Filed on behalf of: Philip Morris Products, S.A.
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`Entered: July 21, 2022
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________________
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`PHILIP MORRIS PRODUCTS, S.A.,
`Petitioner,
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`v.
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`RAI STRATEGIC HOLDINGS, INC.,
`Patent Owner.
`_______________________
`Case IPR2020-00919
`Patent 9,901,123
`______________________
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`PETITIONER’S REQUEST FOR REHEARING
`OF THE INSTITUTION DECISION
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`Entered: July 21, 2022
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________________
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`PHILIP MORRIS PRODUCTS, S.A.,
`Petitioner,
`
`v.
`
`RAI STRATEGIC HOLDINGS, INC.,
`Patent Owner.
`_______________________
`Case IPR2020-00919
`Patent 9,901,123
`______________________
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`PETITIONER’S REQUEST FOR REHEARING
`OF THE INSTITUTION DECISION
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`TABLE OF CONTENTS
`Introduction ...................................................................................................... 1
`I.
`Relevant Background....................................................................................... 3
`II.
`III. Good Cause And The Interests Of Justice Warrant Rehearing ....................... 4
`A.
`The Board’s Fintiv application was improper and unpredictable ......... 5
`B.
`PMP relinquished rights in reliance on Fintiv ...................................... 8
`C.
`Rehearing is needed to safeguard public health .................................... 9
`D.
`Prior pursuit of a rehearing would have been futile ............................ 13
`IV. This IPR Should Be Instituted ....................................................................... 14
`V.
`Conclusion ..................................................................................................... 15
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`Petitioner’s Rehearing Request
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`TABLE OF AUTHORITIES
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`CASES
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` Page(s)
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`3Shape A/S v. Align Tech., Inc.,
`IPR2020-00223, Paper 12 (May 26, 2021) ........................................................... 5
`Apple Inc. v. Fintiv, Inc.,
`IPR2020-00019, Paper 11 (Mar. 20, 2020) .................................................. 1, 5, 8
`Apple Inc. v. Neodron Ltd.,
`IPR2020-00779, Paper 10 (Sept. 14, 2020) .......................................................... 5
`Bio-Rad Labs., Inc. v. 10x Genomics, Inc.,
`IPR2019-00567, Paper 23 (Aug. 8, 2019) ............................................................ 3
`
`In the Matter of Certain Tobacco Heating Articles and Components
`Thereof,
`Inv. No. 337-TA-1199 (ITC Oct. 19, 2021) (Ex. 1056) ..................................... 11
`Cuozzo Speed Techs., LLC v. Lee,
`579 U.S. 261 (2016) ............................................................................................ 14
`Henry v. INS,
`74 F.3d 1 (1st Cir. 1996) ....................................................................................... 7
`INS v. Yang,
`519 U.S. 26 (1996) ................................................................................................ 6
`Intel Corp. v. VLSI Tech. LLC,
`IPR2022-00366, Paper 14 (June 8, 2022) ........................................................... 14
`McCarthy v. Merit Sys. Prot. Bd.,
`809 F.3d 1365 (Fed. Cir. 2016) ............................................................................ 6
`Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
`463 U.S. 29 (1983) ................................................................................................ 7
`Mylan Labs. Ltd. v. Janssen Pharmaceutica, N.V.,
`989 F.3d 1375 (Fed. Cir. 2021) ............................................................................ 7
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`Samsung Elecs. Co. v. Dynamics Inc.,
`IPR2020-00499, Paper 41 (Aug. 12, 2020), reh’g denied, Paper 46
`(Oct. 5, 2020) ........................................................................................................ 5
`SKF USA Inc. v. United States,
`263 F.3d 1369 (Fed. Cir. 2001) ............................................................................ 7
`Thompson v. Barr,
`959 F.3d 476 (1st Cir. 2020) ................................................................................. 6
`Verizon Tel. Cos. v. FCC,
`570 F.3d 294 (D.C. Cir. 2009) .............................................................................. 6
`STATUTES
`Pub. L. No. 111-31, 123 Stat. 1776 (2009) .............................................................. 12
`REGULATIONS
`37 C.F.R. § 42.5 ......................................................................................................... 4
`OTHER AUTHORITIES
`Current Cigarette Smoking Among Adults in the United States, CDC,
`https://www.cdc.gov/tobacco/data_statistics/fact_sheets/
`adult_data/cig_smoking/index.htm (last visited July 11, 2022) ......................... 10
`Katherine K. Vidal, Interim Procedure for Discretionary Denials in
`AIA Post-Grant Proceedings with Parallel District Court
`Litigation, USPTO (June 21, 2022) .............................................................passim
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`Exhibit List
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`Ex.
`Description
`1001 U.S. Patent No. 9,901,123 (“the ’123 patent”)
`1002
`File History for U.S. Patent No. 9,901,123
`1003 Declaration of Dr. Seetharama C. Deevi in Support of Petition for
`Inter Partes Review of ’123 Patent (“Deevi Decl”)
`1004 Curriculum Vitae of Dr. Seetharama C. Deevi
`1005 U.S. Patent No. 5,249,586 (“Morgan”)
`1006 U.S. Patent No. 4,947,874 (“Brooks”)
`1007 U.S. Patent Application Publication No. 2007/0102013 (“Adams”)
`1008 U.S. Patent No. 5,144,962 (“Counts-962”)
`1009 U.S. Patent No. 5,060,671 (“Counts-671”)
`1010 Chemical and Biological Studies on New Cigarette Prototypes that
`Heat Instead of Burn Tobacco, R. J. Reynolds Tobacco Company
`Monograph (1988) (“RJR’s 1988 Monograph”) (markings on exhibit
`appeared in the used copy purchased by counsel)
`1011 U.S. Patent No. 5,692,525 (“Counts-525”)
`1012 U.S. Patent No. 5,095,921 (“Losee”)
`1013 U.S. Patent No. 5,591,368 (“the ’368 patent”)
`1014
`International Patent Application Publication No. WO 96/32854
`(“Baggett”)
`1015 Korean Patent No. 10-0636287 (“Park”)
`(including certified English translation and original Korean version of
`patent)
`Philip Morris Incorporated Invention Record (submitted May 19,
`1994; witnessed May 23, 1994) (“May 1994 Invention Record”)
`1017 U.S. Patent No. 4,510,950 (“Keritsis”)
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`1016
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`Ex.
`1018
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`1019
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`1020
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`Description
`Steven M. Kaplan, Wiley Electrical and Electronics Engineering
`Dictionary (2004)
`IEEE 100, The Authoritative Dictionary of IEEE Standards Terms (7th
`ed. 2000) (“IEEE Dictionary”)
`Philip Morris Incorporated Invention Record (dated October 11, 1988)
`(“October 1988 Invention Record”)
`1021 U.S. Patent No. 2,104,266 (“McCormick”)
`1022 U.S. Patent No. 5,865,185 (“Collins”)
`1023 U.S. Patent Application Publication No. 2007/0215167 (“Crooks”)
`1024 U.S. Provisional Application Serial No. 60/722,036
`1025
`Patent Owner’s infringement chart for ’123 patent, In the Matter of
`Certain Tobacco Heating Articles and Components Thereof, Inv. No.
`___, EDIS Doc. ID 707369 (Filed Apr. 9, 2020) (“Infringement
`Chart”)
`1026 U.S. Patent No. 5,498,855 (“the ’855 patent”)
`1027 Modern Dictionary of Electronics (7th ed., 1999) (excerpt)
`1028 Merriam-Webster’s Collegiate Dictionary (10th ed., 2001) (excerpt)
`1029 Concise Oxford English Dictionary (11th ed., 2008) (excerpt)
`1030
`The Lady Smokes, www.theladysmokes.com (archived at
`web.archive.org, 2006-2007)
`1031 Chambers Dictionary of Science and Technology (1999) (excerpt)
`1032 Complaint for Patent Infringement, RAI Strategic Holdings, Inc. v.
`Altria Client Services, No. 1:20-cv-393 (E.D. Va. April 9, 2020)
`1033 Document Filing Report for In the Matter of Certain Tobacco Heating
`Articles and Components Thereof, No. 337-TA-1199 (ITC filed April
`9, 2020)
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`1036
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`1037
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`Ex.
`Description
`1034 Civil docket report for RAI Strategic Holdings, Inc. v. Altria Client
`Services LLC, No. 1:20-cv-00393-LO-TCB (E.D. Va. filed April 9,
`2020)
`1035 Order Granting Defendants’ Unopposed Motion to Invoke the
`Statutory Stay of Plaintiff’s Claims Relating to U.S. Patent Nos.
`9,839,238, 9,901,123, and 9,930,915 Pursuant to 28 U.S.C. §1659, RAI
`Strategic Holdings, Inc. v. Altria Client Services LLC, No. 1:20-cv-
`00393-LO-TCB (E.D. Va. June 19, 2020), ECF No. 27
`Excerpt from Respondent’s Joint Disclosure of Final Contentions from
`ITC Investigation 337-TA-1199 (September 18, 2020) (Final
`Invalidity Contentions)
`Exhibit C1 to Respondent’s Joint Disclosure of Final Contentions from
`ITC Investigation 337-TA-1199 (September 18, 2020) (Final
`Invalidity Contentions)
`Joint Claim Construction Chart, In the Matter of Certain Tobacco
`Heating Articles and Components Thereof, No. 337-TA-1199 (ITC
`August 13, 2020)
`1039 Commission Opinion, In the Matter of Certain Unmanned Aerial
`Vehicles and Components Thereof, No. 337-TA-1133 (ITC September
`8, 2020)
`Philip Morris Products SA’s Comments to Complainants’ Public
`Interest Statement, In the Matter of Certain Tobacco Heating Articles
`and Components Thereof, No. 337-TA-1199 (ITC April 23, 2020)
`1041 Comments of The American Conservative Union, In the Matter of
`Certain Tobacco Heating Articles and Components Thereof, No. 337-
`1199 (ITC April 22, 2020)
`Public Interest Comments of the Consumer Advocates for Smoke-free
`Alternatives Association, In the Matter of Certain Tobacco Heating
`Articles and Components Thereof, No. 337-TA-1199 (ITC April 23,
`2020)
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`1042
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`1038
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`1040
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`Ex.
`1043
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`1044
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`1045
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`1046
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`1047
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`1048
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`1049
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`1050
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`1051
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`Description
`Public Interest Comments of Congressman George Holding, In the
`Matter of Certain Tobacco Heating Articles and Components Thereof,
`No. 337-TA-1199 (ITC April 15, 2020)
`Public Interest Comments of Dr. Nikan H. Khatibi, MD, In the Matter
`of Certain Tobacco Heating Articles and Components Thereof, No.
`337-TA-1199 (ITC April 23, 2020)
`Public Interest Comments of Nextera Healthcare, In the Matter of
`Certain Tobacco Heating Articles and Components Thereof, No. 337-
`TA-1199 (ITC April 23, 2020)
`Public Interest Comments of the Progressive Policy Institute, In the
`Matter of Certain Tobacco Heating Articles and Components Thereof,
`No. 337-TA-1199 (ITC April 23, 2020)
`Public Interest Comments of the Reason Foundation, In the Matter of
`Certain Tobacco Heating Articles and Components Thereof, No. 337-
`TA-1199 (ITC April 23, 2020)
`Public Interest Comments of the Schizophrenia and Related Disorder
`Alliance of America, In the Matter of Certain Tobacco Heating
`Articles and Components Thereof, No. 337-TA-1199 (ITC April 23,
`2020)
`Public Interest Comments of the Smoke-Free Alternatives Trade
`Association, In the Matter of Certain Tobacco Heating Articles and
`Components Thereof, No. 337-TA-1199 (ITC April 23, 2020)
`Public Interest Comments of Spark MD, In the Matter of Certain
`Tobacco Heating Articles and Components Thereof, No. 337-TA-1199
`(ITC April 23, 2020)
`Public Interest Comments of TechFreedom, In the Matter of Certain
`Tobacco Heating Articles and Components Thereof, No. 337-TA-1199
`(ITC April 23, 2020)
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`1053
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`1055
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`Ex.
`1052
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`Description
`FDA News release, FDA Authorizes Marketing of IQOS Tobacco
`Heating System with ‘Reduced Exposure’ Information (July 7, 2020),
`https://www.fda.gov/news-events/press-announcements/fda-
`authorizes-marketing-iqos-tobacco-heating-system-reduced-exposure-
`information
`FDA News release, FDA permits sale of IQOS Tobacco Heating
`System through premarket tobacco product application pathway (April
`30, 2019), https://www.fda.gov/news-events/press-
`announcements/fda-permits-saleiqos-tobacco-heating-system-through-
`premarket-tobacco-product-application-pathway
`1054 Brief of Amicus Curiae Fitbit, Inc. in Support of Plaintiffs’ Motion for
`Summary Judgment, Apple Inc. v. Iancu, No. 5:20-cv-06128-EJD
`(N.D. Cal Dec. 23, 2020), ECF No. 81-1
`Email from Jonathan Strang to Board, Philip Morris Products S.A. v.
`RAI Strategic Holdings, Inc., No. IPR2020-01097 (Feb. 18, 2021)
`1056 Commission Opinion, In the Matter of Certain Tobacco Heating
`Articles and Components Thereof, No. 337-TA-1199 (ITC October 19,
`2021)
`1057 Respondents’ Reply Submission to Commission’s Notice, In the
`Matter of Certain Tobacco Heating Articles and Components Thereof,
`No. 337-TA-1199 (ITC August 17, 2021)
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`Petitioner’s Rehearing Request
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`I.
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`Introduction
`It is in the interest of justice for the Board (or the Precedential Opinion Panel)
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`to grant this request for rehearing of the institution decision for U.S. Patent No.
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`9,901,123 (“’123 patent”). The USPTO Director recently confirmed that the Fintiv
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`factors do not apply, and have never applied, to parallel investigations at the U.S.
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`International Trade Commission (“ITC”). Katherine K. Vidal, Interim Procedure for
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`Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court
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`Litigation, USPTO, at 2-3, 6 (June 21, 2022) (“Director’s Memo” or “Dir. Mem.”);
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`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5-6 (Mar. 20, 2020)
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`(precedential) (“Fintiv”). The Director acknowledged, however, that the PTAB has
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`denied AIA reviews in the past based on such ITC litigation, citing the denial of this
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`IPR as her example. Dir. Mem. at 6 & n.9. Given the Director’s specific
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`pronouncements, the only possible conclusion is that the Board misapplied Fintiv
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`vis-à-vis the ’123 patent, and that, but for this misapplication, would have decided
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`the Petition on its merits rather than issuing a discretionary denial.
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`As the record confirms, Petitioner Philip Morris Products, SA (“PMP”) did
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`everything by the book in seeking review of the ’123 patent. PMP filed its IPR within
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`a month of being sued. PMP followed the guidance in the precedential Fintiv opinion
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`to address a parallel district court case. And PMP went beyond Fintiv (in an
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`abundance of caution) by unconditionally dropping invalidity defenses at the ITC to
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`ensure immediate and substantial reduction of duplicative work. The Board,
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`however, deviated from its precedent and long-standing practice and denied IPR
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`institution based on the existence of parallel ITC litigation.
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`The adverse ramifications of the Board’s abuse of discretion have been severe.
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`Not only did the Board’s misapprehension of Fintiv deprive PMP of proper
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`administrative process, it adversely affected important public health initiatives to
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`reduce smoking rates. The ’123 patent is the only not-yet-invalidated patent
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`preventing PMP from supplying over thirty million American smokers with IQOS,
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`an alternative to combustible cigarettes the U.S. Food and Drug Administration
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`(“FDA”) has deemed beneficial to public health. Exs. 1052, 1053.
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`PMP’s request is reasonable, narrow, and its only recourse to redress the
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`Board’s arbitrary and capricious misapplication of Fintiv.1 Accordingly, there is
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`good cause to grant this Request.
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`1 Granting PMP’s Petition does not disturb all improper institution denials based on
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`parallel ITC actions and Fintiv misinterpretation, but rather only under limited
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`circumstances where: (i) the petitioner dropped overlapping invalidity theories from
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`a parallel ITC matter; (ii) the ITC found that the petitioner infringed the patent
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`covered in the denied IPR; (iii) the petitioner is subject to ITC remedial orders based
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`on that infringement; and (iv) those orders ban products beneficial to public health.
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`2
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`II. Relevant Background
`Less than one month after being accused of patent infringement in the ITC
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`and in the U.S. District Court for the Eastern District of Virginia (“EDVA”), PMP
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`filed its IPR petition on May 8, 2020. Reply to POPR at 2 (Paper 7, “Reply”). This
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`was before the parties had served discovery, exchanged contentions, or answered the
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`complaint in either action. Reply 2. It was even before the ITC instituted its
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`investigation. Id. Shortly thereafter, the EDVA case was stayed as to the ’123 patent
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`pending resolution of the ITC matter. Id.
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`On August 17, 2020, RAI Strategic Holdings, Inc. (“RJR”) filed its POPR
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`(Paper 6), and on September 18, 2020, PMP filed its Reply (Paper 7). Fintiv already
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`had been designated precedential (on May 5, 2020), but with one distinguishable
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`exception, the Board had never before denied IPR institution due to the existence of
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`parallel ITC litigation. Ex. 1054 at 16-18 (listing thirty-five grants before September
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`14, 2020); cf. Bio-Rad Labs., Inc. v. 10x Genomics, Inc., IPR2019-00567, Paper 23
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`at 26-29 (Aug. 8, 2019) (denying institution where ITC already had issued its Initial
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`Determination addressing the same claims, same art, and testimony from same
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`declarants). Nonetheless, to ensure IPR institution of the ’123 patent, PMP dropped
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`nearly all of its overlapping invalidity theories from the ITC investigation.
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`On October 19, 2020, without explanation and after pre-institution briefing in
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`this IPR was complete, the PTAB reversed its long-standing NHK/Fintiv practice
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`and began denying IPR institution because of parallel ITC matters. See Ex. 1054 at
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`16-18. Shortly thereafter, on November 16, 2020, the Board denied institution of this
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`IPR, similarly misapplying Fintiv and finding that:
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`[T]he proximity of the anticipated ITC hearing date, combined with an
`anticipated final determination from the ITC prior to the Board’s final
`decision on validity of claims in dispute between the same parties,
`outweigh the relatively moderate investment to date in the ITC
`proceeding, the Petitioner’s diligence in filing the Petition less than one
`month after Patent Owner filed its complaints in the ITC proceeding
`and the related district court action, and the lack of complete overlap in
`the prior art asserted. Thus, we determine that the facts presented weigh
`in favor of exercising discretion to deny institution in this instance.
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`Paper 9 at 12-13 (“Institution Decision” or “Inst. Dec.”) (per curiam).
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`III. Good Cause And The Interests Of Justice Warrant Rehearing
`Given the rare circumstances presented here, the Board should grant PMP’s
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`rehearing request. Although the standard thirty-day time limit for rehearing requests
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`on decisions denying institution has passed, the Board may waive such requirements
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`without any showing. 37 C.F.R. § 42.5(b). In addition, “[a] late action will be
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`excused on a showing of good cause or upon a Board decision that consideration on
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`the merits would be in the interests of justice.” 37 C.F.R. § 42.5(c)(3).2 Here, both
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`2 Unless otherwise noted, all emphases are added and citations omitted.
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`good cause and the interests of justice warrant rehearing.
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`A. The Board’s Fintiv application was improper and unpredictable
`As the Director’s Memo reflects, the Board unequivocally misapplied Fintiv
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`in denying IPR institution for the ’123 patent. Dir. Mem. at 2-3, 6 & n.9. The “plain
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`language of the Fintiv factors” does not apply to the ITC—not now, not ever. Id.
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`Fintiv “seek[s] to avoid duplicative efforts between the PTAB and the federal
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`district courts,” not the ITC. Id. at 5-6; Fintiv at 6-15. Further, denying an IPR due
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`to a co-pending ITC action does nothing to maintain patent quality, a key focus of
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`Fintiv, because the ITC cannot cancel patents. Dir. Mem. at 6-7; Samsung Elecs. Co.
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`v. Dynamics Inc., IPR2020-00499, Paper 41 at 11-16 (Aug. 12, 2020), reh’g denied,
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`Paper 46 (Oct. 5, 2020) (and similar related cases IPR2020-00502, -00504, and
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`-00505); 3Shape A/S v. Align Tech., Inc., IPR2020-00223, Paper 12 (May 26, 2021);
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`Apple Inc. v. Neodron Ltd., IPR2020-00779, Paper 10 (Sept. 14, 2020) (and similar
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`related case IPR2020-00778).
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`If the Board had applied Fintiv correctly and removed the ITC parallel
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`litigation from consideration, the Board would have instituted review for the ’123
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`patent. For example, Fintiv Factor 1 addresses “whether there is a parallel district
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`court case that is ongoing or stayed,” Fintiv Factor 2 addresses “the court’s trial
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`date,” and Fintiv Factor 3 addresses “investment in the parallel proceeding by the
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`court and the parties.” Fintiv at 6-8. These factors each strongly favored PMP
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`5
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`because the EDVA case had been (and remains) stayed, with no trial date assigned
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`and practically zero investment thus far. Fintiv Factor 6, which addresses “other
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`circumstances that impact the Board’s exercise of discretion,” also favored PMP,
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`given the public health issues tied to the ’123 patent, discussed, infra. Id. The Board,
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`however, improperly relied on the existence of a parallel ITC action to justify its
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`denial—a determination PMP could not have predicted. Inst. Dec. 12-13.
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`Consequently, the Board’s Institution Decision was arbitrary and capricious;
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`it should be revisited. As the Supreme Court has explained:
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`[Even if] the agency’s discretion is unfettered at the outset, if it
`announces and follows—by rule or by settled course of adjudication—
`a general policy by which its exercise of discretion will be governed,
`an irrational departure from that policy (as opposed to an avowed
`alteration of it) could constitute action that must be overturned as
`“arbitrary, capricious, [or] an abuse of discretion” within the meaning
`of the Administrative Procedure Act.
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`INS v. Yang, 519 U.S. 26, 32 (1996); McCarthy v. Merit Sys. Prot. Bd., 809 F.3d
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`1365, 1372 (Fed. Cir. 2016) (quoting the above).
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`When the Board “decides to depart significantly from its own precedent, it
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`must confront the issue squarely and explain why the departure is reasonable, the
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`obvious goal being to avoid arbitrary action.” Thompson v. Barr, 959 F.3d 476, 484
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`(1st Cir. 2020) (internal quotation marks omitted); see Verizon Tel. Cos. v. FCC, 570
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`F.3d 294, 301 (D.C. Cir. 2009) (stating that if an agency “changes course, it ‘must
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`supply a reasoned analysis’ establishing that prior policies and standards are being
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`deliberately changed”) (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
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`Ins. Co., 463 U.S. 29, 57 (1983)). “[A]dministrative agencies must apply the same
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`basic rules to all similarly situated supplicants. An agency cannot merely flit
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`serendipitously from case to case, like a bee buzzing from flower to flower, making
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`up the rules as it goes along.” Henry v. INS, 74 F.3d 1, 6 (1st Cir. 1996); see SKF
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`USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001).
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`The Board failed to provide a reasoned analysis for its unannounced departure
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`from Fintiv and its well-established practice based on the Fintiv ruling. Until mid-
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`October 2020, the Board granted institution in thirty-five of thirty-six instances
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`where there was parallel ITC litigation. See Section II, supra. Then, without warning
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`or justification, the Board changed its approach and issued a string of twenty denials
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`based on the existence of a co-pending ITC matter. That is the definition of arbitrary
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`and capricious.
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`The Director’s Memo validates that Fintiv never supported the Institution
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`Decision. Because there is no judicial review of institution denials, however, this
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`request is the sole procedural avenue to redress the Board’s irrefutable
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`misapplication of this precedential case. Dir. Mem. at 5-6; Mylan Labs. Ltd. v.
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`Janssen Pharmaceutica, N.V., 989 F.3d 1375, 1379 (Fed. Cir. 2021). Therefore,
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`rehearing is merited.
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`7
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`B.
`PMP relinquished rights in reliance on Fintiv
`Although Fintiv was never meant to apply to parallel ITC litigation, in an
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`abundance of caution, PMP categorically dropped nearly all of its IPR grounds from
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`the ITC investigation in an effort to immediately minimize overlap per Fintiv Factor
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`4 and ensure that its IPR Petition would be decided on its merits. Fintiv at 6; Reply
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`at 4-5; Inst. Dec. 11-12.
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`The IPR petition for the ’123 patent contended that the challenged claims were
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`unpatentable over (i) Morgan combined with a POSA’s knowledge and/or Adams to
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`center Morgan’s heater, (ii) starting with Adams’ centered heater instead, and using
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`Morgan to fill in the details of a surrounding device, and (iii) Counts-962 with its
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`centered heater.3 Adopting Fintiv’s emphasis on “system efficiency, fairness, and
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`patent quality,” PMP took the most effective, albeit overcautious, course of action
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`and relinquished all of those theories at the ITC, save one portion of the first, to
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`immediately halt duplicative work.4 See Fintiv at 5. The ITC subsequently found that
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`3 These grounds also included Brooks, in case the “controller” was construed as a
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`means-plus-function term. See, e.g., Pet. 34-35.
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`4 A stipulation would not have facilitated efficiency. The parties would have had to
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`continue litigating PMP’s invalidity theories at the ITC while waiting for the
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`stipulation to take effect (on the IPR’s institution), which would not have been until
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`8
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`PMP had failed to prove by clear and convincing evidence that a POSA would have
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`placed the heater in the middle of the device—as expressly taught by the primary
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`references in two of PMP’s IPR grounds, and a secondary reference in the remaining
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`ground. Thus, PMP sacrificed critical defenses at the ITC without any IPR benefit
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`due to the Board’s misapplication of Fintiv (i.e., considering ITC parallel
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`proceedings and failing to properly consider PMP’s Factor 4 efforts).
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`Ironically, after the Board issued twenty-one Fintiv-based IPR denials in a
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`row (of which this case was the seventh), PMP was the first to obtain an IPR
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`institution for U.S. Patent No. 9,930,915 (“’915 patent”), which also was asserted in
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`the ITC. Ex. 2026 at 19. PMP accomplished this by dropping all of its IPR-eligible
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`invalidity defenses from the ITC investigation. IPR2020-01094, Paper 9 at 21-23
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`(Jan. 25, 2021). Such drastic measures are not required under Fintiv, and granting
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`this Request will allow the Board on rehearing to determine whether to institute
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`review based on the merits of the Petition.
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`C. Rehearing is needed to safeguard public health
`Public health concerns, alone, provide sufficient good cause to grant PMP’s
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`Request. FDA, the agency charged with regulating tobacco products, has concluded
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`that PMP’s IQOS device, an alternative to combustible cigarettes, will benefit public
`
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`around the time of the ITC evidentiary hearing.
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`9
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`health. Ex. 1052 at 1, 3; Ex. 1053 at 1. And it is only the unreviewed ’123 patent
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`preventing access to these much needed products.
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`According to the Centers for Disease Control and Prevention, over thirty
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`million Americans smoke cigarettes, and smoking remains the leading cause of
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`preventable disease in the United States, accounting for more than 480,000 deaths
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`every year. Current Cigarette Smoking Among Adults in the United States, CDC,
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`https://www.cdc.gov/tobacco/data_statistics/fact_sheets/adult_data/cig_smoking/
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`index.htm (last visited July 11, 2022); Ex. 1045 at 3; Ex. 1048 at 3. Many, if not
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`most, smokers will never quit tobacco use altogether. Ex. 1045 at 2-3; Ex. 1050 at
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`2-3; Ex. 1051 at 3-4. For that reason, PMP’s IQOS heat-not-burn device was created
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`as part of a reduced harm paradigm. This smoke-free product helps to transition
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`smokers away from combustible cigarettes—the most deadly form of tobacco use—
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`to less harmful alternatives. It is available in dozens of countries, has tens of millions
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`of users worldwide, and a conversion rate above 70%. Ex. 1043 at 2.
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`In the United States, after years of “rigorous science-based review,” FDA
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`awarded IQOS two rare and coveted authorizations to sell its products: (i) premarket
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`tobacco (“PMT”) authorization, which requires a showing that IQOS is “appropriate
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`for the protection of the public health”; and (ii) modified risk tobacco product
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`(“MRTP”) authorization, which requires a showing that IQOS “is expected to benefit
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`the health of the population.” Ex. 1052 at 1; Ex. 1053 at 1; Ex. 1043 at 1-2.
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`10
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`“[T]hrough the FDA’s scientific evaluation of the company’s applications, peer-
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`reviewed published literature and other sources, the agency found that the aerosol
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`produced by the IQOS Tobacco Heating System contains fewer toxic chemicals than
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`cigarette smoke, and many of the toxins identified are present at lower levels than in
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`cigarette smoke”—up to 95% lower. Ex. 1053 at 2.
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`The Board overlooked the importance of IQOS to public health (raised at
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`Reply 6-7) when it refused institute this IPR. As for the other two patents at issue in
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`the ITC investigation, as discussed above, the Board instituted review of the ’915
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`patent after PMP dropped all of its IPR-eligible defenses from the ITC matter, and
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`found all challenged claims unpatentable. IPR2020-01094, Paper 9 at 19-25 (Jan.
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`25, 2020) and Paper 29 (January 11, 2022). In contrast, PMP did not drop any of its
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`IPR-eligible defenses for U.S. Patent No. 9,839,238 (“’238 patent”), and the Board
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`denied IPR institution for that patent. IPR2020-01097, Paper 9 (Jan. 19, 2021). The
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`ITC, however, found those claims invalid and not infringed. Comm’n Op., In the
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`Matter of Certain Tobacco Heating Articles and Components Thereof, Inv. No. 337-
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`TA-1199, at 38-40 (ITC Oct. 19, 2021) (Ex. 1056). Consequently, the ’123 patent is
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`the only not-yet-invalidated patent preventing current US smokers from enjoying the
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`health benefits of IQOS.
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`To date, IQOS remains the only heat-not-burn device that has earned both
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`PMT and MRTP authorizations in the twenty-three year history of the Family
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`11
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`Smoking Prevention and Tobacco Control Act. Ex. 1046 at 2; Ex. 1051 at 5; see Pub.
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`L. No. 111-31, § 2(40), 123 Stat. 1776, 1780 (2009). It most closely resembles the
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`taste and ritual of smoking, which increases the likelihood of switching from
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`conventional cigarettes, and – unlike e-cigarettes – youth are unlikely to use IQOS.
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`Ex. 1042 at 4; Ex. 1044 at 3; Ex. 1047 at 4; Ex. 1051 at 4.
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`A variety of groups and individuals have lauded the attributes of IQOS,
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`including the American Cancer Society; unsurprisingly, many have expressed
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`concern that removing IQOS from the U.S. market is deleterious to public health.
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`Ex. 1040 at 2, 3 (referencing American Cancer Society study and views of public
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`health experts that IQOS is needed to fulfill FDA’s initiative to reduce smoking);
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`Ex. 1047 at 4 (describing American Cancer Society study); see generally Exs. 2026,
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`1044.5 At a minimum, given the unique public health implications entwined with the
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`’123 patent, it is in the interest of justice for the Board to grant rehearing and review.
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`5 Dozens of IQOS users, health experts, and non-profit organizations have filed
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`additional public comments with the ITC describing the drastic, negative effects a
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`ban on IQOS has. Certain Tobacco Heating Articles and Components Thereof, Inv.
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`No. 337-TA-1199, Resp’ts Reply Submission to Comm’n Notice, at 34, 41-45, 48-
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`51, 54-56, 59, 61-62 (ITC Aug. 17, 2021) (Ex. 1057) (discussing dozens of public
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`interest comments filed at ITC in support of keeping IQOS on the U.S. market).
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`12
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`IPR2020-00919 (USP 9,901,123)
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`Petitioner’s Rehearing Request
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`D.
`Prior pursuit of a rehearing would have been futile
`PMP’s Petition, from a practical perspective, is timely. Had PMP filed earlier,
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`the Board simply would have denied rehearing or POP review. In fact, months after
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`the Institution Decision denying review in this IPR, the Board confirmed the futility
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`o
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