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.
`
`SAINT REGIST MOHAWK TRIBE,
`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 RESPONSE TO AMICUS BRIEFING
`
`
`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).
`
`

`

`Proceeding No.: IPR2016-01128
`
`TABLE OF CONTENTS
`
`
`I.
`
`INTRODUCTION .............................................................................................. 1
`A. The Sham Transaction Arguments Advanced by Amici Are a Sham. ......... 1
`B. Inter Partes Review Is Not a Federal Enforcement Action. .......................... 8
`C. This Is Not an In Rem Proceeding. ............................................................... 13
`CONCLUSION ................................................. Error! Bookmark not defined.
`II.
`III. LIST OF EXHIBITS ......................................................................................... 17
`
`
`
`
`
`ii
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`Proceeding No.: IPR2016-01128
`
`TABLE OF AUTHORITIES
`
`
`CASES:
`
`Betar v. De Havilland Aircraft of Canada, Ltd.,
`603 F.2d 30 (7th Cir. 1979) ........................................................................................ 8
`
`
`Cayuga Indian Nation of New York v. Seneca Cty., N.Y.,
`890 F. Supp. 2d 240 (W.D.N.Y. 2010) .............................................................. 14, 15
`
`
`Cayuga Indian Nation of New York v. Seneca Cty., N.Y.,
`761 F.3d 218 (2d Cir. 2014) ..................................................................................... 14
`
`
`Consumer Financial Protective Bureau v. Great Plains Lending, LLC,
`846 F.3d 1049 (9th Cir. 2017) .................................................................................. 10
`
`
`County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation,
`502 U.S. 251 (1992) ................................................................................................. 15
`
`
`Florida Paraplegic Assoc. v. Miccosukee Tribe of Indians of Florida,
`166 F.3d 1126 (11th Cir. 1999) .................................................................................. 8
`
`
`Hamaatsa, Inc. v. Pueblo of San Felipe,
`388 P.3d 977 (N.M. 2016) ....................................................................................... 15
`
`
`Horn v. Comm’r.,
`968 F.2d 1229 (D.C. Cir.1992) .................................................................................. 5
`
`
`Hubb v. State Farm Mut. Auto. Ins. Co.,
`85 A.3d 836 (D.C. 2014) ............................................................................................ 4
`
`
`IES Industries v. U.S.,
`253 F.3d 350 (8th Cir. 2001) ...................................................................................... 5
`
`
`Kramer v. Caribbean Mills, Inc.,
`394 U.S. 823 (1969) ................................................................................................... 7
`
`
`Menominee Tribal Enters. v. Solis,
`601 F.3d 669 (7th Cir. 2010) .................................................................................... 10
`
`
`
`iii
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`Proceeding No.: IPR2016-01128
`
`Michigan v. Bay Mills Indian Community,
`134 S.Ct. 2024 (2014) .............................................................................................. 15
`
`
`NLRB v. Little River Band of Ottawa Indians Tribal Gov't,
`788 F.3d 537 (6thth Cir. 2015) ................................................................................... 9
`
`
`People ex rel. Owen v. Miami Nation Enter.,
` 386 P.3d 357 (Cal. 2016) ........................................................................................... 7
`
`Pharmachemie B.V. v. Pharmacia S.p.A.,
` 934 F. Supp. 484 (D. Mass 1996) .............................................................................. 6
`
`Salem Fin., Inc. v. United States,
`786 F.3d 932 (Fed. Cir. 2015) .................................................................................... 5
`
`
`SiRF Tech., Inc. v. Int'l Trade Comm'n,
`601 F.3d 1319 (Fed. Cir. 2010) .................................................................................. 2
`
`
`The Siren,
`74 U.S. 152 (1868) ................................................................................................... 15
`
`
`Treehouse Avatar, LLC v. Valve Corp.,
`170 F. Supp. 3d 706 (D. Del. 2016) ........................................................................... 6
`
`
`United Parcel Serv. of Am., Inc. v. C.I.R.,
`254 F.3d 1014 (11th Cir. 2001) .................................................................................. 5
`
`
`STATUTES:
`
`15 U.S.C. § 1125 .......................................................................................................... 14
`
`19 U.S.C. § 1337 ............................................................................................................ 1
`
`26 U.S.C. § 7323 .......................................................................................................... 14
`
`28 U.S.C. § 1359 ............................................................................................................ 8
`
`29 U.S.C. § 160 ............................................................................................................ 11
`
`35 U.S.C. § 6 ................................................................................................................ 11
`
`iv
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`Proceeding No.: IPR2016-01128
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`
`35 U.S.C. § 261 .............................................................................................................. 2
`
`35 U.S.C. § 311 .................................................................................................. 1, 10, 14
`
`35 U.S.C. § 317 ............................................................................................................ 12
`
`REGULATIONS:
`
`37 C.F.R. § 42.22 ......................................................................................................... 11
`
`37 C.F.R. § 42.73 ......................................................................................................... 13
`
`37 C.F.R. §§ 42.51-42.53 ............................................................................................. 11
`
`37 CFR § 42.104 .......................................................................................................... 11
`
`37 CFR § 42.2 ........................................................................................................ 11, 12
`
`OTHER AUTHORITIES:
`
`House Report 112-98(I) ............................................................................................... 12
`
`Restatement (Second) of Judgments, § 6 .................................................................... 13
`
`Restatement of Law (Second) Contracts § 178(1) ........................................................ 4
`
`ADMINISTRATIVE ORDERS:
`
`Covidien LP v. Univ. of Fla. Research Found. Inc.,
` Case IPR 2016-01274, Paper 21 (Jan. 25, 2017) .................................. 10, 12, 13, 14
`
`Reactive Surfaces Ltd., LLP v. Toyota Motor Corp.,
` Case IPR2016-01914, Paper 36 (July 13, 2017) ............................................... 13, 14
`
`
`
`
`
`
`v
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`

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`Proceeding No.: IPR2016-01128
`
`
`
`I. INTRODUCTION
`The amicus briefs make it clear that there is no legal basis that would allow the
`
`Board to deny the Tribe’s motion to dismiss. Amici supporting the Petitioners offer
`
`no new or compelling arguments. Instead, they make arguments previously
`
`rejected by this Board and repeat the Petitioners’ oft stated, but never supported,
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`“sham transaction” argument. In short, the Tribe’s motion should be granted.
`
`A. The “Sham Transaction” Arguments Advanced by Amici Are a Sham.
`Relying on Judge Bryson’s Order, joining the Tribe as a co-plaintiff in a district
`
`court action, several Amici contend this Board should disregard the Assignment
`
`between Allergan and the Tribe as “a sham” and that the use of immunity based on
`
`it cannot be used to divest this Board of jurisdiction. See Askladden Brief, Paper
`
`107 at 14; Accessible Medicines Brief, Paper 116 at 15. Essentially, the Amici
`
`(and Petitioners) are suggesting the Board can use this hook to ignore the Tribe’s
`
`assertion of immunity.
`
`But the Board lacks jurisdiction under its limited statutory authority to
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`determine whether an assignment and license are a “sham” and declare them void.
`
`The Board does not have the statutory authority to consider any equitable defenses,
`
`including those advanced by Amici. Compare 19 U.S.C. § 1337 (“All legal and
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`equitable defenses may be presented in all cases.”); with 35 U.S.C. § 311 (scope
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`expressly limited to unpatentability under § 102 or § 103).
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`1
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`Proceeding No.: IPR2016-01128
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`The Assignment has been recorded so it is presumptively valid and “the burden
`
`to rebut such a showing on the one challenging the assignment.” EX. 2103; 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.
`
`The Tribe has retained substantial interests in the patents under the licensing
`
`agreement and it is false to suggest the Tribe did not retain anything of substance.
`
`The transactions gave Allergan exclusive control over the FDA-approved use for
`
`Restasis (Dry Eye Syndrome) (EX. 2008), but they also provided the Tribe the
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`ability to pursue, develop, commercialize, and control multiple off-label uses. The
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`Tribe was broadly assigned all “right, title, prerogatives, benefits and interest in”
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`the six Restasis Patents, and “any ownership claims or beneficial rights, of any
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`kind whatsoever of [Allergan] that have accrued, or that may accrue now or in the
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`future.” EX. 2086 at 1. The Tribe provided Allergan an exclusive license for “all
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`FDA-approved uses in the United States” and an exclusive right to commercialize
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`“Licensed Product[s].” EX. 2087 at §§ 2.1, 3.1, 1.33. But the Tribe retained for
`
`itself all rights under the patents “not expressly granted” to Allergan, which
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`included rights to utilize the patents to develop uses that are not currently FDA-
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`approved, and then commercially exploit those developments, provided they do not
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`qualify as or compete with “Licensed Products.” Id. at § 2.4. The Tribe also
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`reserved the right to use and practice the patents for “research, scholarly use,
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`2
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`Proceeding No.: IPR2016-01128
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`teaching, education, patient care incidental to the foregoing [and] sponsored
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`research” in connection with the FDA-approved use of Restasis, as well as off-
`
`label uses. Id. Physicians have successfully used Restasis for numerous off-label
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`uses. See, e.g., EX. 2014; EX. 2015.
`
`Given the widespread physician acceptance for and interest in off-label uses of
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`Restasis and the significant potential markets for additional patients that could be
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`served, the Tribe will have the opportunity, partnering with physicians, research
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`institutions, pharmaceutical companies, and others, to use its patent rights to
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`explore and develop cyclosporin emulsions for such off-label, non-FDA-approved
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`uses and to seek FDA approvals for and commercialize these new treatments.
`
`As for legal support for the sham transaction argument, while Judge Bryson
`
`went out of his way to express “serious concerns” about the legitimacy of the
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`Tribe’s agreements with Allergan, EX. 1163 at 4, his commentary was, by his own
`
`admission, pure dicta. Id. at 7 (“The questions as to the validity of the assignment
`
`and exclusive license transaction … do not bear on this Court’s power to hear this
`
`case.”). And despite his misgivings, and the fact he had all the transaction
`
`documents and the Petitioners’ briefing on the same allegations of “sham
`
`transaction,” Judge Bryson did not find the agreements legally unenforceable. Id.
`
`at 8-9. Nor could he have.
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`3
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`Proceeding No.: IPR2016-01128
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`Judge Bryson identified no legal precedent that provided a basis to void the
`
`agreements, whether as contrary to public policy or as a sham transaction. He cited
`
`only the Restatement of Law (Second) Contracts, two tax cases concerning the
`
`“economic substance doctrine,” and one case concerning the proper formulation of
`
`the “arm of the tribe” test. Id. at 5-6. The cases cited by Amici are equally
`
`unavailing.
`
`First, public policy concerns may render a contract unenforceable only if
`
`“legislation provides that it is unenforceable,” or if public policy against such a
`
`contract has already been well-established by prior precedent. Restatement of Law
`
`(Second) Contracts § 178(1). Because freedom to contract is paramount, “courts
`
`will invalidate contract terms that are contrary to public policy only in the clearest
`
`of cases, and with great caution.” Hubb v. State Farm Mut. Auto. Ins. Co., 85 A.3d
`
`836, 839 (D.C. 2014). Judge Bryson exercised such caution and found himself
`
`unable to void the agreements as being contrary to public policy. Notably, neither
`
`Amici, Petitioners, nor Judge Bryson were able to identify any legislation,
`
`established judicial precedent, or specific public policy that warrants voiding the
`
`Tribe’s agreements.
`
`Next, Amici’s and Judge Bryson’s reliance on the jurisprudence developed
`
`under the Internal Revenue Code regarding sham transaction is odd to say the least.
`
`There is a body of well-developed tax law devoted to the complex subject of sham
`
`4
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`Proceeding No.: IPR2016-01128
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`tax transactions. But the sole purpose is to determine if a transaction should be
`
`disregarded “for tax purposes.” Salem Fin., Inc. v. United States, 786 F.3d 932,
`
`942 (Fed. Cir. 2015). Amici ask the Board to cobble together a similar rule of law
`
`that would allow the Board to ignore otherwise valid and enforceable patent
`
`assignments to establish jurisdiction over sovereign patent owners, like the Tribe.
`
`That is a questionable proposition at best. But, we will nevertheless briefly indulge
`
`Amici in their legal gymnastics.
`
`The sham transaction doctrine asks whether there was a business purpose
`
`(looking subjectively at taxpayer’s intent) and whether there was economic
`
`substance (objectively looking at a transaction’s profit potential apart from tax
`
`benefits, i.e., whether there is potential for profit). E.g., IES Industries v. U.S., 253
`
`F.3d 350, 358 (8th Cir. 2001). A transaction has a “business purpose” if it figures
`
`“in a bona fide, profit-seeking business.” United Parcel Serv. of Am., Inc. v. C.I.R.,
`
`254 F.3d 1014, 1019 (11th Cir. 2001). Among other scenarios, courts have found
`
`that a business purpose exists when a transaction is “compelled or encouraged by
`
`business or regulatory realities, is imbued with tax-independent considerations, and
`
`is not shaped solely by tax-avoidance features.” Horn v. Comm’r., 968 F.2d 1229,
`
`1238 (D.C. Cir.1992). A “transaction will not be considered a sham if it is
`
`undertaken for profit or for other legitimate nontax business purposes.” Id. 1238.
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`5
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`Proceeding No.: IPR2016-01128
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`There is a substantial business purpose here. The Tribe entered into these
`
`agreements for considerable profit and obvious business purpose. EX. 2087 § 4.1
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`($13.75 million upfront payment), § 4.2. ($3.75 million quarterly payments). For
`
`Allergan, the transaction has a business purpose because it is compelled to protect
`
`its patents from the double jeopardy created by the inter partes review regulatory
`
`process. Would anyone argue a transaction was a sham if Allergan assigned its
`
`patents to a company that sought to dismiss this case on a different procedural
`
`theory, for instance, by arguing that the IPR is unconstitutional? Of course not.
`
`Allergan has a right to pursue the best legal strategies to protect its assets, as does
`
`the Tribe.
`
`In Pharmachemie B.V. v. Pharmacia S.p.A., 934 F. Supp. 484 (D. Mass. 1996),
`
`the District of Massachusetts addressed the issue of whether an assignment of
`
`patents to avoid jurisdiction was a sham. While the Court found that the timing of
`
`the assignment, made just weeks after the initiation of the lawsuit, was “no mere
`
`coincidence,” the Court further found that it nonetheless lacked jurisdiction, saying
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`“this Court cannot disregard the fact that the assignment of title to the patents
`
`divests this Court of declaratory judgment jurisdiction regardless of the motive
`
`behind the assignment.” Id. at 489.
`
`As noted in a related patent context, in Treehouse Avatar, LLC v. Valve Corp.,
`
`170 F. Supp. 3d 706, 710 (D. Del. 2016), the federal district court refused to find
`
`6
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`Proceeding No.: IPR2016-01128
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`that a company’s incorporation in Delaware just weeks before filing a patent
`
`infringement suit was a basis to overturn the choice of venue of that entity because
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`“[b]usiness entities choose their situs of incorporation for varied reasons, including
`
`the ability to sue and be sued in that venue.” Patent owners can position themselves
`
`so as to best protect their assets from adverse litigation.
`
`Judge Bryson also cited People ex rel. Owen v. Miami Nation Enterp. as being
`
`only “roughly analogous” to the issue presented here. EX. 1163 at 6. Presumably,
`
`Judge Bryson meant that the case was illustrative of a court examining whether an
`
`entity has immunity and refusing to recognize that immunity in context. But in
`
`Owen the only issue presented was “how to determine whether a tribally affiliated
`
`entity shares in a tribe's immunity from suit.” 386 P.3d 357, 365 (Cal. 2016).
`
`Naturally, Owen focused solely on specific facts relevant to that analysis, and not
`
`some overarching public policy concern, to determine if a tribally-affiliated entity
`
`had immunity. Id. Here, the Patent Owner is the Tribe, not a tribally-affiliated
`
`entity. And the Tribe’s sovereign status is undisputed. The Tribe’s sovereignty is
`
`inherent, not “transactional,” and applies to all the Tribe’s business transactions.
`
`Finally, Amici and Judge Bryson point to diversity rules, which allow a court to
`
`ignore assignments made to create diversity jurisdiction. See Askladden Brief,
`
`Paper 107 at 14. But by its plain terms, the statute applies to efforts to create, not
`
`defeat, federal jurisdiction. Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 826
`
`7
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`Proceeding No.: IPR2016-01128
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`(1969) (describing the purpose of the provision as “prevent[ing] the manufacture of
`
`Federal jurisdiction by the device of assignment”); Betar v. De Havilland Aircraft
`
`of Canada, Ltd., 603 F.2d 30, 33 (7th Cir. 1979) (“Devices to create federal
`
`jurisdiction have historically been limited by statute; devices to defeat jurisdiction
`
`have not.”). Regardless, the cited statute, 28 U.S.C. § 1359, applies only to
`
`jurisdiction in federal district court, not administrative tribunals like the PTAB.
`
`There is no statutory authority that would allow the Board to examine the
`
`motivation behind the assignment, even if it was to defeat jurisdiction.
`
`In short, the Amici have presented no legal authority that provides any basis to
`
`interfere with the agreements between Allergan and the Tribe.
`
`B. Inter Partes Review Is Not a Federal Enforcement Action.
`Several Amici assert that the Tribe’s immunity does not apply in an IPR
`
`proceeding because the IPR is a federal enforcement action pursuant to a law of
`
`general applicability. Since tribes have no immunity from the federal government,
`
`the argument goes, then the Tribe’s immunity cannot prevent the IPR from going
`
`forward.
`
`The general rule is that unless barred by specific exceptions, while the federal
`
`government has the authority to enforce a law of general applicability against a
`
`tribe, private citizens do not have the authority to enforce such laws absent
`
`abrogation of immunity. Florida Paraplegic Assoc. v. Miccosukee Tribe of Indians
`
`8
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`

`

`Proceeding No.: IPR2016-01128
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`of Florida, 166 F.3d 1126 (11th Cir. 1999), illustrates the distinction, holding that,
`
`while the tribe was subject to the Americans with Disabilities Act as a law of
`
`general applicability, it was not subject to a private enforcement action of the ADA
`
`because tribal immunity had not been abrogated. Instead, only the federal
`
`government could enforce the law against a tribe. Id. at 1134-35.
`
`As applied in an IPR, the Amici insist this is a federal enforcement action, not a
`
`private action, and immunity cannot stop the IPR from going forward. The core
`
`problem with this argument is that an IPR is nothing like any of the federal
`
`enforcement actions that have been held to apply to tribes. Agencies such as the
`
`NLRB, OSHA, and the EEOC enforce federal laws based on either third-party
`
`complaints or their own investigations. Once the agency believes the law has been
`
`violated, the agency then moves against the violator, like a tribe, by filing a
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`complaint before its respective board. The case is then prosecuted by the federal
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`government attorney, who is responsible for all aspects of proving up the case,
`
`such as discovery, developing expert testimony, calling witnesses and presenting
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`arguments.
`
`For example, in NLRB v. Little River Band of Ottawa Indians Tribal Gov’t, 788
`
`F.3d 537 (6th Cir. 2015), the local Teamsters filed an unfair labor practices charge
`
`with the NLRB. The General Counsel of the Board then filed a complaint with the
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`Board alleging violations of the law. Id. at 541. The Court allowed the case to go
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`9
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`Proceeding No.: IPR2016-01128
`
`forward since the tribe had failed to establish that it was entitled to be exempted
`
`from the law and the tribe had no immunity from suit by the federal government.
`
`Id.at 556. Importantly, the complaining party was not engaged in prosecuting the
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`case. Id. at 539. This was an entirely agency-based prosecution. See also e.g.,
`
`Menominee Tribal Enters. v. Solis, 601 F.3d 669 (7th Cir. 2010) (DOL cited tribe
`
`for violations of OSHA); Consumer Financial Protective Bureau v. Great Plains
`
`Lending, LLC, 846 F.3d 1049 (9th Cir. 2017) (CFPB sought to compel compliance
`
`with its civil investigative demands that the agency issued to tribal entity).
`
`In an IPR, neither the Board nor the Director has a role to play in the direct
`
`enforcement of patent laws. No federal attorney or third-party “prosecutes” the
`
`case on behalf of the private party or the federal government. As the Board
`
`correctly explained in Covidien “we are not persuaded that an inter partes review
`
`is an action brought by the federal government against a state.” EX. 2095:
`
`Covidien LP v. Univ. of Fla. Research Found. Inc., Case IPR2016-01274, Paper 21
`
`at 16 (Jan. 25, 2017) (“Covidien”). Rather, the Board’s role is to “assess the merits
`
`of the arguments presented by the parties in an impartial manner.” Id. at 16-17. The
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`IPR regulations bear this out. First, the IPR process may only be initiated via a
`
`private-party petitioner filing a petition for review with the Board. 35 U.S.C. §
`
`311. Unlike other agencies, the PTAB does not have an enforcement division to
`
`10
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`Proceeding No.: IPR2016-01128
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`unilaterally identify and challenge the patentability of specific patents. See 35
`
`U.S.C. § 6.
`
`If the petitioner was not in the case to present the challenge, there is no case for
`
`the Board to decide. The statutory language provides that a private party must
`
`initiate the action because the Director must assess whether “there is a reasonable
`
`likelihood that the petitioner would prevail with respect to at least 1 of the claims
`
`challenged in the petition.” 35 U.S.C. § 314(a). The petitioner defines the relief
`
`sought from the Board. 37 C.F.R. § 42.22. The petitioner must also establish
`
`“grounds for standing” by “certify[ing] that the patent for which review is sought is
`
`available for inter partes review and that the petitioner is not barred or estopped
`
`from requesting an inter partes review challenging the patent claims on the
`
`grounds identified in the petition.” 37 CFR § 42.104(a). By placing the burden on
`
`the petitioner to support the case, the petitioner, not the federal government, is
`
`acting as an adversary and statutory enforcer.
`
`Second, the federal government is not separately represented in the proceeding.
`
`The PTAB, a neutral arbiter, is entirely reliant on the petitioner to conduct most
`
`aspects of the trial, including engaging in discovery, taking depositions, or hiring
`
`expert witnesses to present material to the Board. See 37 C.F.R. §§ 42.51-42.53.
`
`The PTAB is not authorized to engage in any evidentiary development. In contrast,
`
`an agency like the NLRB is. See 29 U.S.C. § 160.
`
`11
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`Proceeding No.: IPR2016-01128
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`In fact, the IPR process was created to make sure the third-party challenger has
`
`a role, unlike previous reexaminations system. As explained in the House Report
`
`112-98(I)(2011), “in the original reexamination system, the third-party challenger
`
`had no role once the proceeding was initiated, while the patent holder had
`
`significant input throughout the entire process.” The IPR process was intended to
`
`make the proceeding adversarial. As explained in Covidien, “inter partes reviews
`
`are adversarial contested cases between a patent owner and a petitioner in which
`
`the petitioner bears the burden of proof and initiates the proceeding by filing a
`
`petition requesting the institution of a trial.” Covidien at 19-20. This conclusion is
`
`supported by the IPR regulations, 37 CFR § 42.2, that define “trial” as “a contested
`
`case instituted by the Board based upon a petition” and “party” as only the
`
`“petitioner and patent owner.”
`
`The Amici rely on the fact that the Board may issue a decision even if there is a
`
`settlement and no one participating in the proceeding. 35 U.S.C. § 317(a). But this
`
`authority is strictly limited to circumstances where the parties jointly request
`
`termination after “the Office has decided the merits of the proceeding.” Id. The
`
`Board has no unilateral authority to initiate a proceeding without a petitioner and it
`
`cannot reach a decision on the merits in the absence of the parties. There simply is
`
`no circumstance where the Director, the Board or some other official in the PTO
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`12
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`Proceeding No.: IPR2016-01128
`
`may pursue an adversarial role and present evidence necessary to decide the case
`
`without the patent owner or petitioner appearing in opposition.
`
`C. This Is Not an In Rem Proceeding.
`Amici argue that sovereign immunity should not apply to this proceeding
`
`because inter partes review is an in rem proceeding against the patent. The Board
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`has already determined twice that inter partes review is not an in rem proceeding.
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`Covidien at 13-15; EX. 2097: Reactive Surfaces Ltd, LLP v. Toyota Motor Corp.,
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`Case IPR 2016-01914, Paper 36 at 7-8 (July 13, 2017) (“Reactive”). There is no
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`need to revisit that argument since the Board was correct.
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`In Covidien, the Board found that “an inter partes review is not a proceeding
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`“against the world,” but directed to evaluating the validity of the patent owner’s
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`patent.” Covidien at 15 (emphasis in original). The Board also pointed out that “the
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`term inter partes means between the parties, which in itself captures the notion that
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`the proceeding is directed to both parties over whom the Board exercises
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`jurisdiction.” Id. at 13. Further, the Board found that “an inter partes review is an
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`action against the patent owner, who as a party, may suffer the consequences of an
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`adverse judgment for failing to respond to the petition. See 37 C.F.R. §
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`42.73(d)(3).” Id. at 19.
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`According to the Restatement (Second) of Judgments, § 6, there are four true in
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`rem proceedings: “An admiralty libel in rem; a proceeding in which a thing is
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`Proceeding No.: IPR2016-01128
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`forfeited to the government; a title clearance or registration proceeding; and a
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`proceeding to settle an estate, such as probate or a final accounting and discharge
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`of a trustee or administrator.” As explained by the Restatement, “All four types of
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`proceeding have a common aim. … [T]o reach a conclusive determination of all
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`claims to the thing so that a person [can] hold it free and clear of all claims.
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`Clearing title to the thing eliminates risk … and thus enhances its value for
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`exchange and investment purposes.” An IPR is nothing like a true in rem
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`proceeding since it is not clearing title to property against all claims but rather
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`determines the validity of a patent issued to the patent owner. 35 U.S.C. § 311(b).
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`Congress knows how to state whether a proceeding is in rem, see, e.g., 15 U.S.C. §
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`1125(d)(2)(A) (“an in rem civil action against a domain name”); 26 U.S.C. §
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`7323(a) (tax forfeiture action “shall be in the nature of a proceeding in rem”). The
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`AIA does not in any way suggest the IPR is an in rem proceeding.
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`Even assuming arguendo that this Board decides it should overrule Covidien or
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`Reactive, the Tribe remains immune to in rem proceedings unless Congress has
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`specified otherwise. In Cayuga Indian Nation of New York v. Seneca Cty., N.Y.,
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`890 F. Supp. 2d 240 (W.D.N.Y. 2010), aff’d 761 F.3d 218, 221 (2d Cir. 2014), the
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`federal court considered the extent to which a tribe would be subject to a
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`foreclosure action to enforce property taxes. Relying on the long line of Supreme
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`Court cases deferring to tribal immunity, the Second Circuit stated, “[W]e decline
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`Proceeding No.: IPR2016-01128
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`to draw the novel distinctions—such as a distinction between in rem and in
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`personam proceedings—that Seneca County has urged us to adopt.” Cayuga
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`Indian Nation, 761 F.3d at 221. This principle dates back more than a century. See
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`The Siren, 74 U.S. 152, 154 (1868) (“As justly observed by the learned judge who
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`tried this case, there is no distinction between suits against the government
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`directly, and suits against its property.”). State court cases to the contrary (and
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`relied upon by Amici) rely on a misreading of County of Yakima v. Confederated
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`Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251 (1992). See Cayuga,
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`890 F. Supp. 2d at 247-248 (“The Court disagrees that [Yakima] stands for the
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`proposition that tribal sovereign immunity from suit is inapplicable to in rem
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`proceedings.”). Nor do the state court cases take into account the Supreme Court’s
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`most recent immunity ruling in Bay Mills. See Hamaatsa, Inc. v. Pueblo of San
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`Felipe, 388 P.3d 977, 986 (N.M. 2016) (“Bay Mills… unequivocally bars us from
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`carving out a similar [in rem] exception.”).
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`II. CONCLUSION
`The amicus briefs further reveal that there is no valid legal basis for the Board
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`to deny the Tribe’s motion to dismiss. The Tribe is undisputedly sovereign and is
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`the Patent Owner. Therefore, this proceeding must be dismissed.
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`Dated: December 15, 2017
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`Proceeding No.: IPR2016-01128
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`Respectfully submitted,
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`
` /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 75202
`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
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`Attorneys for Saint Regis Mohawk Tribe
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`Proceeding No.: IPR2016-01128
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`III. LIST OF EXHIBITS
`
`EX. 2001
`
`EX. 2003
`
`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
`Mu