UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________
`
`MYLAN PHARMACEUTICALS INC., TEVA PHARMACEUTICALS USA,
`INC., and AKORN INC., 1
`Petitioners,
`
`v.
`
`ALLERGAN, INC.,
`Patent Owner.
`_____________
`
`Case IPR2016-01127 (8,685,930 B2)
`Case IPR2016-01128 (8,629,111 B2)
`Case IPR2016-01129 (8,642,556 B2)
`Case IPR2016-01130 (8,633,162 B2)
`Case IPR2016-01131 (8,648,048 B2)
`Case IPR2016-01132 (9,248,191 B2)
`_____________
`
`PATENT OWNER’S REPLY TO OPPOSITION TO
`MOTION TO DISMISS FOR LACK OF JURISDICTION
`BASED ON TRIBAL SOVEREIGN IMMUNITY
`
`
`1 Cases IPR2017-00576 and IPR2017-00594, IPR2017-00578 and IPR2017- 00596,
`
`IPR2017-00579 and IPR2017-00598, IPR2017-00583 and IPR2017- 00599,
`
`IPR2017-00585 and IPR2017-00600, and IPR2017-00586 and IPR2017-00601 have
`
`respectively been joined with the captioned proceedings. The word-for-word
`
`identical paper is filed in each proceeding identified in the caption pursuant to the
`
`Board’s Scheduling Order (Paper 10).
`
`

`

`Paper No. 95
`Proceeding No.: IPR2016-01128
`
`TABLE OF CONTENTS
`
`
`I.
`INTRODUCTION .................................................................................................. 1
`II. ARGUMENTS AND AUTHORITY .................................................................... 1
`A. The Tribe is the Patent Owner. ........................................................................... 1
`1. The Tribe Did Not Transfer “Substantially All” Rights to Allergan. .......... 2
`2. The Assignment of the Patents-at-Issue to the Tribe is Valid. ..................... 5
`3. Petitioners’ “Sham Transaction” Argument Lacks Legal and Factual
`Support. ............................................................................................................... 6
`B. The Tribe is an Indispensable Party. ................................................................ 10
`C. Petitioners’ Remaining Arguments Do Not Withstand Scrutiny. ................... 12
`D. The Tribe Seeks to Strengthen the U.S. Patent System. ................................. 13
`III. CONCLUSION .................................................................................................... 15
`
`
`
`
`
`ii
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`

`

`Paper No. 95
`Proceeding No.: IPR2016-01128
`TABLE OF AUTHORITIES
`
`CASES:
` 
`Alfred E. Mann Found. For Sci. Research v. Cochlear Corp.,
`604 F.3d 1354 (Fed. Cir. 2010) ............................................................................... 3, 4
`
` C
`
` & L Enterprises, Inc. v. Citizen Band Potawatomi Indian Tribe of Oklahoma,
`532 U.S. 411 (2001) ..................................................................................................... 4
`
`
`Coach Servs., Inc. v. Triumph Learning LLC,
`668 F.3d 1356 (Fed. Cir. 2012) ................................................................................. 11
`
`
`Kiowa Tribe of Oklahoma v. Mfg. Techs., Inc.,
`523 U.S. 751 (1998) ............................................................................................... 8, 10
`
`
`Kroll v. Bd. of Trustees of Univ. of Illinois,
`934 F.2d 904 (7th Cir. 1991) ..................................................................................... 10
`
`
`Maysonet-Robles v. Cabrero,
`323 F.3d 43 (1st Cir. 2003) ......................................................................................... 9
`
`
`Memorylink Corp. v. Motorola Sols., Inc., Motorola Mobility, Inc.,
`773 F.3d 1266 (Fed. Cir. 2014) ................................................................................... 6
`
`
`Michigan v. Bay Mills Indian Community,
`134 S.Ct. 2024 (2014) .................................................................................................. 8
`
`
`Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma,
`498 U.S. 505 (1991) ..................................................................................................... 9
`
`
`Santa Clara Pueblo v. Martinez,
`436 U.S. 49 (1978) ..................................................................................................... 13
`
`
`Secured Worldwide LLC v. Kinney,
`No. 15 CIV. 1761 CM, 2015 WL 1514738 (S.D.N.Y. Apr. 1, 2015) ....................... 6
`
`
`Sicom Sys., Ltd. v. Agilent Techs., Inc.,
`427 F.3d 971 (Fed. Cir. 2005) ..................................................................................... 4
`
`
`
`iii
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`
`SiRF Tech., Inc. v. Int'l Trade Comm'n,
`601 F.3d 1319 (Fed. Cir. 2010) ................................................................................... 5
`
`
`Surprenant v. Massachusetts Tpk. Auth.,
`768 F. Supp. 2d 312 (D. Mass. 2011) ....................................................................... 10
`
`
`W.L. Gore & Assocs., Inc. v. C.R. Bard, Inc.,
`198 F. Supp. 3d 366 (D. Del. 2016) ............................................................................ 6
`ADMINISTRATIVE ORDERS:
`
`Covidien LP v. Univ. of Fla. Research Found. Inc.,
` Case IPR 2016-01274, Paper 21 (Jan. 25, 2017) ................................................. 8, 12
`
`Neochord, Inc. v. Univ. of Md., et al,
` Case IPR2016-00208, Paper 28 (May 23, 2017) ............................................. 4, 8, 12
`
`Reactive Surfaces Ltd., LLP v. Toyota Motor Corp.,
` Case IPR2016-01914, Paper 36 (July 13, 2017) ............................................ 8, 11, 12
`STATUTUES:
`
`28 U.S.C. § 1359 .............................................................................................................. 7
`
`35 U.S.C. § 103 .............................................................................................................. 12
`
`35 U.S.C. § 261 ................................................................................................................ 5
`
`35 U.S.C. §§ 311-319 ...................................................................................................... 7
`
`
`
`
`
`iv
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`

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`Paper No. 95
`Proceeding No.: IPR2016-01128
`I. INTRODUCTION
`
`Petitioners’ Opposition is premised entirely on their unsubstantiated claim that
`
`the Saint Regis Mohawk Tribe (“Tribe”) is not the Patent Owner. That premise is
`
`false. Allergan permanently and irrevocably assigned ownership of the Patents-at-
`
`Issue to the Tribe. Moreover, when the Tribe licensed back to Allergan certain
`
`limited field-of-use rights, the Tribe retained substantial rights to the Patents-at-
`
`Issue. Petitioners failed to cite any case law or make any coherent legal arguments
`
`that would provide the Board with any basis for finding that the agreements
`
`between the Tribe and Allergan are a “sham.”
`
`The only issue before the Board is whether the Tribe’s sovereign immunity
`
`necessitates dismissal of the above-captioned IPRs. Petitioners do not contest that
`
`(1) the Tribe is a sovereign entity protected by sovereign immunity and (2) the
`
`Tribe’s immunity has not been abrogated or waived. Petitioners’ concessions lead
`
`to only one outcome: the IPRs must be dismissed.
`
`II. ARGUMENTS AND AUTHORITY
`A. The Tribe is the Patent Owner.
`Petitioners attempt to cast doubt on the Tribe’s ownership of the Patents-at-
`
`Issue by arguing that (i) Allergan, not the Tribe, is the owner because the Tribe
`
`transferred substantially all rights to Allergan or (ii) Allergan’s assignment to the
`
`Tribe was a sham. But neither argument is supported by any facts or applicable
`
`legal authority.
`
`1
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`1. The Tribe Did Not Transfer “Substantially All” Rights to Allergan.
`As explained in its Motion to Dismiss, the Tribe has retained substantial rights
`
`to the Patents-at-Issue. Motion to Dismiss at 16-24. Petitioners now argue that the
`
`Tribe cannot prosecute infringement actions, will not receive proceeds from any
`
`infringement actions, and that Allergan can simply grant a sublicense to end any
`
`such action brought by the Tribe. Opp. Brief at 4-8. This is not true.
`
`First, the Tribe has the first right to enforce the Patents-at-Issue for all
`
`infringement unrelated to generic equivalents of Restasis®. EX. 2087 at § 5.2.3.
`
`To conduct such an enforcement campaign, the Tribe need only provide Allergan
`
`with notice and consider Allergan’s reasonable input. Id. In such an enforcement
`
`campaign, the Tribe has complete discretion to decide what trial strategy and
`
`tactics to employ. Id. (“Licensor shall retain control of the prosecution of such
`
`Infringement, including the response to any defense or defenses of any
`
`counterclaim…”). This right is not illusory. Yesterday, Imprimis Pharmaceuticals,
`
`Inc. announced plans to launch a compounded-based non-FDA-approved
`
`cyclosporine product to compete directly with Restasis®. EX. 2111. If this product
`
`infringes the Patents-at-Issue, the Tribe will have the first right to bring and control
`
`an infringement suit and retain the proceeds. EX. 2087 at § 5.2.5.
`
`Second, the Tribe also has the right to enforce the Patents-at-Issue for
`
`infringement in Allergan’s exclusive field-of-use if Allergan declines to do so. EX.
`
`2
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`2087 at § 5.2.2. And once that right vests, the Tribe has complete discretion to
`
`decide what trial strategy and tactics to employ. Id.
`
`Third, Allergan cannot simply “end any proceedingeven one the Tribe wants
`
`to pursue” by granting a sublicense. Opp. Brief at 7. Allergan can only grant a
`
`sublicense in its limited field-of-use. EX. 2087 at § 2.3 (sublicensing limited to
`
`license granted in § 2.1); Id. at § 2.1 (Allergan licensed to “Exploit Licensed
`
`Products”); Id. at § 1.33 (Licensed Products defined as products approved by FDA
`
`under NDA Nos. 050790 and 021023, including authorized generics); EX. 2032
`
`(NDA No. 021023 covers Restasis); EX 2034 (NDA No. 050790 covers Restasis®
`
`and Restasis® Multidose). So Allergan cannot grant a sublicense to end litigation
`
`brought by the Tribe involving infringement outside Allergan’s field-of-use. Id. at
`
`§ 5.2.3 (“With regard to any Infringement that does not relate to a Generic
`
`Equivalent…”); Id. at § 1.23 (“Generic Equivalent” defined as produce seeking
`
`FDA approval in reliance of the prior FDA approval of Restasis®). Nor can
`
`Allergan grant a sublicense to end litigation controlled by the Tribe within
`
`Allergan’s field-of-use because only the Tribe, as the controlling party, “shall have
`
`the right to settle such claim.” Id. at § 5.2.4.
`
`The Federal Circuit has held that “[s]uch a broad right to decide whether to
`
`bring suit and to control litigation is thoroughly inconsistent with an assignment.”
`
`Alfred E. Mann Found. For Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1362
`
`3
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`(Fed. Cir. 2010). The Board also previously held that nearly identical rights
`
`retained by The University of Maryland established it as “a necessary and
`
`indispensable party.” EX. 2096: Neochord, Inc. v. Univ. of Md., et al, IPR2016-
`
`00208, Paper 28 at 18-20 (May 23, 2017) (“Neochord”).
`
`Additionally, even when Allergan controls litigation it must consult with the
`
`Tribe over strategy, consider the Tribe’s reasonable input, and obtain the Tribe’s
`
`written consent before settling. EX. 2087 at §§ 5.2.2 (“Allergan will consider the
`
`reasonable input of Licensor…”), 5.2.4 (“[T]he prosecuting Party must obtain the
`
`other Party’s written consent to any settlement …. [and] shall (a) consult with the
`
`other party as to the strategy for the prosecution of such action.”); Sicom Sys., Ltd.
`
`v. Agilent Techs., Inc., 427 F.3d 971, 979 (Fed. Cir. 2005) (finding right to approve
`
`settlement significant to inquiry). Further, it is false to claim that Allergan controls
`
`the Tribe’s invocation of immunity. Opp. Brief at 9. Only the Tribe is entitled to
`
`assert its immunity as a sovereign and it is entitled to define when and how it will
`
`raise or waive it. EX. 2087 at § 5.1.2; See e.g., C & L Enterprises, Inc. v. Citizen
`
`Band Potawatomi Indian Tribe of Oklahoma, 532 U.S. 411 (2001).
`
`The Tribe retains the right to defend the validity of the Patents-at-Issue if
`
`Allergan declines to do so. EX. 2087 at § 5.2.2. This is now a critically important
`
`right, as the district court has found the Patents-at-Issue invalid as obvious. EX.
`
`1165. Allergan could choose not to appeal the district court opinion and thereby
`
`4
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`avoid paying any additional royalties to the Tribe, which potentially total more
`
`than $100,000,000. EX. 2087 at §4.2. The Tribe’s negotiated-for right to defend
`
`the validity of the patents in the absence of any cooperation from Allergan has a
`
`liquidated value greater than $100,000,000.00, a significant economic and legal
`
`right that rests with the Tribe because of its status as the Patent Owner.
`
`Thus, the Tribe has not transferred substantially all rights to the Patents-at-Issue
`
`to Allergan and the rights it has retained are of significant value.
`
`2. The Assignment of the Patents-at-Issue to the Tribe is Valid.
`It is uncontested that on September 8, 2017, Allergan executed an assignment
`
`of all Patents-at-Issue to the Tribe (“Assignment”). EX. 2086. That Assignment
`
`was immediately recorded at the PTO. EX. 2103. Thus, the Assignment is
`
`presumptively valid and “places the burden to rebut such a showing on the one
`
`challenging the assignment.” SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d
`
`1319, 1327–28 (Fed. Cir. 2010); See also 35 U.S.C. § 261 (recordation of an
`
`assignment with the PTO can be the basis for a bona fide purchaser defense).
`
`Petitioners have failed to meet their burden of proof because they offered no
`
`evidence to demonstrate the Assignment is a sham. Petitioners’ only argument is
`
`that the Tribe “provided no consideration in return for the sham patent
`
`assignment.” Opp. Brief at 12. But Petitioners were unable to cite to any authority
`
`requiring consideration for a valid assignment because, according to the Federal
`
`5
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`Circuit, no consideration is required beyond an acknowledgement of consideration.
`
`Memorylink Corp. v. Motorola Sols., Inc., Motorola Mobility, Inc., 773 F.3d 1266,
`
`1271 (Fed. Cir. 2014). The Assignment has such an acknowledgement: “Be it
`
`known that for good and valuable consideration, the receipt and sufficiency of
`
`which is hereby acknowledged…” EX. 2086 at 1. Consideration is unnecessary to
`
`make a written, signed patent assignment valid. W.L. Gore & Assocs., Inc. v. C.R.
`
`Bard, Inc., 198 F. Supp. 3d 366, 377–78 (D. Del. 2016) (“[C]onsideration on the
`
`part of assignees is not required for gratuitous assignments.”).
`
`Moreover, it would be improper for the Board to address the adequacy of the
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`consideration. The Assignment is governed by New York law. EX. 2086 at 6.
`
`Under New York law, nominal consideration is sufficient to support a contractual
`
`duty and “the issue of inadequacy of consideration is for the parties to resolve upon
`
`entering into the contract.” Secured Worldwide LLC v. Kinney, No. 15 CIV. 1761
`
`CM, 2015 WL 1514738, at *21 (S.D.N.Y. Apr. 1, 2015). The Assignment is valid.
`
`3. Petitioners’ “Sham Transaction” Argument Lacks Legal and Factual
`Support.
`Petitioners have not articulated any coherent legal theory to support their oft
`
`repeated allegation that this transaction is a sham. Instead, they rely on liberal
`
`citations to news articles rather than law. See EX. 1148-1150, 1152, 1153, 1155,
`
`1157. But Petitioners’ “sham” argument lacks substance.
`
`First, Petitioners cite to payday lending and state tax avoidance cases for the
`
`6
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`unremarkable proposition that courts reject third-party abuse of tribal immunity to
`
`“evade laws.” Opp. Brief at 10-11. They add to the hyperbole with an assertion that
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`the Assignment to the Tribe is a “scheme to buy tribal immunity for dubious
`
`activities.” Id. But Petitioners do not articulate what “dubious activity” the Tribe or
`
`Allergan has engaged in beyond owning and asserting patents in the same manner
`
`as other sovereigns. Id. Nor do Petitioners allege that the Tribe or Allergan have
`
`committed fraud, engaged in criminal activity, or evaded any specific law. These
`
`cases are simply not relevant.
`
`Next, Petitioners argue that “sham assignments made to destroy jurisdiction are
`
`ineffective.” Opp. Brief at 11-12. None of the cases Petitioners cite concern patent
`
`assignments. Id. And the cases they cite are easily distinguished because they
`
`involve attempts to manipulate Federal diversity jurisdiction. The diversity statute,
`
`28 U.S.C. § 1359, has a specific and express prohibition on the use of assignments
`
`to affect diversity jurisdiction. No such language or statutory requirement applies
`
`here.
`
`Third, Petitioners argue that the Assignment must be “void because it
`
`undermines the AIA.” Opp. Brief at 12-13. Initially, it is not clear how the Board
`
`can declare the contract void since it has no jurisdiction over the Tribe and nothing
`
`in the IPR statutory scheme bars the assignment of patents that are the subject of an
`
`IPR. See 35 U.S.C. §§ 311-319. Petitioners essentially argue that policy dictates
`
`7
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`that all assignments to sovereign tribes should be facially invalid. Opp. Brief at 13
`
`(“This sham assignment threatens to subvert a cornerstone of patent reform.”). The
`
`Tribe’s assertion of its immunity cannot “subvert” IPRs or patent reform when the
`
`Board has already recognized the right of three sovereign state universities to do
`
`the exact same thing. EX. 2095: Covidien LP v. Univ. of Fla. Research Found.
`
`Inc., IPR2016-01274, Paper 21 at 39 (Jan. 25, 2017) (“Covidien”); Neochord at 20;
`
`EX. 2097: Reactive Surface Ltd., LLP v. Toyota Motor Corp., IPR2016-01914,
`
`Paper 36 at 17 (July 13, 2017) (“Reactive”). A refusal to recognize the Tribe’s
`
`sovereignty here not only violates binding Supreme Court precedent, it also would
`
`not solve the problem articulated by Petitioners since state universities would still
`
`be able to use their immunity to avoid IPRs.
`
`The Supreme Court has repeatedly rejected policy arguments like those
`
`advanced by Petitioners because all policy judgments regarding the extent of tribal
`
`immunity must be left to Congress, even in the commercial context. Michigan v.
`
`Bay Mills Indian Community, 134 S. Ct. 2024, 2039 (2014) (Rejecting Michigan’s
`
`attempt to shut down Tribal Casino based on tribes’ sovereign immunity). In
`
`Kiowa Tribe of Oklahoma v. Mfg. Techs., Inc., the Supreme Court noted that
`
`“when tribes take part in the Nation’s commerce” immunity could “extend[]
`
`beyond what is needed to safeguard tribal self-governance.” 523 U.S. 751, 758
`
`(1998). However, even with this in mind, the Court went on to expressly reject the
`
`8
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`opportunity to “confine [immunity] to reservations or non-commercial activities”,
`
`instead deciding to “defer to the role Congress may wish to exercise in this
`
`important judgment.” Id. This reaffirmed the Supreme Court’s holding in
`
`Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma
`
`rejecting Oklahoma’s contention that “because tribal business activities ... are now
`
`so detached from traditional tribal interests,” tribal immunity “no longer makes
`
`sense in [the commercial] context.” 498 U.S. 505, 510 (1991).
`
`There is no basis for this Board to declare the Assignment void simply because
`
`the Tribe is invoking sovereign immunity in a commercial context. The Supreme
`
`Court has repeatedly held that even States cannot overcome the principle of tribal
`
`sovereign immunity. Petitioners ask the Board to give generic drug manufacturers
`
`more rights than State governments when it comes to protecting their business
`
`interests against those of a Tribe.
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`Moreover, encouraging “economic development” is one of the primary policy
`
`purposes cited by Congress and the Supreme Court for tribal sovereign immunity.
`
`See, e.g., Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. at 510.
`
`That is exactly what the Tribe is doing here, as it explained in a recent letter to
`
`Senators Charles Grassley and Dianne Feinstein. EX. 2109.
`
`All sovereigns use immunity for commercial purposes and to avoid liability in
`
`pending lawsuits. Maysonet-Robles v. Cabrero, 323 F.3d 43, 51-54 (1st Cir. 2003)
`
`9
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`Paper No. 95
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`(upholding dismissal on immunity grounds even though assets of non-sovereign
`
`entity controlled by Puerto Rico, were transferred in the middle of litigation to a
`
`sovereign entity created solely for the express purpose of asserting sovereign
`
`immunity to dismiss the lawsuit); Kroll v. Bd. of Trustees of Univ. of Illinois, 934
`
`F.2d 904, 909-10 (7th Cir. 1991) (holding that Board of Trustees may assert
`
`sovereign immunity after becoming a party during the pendency of the case);
`
`Surprenant v. Massachusetts Tpk. Auth., 768 F. Supp. 2d 312, 318 (D. Mass. 2011)
`
`(“It may seem unfair that an immunity defense that was not available to the MTA
`
`can be bestowed on the MassDOT as its successor by legislative fiat.”).
`
`That fact that immunity upsets litigation opponents is not new. The Supreme
`
`Court has noted that, in the economic context of tribal commercial enterprises,
`
`“immunity can harm those who are unaware that they are dealing with a tribe, who
`
`do not know of tribal immunity, or who have no choice in the matter, as in the case
`
`of tort victims.” Kiowa, 523 U.S. at 758. Yet, the Supreme Court has never voided
`
`a contract or otherwise declared a tribal activity so questionable as to justify
`
`abrogation of immunity based on policy concerns.
`
`When and for what reasons the Tribe asserts its immunity is not a policy matter
`
`for the Board.
`
`B. The Tribe is an Indispensable Party.
`As discussed at length in the Motion to Dismiss, the Tribe is an indispensable
`
`10
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`Proceeding No.: IPR2016-01128
`party to these proceedings. Motion to Dismiss at 16-24. Petitioners’ arguments to
`
`the contrary are premised on their claim that the Tribe cannot legitimately be the
`
`Patent Owner. But that argument is meritless as discussed above. The Tribe’s
`
`property interest cannot be taken in its absence and no party present in this
`
`proceeding other than the Tribe can protect that property interest. Motion to
`
`Dismiss at 16-24.
`
`Petitioners also suggest that the Tribe has only a nominal interest in the patent.
`
`Opp. Brief at 18. The Tribe’s interest in quarterly royalty payments exceeding
`
`$100,000,000 are not nominal. EX. 2087 at § 4.2. While that may seem “nominal”
`
`to Petitioners, to the Tribe those royalties represent an important opportunity to
`
`provide needed services to its community.
`
`Moreover, Petitioners appear to have conceded that Allergan, as a mere
`
`licensee, lacks administrative standing under the statutory scheme to continue to
`
`participate in these proceedings. Motion to Dismiss at 24-25; Coach Servs., Inc. v.
`
`Triumph Learning LLC, 668 F.3d 1356, 1376 (Fed. Cir. 2012). Allergan has
`
`already sought leave to withdraw from the proceedings, which it will renew after
`
`this briefing is completed. Paper 85 at 4. If it cannot participate, Allergan certainly
`
`cannot adequately protect the Tribe’s interests.
`
`The Petitioners also erroneously rely on Reactive, for the proposition that the
`
`Tribe is not indispensable. Opp. Br. at 14-15. But that case involved patent co-
`
`11
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`owners. Reactive at 15. The Board in Reactive did not “deem” a licensee to be a
`
`co-owner as Petitioners ask the Board to do so here. Id. Petitioners cite no
`
`authority authorizing the Board to continue in the complete absence of the Patent
`
`Owner.
`
`Moreover, Judge Bryson issued an Order invalidating the Patents-at-Issue under
`
`35 U.S.C. § 103. EX. 1165. So clearly the Petitioners will still have an adequate
`
`remedy if this proceeding were dismissed.
`
`C. Petitioners’ Remaining Arguments Do Not Withstand Scrutiny.
`Petitioners argue, briefly, that tribal sovereign immunity does not apply to IPRs
`
`because they are either (i) in rem proceedings or (ii) a proceeding brought by a
`
`federal agency against the Tribe. Opp. Brief at 22-24. But the Board has thrice held
`
`that inter partes review is not an in rem action. Covidien at 12-17; Neochord at 12-
`
`13; Reactive at 7-8. Nor is inter partes review a proceeding brought by a federal
`
`agency because the role of the Board is virtually identical to that of the
`
`Commission in FMC, which is assessing the merits of the arguments presented by
`
`the parties in an impartial manner. Covidien at 16-17.
`
`Finally, Petitioners’ argument that explicit statutory authority is required for the
`
`Board to dismiss the proceedings based on the Tribe’s immunity would require the
`
`Board to overturn decades of Supreme Court precedent. Opp. Brief at 24-25.
`
`Immunity is an inherent sovereign protection. Abrogation must be “unequivocally
`
`12
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`Paper No. 95
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`expressed.” See e.g., Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978).
`
`D. The Tribe Seeks to Strengthen the U.S. Patent System.
`In its Brief, Petitioners have asserted that Allergan’s Assignment is void
`
`because it undermines the AIA. But Petitioners’ concerns ignore the far greater
`
`impact that serial abusers of the IPR process have had on the U.S. patent system.
`
`For example, the IPR process creates a “double jeopardy” effect for patent owners
`
`attempting to enforce their patents. IPRs are also being exploited by “reverse
`
`trolls,” that often hold themselves out as generic drug companies. EX. 2110 at 2.
`
`The “reverse trolls” either demand cash as a payoff for not filing an IPR petition or
`
`take a short position before filing an IPR petitions that cause the stock to drop. Id.
`
`The impact of IPRs cannot be overstated. On September 26, 2016, the U.S.
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`Commerce Department released a comprehensive report, “Intellectual Property and
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`the U.S. Economy: 2016 Update,” which found that IP-intensive industries support
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`at least 45 million U.S. jobs and contribute more than $6 trillion dollars to, or
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`38.2% of the U.S. gross domestic product. EX. 2105. But a crisis has emerged in
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`this sector of the U.S. economy since the prior administration’s implementation of
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`the America Invents Act (“AIA”), especially its IPR procedures.
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`It has been estimated that the AIA’s implementation has resulted in a decline in
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`the value of U.S. patents in the trillions of dollars. EX. 2106. The average price per
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`patent over the three-year period 2012 to 2014 dropped 61%. Id. In that timeframe,
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`Paper No. 95
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`the number of patents sold on the secondary markets dropped from just under
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`7,000 to 2,800, showing a decrease in liquidity in the patent market. Id. The
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`decline in U.S. patent values has accelerated across the board since 2014.
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`Since passage of the AIA and its implementation by the prior administration, in
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`the eyes of the U.S. Chamber of Commerce, the U.S. patent system has fallen from
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`1st to 10th in the ranking of its strength, behind the United Kingdom, Switzerland,
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`Sweden, Germany, France, Japan, Spain, Singapore, Italy, and tied with patent
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`powerhouse Hungary. EX. 2107 at 18, 117. The Chamber of Commerce report
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`attributes this decline specifically to inter partes review and its “high rate of trial
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`and of rejections … with challenges … disproportionately funded by bad faith
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`actors and with steeply increasing defense costs for patent holders.” Id. at 18. As
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`the U.S. patent system weakens, other countries are strengthening theirs. China, in
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`particular, is strengthening its patent enforcement regime by providing injunctions
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`and allowing ever higher damages awards. EX. 2107 at 20, 22, 40.
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`These views are not confined to the press or blogosphere. A former chief judge
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`of the Federal Circuit Court of Appeals looked at the damage to the U.S. Patent
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`system and judged IPRs to be “patent death squads.” EX. 2108. This label was also
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`embraced by former PTAB Chief Judge James Smith who told the PTO’s Patent
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`Public Advisory Committee on August 14, 2014 that “If we [PTAB] weren’t, in
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`part, doing some ‘death squadding,’ we would not be doing what the statute calls
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`on us to do.” Id. Petitioners’ attempts to focus the Board on the perceived negative
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`implications of tribal sovereign immunity (while ignoring state sovereign’s rights
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`to do the exact same thing) are nothing more than an attempt to misdirect attention
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`away from the broader abuses of the IPR process. By contrast, the Tribe wants to
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`strengthen the U.S. Patent system and protect innovators.
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`To be clear, this is not a critique of the Board, but the system created by the
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`current law, and those who abuse it. The Tribe trusts that the Board will follow the
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`law and dismiss these proceedings.
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`III. CONCLUSION
`This Board must dismiss the IPRs. Petitioners do not contest the sovereignty of
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`the Tribe. Instead, their Opposition boils down to unsubstantiated assertions that
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`the Assignment of the Patents-at-Issue to the Tribe should be voided based on
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`broader policy concerns. But the principles of sovereign immunity are well
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`founded in the law and, to quote Petitioners, “The Board has no power to address
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`these policies, any remedy must come from Congress.” Paper No. 84 at 1.
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`Accordingly, these proceedings must be dismissed.
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`Paper No. 95
`Proceeding No.: IPR2016-01128
`Respectfully submitted,
`
` /Alfonso Chan /
`Alfonso Chan
`Reg. No. 45,964
`achan@shorechan.com
`Michael Shore*
`mshore@shorechan.com
`Christopher Evans*
`cevans@shorechan.com
`SHORE CHAN DEPUMPO LLP
`901 Main Street, Suite 3300
`Dallas, TX 75201
`Tel: (214) 593-9110
`Fax: (214) 593-9111
`
`Marsha Schmidt*
`Attorney at Law
`14928 Perrywood Drive
`Burtonsville, MD 20866
`marsha@mkschmidtlaw.com
`Tel: (301) 949-5176
`*admitted pro hac vice
`
`Attorneys for Saint Regis Mohawk Tribe
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`
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`
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`Dated: October 20, 2017
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`IV. LIST OF EXHIBITS
`
`
`EX. 2003
`
`EX. 2001
`
`Exhibit No. Description
`NDA 21-023 Cyclosporine Ophthalmic Emulsion 0.05%, Original
`NDA Filing, Vol. 1 (Feb. 24, 1999)
`EX. 2002 U.S. Pat. No. 4,839,342
`Said et al., Investigative Ophthalmology & Visual Science, vol. 48, No.
`11 (Nov. 2007):5000-5006
`EX. 2004 Alba et al., Folia Ophthalmol. Jpn. 40:902-908 (1989)
`Stedman’s Medical Dictionary, definition of therapeutic
`EX. 2005
`EX. 2006 Dorland’s Illustrated Medical Dictionary, definition of therapeutic
`Stedman’s Medical Dictionary, definition of palliative
`EX. 2007
`
`EX. 2008
`
`RESTASIS® label
`
`EX. 2009
`
`Murphy, R., “The Once and Future Treatment of Dry Eye,” Review of
`Optometry, pp. 73-75 (Feb. 15, 2000)
`
`EX. 2010
`
`RESERVED
`
`EX. 2011
`
`EX. 2012
`
`EX. 2013
`
`EX. 2014
`
`Agarwal, Priyanka and Ilva D. Rupenthal, “Modern Approaches to the
`Ocular Delivery of Cyclosporine A,” Drug Discovery Today, vol. 21,
`no. 6 (June 2016)
`
`Damato et al., “Senile Atrophy of the Human Lacrimal Gland: The
`Contribution of Chronic Inflammatory Disease,” British Journal of
`Ophthalmology (1984)
`
`Higuchi, “Physical Chemical Analysis of Percutaneous Absorption
`Process From Creams and Ointments,” Seminar, New York City
`(1959)
`
`Lallemand et al., “Cyclosporine a Delivery to the Eye: A
`Pharmaceutical Challenge,” European Journal of Pharmaceutics and
`Biopharmaceutics (2003)
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`Proceeding No.: IPR2016-01128
`das Neves et al., “ Mucosal Delivery of Biopharmaceuticals: Biology,
`Challenges and Strategies,” Springer Science (2014)
`
`Power et al., “Effect of Topical Cyclosporin A on Conjunctival T Cells
`in Patients with Secondary Sjögren’s Syndrome,” Cornea 12(6): 507-
`511 (1993)
`
`Schaefer et al., “Skin Permeability,” Springer-Verlag (1982)
`
`Stern et al., “The Pathology of Dry Eye: The Interaction Between the
`Ocular Surface and Lacrimal Glands,” Cornea 17(6): 584-589 (1998)
`
`Wepierre, Jacques and Jean-Paul Marty, “Percutaneous Absorption of
`Drugs,” Elsvier/North-Holland Biomedical Press (1970)
`
`Williamson et al., “Histology f the Lacrimal Gland in
`Keratoconjunctivitis Sicca,” Brit. F. Ophthal /91973)
`
`“Approved Drug Products with Therapeutic Equivalence Evaluations,”
`U.S. Department of Health and Huma Services, 37th Edition