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`Conference Call - September 11, 2017
`
`Page 1
`
` UNITED STATES PATENT AND TRADEMARK OFFICE
`
` __________
`
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
` __________
`
`MYLAN PHARMACEUTICALS INC., TEVA PHARMACEUTICALS
`
` USA, INC., and AKORN INC.
`
` Petitioners,
`
` v.
`
` ALLERGAN, INC.
`
` Patent Owner.
`
` __________
`
` Case IPR2016-01127
` Patent No. 8,685,930 B2
`
` Case IPR2016-01128
` Patent No. 8,629,111 B2
`
` Case IPR2016-01129
` Patent No. 8,642,556 B2
`
` Case No. IPR2016-01130
` Patent No. 8,633,162
`
` Case No. IPR2016-01131
` Patent No. 8,648,048
`
` Case No. IPR2016-01132
` Patent No. 9,248,191
` __________
`
` TELEPHONE CONFERENCE CALL
` September 11, 2017
` 1:00 p.m.
`
`GregoryEdwards, LLC | Worldwide Court Reporting
`GregoryEdwards.com | 866-4Team GE
`
`MYLAN - EXHIBIT 1137
`Mylan Pharmaceuticals Inc., et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131 & -01132
`
`
`
`Conference Call - September 11, 2017
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`Page 2
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` A P P E A R A N C E S
`
` (all appearances telephonically)
`
`PRESIDING:
`
` SHERIDAN K. SNEDDEN, Administrative
`
` Patent Judge
`
` TINA E. HULSE, Administrative
`
` Patent Judge
`
` CHRISTOPHER GILBERT PAULRAJ,
`
` Administrative Patent Judge
`
`ON BEHALF OF PETITIONER MYLAN PHARMACEUTICALS,
`
`INC.:
`
` RICHARD TORCZON, ESQUIRE
`
` Wilson Sonsini Goodrich & Rosati
`
` 1700 K Street, N.W., 5th Floor
`
` Washington, D.C. 20006
`
` 202-973-8811 (P) 202-973-8899 (F)
`
` rtorczon@wsgr.com
`
` - and -
`
`Reported by: Cappy Hallock, RPR, CRR, CLR
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`Conference Call - September 11, 2017
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`Page 3
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`APPEARANCES: (Continued)
`
` STEVEN W. PARMELEE, ESQUIRE
`
` JAD A. MILLS, ESQUIRE
`
` Wilson Sonsini Goodrich & Rosati
`
` 701 Fifth Avenue, Suite 5100
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` Seattle, Washington 98104-7036
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` 206-883-2542 (P) 206-883-2699 (F)
`
` sparmelee@wsgr.com jmills@wsgr.com
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` - and -
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` WENDY L. DEVINE, ESQUIRE
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` Wilson Sonsini Goodrich & Rosati
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` One Market Street
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` Spear Tower Floor 33
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` San Francisco, California 94105-1126
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` 858-350-2321 (P) 415-947-2099 (F)
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` wdevine@wsgr.com
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`
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`Conference Call - September 11, 2017
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`Page 4
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`APPEARANCES: (Continued)
`
`ON BEHALF OF PETITIONER TEVA PHARMACEUTICALS USA,
`
`INC.:
`
` GARY SPEIER, ESQUIRE
`
` RIVKA JUNGRIES, ESQUIRE
`
` Carlson Caspers Vandenburgh Lindquist &
`
` Schuman, P.A.
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` 225 South Sixth Street, Suite 4200
`
` Minneapolis, Minnesota 55402
`
` 612-436-9600 (P) 612-436-9605 (F)
`
` gspeier@carlsoncaspers.com
`
`ON BEHALF OF PETITIONER AKORN INC.:
`
` MICHAEL R. DZWONCZYK, ESQUIRE
`
` Sughrue Mion, PLLC
`
` 2100 Pennsylvania Avenue, NW
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` Washington, D.C. 20037
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` 202-293-7060 (P) 202-293-7860 (F)
`
` mdzwonczyk@sughrue.com
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`APPEARANCES: (Continued)
`
`ON BEHALF OF ALLERGAN, INC.:
`
` DOROTHY P. WHELAN, ESQUIRE
`
` MICHAEL KANE, ESQUIRE
`
` Fish & Richardson P.C.
`
` 3200 RBC Plaza
`
` 60 South Sixth Street
`
` Minneapolis, Minnesota 55402
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` 612-335-5070 (P) 612-288-9696 (F)
`
` PTABInbound@fr.com
`
`ON BEHALF OF THE ST. REGIS MOHAWK TRIBE:
`
` MICHAEL W. SHORE, ESQUIRE
`
` ALFONSO G. CHAN, ESQUIRE
`
` CHRISTOPHER EVANS, ESQUIRE
`
` JOSEPH F. DePUMPO, ESQUIRE
`
` Shore Chan DePumpo LLP
`
` 901 Main Street, Suite 3300
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` Dallas, Texas 75202
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` 214-593-9110 (P) 214-593-9111 (F)
`
` mshore@shorechan.com, achan@shorechan.com
`
` jdepumpo@shorechan.com, cevans@shorechan.com
`
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`Conference Call - September 11, 2017
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` P R O C E E D I N G S
`
` - - - - - -
`
` THE COURT: Who is on the call
`
`representing Petitioner?
`
` MR. TORCZON: Thank you, Your Honor,
`
`this is Richard Torczon. I'm appearing on behalf
`
`of Mylan, and with me on the line is Steve
`
`Parmelee and Jad Mills and Wendy Devine.
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` THE COURT: And Mr. Torczon?
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` MR. TORCZON: Yes, T-o-r-c-z-o-n.
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` THE COURT: And you will be speaking
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`today on behalf of Petitioner, Mylan.
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` MR. TORCZON: Yes, Your Honor.
`
` THE COURT: And who do we have on the
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`call for Allergan?
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` MS. WHELAN: Your Honor, this is
`
`Dorothy Whelan. I am joined by Michael Kane. We
`
`represent Allergan.
`
` THE COURT: Who will be speaking for
`
`Allergan?
`
` MS. WHELAN: No one will be speaking
`
`for Allergan, but Michael Shore will be speaking
`
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`Conference Call - September 11, 2017
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`on behalf of the Mohawk Tribe because the
`
`sovereign immunity issue is the Tribe issue.
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` THE COURT: And who is on the line
`
`representing the Tribe?
`
` MR. SHORE: Michael Shore, S-h-o-r-e,
`
`and listening in the room with me are Chris Evans
`
`and Joseph DePumpo.
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` THE COURT: And I understand that we
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`have pro hac vice motions, and I want to confirm
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`that no one objects to Mr. Shore speaking today on
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`the today's conference call?
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` MR. TORCZON: Your Honor, this is
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`Richard Torczon on behalf of Mylan. We have
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`already indicated to the Tribe that we do not
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`oppose their pro hac vice entry.
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` THE COURT: Okay, thank you. I hear
`
`we have a court reporter.
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` MR. CHAN: This is Alfonso Chan. I'm
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`also on the call on behalf of the Tribe.
`
` THE COURT: Thank you.
`
` Is there anybody else on the call?
`
` MR. SPEIER: Your Honor, this is Gary
`
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`Conference Call - September 11, 2017
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`Speier on behalf of Teva.
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` MR. DZWONCZYK: Your Honor, this is
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`Mike Dzwonczyk on behalf of Akorn.
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` THE COURT: And anyone else?
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` MS. YOUNGBRIGHT: Your Honor, this is
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`Rivka Jungries on behalf of Teva.
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` THE COURT: I will keep asking until I
`
`get silence.
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` Anyone else?
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` MR. TORCZON: Your Honor, this is
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`Richard Torczon. If counsel are all done, you
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`should be aware there are two court reporters on
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`the call. Each side has requested to have a court
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`reporter present.
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` THE COURT: Thank you for that
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`information. And if you could, both parties
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`should file their transcript following this call.
`
` Okay, I think with that we will begin.
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` Mr. Shore, would you like to begin?
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` MR. SHORE: Yes, Your Honor. I will
`
`pick this phone up off speaker so this part of the
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`call will be easier for the court reporters to
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`hear.
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` Thank you for taking this call today,
`
`Your Honor. For the record, my name is Michael W.
`
`Shore and I represent the St. Regis Mohawk Tribe.
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`I do not represent Allergan, and I do not speak
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`for Allergan on this call. I only speak on behalf
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`of the St. Regis Tribe.
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` Patent Owner, St. Regis Mohawk Tribe,
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`which I am going to refer to as Tribe for the
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`remainder of my discussion today for the court
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`reporters, hereby makes a special appearance
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`before the Board to protect its sovereignty. No
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`immunity is waived by the Tribe's counsel
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`participating in this call or in any briefing that
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`might follow regarding the Tribe's assertion of
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`its sovereign immunity.
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` First, the Tribe requests that the
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`Board immediately enter an order staying all
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`proceedings and all IPRs before the Board that
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`might in any way adversely affect the Tribe's
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`rights in U.S. Patent Numbers 8,685,930,
`
`8,629,111, 8,642,556, 8,633,162, 8,648,048,
`
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`Conference Call - September 11, 2017
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`Page 10
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`9,248,191. And for the purposes of the court
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`reporters for the remainder of my discussion today
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`the '930 patent, the '111 patent, the '556 patent,
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`the '162 patent, the '048 patent and the '191
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`patent will be collectively referred to as the --
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`patents-at-issue.
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` The stay requested should remain in
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`place pending the resolution of the Tribe's
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`sovereign immunity challenge to the Board's
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`jurisdiction to proceed with the IPRs. The Tribe
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`is a federally recognized sovereign American
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`Indian Tribe. It has acquired all the patents at
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`issue. This is established by the Assignment,
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`which is Exhibit 2086 in the court's record, and
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`the updated mandatory notice which was Paper
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`Number 36 in IPR2016-01127. The Tribe, as a
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`sovereign government, is not amenable to suit
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`unless it expressly consents or Congress abrogates
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`its immunity. Neither of these exceptions apply
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`here, as will be more fully briefed in the Tribe's
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`forthcoming Motion to Dismiss.
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` The stay is required, Your Honor, not
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`discretionary, because sovereign immunity is by
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`nature jurisdictional, so it must be addressed
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`before the Board may proceed to the merits.
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`Sovereign immunity goes to the issue of the
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`court's power to hear the case, and therefore it
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`must be decided as an antecedent issue to the
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`merits. Absent jurisdiction, the Board cannot
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`proceed to the merits. It would frankly be
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`unprecedented for the Board to deny the Tribe the
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`right to seek a dismissal before conducting the
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`hearing on the merits.
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` Every other instance in which a
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`sovereign has applied to the Patent Trial and
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`Appeal Board to seek a dismissal prior to a
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`hearing on the merits has been granted, and we can
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`give you multiple examples of that, and I believe
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`some of them are already in the record as Exhibits
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`2094, or will be in the record as Exhibits 2094,
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`2095 and 2096 when filed.
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` The Tribe's sovereign immunity is not
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`merely a liability defense, it's an immunity from
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`suit that would effectively be lost if IPRs are
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`permitted to go trial. To respect the Tribe's
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`sovereign immunity as required by binding Supreme
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`Court precedent, the court must stay this
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`proceeding pending a final determination of the
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`Tribe's assertion of its immunity. Should the
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`Board disregard binding precedent and attempt to
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`force the Tribe to participate in this process
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`before ruling on the applicability of its
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`immunity, the Tribe has a right to an immediate
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`appellate review.
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` The Tribe does not, and will not,
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`waive its sovereign immunity to the IPRs
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`proceeding against the patents-in-suit.
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`Therefore, if the Board allows the September 15,
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`2017 proceeding to proceed, the Tribe's immunity
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`would be effectively abrogated in violation of
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`federal law. The better course is to stay the
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`current proceedings, preserve the status quo, and
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`continue the hearing until after the Board has had
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`an opportunity to fully consider the Tribe's of
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`sovereign immunity, and if the Board acts
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`adversely, await a decision on the application of
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`
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`Conference Call - September 11, 2017
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`Page 13
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`the Tribe's immunity at the Federal Circuit, that
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`the Tribe would pursue its right to an immediate
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`appeal under the collateral order doctrine.
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` I would also note that the one-year
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`statutory deadline to complete the IPRs, which
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`expires on December 8, 2017, can be extended under
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`37 C.F.R. Section 42.100(c) for either good cause
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`or joinder of new parties. The need to allow the
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`Tribe to assert its sovereign immunity clearly
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`qualifies as good cause, and the addition of the
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`Tribe as a newly joined party and the late
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`addition of Teva and Akorn would also support the
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`extension of the deadlines.
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` The Tribe requests 15 days to prepare
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`and file its Motion to Dismiss the IPRs, and
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`understanding that the Petitioners do not likely
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`have a great deal of experience in briefing Indian
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`sovereign immunity and may need time to line up
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`additional counsel with experience in that area,
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`the Tribe is willing to voluntarily provide the
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`Petitioners 60 days from the day we file our
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`motion to file a response, or more time if they
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`request it, and the Tribe would then ask for 15
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`days after their filing to file a reply brief.
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` So unless the Board has any other
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`questions for me, I believe I have stated the
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`Tribe's position. I understand this call is not
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`normally the place to argue case law, but I have
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`at my disposal citations to cases that back every
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`factual and legal statement I have made, so if the
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`Board would like a reference to anything on this
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`call I can provide it.
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` The St. Regis Mohawk Tribe would like
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`to thank you for taking our call today, and I look
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`forward to working with the Board to resolving all
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`of these issues before us.
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` THE COURT: Thank you, Mr. Shore. I
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`think we understand the nature of your request.
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` I will go ahead and allow Mr. Torczon
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`to respond.
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` MR. TORCZON: Thank you, Your Honor.
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`This is Richard Torczon from Mylan.
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` As an initial matter I would like to
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`address our objections to the call. The Board in
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`setting the call on Friday said we could do that
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`today. I would also like to discuss the moving of
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`the hearing date, and then finally suggest that
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`there is little reason to believe that there would
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`be success on the merits as a further assurance for
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`not moving the date.
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` The objections to the call, there was
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`no meet and confer. This is a concern for several
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`reasons. In this case, particularly at this
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`juncture, we are seeing a lot of push on both the
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`Petitioners and on the Board to act hastily in
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`this particular case because there was no meet and
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`confer, and Mylan at least was unable to determine
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`a timely availability for the call. One of our
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`key attorneys is not available today.
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` This is not the first time Allergan
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`has failed to do a meet and confer in this
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`proceeding. At least once before a surreply was
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`authorized under similar circumstances, and we
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`just would like to note our objection to these
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`procedural irregularities.
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` Let me clarify, there was a meet and
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`confer this morning, but I mean a meet and confer
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`before the call was set.
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` The second point of objection is we
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`were given less than one business day to prepare
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`for this. The Tribe has known about this since
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`April, they have been telling the media that, and
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`so there is really no basis for hurry in this
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`case. They have had plenty of time to consider
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`what they were doing. They waited until the last
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`possible moment. The only construction that can
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`go with that is intentional prejudice to the
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`Petitioner, and therefore we ask that you not
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`consider their belatedness a good reason for haste
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`on Mylan's part or on the Board's part.
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` We also understand that this call is
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`just about whether you are going to authorize a
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`motion to delay the hearing and authorize a Motion
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`to Dismiss. Again, we have had so little time to
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`prepare to address the merits we are really not
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`prepared at this juncture to address the substance
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`of all of those things.
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` Having gone through the objections, I
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`would like to address the hearing date. As the
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`Board knows, it's under a one-year clock to decide
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`this. That means that the decision is going to be
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`due in early December. While opposing counsel has
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`noted that there are bases for extending, this
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`case is not one of those cases that would justify
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`such an extension. The briefing has all been
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`timely. The briefing has all been completed. The
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`only thing that awaits is the hearing and the
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`decision on the merits. Once again, Allergan's
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`decision to delay this until the last possible
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`moment is not good cause for anything.
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` Secondly, the Board is supposed to
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`take into account in its proceedings the efficient
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`administration of the office and the ability of
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`the office to timely complete its proceedings,
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`both of which clearly apply in this circumstance.
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`The same provision of the statute, 316(b), also
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`requires the Board to take into account the
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`economy and the integrity of the patent system,
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`both of which are strongly implicated in this
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`case. The motion should not be authorized, the
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`Motion to Dismiss, but if it is it should proceed
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`in parallel, not to the exclusion of consideration
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`of the merits.
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` We have been told that there is no
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`precedent for delay. Quite to the contrary, in
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`the closest authority to this case, there is
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`precedent for briefing after -- when the immunity
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`issue is raised at the very last moment. That's
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`the Neochord versus Maryland decision,
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`IPR2016-00208, Paper 28.
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` We have been told in this proceeding,
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`or in this call, that the -- that if the Board
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`doesn't stay there is an immediate appeal. We
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`know that's not true. The first time we heard
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`about this was about an hour ago from opposing
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`counsel during the meet and confer. They cited
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`the collateral order doctrine. Just cursory
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`research into that shows that that doctrine, which
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`is actually a statute 28 U.S.C. 1291, only applies
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`to district court proceedings and it is applied
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`very, very stringently even in those proceedings.
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`There is nothing that they have cited to suggest
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`that it applies in an administrative context.
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`There is nothing to suggest it overrules the
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`finality doctrine that applies under the APA. And
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`in any case we know from IPR-specific case law
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`that there is no interlocutory appeal, so that is
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`simply a misplaced assumption on opposing
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`counsel's part.
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` There has already been delay in this
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`case. We have already set the hearing back and
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`that's going to further prejudice the Board's
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`ability to get a decision out in a timely fashion.
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`We would expect that any motion that gets
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`authorized will require substantial briefing and
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`fact production from both sides. Due to
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`Allergan's last minute raising of this issue, we
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`would expect to have time commensurate to the
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`month-long preparation they have had to address
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`this issue to fully explore the facts and legal
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`issues involved.
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` Any opposition that would be due from
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`us should await Allergan's or rather the Tribe's
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`action in the district court. While the Tribe is
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`insisting that the Board act immediately,
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`affecting its immunity in this case, they have
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`told -- they have told the district court in a
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`letter on Friday that they would make an
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`appearance in due course. This is clearly an
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`effort by them to play the court and the Board's
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`jurisdiction off each other because they know that
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`the minute they make an appearance in the district
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`court there will be yet another waiver argument.
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`Mylan shouldn't have to file any opposition until
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`they have acted in the district court. Anything
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`else would be allowing them to manipulate both the
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`Board and the court's jurisdiction.
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` Any delay in considering the merits in
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`this case prejudices Mylan. Mylan has already
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`expended substantial resources in this case
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`including since April when a lot of the discovery
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`and briefing has occurred. It's expended
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`substantial resources before Friday when this
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`issue was first raised preparing for the hearing.
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`It also has business interests that have involved
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`substantial investment toward launching a product
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`that now would be delayed.
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` The Tribe's media-reported royalty for
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`delay works out to about $41,000 a day. That's
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`just the Tribe's fraction of the royalties
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`involved here, so they have a substantial interest
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`in dragging this out as long as possible. We
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`really need to get to the merits. The public
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`deserves that. The integrity of the patent system
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`deserves that.
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` Allergan's delay in making the request
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`waives any equity it has on this. Allergan has
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`controlled the timing. It has timed things to
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`maximize the prejudice to the Board and Mylan.
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`There is no prejudice to Allergan. Allergan can
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`appear for the oral argument, or not, at its
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`discretion. If it does appear it won't waive it's
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`right anymore than it already has, so that
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`argument is specious. If Allergan remains, the
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`Tribe can be dismissed in the proceeding and
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`continue without it.
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` There is actually precedent from the
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`Board. Again, the most on point precedent is the
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`case of Reactive Surfaces versus Toyota in which
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`the state entity was dismissed and the proceeding
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`continued with the other interested party.
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` On the likelihood of the motion to
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`succeed on the merit, I would like to point out they
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`haven't cited any authority directly on point to
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`this situation. Counsel has just told us that
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`there are a lot of cases out there, but we know
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`for a fact that there is not a single IPR tribal
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`immunity case. They would like us to draw
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`analogies to the 11th Amendment. The Board is
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`probably very familiar with the 11th Amendment and
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`knows that it does not apply to tribes. If there
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`is any doubt, there are multiple supreme court
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`cases that say that. Instead, tribal immunity is
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`a common law privilege. It doesn't control any
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`congressionally mandated scheme. There is ample
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`Supreme Court and appeals court authority for
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`that. So they are essentially asking you to use
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`federal common law to overcome a statutory scheme
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`that Congress has created.
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` There are also plenty -- there are a
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`lot of reasons for concern that this transaction
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`is a sham transaction. In this case the Tribe did
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`not purchase the intellectual property, instead
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`they were paid to take it, plus promised a $15
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`million a year royalty stream on top of the 13 and
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`a half million dollars they were paid to take it.
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` There are extensive cases in a lending
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`fraud context where federal courts are permitting
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`extensive briefing and discovery into these kinds
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`of sham transactions, and at least in one case
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`there is a federal prosecution that is being
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`pursued on racketeering charges in these sort of
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`circumstances. So basically this transaction is a
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`sham. There is no reason to believe that it will
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`lead to any success.
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` But in any case, there is an
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`unequivocal waiver here. Mylan expects to have a
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`lot of arguments on the merits, but you should have
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`confidence this motion can't succeed because they
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`have clearly sought out this forum. Mylan did not
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`drag them into this forum. Akorn did not drag
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`them into this forum. Teva did not drag them into
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`the forum. And even the Board did not drag them
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`into this forum. Rather, by their own admissions
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`to the press, the press releases, the Tribe has
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`said that they have sought this out as an
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`opportunity that they are marketing to patentees,
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`that this is basically a protection scheme that
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`they have put forth. They have been looking at
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`this with the advice of counsel. They are
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`marketing it to people. They are specifically
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`targeting the Patent Trial and Appeal Board. They
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`are going to patentees who they think have weak
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`patents and are at risk of cancellation and they
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`are offering this protective service. They are
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`explicitly selling immunity.
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` So this is not -- this is totally not
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`analogous to any of the 11th Amendment cases, even
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`if those sorts of cases applied, because in all of
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`those cases the state entity was the preexisting
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`owner of the intellectual property. In all of
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`those cases it was the state entity that had been
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`dragged into the proceeding against its will. The
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`Tribe here has not been dragged into this
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`proceeding against its will. It has deliberately
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`by its own admission targeted these proceedings
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`for exactly this kind of revenue-generating
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`opportunity, so there can be no question that
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`there is waiver under these circumstances. If
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`waiver had any meaning in any context, the Tribe
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`has waived in this circumstance.
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` I will also point out there is
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`statutory waiver under 35 U.S.C. 261. When you
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`accept a patent you accept it with strings
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`attached. Congress did not create unlimited
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`property. Under 261, which is the only thing that
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`addresses any kind of property rights under the
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`patent code, Congress actually expressly reserves
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`that any ownership is taken subject to the
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`provisions of the patent code. One of those
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`provisions is amenability to IPRs, so the Tribe
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`went into this with eyes open. They are stuck
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`with it. They have waived it statutorily. They
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`have waived it equitably.
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` Finally, I would like to point out
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`that the director of the PTO has policy guidance
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`and management supervision duties under 35 U.S.C.
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`3(a)(2)(A). Sovereignty is clearly a policy issue.
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`Destroying IPRs with sham transactions is a policy
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`matter. The head of Allergan has said that this
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`is going to open the floodgates. The Tribe has
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`said that they already have an unidentified
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`non-pharma, tech-patent owner who they are extending
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`this protection service to. So this is just the
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`tip of the iceberg.
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` The effect of this would be to, if
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`granted, if the motion were granted, would be to
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`deny the Director of the power to institute. So
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`this is an attack on Director power. We
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`understand that the Board has taken a position
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`that you cannot request an expanded panel.
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`However, SOP 1 actually in Section III.C says that
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`a party can suggest it. And I strongly suggest,
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`Mylan strongly suggests that if the Board decides
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`to authorize this motion, that it do so in a
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`manner that allows the Director to play the
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`Director policy role and speak on how the
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`Director institution powers would be used in
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`this context.
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` MR. SHORE: Your Honor, this is
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`Michael Shore, if I may quickly respond. I
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`apologize, I'm sure that my opponent was speaking
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`with relatively little preparation so I will
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`forgive him for his lack of understanding of
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`tribal immunity.
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` THE COURT: Mr. Torczon, are you
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`finished?
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` MR. TORCZON: I am, Your Honor. I am
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`willing to hear what Mr. Shore says. I would like
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`an opportunity to respond, though.
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` MR. SHORE: First, tribal sovereign
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`immunity is broader, not narrower, than the 11th
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`Amendment immunity. And it is clearly established
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`in the case law that a sovereign entity does not
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`waive its sovereign immunity through the acts
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`succedent to a corporation as either not entitled
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`to sovereign immunity or that it has waived
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`sovereign immunity. There is a whole slew of
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`cases on that, that sovereign immunity attaches
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`under, acquires the assets. It doesn't matter
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`where the asset is or how the asset was positioned
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`before the acquisition. I think the Seminole case
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`on that that came out of Puerto Rico out of the
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`First Circuit. That case has been followed many,
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`many times, but that is not an issue.
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` Second, some of the statements he made
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`were just wrong. This transaction has not been
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`contemplated since April. Allergan and the
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`St. Regus Mohawk Tribe did not ever talk to one
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`another until August, and the deal was consummated
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`on Friday, and within two hours of the deal being
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`consummated paperwork was filed. So this has not
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`been something that anyone has been sitting on
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`their hands about at all.
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` There is no waiver by a