff, who can amend the complaint, dismiss the action and
`refile it in state court, or request a prompt ruling on the Eleventh
`Amendment defense before the parties and the court have invested
`substantial resources in the case. Timely disclosure also facilitates
`
`
`
`3
`
`

`

`discovery, when appropriate, and allows the parties to establish a full
`record for appellate review. Requiring the prompt assertion of an
`Eleventh Amendment defense also minimizes the opportunity for
`improper manipulation of the judicial process.
`Hill v. Blind Ind. and Services of Maryland, 179 F.3d. 754, 757-58
`(9th Cir. 1999).
`
`When it licensed the ‘386 Patent, UMB certainly understood that sovereign
`
`immunity was a legal right that it could seek to assert with respect to the ‘386
`
`Patent. Motion, p. 6; Ex. 2015. The only apparent excuse offered by UMB for its
`
`belated assertion of sovereign immunity in this IPR is the recent decision by
`
`another Board panel in Covidien. Motion, p. 7. But “[t]he ancient legal maxim
`
`continues to apply: ignorance of fact may excuse; ignorance of law does not
`
`excuse. Accordingly, [appellee’s] counsel’s misunderstanding of the law cannot
`
`constitute excusable neglect.” Advanced Estimating Systems, Inc. v. Riney, 130
`
`F.3d 996, 999 (11th Cir. 1997). In deciding whether delay precludes a FRCP Rule
`
`6(b) motion, for example, “inadvertence, ignorance of the rules, or mistakes
`
`construing the rules do not usually constitute ‘excusable’ neglect . . .” Pioneer Inv.
`
`Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 392 (1993).
`
`The burden is on UMB to establish that it is entitled to the relief requested in
`
`its Motion. 37 C.F.R. § 42.20(c). UMB was on notice during the conference call
`
`that it needed to carry that burden, including the burden of establishing why its
`
`
`
`4
`
`

`

`belated attempt to raise the issue and introduce evidence that could have been
`
`introduced earlier should be excused. Transcript of 02-07-2017 Telephonic
`
`Hearing, Paper 21, pp. 21-23. But for the passing reference in this regard to
`
`Covidien in the Motion, there are no other arguments or evidence presented by
`
`UMB that might justify its belated assertion of sovereign immunity. On the
`
`contrary, the only evidence introduced into the record prior to this Motion are the
`
`statements made by UMB not once, but twice, in its Patent Owner Response
`
`expressly requesting the Board to exercise authority over this proceeding.
`
`Accordingly, PO requests that the Board issue a Final Decision
`confirming the patentability of challenged claims 1-23 of the ‘386
`Patent.”
`Patent Owner Response, pp. 1 and 50. (emphasis added)
`
`The Board should find that UMB’s conduct in participating in this IPR up
`
`until the Oral Hearing without a single mention of sovereign immunity, but with
`
`two express requests for the Board to issue a Final Decision, effectively constitutes
`
`a constructive waiver of sovereign immunity by UMB by its voluntary submission
`
`to substantively participate in this IPR.
`
`
`
`5
`
`

`

`The immunity from suit belonging to a state, which is respected and
`protected by the constitution within the limits of the judicial power of
`the United States, is a personal privilege which it may waive at
`pleasure; so that in a suit, otherwise well brought, in which a state had
`sufficient interest to entitle it to become a party defendant, its
`appearance in a court of the United States would be a voluntary
`submission to its jurisdiction.
`Clark v. Barnard, 108 U.S. 436, 447 (1883).
`
`C. Sovereign Immunity Is Expressly Waived for USPTO Proceedings by
`UMB’s License Agreement
`
`
`
`UMB cites a general construction provision in Section 14.6 of the License
`
`Agreement to support its position that sovereign immunity was not waived.
`
`Motion, p. 6; Ex. 2015. Elsewhere in the License Agreement, however, UMB
`
`expressly agrees that Harpoon first must use USPTO reexamination and reissue
`
`proceedings to resolve any “Patent Challenge” regarding disputes as to validity or
`
`enforceability of the ‘386 Patent. Ex. 2015, Section 3.7. Although the License
`
`Agreement sets forth the primacy of ex parte reexamination proceedings over other
`
`USPTO proceedings, the definition of “Patent Challenge” and Section 3.7.1
`
`specifically authorize Harpoon to use any forum to mount such a challenge, which
`
`would include a review proceeding. Moreover, the procedural provisions of
`
`Section 3.7.1(d) distinguish all USPTO proceedings, including review proceedings,
`
`from challenges in other forums:
`
`
`
`6
`
`

`

`(d) Company and University agree that this Section 3.7.1 does not
`prohibit or limit Company’s ability to take or cause the taking of any
`Patent Challenge, but merely dictates procedurally a Patent Challenge
`falling under the scope and kind that the USPTO is authorized to
`adjudicate.
`Ex. 2015, Section 3.7.1 (d) (emphasis added)
`
`
`
`Despite the general language of Section 14.6 of the License Agreement, the
`
`specific language of Section 3.7 makes clear that UMB did not consider Patent
`
`Challenges at the USPTO to be subject to state sovereign immunity. At a
`
`minimum, agreeing to jurisdiction at the USPTO in a license agreement is
`
`analogous to agreeing to federal district court litigation in a license agreement that
`
`was found to be a waiver of sovereign immunity. Baum Research and
`
`Development Co., Inc. v. University of Massachusetts at Lowell, 503 F.3d 1367
`
`(Fed. Cir. 2007).
`
`If the same prior art and arguments raised by Petitioner in this IPR were
`
`raised by Harpoon in an ex parte reexamination request, the License Agreement
`
`confirms that UMB would have no ability to assert sovereign immunity as a
`
`defense to that USPTO proceeding. See, A123 Systems v. Hydro-Quebec, 626 F.3d
`
`1213 (Fed. Cir. 2010). This conclusion is further supported by the fact that
`
`Maryland has not raised the issue of sovereign immunity in its recent appeal of an
`
`inter partes reexamination where another University of Maryland institute is the
`
`
`
`7
`
`

`

`patent owner. See, University of Maryland Biotechnology Institute v. Presens
`
`Precision Sensing GMBH, Fed. Cir. Appeal Nos. 2016-2745 and 2017-1057,
`
`Opening Brief of Appellant, (January 9, 2017). Ex. 1021.
`
`Accordingly, the Board should find that UMB has effectively waived
`
`sovereign immunity for patentability challenges at the USPTO, including review
`
`proceedings, by the provisions of the License Agreement that expressly require the
`
`use of USPTO proceedings for Patent Challenges.
`
`III. COVIDIEN DOES NOT CONTROL
`
`
`
`Even assuming UMB has not waived its ability to assert sovereign
`
`immunity, the Motion relies exclusively on Covidien to support the argument that
`
`sovereign immunity must bar any IPR against UMB. Motion, p. 7-10. But
`
`Covidien is neither sufficiently similar nor binding to be controlling for this IPR.
`
`A. Covidien Is Not Similar to This IPR
`
`
`
`Covidien is procedurally different from this IPR because the patent owner,
`
`University of Florida Research Foundation Inc. (UFRF), asserted sovereign
`
`immunity at the initial stage of the IPR and did not otherwise substantively
`
`participate in the IPR. Ex.1002, pp. 2-3. Unlike the belated request made by UMB
`
`on the eve of the Oral Hearing in this IPR, in Covidien a request was made less
`
`than two months after the IPR Petitions were filed. Id. The Covidien panel
`
`
`
`8
`
`

`

`authorized briefing to be filed on the sole issue of sovereign immunity before any
`
`Patent Owner Preliminary Response were filed. Id.
`
`In Covidien, the petitioner and patent owner also were parties to concurrent
`
`breach of contract litigation over the license agreement made between them based
`
`on patentability challenges to the underlying patents. That concurrent litigation had
`
`been removed from state court to federal district court where UFRF successfully
`
`asserted sovereign immunity and the district court returned the litigation to state
`
`court. Id. at pp. 3-4. In addition, there is no underlying licensee agreement or
`
`concurrent litigation between NeoChord and UMB/Harpoon in this IPR as
`
`compared to Covidien.
`
`B. Covidien is Not Binding on This IPR
`
`
`
`The panel decision in Covidien is neither a precedential decision nor an
`
`informative or representative decision of the Board.1 Decisions that are not
`
`precedential are not binding precedent on another Board panel, particularly where
`
`the facts differ. Chevron North America, Inc. v. Milwaukee Electric Tool Corp.,
`
`IPR2015-00595, Paper 35, p. 4 (Nov. 13, 2015). Ex. 1022. Accordingly, Covidien
`
`cannot be considered binding on this Board panel and, if considered at all, should
`
`be carefully evaluated by this Board for at least the reasons set forth in Section IV.
`
`1 See, Paper 21, pp. 7, ll. 9-10; https://www.uspto.gov/patents-application-
`
`process/patent-trial-and-appeal-board/decisions.
`
`
`
`9
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`

`

`IV. COVIDIEN WAS WRONGLY DECIDED
`
`
`
`Covidien should not be followed by this Board panel because it was wrongly
`
`decided. Covidien turns on that panel’s own answer to the question of whether an
`
`IPR more closely resembles a reexamination or a litigation as a basis for extending
`
`the Supreme Court’s holding in Fed. Mar. Comm'n v. South Carolina State Ports
`
`Auth., 535 U.S. 743 (2002) (FMC) to IPR proceedings. But the panel’s analysis
`
`and answer to this question in Covidien ignores the fact that the Supreme Court
`
`had already definitively answered the very same question in Cuozzo Speed Tech.
`
`LLC. v. Lee, 136 S.Ct. 2131 (2016) (Cuozzo). In addition, the decision in Covidien
`
`did not consider either a constitutional basis or a statutory basis for why sovereign
`
`immunity does not apply to USPTO proceedings.
`
`A. Both the Motion and Covidien Ignore Supreme Court Precedent in
`Cuozzo
`
`
`
`In its Motion, UMB cites to FMC and argues that “sovereign immunity is a
`
`bar to administrative proceedings that have a ‘strong resemblance’ or ‘similari[ty]’
`
`to civil litigation, and so would impinge on the same dignitary interests that the
`
`11th Amendment protects.” Motion, p. 8. The Motion goes on to argue that the
`
`panel in Covidien undertook a comparative analysis of IPR and civil litigation and
`
`correctly determined that the two are so similar as to trigger 11th Amendment
`
`immunity under FMC. Motion, p. 9. The Motion, however, never discusses or even
`
`
`
`10
`
`

`

`cites to cite Cuozzo in arguing that IPR proceedings are “a surrogate for court
`
`proceedings.” The panel in Covidien apparently considered Cuozzo only with
`
`respect to the “public rights” arguments made by the petitioner in that IPR, and
`
`declined to apply Cuozzo because it purportedly did not directly lay out a
`
`framework for determining whether an administrative proceeding is subject to
`
`sovereign immunity. Ex.1022, pp. 10-11 and 25.
`
`What both the Motion and the panel in Covidien failed to appreciate is that
`
`Cuozzo had already directly answered the question of whether IPR proceedings are
`
`“a surrogate for court proceedings.” The Supreme Court in Cuozzo held that IPRs
`
`are a specialized agency proceeding that continues to be properly characterized as a
`
`reexamination of an earlier agency decision, and rejected the argument that IPRs
`
`are “a surrogate for court proceedings” as Cuozzo had argued:
`
`The problem with Cuozzo's argument [that IPR proceedings are a
`‘surrogate for court proceedings’], however, is that, in other
`significant respects, inter partes review is less like a judicial
`proceeding and more like a specialized agency proceeding. . . .
`Most importantly, these features, as well as inter partes review's
`predecessors, indicate that the purpose of the proceeding is not quite
`the same as the purpose of district court litigation. The proceeding
`involves what used to be called a reexamination. … The name and
`accompanying procedures suggest that the proceeding offers a second
`look at an earlier administrative grant of a patent. Although Congress
`changed the name from “reexamination” to “review,” nothing
`11
`
`
`
`

`

`convinces us that, in doing so, Congress wanted to change its basic
`purposes, namely, to reexamine an earlier agency decision.
`Cuozzo Speed Tech. LLC. v. Lee, 136 S.Ct. 2131, 2143 (2016)
`(emphasis added).
`
`Cuozzo is binding Supreme Court precedent that should have precluded the
`
`panel in Covidien from reaching a different legal conclusion as to the nature of IPR
`
`proceedings. Because the Supreme Court has held that IPRs are more akin to
`
`reexaminations than to civil litigation, the panel’s conclusion that FMC compels a
`
`finding that sovereign immunity applies to IPR proceedings is fundamentally
`
`flawed and legally incorrect.2
`
`B. Covidien Incorrectly Analyzes Supreme Court Precedent in
`Bankruptcy Cases that Exempt Sovereign Immunity
`
`Covidien also improperly analyzed the Supreme Court decisions subsequent
`
`to FMC relating to the constitutional exemption of sovereign immunity in the
`
`context of bankruptcy proceedings. Covidien, p. 12-15. The panel dismissed the
`
`holding of Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004)
`
`(Hood) on the basis that bankruptcy proceedings are in rem actions. However, both
`
`
`2 As discussed in Section II.C above, sovereign immunity does not apply to
`
`reexaminations and UMB has expressly agreed in the License Agreement to use ex
`
`parte reexaminations for any Patent Challenges.
`
`
`
`12
`
`

`

`Hood and the subsequent Supreme Court decision in Central Virginia Community
`
`College v. Katz, 546 U.S. 346 (2006) (Katz) rely on more than just the in rem
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`nature of bankruptcy proceedings to support not applying sovereign immunity in
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`those proceedings. These decisions also rely on the unique nature of bankruptcy
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`proceedings as rights exclusively granted to the federal government under the
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`Constitution as an exemption to the application of state sovereign immunity.
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`Because the rights conferred under Article I, Sec. 4 of the Constitution create a
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`uniform system of laws throughout the United States there is a constitutional basis
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`for finding that bankruptcy proceedings “do not implicate sovereign immunity.”
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`Katz, 546 U.S. at 370-71.3 Respectfully, a similar analysis and result should apply
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`to the patent laws administered by the USPTO with respect to the power
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`exclusively granted to the federal government to create a uniform system of patent
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`rights under Article I, Sec. 8 of the Constitution.
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`C. Covidien Ignores the Second Sentence of Section 271(h) as a Basis for
`Statutory Abrogation
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`The panel in Covidien also rejected the argument that applying state
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`sovereign immunity to IPRs would damage the patent system, citing Florida
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`Prepaid Postsecondary Educ. Expense Bd. v. College Savings Bank, 527 U.S. 627
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`(1999) (“Florida Prepaid”). Ex. 1022, pp. 26-27. In that case, the Supreme Court
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`3Katz is not cited in either Covidien or the Motion.
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`found that Congress had provided no evidence of harm to the patent system by
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`states being exempt from actions in federal courts with respect to patents owned by
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`the states when it enacted 35 U.S.C. § 271(h). The Court held that the first
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`sentence of Section 271(h), which abrogates state sovereign immunity under the
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`Eleventh Amendment in the context of an action in district court, was an
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`unconstitutional act by Congress. Florida Prepaid, 527 U.S. at 647. The Court in
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`that case, however, did not address the second sentence of Section 271(h). As can
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`be seen from the statutory language, it is this second sentence that is directly
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`relevant to the issue of whether sovereign immunity can be raised in a proceeding
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`at the USPTO under Chapter 35 of the United States Code.
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`(h) As used in this section, the term “whoever” [is accused of
`infringement or sued for declaratory judgment] includes any State,
`any instrumentality of a State, any officer or employee of a State or
`instrumentality of a State acting in his official capacity. Any State, and
`any such instrumentality, officer, or employee, shall be subject to the
`provisions of this title in the same manner and to the same extent as
`any nongovernmental entity.
`35 U.S.C. § 271(h). (emphasis added).
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`Respectfully, the second sentence of Section 271(h) provides a statutory
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`basis for the abrogation of state sovereign immunity with respect to any action
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`before the USPTO involving a state. This second sentence of Section 271(h)
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`remains good law after Florida Prepaid and serves to ensure the kind of uniform
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`administration of patent laws in proceedings before the USPTO for which the
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`federal government is granted exclusive authority to administer such laws under
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`the Constitution.
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`V. CONCLUSION
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`Petitioner therefore respectfully requests the Motion to Dismiss be denied.
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`Respectfully submitted,
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`__/Brad Pedersen/__
`Brad D. Pedersen
`Reg. No. 32,432
`Attorney for Petitioner
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`Dated: March 2, 2017
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`CERTIFICATE OF COMPLIANCE WITH PAGE LIMITATIONS
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` hereby certify that the foregoing Opposition to Patent Owner’s Motion to
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` I
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`Dismiss complies with 37 C.F.R. § 42.24 and the Board’s Order of February 15,
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`2017 limiting this Opposition to fifteen (15) pages.
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`Dated: March 2, 2017
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`Respectfully submitted,
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`__/Brad Pedersen/__
`Brad D. Pedersen
`Reg. No. 32,432
`Attorney for Petitioner
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`CERTIFICATE OF SERVICE
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`I hereby certify that on March 2, 2017, a copy of the foregoing was
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`electronically served on patent owner at the following addresses:
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`stalbot@cooley.com,
`emilch@cooley.com
`nvashaw@cooley.com
`IPR2016-00208@cooley.com
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`Dated: March 2, 2017
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`Respectfully submitted,
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`__/Brad Pedersen/__
`Brad D. Pedersen
`Reg. No. 32,432
`Attorney for Petitioner
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