throbber

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`Paper No. ___
`Filed: November 27, 2017
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`ACRUX DDS PTY LTD., ACRUX LIMITED, and
`ARGENTUM PHARMACEUTICALS LLC,
`Petitioners,
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`v.
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`KAKEN PHARMACEUTICAL CO., LTD. and
`VALEANT PHARMACEUTICALS INTERNATIONAL, INC.,
`Patent Owner.
`
`
`
`Case: IPR2017-001901
`U.S. Patent No. 7,214,506
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`
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`PATENT OWNER’S MOTION TO STRIKE
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`1 Case IPR2017-01429 has been joined with the instant proceeding.
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`I.
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
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`II.
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`BASES FOR STRIKING EXHIBITS AND ARGUMENTS ......................... 1
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`A.
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`Significant Portions of Exhibits 1509-1511 Should Be Struck ............ 4
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`B. Additional New Exhibits Should Be Struck.......................................... 9
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`C.
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`Petitioner’s New Argument Should Be Struck ...................................10
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`III. RELIEF REQUESTED .................................................................................13
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`IV. CONCLUSION ..............................................................................................15
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`I.
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`INTRODUCTION
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`In an end-run around the Office’s Rules, Petitioner’s Reply (Paper 37;
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`“Reply”) includes three new declarations, totaling nearly 50,000 additional words,
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`and 162 further exhibits, amounting to over 5,000 new pages of information. The
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`Reply does little to assist the Board in sifting through this data dump, because it
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`improperly cites vast chunks of the declarations to support broad generalities rather
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`than identifying specific arguments with particularity. In fact, large portions of the
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`new declarations, and most of the new exhibits, are never cited at all in the Reply.
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`Not only is Petitioner’s data dump prohibited by the Rules, it creates a
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`misleading, bloated record that severely hinders the Board’s and Patent Owner’s
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`ability to evaluate (or even discern) the arguments and evidence Petitioner intends
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`to use in this proceeding. Petitioner relies on this evidence overload to raise a new
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`legal theory that should have been in the Petition. If left in the record, the Federal
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`Circuit will assume that the evidence was properly considered, when it had not,
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`prejudicing Patent Owner.
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`II. BASES FOR STRIKING EXHIBITS AND ARGUMENTS
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`After the Board instituted trial, Patent Owner’s Response demonstrated
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`various fatal flaws in the Petition. These included objective, real-world evidence of
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`non-obviousness and Petitioner’s improper reliance on an expert lacking
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`familiarity with methods of treating onychomycosis. In an attempt to overcome
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`1
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`

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`these deficiencies, Petitioner improperly overwhelmed the record with new expert
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`declarations, numerous new exhibits, and a new legal theory to which Patent
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`Owner will not have any opportunity to respond.
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`To get this new material in the record, Petitioner’s Reply circumvents the
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`word limit by pushing most of its evidence and argument into declarations that are
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`not cited with particularity. Rather, Petitioner incorporates by reference into the
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`Reply large sections of its declarations without explaining their specific relevance.
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`Such incorporation of large and non-specific sections of declarations is a
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`particularly egregious and Board-recognized violation of the rules. 37 C.F.R.
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`§ 42.6(a)(3); see Elec. Arts Inc. v. Terminal Reality, Inc., IPR2016-00929,
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`IPR2016-00930, No. 50, at 37 (PTAB Oct. 19, 2017) (finding that the petitioner’s
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`citation of two expert declarations by citation to “Ex. 1003, 250-51; Ex. 1023 ¶¶ 4-
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`22, 32,” did not provide a persuasive argument in its Reply regardless of the
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`additional detail in the cited declarations).
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`Petitioner’s misuse of its new declarations does not stop there. Petitioner
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`also uses the declarations as the sole vehicle for introducing most of its other new
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`exhibits in violation of 37 C.F.R. § 42.6(a)(3) (“Arguments must not be
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`incorporated by reference from one document into another document.”). This
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`indirect incorporation of exhibits is clearly contrary to the requirement to identify
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`“specific portions of the evidence that support the challenge” and explain their
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`2
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`

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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`relevance with particularity in the Reply. 37 C.F.R. § 42.104(b)(5). The Board may
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`exclude or give no weight to such vaguely cited evidence. Id.
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`Moreover, a Reply may only respond to arguments raised in Patent Owner’s
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`Response and not include new evidence that could have been presented earlier.
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`Office Patent Trial Practice Guide (“TPG”), 77 Fed. Reg. 48756, 48767 (“[A]
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`reply that raises a new issue or belatedly presents evidence will not be considered
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`and may be returned. The Board will not attempt to sort proper from improper
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`portions of the reply.”). Yet Petitioner raises a new legal theory and introduces a
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`new supporting declaration to buttress the inadequacies of its original Petition.
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`Petitioner’s failure to comply with the rules damages the efficiency and
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`integrity of this proceeding, prejudicing both the Board and Patent Owner. Both
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`must now approach the final stages of this proceeding without any clear sense of
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`how Petitioner intends to use its vast array of new evidence. In fact, during the
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`Parties’ November 16 conference with the Board (“the Call”), Petitioner tacitly
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`admitted as much, suggesting the Board should fill in the missing citations by
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`lining up section headings between the Reply and corresponding, large sections of
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`the declarations. Petitioner also suggested that the Board should determine the
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`relevance of over a hundred vaguely or indirectly cited exhibits by reading all of
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`them. That burden, however, rests with the Petitioner—not the Board or Patent
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`Owner.
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`3
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`

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`Further, Petitioner’s suggestion that the Board should review this extensive
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`collection of uncited evidence to reach their own conclusion in the Final Written
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`Decision could lead to a violation of the Administrative Procedure Act (“APA”).
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`The APA requires that the patent owner be provided notice of the challenges
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`against it and that the patent owner has sufficient opportunity to provide comment
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`as to these challenges. 5 U.S.C. §§ 554(b)(3), (c). As the Federal Circuit explained,
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`“[a] patent owner . . . is undoubtedly entitled to notice of and a fair opportunity to
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`meet the grounds of rejection based on due-process and APA guarantees.”
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`NuVasive, Inc., 841 F.3d 966, 971 (Fed. Cir. 2016) (internal citations omitted).
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`Where Patent Owner must guess at what arguments may be reached from
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`thousands of pages of vaguely cited evidence, Patent Owner has not been afforded
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`such notice and opportunity to respond.
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`Clarifying the record by striking Petitioner’s evidence would remove the
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`prejudice and burden on the Board and Patent Owner, and it would ensure the
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`Board only considers evidence that had been appropriately evaluated before
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`rendering a final decision.
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`A.
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`Significant Portions of Exhibits 1509-1511 Should Be Struck
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`As a means to bypass the limits imposed on the Reply, Petitioner suggests
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`that it may bootstrap additional arguments and evidence that it discusses nowhere
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`but in its three new declarations without specifically explaining their use in the
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`4
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`Reply. Petitioner thereby strategically preserves for appeal vast amounts of
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
`
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`evidence for which it has not explained the intended use in the Reply.
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`Ex. 1510 is a declaration by a new expert (Dr. Weinberg) that attempts to fill
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`the void created by Petitioner’s original declarant, Dr. Walters, who is not one of
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`skill in the art. Dr. Walter’s admitted expertise is in formulations (Ex. 2050 at
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`14:5-15:15 and 47:1-19), but this is not a formulation patent. The Weinberg
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`declaration (styled as a Rebuttal but actually used to compensate for the
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`inadequacies Dr. Walters’ original testimony) runs to over 9,000 words and
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`addresses arguments that Petitioner could not squeeze into the Reply.
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`The Weinberg declaration most clearly demonstrates Petitioner’s end-run
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`tactics. Only 4 out of the 77 paragraphs in the declaration are cited with any
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`particularity. Reply at pp. 17 (citing ¶ 28), 19 (citing ¶ 64), 20 (citing ¶ 72), 20
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`(citing ¶ 73). The remaining cited paragraphs are found in only four other
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`sentences of the Reply that reference vast sections of Ex. 1510. See Reply at pp. 11
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`(citing § VI.B), 14 (citing § VI.D), 20 (citing § X), 24 (citing § X). Incredibly,
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`Petitioner seeks to incorporate thousands of words of arguments from the
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`declaration into these few sentences of the Reply, expecting the Board and Patent
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`Owner to guess at their applicability.
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`For example, page 20 of the Reply cites “Ex. 1510, § X,” which spans
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`twelve paragraphs, for the modest statement that Jublia®’s efficacy is allegedly
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`5
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`incremental over Penlac’s. But Section X of Ex. 1510 is broadly directed to
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`“Secondary Considerations” and describes opinions well beyond Penlac’s efficacy.
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`Thus, it is not at all clear whether and how Petitioner relies on additional
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`arguments and evidence from § X of Ex. 1510 on page 20 of the Reply.
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`More egregious, the Reply does not even cite 53 of the 77 paragraphs in
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`Ex. 1510. Petitioner asks the Board to read those paragraphs back into its Reply
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`without any guidance as to their particular relevance or applicability. Apparently,
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`Petitioner expects the Board and Patent Owner to bear that burden.
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`Petitioner’s data dump continues in Exs. 1509 and 1511. Ex. 1509 is Dr.
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`Walters’ second declaration with almost 19,000 words. Yet only 5 of 134
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`paragraphs are specifically cited in Ex. 1509. Otherwise, the Reply cites almost
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`exclusively to large sections of Ex. 1509 without any specificity. See Reply at pp. 5
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`(citing §§ VIII-X), 8 (citing §VII; § XIII), 9 (citing §§ IV.C., XII-XIII; § IX), 10
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`(citing § IV.B), 11 (citing §§ IV.B-C; § IV.C; § XIII), 12 (citing §§ V, VI; § V), 13
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`(citing § V; §§ VIII-X), 15 (citing § IX; §§ V, IX), 15-16 (citing § IX), 17 (citing §
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`XIII), 24 (citing § VII). Even then, approximately one-third (45 of 134
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`paragraphs) of the Exhibit are never cited at all.
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`For example, the Reply at page 9 cites “Ex. 1509, §§ IV.C., XII-XIII,”
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`which is three different sections of Dr. Walter’s declaration spanning eighteen
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`pages with widely-ranging headings, respectively entitled “Dr. Elewski’s Attacks
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`6
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`on the Hay Reference are Baseless,” “Efinaconazole was Already a Known Potent
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`Topical Antifungal Compound by 1999,” and “POSAs were Motivated to Treat
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`Onychomycosis Topically with Potent Antifungal Agents such as Efinaconazole.”
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`Petitioner allegedly cites this enormous portion of Ex. 1509 to support the assertion
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`that JP ’639 combined with other art would have motivated a POSA to use
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`efinaconazole for its known properties. Reply at p. 9. The generality of Petitioner’s
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`argument, and the non-particularity of the corresponding citation to Ex. 1509, does
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`little to direct the Board to exactly what “known properties” or other factors the
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`Petitioner believes motivated the proposed combination.
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`In another example, page 13 of the Reply cites “Ex. 1509, §§ VIII-X,”
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`spanning fifteen pages, to support the generalization that efinaconazole’s
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`properties are uniquely suited for topical treatment. But the Reply does not explain
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`what properties those are and why they would have been expected to be beneficial
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`for topical treatment, or how to even find Petitioner’s arguments about those points
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`buried in Dr. Walters’ declaration. The Board is expected instead to wade through
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`fifteen pages of the declaration to try and guess at the details themselves.
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`Ex. 1511, a declaration of Mr. John Staines, continues this pattern. It is over
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`22,000 words long and again 31 of its 77 paragraphs are never cited in the Reply.
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`When Petitioner does cite Ex. 1511, it once again does so in sweeping sections that
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`provide little assistance to the Board in lining up the declaration with the
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`7
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`arguments in the Reply. See Reply at pp. 21-22 (citing ¶¶ 20-54), 22 (citing ¶¶ 26-
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`47; ¶¶ 12-17, 53), 23 (citing ¶¶ 61-71). For example, page 22 of the Reply
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`summarily concludes that the economic analysis provided by Patent Owner’s
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`expert, Mr. Thomas, is “flawed” and “when appropriately adjusted, leads to the
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`opposite conclusion.” To support this incredibly vague statement, the Reply cites
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`paragraphs 20-54 of Ex. 1511. Petitioner leaves it to the Board and Patent Owner
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`to figure out how to link up more than fifty pages of detailed analysis in the
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`declaration with a conclusory statement in the Reply.
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`Similarly, page 22 of the Reply asserts that “[c]onsidering appropriately-
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`adjusted publicly-available net sales information, Jublia® is not a commercial
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`success.” To support this bald conclusion, the Reply broadly cites paragraphs 26-
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`47 of Ex. 1511, but provides virtually no explanation of this “publicly-available net
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`sales information” or how it would be appropriately adjust that information. So to
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`gain any insight, Petitioner expects the Board to root around for an explanation in
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`the twenty-plus cited paragraphs of the declaration.
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`In short, the non-specific citations to large chunks of Exs. 1509-1511 do
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`little to clarify Petitioner’s conclusory assertions in the Reply. Worse yet, that
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`information would stay in the record and, on appeal, the Federal Circuit would
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`assume it had been considered, further prejudicing Patent Owner. See In re
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`NuVasive, Inc., 841 F.3d at 971.
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`8
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`Incredibly, Petitioner suggested during the recent Call that Patent Owner’s
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`Response justifies the submission of new expert testimony that is not explained
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`with particularity in the Reply.2 Yet Petitioner did not request additional space for
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`its Reply. Instead, it offered a data dump and a post-hoc rationale to justify
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`violating the practice rules. Petitioner should not be allowed to flood the record
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`with uncited information that could obfuscate the evidence actually relied upon by
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`the parties and useful for the Board in reaching a final written decision.
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`B. Additional New Exhibits Should Be Struck
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`Beyond the three new declarations, Petitioner also filed a further 162 new
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`exhibits (for a total of 165) but cited just 10 of these in the Reply. On its face, this
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`conduct violates 37 C.F.R. § 42.104(b)(5). And to the extent Petitioner attempts to
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`rely on citations of these Exhibits in its new declarations, such incorporation by
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`reference is likewise improper. 37 C.F.R. § 42.6(a)(3).
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`Indeed, rather than explaining the relevance of these exhibits in the Reply,
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`Petitioner again reverts to Exs. 1509-1511 to do the heavy lifting. Petitioner simply
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`ignored the rules governing the integrity of this proceeding and dumped
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`voluminous evidence that it cited only indirectly. The Board should therefore reject
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`2 Patent Owner cited to its own declarations with much more specificity in its
`Patent Owner Response. Indeed, Petitioner never objected to Patent Owner’s
`citations until challenged on its improper Reply. Any such objection has been
`waived.
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`9
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`Petitioner’s tactics and preserve Patent Owner’s notice of and a fair opportunity to
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`meet the grounds of rejection only as outlined expressly in the Reply. NuVasive,
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`841 F.3d at 971.
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`On the Call, Petitioner argued that this is a complicated IPR requiring a
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`“thorough and comprehensive” response. But there are no exceptions to the rule for
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`“complicated IPRs.” Whether these exhibits are otherwise relevant is beside the
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`point. Petitioner has not provided context for the exhibits in its Reply. The Board
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`should not fill in the missing material for Petitioner or guess about its relevance.
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`Indeed, of the new exhibits, the Reply does not even incorporate by reference
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`twenty of them, because it fails to even cite sections of the three declarations that
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`do reference those twenty exhibits. Thus, Petitioner chose not to rely on these
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`exhibits in any manner. The remaining exhibits are cited only in the declarations
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`(with the exception of the ten mentioned previously).
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`The Board should strike Petitioner’s improper inclusion of these new
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`exhibits. 37 C.F.R. §§ 42.6(a)(3), 42.104(b)(5). Otherwise, the Federal Circuit will
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`assume the Board has considered every last one of the more than 5,000 pages of
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`additional evidence that Petitioner never bothered to explain at all in its Reply.
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`C.
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`Petitioner’s New Argument Should Be Struck
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`The Reply also errs by introducing a new argument based on Exs. 1007 and
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`1505 that could have been properly raised in its Petition. 37 C.F.R. § 42.23(b);
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`10
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`Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed.
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`Cir. 2016) (“Unlike district court litigation—where parties have greater freedom to
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`revise and develop their arguments over time and in response to newly discovered
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`material—the expedited nature of IPRs bring with it an obligation for petitioners to
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`make their case in their petition to institute.”).
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`Petitioner argues in its Reply that earlier Kaken patents (Exs. 1007 and
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`1505) are genus patents covering the use efinaconazole in treating mycosis.
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`Petitioner concludes for the first time in the Reply that it would be obvious to use
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`efinaconazole in treating a species of mycosis—onychomycosis— based on the
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`generic disclosure of treating any type of mycosis in Exs. 1007 and 1505.
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`Petitioner concludes that these earlier patents allegedly undermine evidence of
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`commercial success for Jublia®, the marketed topical efinaconazole product for
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`treating onychomycosis (see Reply at p. 9).
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`The Petition did not suggest, and the Board did not institute a trial on, any
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`grounds of rejection using this legal theory. Indeed, Petitioner previously argued
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`that the disclosure of data on treating other mycosis, plus a suggestion to treat
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`onychomycosis, was not sufficient to support Patent Owner’s priority claim. See
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`Pet. at pp. 16-17. And, despite arguing lack of secondary considerations in its
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`Petition, Petitioner only now argues in the Reply that Exs. 1007 and 1505 are
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`11
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`blocking patents that prevent a finding of commercial success. Reply at pp. 3, 6,
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`12, 19.
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`To be clear, Petitioner knew about these exhibits when it filed its Petition,
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`because it cited at least one of them at the time. Pet. at pp. 10-11 (citing Ex. 1007).
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`But Petitioner strategically chose not to rely on these patents in its obviousness
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`analyses or in its secondary consideration theories in the Petition, likely because it
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`conflicted with another of Petitioner’s arguments regarding Patent Owner’s
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`claimed priority date. Pet. at pp. 16-17. Now that Petitioner is relying less on its
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`priority argument, Petitioner flips to a new, inconsistent position. Reply at p. 9.
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`Having waited for Patent Owner to exhaust its opportunity to attack Petitioner’s
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`positions, it cannot now pivot to make contradictory arguments for the first time in
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`the Reply.
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`Portions of the Reply related to those arguments should therefore be
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`stricken. Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1367-68
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`(Fed. Cir. 2015) (generic citation of exhibits in Petition not adequate to justify later
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`reliance on other portions of exhibits to support new legal theories in Petitioner
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`Reply). Patent Owner was not provided adequate notice of these arguments and has
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`not had any opportunity to reply to them.
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`12
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`III. RELIEF REQUESTED
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`Based on the foregoing, Patent Owner moves to strike evidence and
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`argument from the Reply as improper under 37 C.F.R. §§ 42.6(a)(3), 42.23(b),
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`42.24(c)(1), 42.104(b)(5):
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`First, portions of Petitioner’s new expert declarations should be struck:
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`• Exhibit 1510: Ex. 1510 should be struck in its entirety because it only
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`cures deficiencies in the Petition and presents arguments and evidence
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`that should have been introduced with that Petition. In the alternative,
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`paragraphs 1-27, 29-33, 37-38, 46-62, and 76-77 should be struck as
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`Petitioner elected not to rely on these paragraphs in the Reply.
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`Paragraphs 34-36, 39-45, 53, 65-71, and 74-75 should also be struck
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`as the Reply only cites them in bulk form without particularity and
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`improperly incorporates these arguments by reference.
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`• Exhibit 1509: Paragraphs 1-27, 30-31, 107-114, and 127-134 should
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`be struck because Petitioner never relied on them in the Reply.
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`Paragraphs 32-33, 35-47, 49-106, and 116-126 should also be struck
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`because the Reply only cites them in bulk form without particularity
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`and improperly incorporates these arguments by reference.
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`• Exhibit 1511: Paragraphs 1-11, 18-19, 55-60, and 72-77 should be
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`struck as Petitioner never relied on these paragraphs in the Reply.
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`13
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`Paragraphs 12-17, 20, 23-48, 54, and 61-71 should also be struck
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`because the Reply only cites them in bulk form without particularity
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`and improperly incorporates these arguments by reference.
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`Second, Exs. 1512 and 1514-1660 should be struck:
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`• Exs. 1514, 1518-1520, 1522-1549, 1551-1561, 1566-1569, 1571-
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`1605, 1608-1623, 1636, and 1638-1651 should be struck as Petitioner
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`never relied on these exhibits in the Reply. Petitioner only cited them
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`in parts of Exs. 1509-1511 that were, in turn, cited in the Reply only
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`in bulk form. In addition, the Reply provides no specificity as what
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`evidence from these exhibits is incorporated, through the expert
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`declarations, into the Reply. See Reply at pp. 5, 8-17, 19-24.
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`• Exs. 1515-1517, 1550, 1562-1565, 1570, and 1652-1657 should be
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`struck as Petitioner never relied on these exhibits in the Reply.
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`Petitioner only cited them in Ex. 1511. Although these exhibits are in
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`paragraphs of Ex. 1511 that Patent Owner is not moving to strike, the
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`Reply improperly provides no specificity as to what evidence is
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`incorporated from the exhibits, through Ex. 1511, into the Reply. See
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`Reply at pp. 21-23.
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`• Exs. 1512, 1521, 1606-1607, 1624-1634, and 1658-1660 should be
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`struck as Petitioner never relied on these exhibits in the Reply. These
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`14
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`exhibits are not cited in any paragraph of Petitioner’s new
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`declarations, Exs. 1509-1511.
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`• Exs. 1635 and 1637 should be struck because they are not cited in any
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`document, including the Reply and Exs. 1509-1511.
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`Third, portions of the Reply that present new legal theories in violation of 37
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`C.F.R. § 42.23(b) should be struck. Reply at p. 3, ¶ 3; id. at p. 6, third bullet point;
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`id. at p. 9, ¶ 2, second sentence; id. at p. 12, ll. 1-3; id. at p. 19, ¶ 1; Ex. 1509 at ¶
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`29; and Ex. 1505.
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`IV. CONCLUSION
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`Accordingly, the Reply and the evidence submitted therewith represent a
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`flagrant effort to avoid the practice rules clearly limiting the scope of the Reply
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`and, as described above, Petitioner’s evidence should be struck.
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`Date: November 27, 2017
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`By:
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` / John D. Livingstone /
`John D. Livingstone, Reg. No. 59, 613
`Counsel for Patent Owner
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`15
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`Case: IPR2017-00190
`U.S. Patent No. 7,214,506
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that a copy of the foregoing Patent Owner’s
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`Motion to Strike was served electronically via email on November 27, 2017, in its
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`entirety on the following:
`
`E. Anthony Figg
`Aydin H. Harston
`Lisa N. Phillips
`Rothwell, Figg, Ernst & Manbeck, P.C.
`607 14th Street, N.W., Suite 800
`Washington, DC 20005
`efigg@rothwellfigg.com
`aharston@rothwellfigg.com
`lphillips@rothwellfigg.com
`litigationparalegals@rothwellfigg.com
`
`Teresa Stanek Rea
`Shannon M. Lentz
`Crowell & Moring LLP
`Intellectual Property Group
`1001 Pennsylvania Ave., NW
`Washington, DC 20004-2595
`trea@crowell.com
`slentz@crowell.com
`
`Tyler C. Liu
`Argentum Pharmaceuticals, LLC
`tliu@agpharm.com
`
`
`
`
`
`
`
`
`
`By: / John D. Livingstone /
`John D. Livingstone
`Reg. No. 59,613
`
`
`
`

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