UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`REACTIVE SURFACES LTD. LLP,
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`Petitioner,
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`v.
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`TOYOTA MOTOR CORPORATION,
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`Patent Owner.
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`Case IPR2016-01914
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`Patent No. 8,394,618 B2
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`PATENT OWNERS’ JOINT MOTION TO DISMISS
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES .................................................................................... ii
`
`INTRODUCTION ..................................................................................................... 1
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`I.
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`II. ARGUMENT ................................................................................................... 2
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`
`BACKGROUND ............................................................................................. 1
`
`A.
`
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`B.
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`C.
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`D.
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`Eleventh-Amendment Sovereign Immunity Extends to
`Inter Partes Reviews. ............................................................................. 8
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`The University Is Entitled to Assert Sovereign Immunity. ................... 8
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`The Merits of This IPR Petition Cannot Be Adjudicated
`in the University’s Absence. ............................................................... 11
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`The University’s Sovereign Immunity Cannot Be Ignored
`Because of Petitioner’s Speculative Policy Concerns. ........................ 18
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`
`
`i
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`

`

`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`TABLE OF AUTHORITIES
`
`Cases
`
`A123 Sys. v. Hydro-Quebec,
`626 F.3d 1213 (Fed. Cir. 2010) ..................................................................... 16
`
`
`Abbott Labs. v. Cordis Corp.,
`710 F.3d 1318 (Fed. Cir. 2013) ....................................................................... 3
`
`
`Adams v. Bell,
`711 F.2d 161 (D.C. Cir. 1983) (en banc) ....................................................... 14
`
`
`Biomedical Patent Mgmt. Corp. v. California,
`505 F.3d 1328 (Fed. Cir. 2007) ..................................................................... 20
`
`
`Covidien LP v. Univ. of Fla. Research Found. Inc.,
`IPR2016-01274, -01275, -01276,
`Paper 21 (Jan. 25, 2017) ................................................. 1, 2, 4, 5, 8, 9, 11, 18
`
`
`Cyanotech Corp. v. United States Nutraceuticals, LLC,
`2013 U.S. Dist. LEXIS 16948 (D. Haw. Feb. 7, 2013) ................................. 16
`
`
`Dainippon Screen Mfg. Co. v. CFMT, Inc.,
`142 F.3d 1266 (Fed. Cir. 1998) ..................................................................... 17
`
`
`Delano Farms Co. v. Cal. Table Grape Comm’n,
`623 F. Supp. 2d 1144 (E.D. Cal. 2009) ......................................................... 16
`
`
`Enter. Mgmt. Consultants, Inc. v. United States,
`883 F.2d 890 (10th Cir. 1989) ........................................................... 13, 15, 17
`
`
`Ethicon, Inc. v. United States Surgical Corp.,
`135 F.3d 1456 (Fed. Cir. 1998) ..................................................................... 19
`
`
`Faibisch v. Univ. of Minn.,
`304 F.3d 797 (8th Cir. 2002) ......................................................................... 11
`
`
`FCC v. Pottsville Broad. Co.,
`309 U.S. 134 (1940)......................................................................................... 8
`
`
`
`ii
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`
`
`Fluent v. Salamanca Indian Lease Auth.,
`928 F.2d 542 (2d Cir. 1991) .......................................................................... 14
`
`
`FMC v. S.C. State Ports Auth.,
`535 U.S. 743 (2002)................................................................. 2, 4, 6, 8, 11, 12
`
`
`Hoeffner v. Univ. of Minn.,
`948 F. Supp. 1380 (D. Minn. 1996) .................................................... 8, 10, 11
`
`
`Issaenko v. Univ. of Minn.,
`57 F. Supp. 3d 985 (D. Minn. 2014) ............................................................. 11
`
`
`Lapides v. Bd. of Regents,
`535 U.S. 613 (2002)....................................................................................... 19
`
`
`Philippines v. Pimentel,
`553 U.S. 851 (2008)...........................................................1, 12, 14, 14, 15, 17
`
`Raygor v. Regents of the Univ. of Minn.,
`534 U.S. 533 (2002)......................................................................................... 9
`
`
`Regents of the Univ. of Cal. v. Doe,
`519 U.S. 425 (1997)..................................................................................... 8, 9
`
`
`Richmond v. Bd. of Regents of Univ. of Minn.,
`957 F.2d 595 (8th Cir. 1992) ......................................................................... 11
`
`
`Shermoen v. United States,
`982 F.2d 1312 (9th Cir. 1992) ....................................................................... 15
`
`
`Shire Dev. LLC v. Lucerne Biosceinces, LLC,
`IPR2014-00739, Paper 26 (May 5, 2015) ....................................................... 7
`
`
`Shire Dev. LLC v. Lucerne Biosciences, LLC,
`IPR2014-00739, Paper 33 (Jun. 4, 2015) ........................................................ 5
`
`
`Star Tribune Co. v. Univ. of Minn. Bd. of Regents,
`683 N.W.2d 274 (Minn. 2004) ........................................................................ 9
`
`
`
`
`iii
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`Three Affiliated Tribes of Ft. Berthold Reservation v. Wold Eng’g, P. C.,
`476 U.S. 877 (1986)....................................................................................... 14
`
`
`Treleven v. Univ. of Minn.,
`73 F.3d 816 (8th Cir. 1996) ................................................................... 8, 9, 11
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`Vas-Cath, Inc. v. Curators of the Univ. of Mo.,
`473 F.3d 1376 (Fed. Cir. 2007) ........................................................... 2, 3, 6, 7
`
`
`Walstad v. Univ. of Minn. Hosps.,
`442 F.2d 634 (8th Cir. 1971) ......................................................................... 11
`
`
`White v. Univ. of Cal.,
`765 F.3d 1010 (9th Cir. 2014) ....................................................................... 14
`
`
`Wichita & Affiliated Tribes of Oklahoma v. Hodel,
`788 F.2d 765 (D.C. Cir. 1986) ................................................................. 13, 14
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`
`Constitutions, Statutes, and Regulations
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`35 U.S.C. § 24 ............................................................................................................ 5
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`35 U.S.C. § 132 .......................................................................................................... 3
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`35 U.S.C. § 133 .......................................................................................................... 3
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`35 U.S.C. § 312(a) (2006) .......................................................................................... 3
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`35 U.S.C. § 313 .......................................................................................................... 5
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`35 U.S.C. § 314(a) ............................................................................................. 3, 4, 6
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`35 U.S.C. § 315(e) ..................................................................................................... 7
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`35 U.S.C. § 316(a) ..................................................................................................... 4
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`35 U.S.C. § 318 .......................................................................................................... 4
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`37 C.F.R. § 41.2 ......................................................................................................... 3
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`iv
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`IPR2016-01914
`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`US. Patent No. 8,394,618 B2
`37 C.F.R. § 42.100 ..................................................................................................... 4
`37 CPR. § 42.100 ................................................................................................... ..4
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`37 C.F.R. § 42.106(a)(2) ............................................................................................ 5
`37 CPR. § 42.106(a)(2) .......................................................................................... ..5
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`37 C.F.R. § 42.107(a) ................................................................................................. 5
`37 CPR. § 42.107(a) ............................................................................................... ..5
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`37 C.F.R. § 42.12 ....................................................................................................... 6
`37 CPR. § 42.12 ..................................................................................................... ..6
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`37 C.F.R. § 42.12(a)(6)(b) ......................................................................................... 6
`37 CPR. § 42.12(a)(6)(b) ....................................................................................... ..6
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`37 C.F.R. § 42.20 ....................................................................................................... 6
`37 CPR. § 42.20 ..................................................................................................... ..6
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`37 C.F.R. § 42.2 ......................................................................................................... 6
`37 CPR. § 42.2 ....................................................................................................... ..6
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`37 C.F.R. § 42.220 ..................................................................................................... 5
`37 CPR. § 42.220 ................................................................................................... ..5
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`37 C.F.R. § 42.5 ......................................................................................................... 6
`37 CPR. § 42.5 ....................................................................................................... ..6
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`37 C.F.R. § 42.51(b)(1)(ii) ......................................................................................... 5
`37 CPR. § 42.51(b)(1)(ii) ....................................................................................... ..5
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`37 C.F.R. § 42.51(b)(2)(ii) ......................................................................................... 5
`37 CPR. § 42.51(b)(2)(ii) ....................................................................................... ..5
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`37 C.F.R. § 42.52(a) ................................................................................................... 5
`37 CPR. § 42.52(a) ................................................................................................. ..5
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`37 C.F.R. § 42.54(a) ................................................................................................... 5
`37 CPR. § 42.54(a) ................................................................................................. ..5
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`37 C.F.R. § 42.62 ....................................................................................................... 6
`37 CPR. § 42.62 ..................................................................................................... ..6
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`37 C.F.R. § 42.64 ....................................................................................................... 6
`37 CPR. § 42.64 ..................................................................................................... ..6
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`37 C.F.R. § 42.70 ....................................................................................................... 6
`37 CPR. § 42.70 ..................................................................................................... ..6
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`37 C.F.R. § 42.73 ....................................................................................................... 6
`37 CPR. § 42.73 ..................................................................................................... ..6
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`37 C.F.R. § 42.73(b)(4) .............................................................................................. 5
`37 CPR. § 42.73(b)(4) ............................................................................................ ..5
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`37 C.F.R. § 42.73(d)(3) .............................................................................................. 7
`37 CPR. § 42.73(d)(3) ............................................................................................ ..7
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`37 C.F.R. § 42.9(b) .................................................................................................. 16
`37 CPR. § 42.9(b) ................................................................................................ ..16
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`
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`v
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`Minnesota Constitution, Article XIII, Section 3 ...................................................... 10
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`Minn. Stat. § 137.0251 ............................................................................................. 10
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`Other
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`Federal Rule of Civil Procedure 19(b) ......................................................... 12, 13, 14
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`Federal Rule of Civil Procedure 55(b) ....................................................................... 5
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`H.R. Rep. No. 112–98 (2011) .................................................................................... 4
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`MPEP § 2636 (8th ed., Aug. 2012) ............................................................................ 3
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`vi
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`
`INTRODUCTION
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`Toyota Motor Corporation (“TMC”) and the Regents of the University of
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`Minnesota (the “University”), the joint owners of the subject patent, move to
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`dismiss this Petition for inter partes review (“IPR”). The Board recently held that
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`the Eleventh Amendment of the U.S. Constitution bars the adjudication of an IPR
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`petition filed against a non-consenting state or its instrumentality. Covidien LP v.
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`Univ. of Flo. Research Found. Inc., IPR2016-01274, -01275, -01276, Paper 21
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`(Jan. 25, 2017) (“Covidien”). This panel should follow that holding and find that
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`the University, an arm of the State of Minnesota entitled to share in its Eleventh-
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`Amendment privileges, is immune from this adjudicative proceeding. Further, the
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`panel should hold that the proceeding cannot go forward in the University’s
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`absence, because the Supreme Court has made it clear that to adjudicate an absent
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`sovereign’s rights without its consent would “itself [be] an infringement” on
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`sovereign immunity. Philippines v. Pimentel, 553 U.S. 851, 864 (2008).
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`I.
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`BACKGROUND
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`The application that led to the challenged patent, U.S. Patent No. 8,394,618
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`B2, was filed on June 21, 2010. (See Ex. 1002.) Through assignments recorded
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`with the Office on August 6, 2010, the named inventors transferred their respective
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`interests in the application to their employers. Inventors Buthe, Wang, and Wu,
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`assigned their interests to the University; inventor Ishii assigned her interest to
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`1
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`TMC; and inventors Jia and Zhang assigned their interests to Toyota Motor
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`Engineering & Manufacturing North America, Inc. (“TEMA”). (Exs. 2003, 2004,
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`2005.) Through an assignment recorded on April 22, 2013 (shortly after the
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`issuance of the patent), TEMA transferred its interest to TMC. (Ex. 2006.)
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` Reactive Surfaces Ltd. LLP (“Petitioner”) filed this Petition on September
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`30, 2016, naming TMC as the only patent owner of record. On October 21, 2016,
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`TMC filed Mandatory Notices notifying the Board of the University’s status as a
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`co-owner of the patent. (See Paper 4.)
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`II. ARGUMENT
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`A.
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`Eleventh-Amendment Sovereign Immunity Extends to Inter
`Partes Reviews.
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`The Eleventh Amendment expressly grants states immunity against being
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`sued by private parties in federal court. In FMC v. S.C. State Ports Auth., 535 U.S.
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`743, 760 (2002), the Supreme Court held that this sovereign immunity extends to
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`certain adjudications conducted by federal administrative agencies. Specifically,
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`the Court held that sovereign immunity protects non-consenting states from agency
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`adjudications that bear “strong similarities” to litigation. Ibid. In Covidien, the
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`Board correctly determined that an IPR is just that type of agency adjudication
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`because of its “considerable resemblance” to a lawsuit. Covidien at 24. Indeed,
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`this conclusion was virtually inescapable in light of Vas-Cath, Inc. v. Curators of
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`the Univ. of Mo., 473 F.3d 1376, 1382 (Fed. Cir. 2007), where the Federal Circuit
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`
`
`2
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`found that sovereign immunity applied to contested interference proceedings due
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`to their “strong similarities” to litigation. Because the similarities between IPRs
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`and litigation are just as strong, Vas-Cath’s analysis controls here.
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`During the conference call in which TMC and the University sought leave to
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`file this motion, the Board inquired why sovereign immunity should apply to IPRs
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`when it did not apply to inter partes reexamination. The answer is that an IPR is a
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`contested litigation-type proceeding, whereas inter partes reexamination was, as its
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`name suggests, much more akin to initial examination. Inter partes reexamination
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`requests were assigned to examiners. See MPEP § 2636 (8th ed., Aug. 2012). In
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`deciding whether to order reexamination, an examiner was not limited to the prior
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`art cited in the request; the reexamination statute expressly allowed consideration
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`of “other patents or printed publications.” 35 U.S.C. § 312(a) (2006). Once
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`ordered, reexamination proceeded “according to the procedures established for
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`initial examination under the provisions of [35 U.S.C. §§] 132 and 133.” Id.
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`§ 314(a) (2006). Depositions and other discovery were not permitted. See Abbott
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`Labs. v. Cordis Corp., 710 F.3d 1318, 1327 (Fed. Cir. 2013) (observing that Office
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`rules make “no provision for either party to take depositions” in reexamination).
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`Even appeals to the Board were not “contested case[s].” 37 C.F.R. § 41.2.
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`In order to “convert[] inter partes reexamination from an examinational to an
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`adjudicative proceeding” that would function as an “alternative[] to litigation,”
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`3
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`Congress created the IPR process. H.R. Rep. No. 112–98, at 46, 48 (2011)
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`(emphasis added). Congress required the merits of an IPR petition to be decided
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`by Administrative Patent Judges (“APJs”) rather than examiners. 35 U.S.C. § 318.
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`It also limited the Office’s authority to consider prior art outside the four corners of
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`the petition by authorizing institution only where “the information presented in the
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`petition” satisfied the institution standard. Id. § 314(a). Finally, Congress directed
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`the Office to prescribe rules for discovery, sanctions, protective orders, and oral
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`hearings. Id. § 316(a). Thus, in contrast to inter partes reexamination, the IPR
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`process was designed by Congress not to reopen prosecution but to adjudicate the
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`merits of the petitioner’s particular challenge in an adversarial, trial-like setting.
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`The Office has furthered Congress’s objective by prescribing rules for the
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`conduct of IPRs that “resemble civil litigation in federal courts.” Covidien at 20.
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`These rules define an IPR as a “trial”—“a contested case instituted by the Board
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`based upon a petition.” 37 C.F.R. §§ 42.2, 42.100. FMC identified three specific
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`factors relevant to whether an agency adjudication is sufficiently similar to a civil
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`lawsuit to warrant the application of sovereign immunity—pleading rules,
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`discovery procedures, and the role of the decision-maker—and all three factors
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`weigh strongly in favor of applying sovereign immunity to IPRs.
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`The petitioner takes the first step by filing a petition, which is “similar to a
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`complaint filed in civil litigation.” Covidien at 20. The petition is not “complete”
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`4
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`until the petitioner serves the patent owner. 37 C.F.R. § 42.106(a)(2). The patent
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`owner may file a responsive paper at the preliminary stage, 35 U.S.C. § 313; 37
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`C.F.R. § 42.107(a), and another at the trial stage, if trial is instituted. Id. § 42.220.
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`If either party abandons the contest, the Board may enter an adverse judgment
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`against it. Id. § 42.73(b)(4). For example, if the patent owner fails to file required
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`papers, the Board can construe that as abandonment of the contest and may cancel
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`the claims, similar to how a district court may enter a default judgment against a
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`defendant under Federal Rule of Civil Procedure 55(b) for failure to defend. Shire
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`Dev. LLC v. Lucerne Biosciences, LLC, IPR2014-00739, Paper 33 at 3 (Jun. 4,
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`2015) (cancelling the claims after the patent owner ignored the Board’s orders).
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`The Office regulations also prescribe discovery procedures that are “similar”
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`to those in district-court litigation. Covidien at 21. Each party is entitled to cross-
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`examine witnesses. 37 C.F.R. § 42.51(b)(1)(ii). A party may also seek permission
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`to obtain “additional discovery,” such as testimony or production of documents
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`and things, and the Board may authorize the party to apply for a subpoena to
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`compel such testimony or production. Id. §§ 42.51(b)(2)(i), 42.52(a); see also 35
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`U.S.C. § 24 (authorizing district courts to issue subpoenas in “contested cases”
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`before the Office). The Board can enter a protective order governing the exchange
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`and submission of confidential information, 37 C.F.R. § 42.54(a), and can also
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`issue various sanctions for discovery misconduct, from “[a]n order holding facts to
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`5
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`have been established in the proceeding,” to “[j]udgment in the trial or dismissal of
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`the petition.” Id. §42.12(a)(6), (b); cf. FMC, 535 U.S. at 758 (the agency’s power
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`to issue sanctions is a factor weighing in favor of applying sovereign immunity).
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`As the Supreme Court observed in FMC, the role of an Administrative Law
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`Judge is “similar” to that of an Article III judge. 535 U.S. at 758. APJs are no
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`exception. APJs serve as impartial officers who review a petition and any
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`preliminary response to determine whether the institution standard has been met.
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`See 35 U.S.C. § 314(a). If a trial is instituted, the panel assigned to the case issues
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`a scheduling order; rules on various motions, see 37 C.F.R. § 42.20; rules on the
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`admissibility of evidence under the Federal Rules of Evidence, id. §§ 42.62, 42.64;
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`if necessary, issues sanctions for abuse of discovery, abuse of process, or other
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`misconduct, id. § 42.12; “determine[s] a proper course of conduct in a proceeding
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`for any situation not specifically covered by [the rules],” id. § 42.5; conducts an
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`oral hearing, id. § 42.70; and issues a judgment “dispos[ing] of all issues that were,
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`or by motion reasonably could have been, raised and decided.” Id. §§ 42.2, 42.73.
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`In sum, there are “strong similarities” between an IPR and a lawsuit. See
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`FMC, 535 U.S. at 760. Indeed, IPRs resemble civil litigation as much as contested
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`interferences do, and those have already been deemed by the Federal Circuit to
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`implicate sovereign immunity. In Vas-Cath, the Court of Appeals noted that
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`interference cases before the Office “involve adverse parties, examination and
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`6
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`cross-examination by deposition of witnesses, production of documentary
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`evidence, findings by an impartial federal adjudicator, and power to implement the
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`decision,” all of which warranted the conclusion that an interference “bear[s]
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`‘strong similarities’ to civil litigation and . . . can indeed be characterized as a
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`lawsuit.” 473 F.3d at 1382 (internal citations omitted). Vas-Cath’s description of
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`interference proceedings is equally applicable to IPRs. Furthermore, because no
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`material distinction can be drawn between interferences and IPRs, Vas-Cath
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`controls here and requires holding that sovereign immunity extends to IPRs.
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`In the joint conference call between the parties and the Board, the Board also
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`inquired whether an IPR might be characterized as an in rem proceeding “against
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`the patent” rather one in which the Board exercises in personam jurisdiction over
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`the parties. The Board’s authority to sanction the parties and enter what amounts
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`to a default judgment, see supra, demonstrates that it possesses in personam
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`jurisdiction. The Board may even cancel the challenged claims as a sanction.
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`Shire Dev. LLC v. Lucerne Biosceinces, LLC, IPR2014-00739, Paper 26 at 3 (May
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`5, 2015) (advising the patent owner that the Board “may impose sanctions up to
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`and including entry of adverse judgment against [it]”). The in personam nature of
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`IPRs is further confirmed by the fact that both petitioners and patent owners are
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`personally bound by various estoppel provisions following judgment. 35 U.S.C.
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`§ 315(e) (petitioner estoppel); 37 C.F.R. § 42.73(d)(3) (patent owner estoppel).
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`
`
`7
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`

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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`In its response, Petitioner may try to point out certain differences between an
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`IPR and a federal lawsuit. That such differences should exist is not surprising.
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`“[D]ifferences in origin and function [between administrative agencies and courts]
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`preclude wholesale transplantation of the rules of procedure, trial and review
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`which have evolved from the history and experience of courts.” FCC v. Pottsville
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`Broad. Co., 309 U.S. 134, 142-43 (1940). In any event, the Supreme Court
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`requires only similarity rather than complete identity between an agency
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`adjudication and civil litigation in order for sovereign immunity to apply to the
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`former. FMC, 535 U.S. at 760. The Board should hold, as it did in Covidien, that
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`the “considerable resemblance” between IPRs and civil litigation requires
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`extending sovereign immunity to IPR proceedings. Covidien at 24.
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`B.
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`The University Is Entitled to Assert Sovereign Immunity.
`
`
`
`The Eleventh Amendment extends “not only [to] actions in which a State is
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`actually named as the defendant, but also certain actions against state agents and
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`state instrumentalities.” Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429
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`(1997) (finding the University of California to be immune). As a matter of settled
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`federal law, the University is an arm of the State of Minnesota entitled to share in
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`its immunity. Treleven v. Univ. of Minn., 73 F.3d 816, 819 (8th Cir. 1996); see
`
`also Hoeffner v. Univ. of Minn., 948 F. Supp. 1380, 1385 (D. Minn. 1996) (“[The
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`Eight Circuit] has consistently found the University to be an instrumentality of the
`
`
`
`8
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`

`

`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`State of Minnesota for Eleventh Amendment purposes.”). Indeed, the Supreme
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`Court itself has recognized the University’s arm-of-the-state status. Raygor v.
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`Regents of the Univ. of Minn., 534 U.S. 533, 536 (2002) (stating that the University
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`is “an arm of the State of Minnesota” for Eleventh-Amendment purposes).1
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`While arm-of-the-state status is ultimately a question of federal law, that
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`question depends on “the provisions of state law that define the agency’s
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`character.” Regents of the Univ. of Cal., 519 U.S. at 429 n.5. The University’s
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`status under Minnesota law as “a state institution established, controlled and
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`carried on by the state itself” is clear. Star Tribune Co. v. Univ. of Minn. Bd. of
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`Regents, 683 N.W.2d 274, 280 (Minn. 2004) (internal quotation marks and citation
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`omitted) (emphasis in original).
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`“[T]he Minnesota Constitution provides that the University of Minnesota is
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`an instrumentality of the state and expressly reserves all immunities to the
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`University.” Treleven, 73 F.3d at 819. The University was incorporated by the
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`Minnesota legislature in 1851. (See Ex. 2007.) When Minnesota entered
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`statehood in 1858, Article VIII, Section 4 of the Minnesota Constitution
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`1 Notably, in Covidien, there was no dispute at all that “the University of Florida is
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`an arm of the State of Florida.” Covidien at 30. The parties disputed only whether
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`the University of Florida Research Foundation (“UFRF”), a patent-holding entity
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`created by the University, qualified for Eleventh-Amendment protection.
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`perpetuated the University’s Charter. (See id. at 4.) The Constitution was
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`amended and re-organized in 1974, and the language incorporating Chapter 3 of
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`the Territorial Laws of 1851 can now be found in Article XIII, Section 3: “All the
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`rights, immunities, franchises and endowments heretofore granted or conferred
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`upon the University of Minnesota are perpetuated unto the university.”
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`“[T]he governing structure of the University evinces a starkly manifest
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`interconnection between the intricacies of the University’s administration . . . and
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`the State of Minnesota.” Hoeffner, 948 F. Supp. at 1388. The University’s Charter
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`vests “[t]he government of this University . . . in a Board of twelve Regents, who
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`shall be elected by the Legislature.” (Ex. 2007 at 2.) It requires the Board to make
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`regular reports to the legislature on matters such as budgeting priorities and the
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`institution’s mission statement. (Id. at 3.) By statute, the Board is obligated to
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`divulge to the State Commissioner of Finance “all books, accounts, documents,
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`and property that the commissioner desires to inspect.” Minn. Stat. § 137.0251.
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`“[T]he University remains financially dependent upon the State.” Hoeffner,
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`948 F. Supp. at 1389. According to the University’s 2016 financial statement,
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`“[t]he University receives strong financial support from the State of Minnesota.”
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`(Ex. 2008 at 19.) In the last fiscal year, state appropriations totaling $663.7 million
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`accounted for 58.9% of the University non-operating revenues. (Id. at 16.)
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`Against this background, the Eight Circuit has repeatedly held that the
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`IPR2016-01914
`U.S. Patent No. 8,394,618 B2
`University is an arm of the state entitled to Eleventh-Amendment immunity.
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`Treleven, 73 F.3d at 819; Walstad v. Univ. of Minn. Hosps., 442 F.2d 634, 641-42
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`(8th Cir. 1971); see also Faibisch v. Univ. of Minn., 304 F.3d 797, 800 (8th Cir.
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`2002); Richmond v. Bd. of Regents of Univ. of Minn., 957 F.2d 595, 598-99 (8th
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`Cir. 1992); Issaenko v. Univ. of Minn., 57 F. Supp. 3d 985, 1003 (D. Minn. 2014);
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`Hoeffner, 948 F. Supp. at 1385. The Board should follow this settled law and hold
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`that the University is entitled to assert sovereign immunity.
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`C.
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`The Merits of This IPR Petition Cannot Be Adjudicated in the
`University’s Absence.
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`If the University had sole ownership of the patent, there is no question the
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`Petition would have to be dismissed. To require the University to “defend itself in
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`an adversarial proceeding against a private party before an impartial federal
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`officer” would be a clear affront to the State of Minnesota’s immunity. FMC, 535
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`U.S. at 760; see also Covidien at 39. The fact that the University co-owns the
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`patent with TMC does not permit a different outcome. Because the University is
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`immune from this proceeding, the only way it could go forward would be without
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`the University as a party. But, as a co-owner of the patent, the University has a
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`significant interest directly at stake and the right to participate. Adjudicating the
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`merits of the Petition in its absence would violate the State of Minnesota’s
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`immunity no less than requiring the University to become a party would. “[W]here
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`sovereign immunity is asserted, and the claims of the sovereign are not frivolous,
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`IPR2016-01914
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`dismissal of the action must be ordered where there is a potential for injury to the
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`interests of the absent sovereign.” Pimentel, 553 U.S. at 867 (emphasis added).
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`Sovereign immunity protects not only a sovereign’s interest against being
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`subjected to the coercive power of a judicial or administrative tribunal, FMC, 535
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`U.S. at 760, but also the sovereign’s interest against having its legal rights
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`adjudicated outside its presence and consent. The Supreme Court made that much
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`clear in Pimentel. That case arose from an interpleader action filed in federal court
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`by Merrill Lynch to settle competing claims to the assets of a former Philippine
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`president. 553 U.S. at 857-59. The Republic of the Philippines and a class of
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`human rights victims who had secured a judgment against the president’s estate
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`each had laid claim to the assets. Ibid. The Repub