Paper No. ___
`Filed: February 10, 2016
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_____________________________
`
`
`
`ALTAIRE PHARMACEUTICALS, INC.,
`Petitioner,
`
`v.
`
`PARAGON BIOTECK, INC.,
`Patent Owner.
`_____________________________
`
`Case PGR2015-00011
`Patent 8,859,623
`
`_____________________________
`
`
`
`PATENT OWNER’S RESPONSE
`PURSUANT TO 37 C.F.R. § 42.220
`
`
`
`REDACTED 4/8/2016
`
`

`
`TABLE OF CONTENTS
`
`Case PGR2015-00011
`Patent 8,859,623
`
`Page
`
`I.
`
`II.
`
`STATEMENT OF PRECISE RELIEF REQUESTED ................................. 1
`
`INTRODUCTION AND OVERVIEW OF ARGUMENT ........................... 1
`
`III. BACKGROUND ......................................................................................... 4
`
`A.
`
`B.
`
`C.
`
`D.
`
`The ’623 patent claims cold storage of phenylephrine to
`maintain chiral purity ......................................................................... 4
`
`The USP method for assessing chiral purity of phenylephrine
`does not work..................................................................................... 5
`
`The business dispute between the Sawayas and Paragon .................... 7
`
`The Sawayas’ complete control of Altaire and Sawaya
`Aquebogue ....................................................................................... 10
`
`IV. CLAIM CONSTRUCTION ....................................................................... 13
`
`V.
`
`PETITIONER FAILED TO IDENTIFY ALL REAL PARTIES IN
`INTEREST ................................................................................................ 14
`
`A.
`
`B.
`
`C.
`
`D.
`
`The declaration of Al Sawaya is not credible ................................... 16
`
`The Sawayas are RPIs ...................................................................... 20
`
`Sawaya Aquebogue is an RPI .......................................................... 21
`
`Correcting RPI would be futile ........................................................ 28
`
`VI. THE PETITION IS SUPPORTED SOLELY BY ATTORNEY
`ARGUMENT............................................................................................. 28
`
`A. Al Sawaya is not an expert witness .................................................. 29
`
`B.
`
`Al Sawaya does not have personal knowledge of the tests and
`data submitted in support of the Petition .......................................... 30
`
`VII. PETITIONER’S TESTS AND DATA DO NOT MEET THE
`REQUIREMENTS OF 37 CFR § 42.65 ..................................................... 31
`
`A.
`
`B.
`
`Background regarding the requirement for tests and data under
`37 C.F.R. § 42.65 ............................................................................. 32
`
`The declaration of Al Sawaya does not satisfy the requirements
`for tests and data under 37 C.F.R. § 42.65 ....................................... 34
`
`1.
`
`2.
`
`The HPLC tests and data are unsupported .............................. 34
`
`The optical rotation tests and data are unsupported ................ 37
`
`
`
`-i-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`VIII. PETITIONER CANNOT ESTABLISH THAT ALTAIRE’S
`PRODUCT MEETS THE LIMITATIONS OF CLAIM 1 .......................... 38
`
`A.
`
`The USP standard HPLC protocol used by Petitioner does not
`reliably detect chiral impurity and does not establish the chiral
`purity of Altaire’s Product ............................................................... 38
`
`1.
`
`2.
`
`Petitioner’s methodology ....................................................... 38
`
`Petitioner’s HPLC evidence does not establish chiral
`purity of Altaire’s Product ..................................................... 42
`
`B.
`
`Petitioner’s optical rotation evidence does not establish the
`chiral purity of Altaire’s Product ...................................................... 43
`
`1.
`
`2.
`
`The optical rotation tests compare Altaire’s Product to a
`sample of unknown purity ...................................................... 43
`
`The optical rotation tests proffered by Petitioner is
`incapable of establishing chiral purity of at least 95% ............ 46
`
`C.
`
`Petitioner does not establish the storage conditions of Altaire’s
`Product ............................................................................................ 48
`
`IX. PETITIONER HAS NOT DEMONSTRATED THAT THE CLAIMS
`WOULD HAVE BEEN OBVIOUS TO A PERSON OF ORDINARY
`SKILL IN THE ART ................................................................................. 53
`
`X.
`
`CONCLUSION ......................................................................................... 54
`
`XI. APPENDIX ............................................................................................... 55
`
`
`
`-ii-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Assad (“Al”) and Theresa Sawaya (as a marital couple, “the Sawayas”)—in
`
`the guise of a company they wholly own and control, Altaire Pharmaceuticals, Inc.
`
`(“Altaire”)1—filed a Petition for post-grant review of claims 1-13 of U.S. Patent
`
`No. 8,859,623 (“the ’623 patent,” Ex. 1001) owned by Paragon BioTeck, Inc.
`
`(“Paragon”). The Board issued a decision instituting trial (“Institution Decision,”
`
`Paper 14) on only one ground of challenge, which alleges that claims 1-13 of the
`
`’623 patent are unpatentable as obvious over Altaire’s Product under 35 U.S.C. §
`
`103.
`
`Paragon requests that the Board now dismiss the sole ground of challenge
`
`remaining in this post-grant review, so as to confirm the patentability of claims 1-
`
`13 of the ’623 patent.
`
`II.
`
`INTRODUCTION AND OVERVIEW OF ARGUMENT
`
`First, the Petition should be dismissed because the Sawayas cannot establish
`
`that they have complied with the requirements of 35 U.S.C. § 322(a)(2) and 37
`
`C.F.R. § 42.8(b)(1) that a petition must identify all real parties-in-interest (“RPIs”).
`
`The Petition lists Altaire as the sole RPI. In instituting trial, the Board relied on the
`
`declaration testimony of Al Sawaya. Following the deposition of Al Sawaya, it is
`
`
`1 Assad Sawaya goes by the name Al (Ex. 2034, 4:19-25); for clarity, this paper
`
`refers to him as Al Sawaya, which seems to be the name he prefers.
`
`
`
`-1-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`now apparent that, whether knowingly or not, Al Sawaya’s declaration contains
`
`numerous falsehoods. The Petition was filed at the behest of the Sawayas. Sawaya
`
`Aquebogue, LLC (“Sawaya Aquebogue”) and Altaire are each alter egos of the
`
`Sawayas, owned and controlled by the Sawayas. Sawaya Aquebogue is a sham
`
`company with no apparent legitimate purpose, which is now being used to attempt
`
`to shield assets, unjustly obtained by the Sawayas, from recovery by Paragon.
`
`Accordingly, the Petition was required to list the Sawayas and Sawaya Aquebogue
`
`as RPIs, but it did not. Amending the Petition would be futile, because the nine
`
`month statutory bar has passed, and so the Petition should be dismissed.
`
`Second, the Petition is supported solely by attorney argument. The Sawayas’
`
`only declarant, Al Sawaya himself, is not qualified as an expert witness.
`
`Accordingly, his opinion testimony is entitled to no weight. Moreover, to the
`
`extent that Al Sawaya provided any non-opinion testimony, it is now apparent that
`
`his testimony is based on inadmissible hearsay rather than personal (that is,
`
`firsthand) knowledge, and is also entitled to no weight. In other words, the Petition
`
`and the unpatentability contentions it contains amount to nothing more than
`
`attorney argument. As the Petition is not supported by any evidentiary foundation,
`
`it should be dismissed.
`
`Third, the Sawayas did not provide the experimental details both required by
`
`the Board’s rules and necessary to evaluate the experimental data submitted with
`
`-2-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`the Petition. The lack of experimental details prevents one from properly
`
`evaluating the experimental data and fails to sufficiently inform Paragon of the
`
`nature of the unpatentability contentions. Accordingly, the experimental data is
`
`entitled to no weight. Again, lacking evidentiary foundation, the Petition should be
`
`dismissed.
`
`Finally, the Sawayas have not, and cannot, establish that Altaire’s Product
`
`meets the limitations of independent claim 1 of the ’623 patent, or any of the
`
`claims that depend from it. The Sawayas have not established that Altaire’s
`
`Product was ever stored at the cold temperatures required by the claims for the
`
`period of time required by the claims, let alone that Altaire’s Product had the
`
`required chiral purity prior to such storage and maintained the required chiral
`
`purity over such a period of storage. The Board instituted trial because it was not
`
`yet convinced that Paragon had “discredit[ed] the USP standard HPLC method
`
`utilized by Petitioner.” Paragon has performed further experimentation that
`
`conclusively demonstrates the inability of the USP-standard HPLC method to
`
`separate phenylephrine enantiomers. Consequently, the Sawayas cannot
`
`demonstrate that Altaire’s Product had the required chiral purity using HPLC, nor
`
`can they demonstrate the required chiral purity using optical rotation. Accordingly,
`
`the Petition fails on the merits, and the patentability of the claims of the ’623
`
`patent should be confirmed.
`
`-3-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`III. BACKGROUND
`
`A. The ’623 patent claims cold storage of phenylephrine to maintain
`chiral purity
`
`The origin of the ’623 patent is in two discoveries made by Paragon. The
`
`first is that, contrary to conventional wisdom in the industry (Ex. 1003 ¶ 53),
`
`solutions of the R-form of phenylephrine suffer substantial degradation when
`
`stored at room temperature, but not when stored in the cold. Ex. 1001, 10:30-49;
`
`Ex. 1002, pp. 108-113. The second is that, also contrary to conventional wisdom in
`
`the industry (Ex. 1003 ¶ 9), the S-form of phenylephrine is not inactive, but rather
`
`is less active than the R-form. Ex. 1001, 7:1-7; Ex. 1002, p. 111. The latter
`
`discovery suggested to Paragon that, similar to the R-form of phenylephrine, the S-
`
`form of phenylephrine likely binds to the α-adrenergic receptor. Ex. 1001, 7:8-15.
`
`As a result, any S-form contamination in ophthalmic solutions of phenylephrine
`
`could interfere with the much more active R-form. Id. In other words, the S-form
`
`may be acting as a competitive inhibitor of the R-form, resulting in decreased
`
`pharmacologic effect per given dose. Ex. 1001, 7:8-15; Ex. 1002, p. 109. These
`
`discoveries led to the novel and nonobvious method of treatment claimed in the
`
`’623 patent.
`
`-4-
`
`REDACTED 4/8/2016
`
`

`
`B.
`
`The USP method for assessing chiral purity of phenylephrine does
`not work
`
`Paragon also discovered that the High Performance Liquid Chromatography
`
`Case PGR2015-00011
`Patent 8,859,623
`
`(“HPLC”) method published by the U.S. Pharmacopeial Convention (“USP”) for
`
`assessing purity of R-phenylephrine does not separate phenylephrine enantiomers.
`
`Ex. 1002, p. 110; see also infra. Instead, the R- and S-forms of phenylephrine elute
`
`from the column at the same time (that is, the enantiomers form one peak on the
`
`chromatogram). Ex. 1002, p. 110. That the USP method does not separate
`
`enantiomers means it is not possible to assess chiral purity using that method.
`
`Paragon developed a new method based on HPLC columns using chiral solid
`
`support, which enabled separation of phenylephrine enantiomers, and as a result,
`
`determination of the chiral purity of phenylephrine solutions. Ex. 1001, 10:55-
`
`11:41.
`
`The discovery that the USP method does not separate phenylephrine
`
`enantiomers has implications for the quality of drugs approved by the U.S. Food
`
`and Drug Administration. The Food, Drug, and Cosmetic Act (“FDCA”) sets out
`
`the ways in which a drug “shall be deemed to be adulterated.” 21 U.S.C. § 351. In
`
`particular, under the FDCA, a drug is deemed adulterated if “it purports to be or is
`
`represented as a drug the name of which is recognized in an official compendium,
`
`and its strength differs from, or its quality or purity falls below, the standard set
`
`forth in such compendium.” 21 U.S.C. § 351(b). One of the compendiums
`
`-5-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`recognized by the FDCA is the USP Compendium (also commonly referred to as
`
`the “USP”). Id. USP is a standards setting organization that develops and publishes
`
`standards for drug substances. Ex. 2011, p. 1. The FDA specifically recognizes the
`
`USP as a source for analytical procedures and allows New Drug Applications
`
`(“NDAs”) to merely reference the USP method without the need for otherwise
`
`detailing the methodology used.2 Ex. 2011, p. 1. Phenylephrine, along with the
`
`means of establishing its purity, is recognized in the USP Compendium. Ex. 2020.
`
`The discovery that the USP method does not separate phenylephrine
`
`enantiomers also has implications for the quality of phenylephrine standards sold
`
`in the United States. While the USP does not disclose the methods employed to
`
`validate the purity of the standards it sells (Ex. 2018), it is reasonable to assume
`
`that they employ the methods developed in-house. Consequently, if the USP
`
`method for validating purity of phenylephrine (for example, HPLC and optical
`
`rotation) is incapable of establishing chiral purity, it is reasonable to assume that
`
`
`2 NDAs are one of the ways in which drug sponsors apply to the FDA for
`
`approval to market a new pharmaceutical. Prior to Paragon’s NDA, ophthalmic
`
`phenylephrine hydrochloride solutions were marketed under a “grandfather”
`
`provision and not subject to FDA regulation. However, the FDA in recent years
`
`has mounted an effort to bring such unregulated drugs into the drug approval
`
`process.
`
`-6-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`the stated purity of the standard sold by USP does not reliably reflect actual purity.
`
`Ex. 2018. Furthermore, given the role of USP in the United States in developing
`
`standards, other suppliers, such as Sigma-Aldrich, rely on USP methods for
`
`verifying the purity of their phenylephrine products. Ex. 2038, p. 2.
`
`C. The business dispute between the Sawayas and Paragon
`
`The genesis of the dispute between the Sawayas and Paragon, and thus this
`
`post-grant review proceeding,3 is a contract under which Altaire was to become the
`
`exclusive manufacturer for an ophthalmic phenylephrine solution for which
`
`Paragon was pursuing an NDA. Ex. 2001, pp. 6-10; Ex. 1003 ¶ 7. Under this
`
`agreement, Altaire was to provide the chemistry, manufacturing, and controls
`
`(CMC) data for use in the NDA submission. Ex. 2001, pp. 6-10; Ex. 1003 ¶ 7. The
`
`contract also contained a nondisclosure agreement, which provided that “any/all
`
`CMC writings, documents, data and/or information disclosed pursuant to the
`
`AGREEMENT are the proprietary and confidential information of Altaire.”
`
`Ex. 2001, p. 8. The nondisclosure agreement also provided that information that
`
`
`3 In the Institution Decision, the Board noted that the related district court cases
`
`“appear to involve issues unrelated to the ’623 patent.” Paper 14 at 2. As explained
`
`here, although the ’623 patent has not been asserted or challenged in the district
`
`court cases to date, the district court litigation arises from the same common
`
`nucleus of operative facts as this proceeding.
`
`-7-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`was in the public domain “through no fault of Paragon” was outside the scope of
`
`the agreement. Ex. 2001, p. 8.
`
`In return for Altaire providing the CMC data, Paragon agreed to give
`
` to the Sawayas, via Sawaya Aquebogue,
`
`
`
`
`
`. Ex. 2001, p. 6. Therefore, Sawaya Aquebogue is a third party
`
`beneficiary of the contract between Altaire and Paragon. Id. There is no apparent
`
`legitimate reason for Sawaya Aquebogue to hold
`
` rather than Altaire. The
`
`only explanation provided by Al Sawaya during his deposition is that Altaire “is
`
`not interested in owning
`
`.” Ex. 2034, 32:3-9. The
`
`Sawayas, through counsel representing both Altaire and Sawaya Aquebogue, are
`
`currently seeking to have Sawaya Aquebogue dismissed from the district court
`
`litigation, apparently in order to shield the Paragon assets currently held by Sawaya
`
`Aquebogue from recovery in the district court. See, e.g., Ex. 2033.
`
`The relationship between the Sawayas and Paragon fell apart when the
`
`Sawayas became aware of the ’623 patent. Ex. 1003 ¶ 7. The Sawayas now assert
`
`that Altaire’s proprietary and confidential information was disclosed in the
`
`specification of the ’623 patent. Ex. 1003 ¶ 7. Accordingly, the Sawayas filed both
`
`a breach of contract claim against Paragon in district court, and the Petition for
`
`post-grant review of the ’623 patent that initiated these proceedings. Ex. 2015.
`
`During his deposition, Al Sawaya identified only Example 1 of the ’623 patent as
`
`-8-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`containing Altaire proprietary and confidential information allegedly disclosed by
`
`Paragon. Ex. 1003 ¶ 15; Ex. 2034, 63:3-16. However, the alleged proprietary
`
`formulation was publically available prior to the signing of the nondisclosure
`
`agreement by Paragon. See, Ex. 1003 ¶¶ 16, 24 n.3; Ex. 1008; Ex. 2023.
`
`According to Al Sawaya during his deposition, the interest that Altaire has in
`
`the present proceedings is “the ability to control its intellectual property” referring
`
`to the formulation. Ex. 2034, 62:17-24. The formulation is not claimed in the ’623
`
`patent. Ex. 1001, 12:39-13:14. Al Sawaya indicated that cancellation of the ’623
`
`patent “would return and restore the science of phenylephrine to where it belongs
`
`without any fantasy.” Ex. 2034, 16:7-21. Al Sawaya does not have any formal
`
`technical education. Id. at 16:3-6 (“Q. What’s the highest level of formal education
`
`you’ve attained? A. I have no degrees, if that’s what you want.”). As discussed in
`
`more detail below, the ’623 patent is based on analytical chemistry, not fantasy.
`
`Although unidentified by Al Sawaya, filing of the Petition could also have been
`
`expected to provide the Sawayas additional leverage against Paragon in their
`
`business dispute.
`
`-9-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`D. The Sawayas’ complete control of Altaire and Sawaya Aquebogue
`
`Altaire4 is a New York corporation founded in 1991 (Ex. 2030, p. 1) by the
`
`married couple Al and Theresa Sawaya (Ex. 2034, 7:18-24).5 The Sawayas are the
`
`sole shareholders of Altaire. Ex. 2034, 16:17-21. The Sawayas are the sole
`
`members of the board of directors of Altaire. Ex. 2030, p. 7; Ex. 2034, 7:6-10.
`
`Publicly available documents indicate that Al Sawaya is the President of Altaire
`
`and Theresa Sawaya is the Secretary of Altaire. Ex. 2030, p. 7. There do not appear
`
`to be any other corporate officers.6 The Sawayas founded Altaire because they
`
`
`4 The name Altaire is a combination of the names of Al and Terry Sawaya.
`
`Ex. 2034, 7:18-8:3.
`
`5 Al Sawaya’s testimony during deposition that the formation of Altaire “would
`
`have to be in the 19- -- in late 1990s” (Ex. 2034, 7:18-22) appears to have been in
`
`error.
`
`6 Al Sawaya’s testimony during deposition that Theresa Sawaya is also the
`
`Treasurer of Altaire is suspect given his apparent lack of understanding regarding
`
`what a corporate officer is. Ex. 2034, 18:18-23 (“I don’t know what [counsel for
`
`Paragon] means by officers, so. . .”), 19:13-17 (“Perhaps if you can enlighten me
`
`and describe to me what do you mean, if there’s a legal meaning to what you
`
`consider an officer of the corporation, because I don’t understand what you’re
`
`asking me.”). Accordingly, his identification of Joseph Sawaya (id. at 19:4-10
`
`-10-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`wished to be in business. Ex. 2034, 20:14-19 (“What kind of question is that, why?
`
`Because I want to be in business.”). Although Al Sawaya indicated that he did not
`
`“want to answer” questions relating to the operations of Altaire’s board of
`
`directors, among other things, Altaire seems to be run by the Sawayas without any
`
`regard for corporate formalities. See, e.g., id. at 8:12-9:19 (“There’s agreement
`
`where the decisions are made, . . .”).
`
`Sawaya Aquebogue7 is a New York limited liability company founded in
`
`1998 (Ex. 2031, p. 1) by the Sawayas (Ex. 2034, 20:21-21:8). The Sawayas are the
`
`sole general partners of Sawaya Aquebogue. Id. at 23:15-24. Al Sawaya may also
`
`be the General Manager of Sawaya Aquebogue. Compare Ex. 1022, ¶ 1 (“I am also
`
`General Manager of Sawaya Aquebogue, LLC”) with Ex. 2034, 25:24-26:9 (“Q.
`
`You are the general manager of Sawaya Aquebogue, LLC, correct? A. I’m one of
`
`the general partners, not the – not the general – the only general, you know. It’s
`
`
`(“He’s my brother, and I love him.”)) as a corporate officer who he asserted is “the
`
`sales and marketing manager, director, whatever” of Altaire is suspect (id. at 19:5-
`
`6, 18:18-21).
`
`7 Aquebogue, New York is the hamlet in which Altaire is located. Ex. 2034,
`
`20:21-21:16.
`
`-11-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`shared.”). The Sawayas’ three sons—Michael, Alan, and Paul8—are limited
`
`partners with no control over Sawaya Aquebogue. Ex. 2034, 23:22-25:18, 26:17-
`
`27:5. Al Sawaya was unable or unwilling to identify what percentage ownership
`
`the sons may have in Sawaya Aquebogue. Id. at 24:5-25:9 (“Q. Can you give a
`
`rough estimate? A. I can’t. Q. What percentage of ownership do you and your wife
`
`have in [Sawaya Aquebogue]? A. I don’t know. I can’t answer the question.”).
`
`Sawaya Aquebogue was formed as a real estate holding vehicle. Id. at 27:6-16. It
`
`owns Altaire’s manufacturing facilities which it “rents” to Altaire. Id. at 21:21-
`
`22:21.9 It also holds
`
`Id. at 29:11-14.
`
`.
`
`Al Sawaya admitted that the ultimate purpose of both Altaire and Sawaya
`
`Aquebogue is “to enrich the owners,” the Sawayas. Id. at 50:2-52:12.
`
`
`8 An earlier corporation that was merged into Altaire in 1992, M.A.P.
`
`Pharmaceuticals, Inc., seems to have been named after the three sons. Ex. 2030,
`
`pp. 6-8; Ex. 2034, 25:11-23.
`
`9 Al Sawaya indicated that Sawaya Aquebogue might also hold “[m]aybe a
`
`house or things of this sort. Very simple.” Ex. 2034, 21:21-22:21. A search of
`
`public records was unable to identify any real property owned by Sawaya
`
`Aquebogue other than the Altaire facility. See Ex. 2032.
`
`-12-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`IV. CLAIM CONSTRUCTION
`
`A claim in an unexpired patent subject to post grant review shall be given its
`
`broadest reasonable interpretation in light of the specification of the patent in
`
`which it appears (“BRI”). See 37 C.F.R. § 42.200(b); In re Cuozzo Speed Techs.,
`
`LLC., 778 F.3d 1271, 1279-82 (Fed. Cir. 2015) (referring to the same standard that
`
`applies for an inter partes review proceeding). This does not mean, however, that
`
`the Board may construe claims “so broadly that its constructions are unreasonable
`
`under general claim construction principles.” Microsoft Corp. v. Proxyconn, Inc.,
`
`798 F.39 1292, 1298 (Fed. Cir. 2015).
`
`Claim 1 of the ’623 patent recites: “the composition comprising R-
`
`phenylephrine hydrochloride having an initial chiral purity of at least 95%.” The
`
`meaning of the recited language would be clear to a person of ordinary skill based
`
`on a plain reading of the claim language. The composition comprises R-
`
`phenylephrine hydrochloride and, if there are two enantiomers present, one of the
`
`enantiomers will represent at least 95% of the enantiomer mixture. The
`
`specification of the ’623 patent provides no alternative definition for the claim
`
`term and instead supports the plain meaning of the claim language. See Ex. 1001,
`
`2:18-22, 11:43-67.
`
`Claim 1 of the ’623 patent also recites: “wherein the chiral purity of R-
`
`phenylephrine hydrochloride is at least 95% of the initial chiral purity after 6
`
`-13-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`months.” Claim 1 further recites: “wherein the composition is stored between −10
`
`to 10 degree Celsius prior to administration.” Reasonably construed, claim 1
`
`requires storage after six months, between −10 to 10 degrees Celsius, such that the
`
`chiral purity after said storage is at least 95% of the initial chiral purity. As set
`
`forth above, the composition has an initial chiral purity of at least 95%.
`
`In its Institution Decision, the Board correctly determined that the claim
`
`terms should be afforded their plain meaning and that “no terms require express
`
`construction” to resolve the controversy. Paper 14 at 9.
`
`V.
`
`PETITIONER FAILED TO IDENTIFY ALL REAL PARTIES IN
`INTEREST
`
`The Petition should be dismissed for failure to identify the Sawayas and
`
`Sawaya Aquebogue as RPIs as required by 35 U.S.C. § 322(a)(2) and 37 C.F.R.
`
`§ 42.8(b)(1).
`
`“A petition [for post grant review] may be considered only if . . . [it]
`
`identifies all real parties-in-interest.” 35 U.S.C. § 322(a)(2); see also Trial Practice
`
`Guide, 77 Fed. Reg. 48756, 48759-60 (Aug. 14, 2012). The requirement that a
`
`petition identify all RPIs is a threshold issue. See ZOLL Lifecor Corp. v. Philips
`
`Elecs. N. Am. Corp., IPR2013-00606, Paper 13 at 7-8 (PTAB Mar. 20, 2014). The
`
`Board “generally accept[s] the petitioner’s identification of [RPIs] at the time of
`
`filing the petition.” Zerto, Inc., v. EMC Corp., IPR2014-01329, Paper 33 at 6
`
`-14-
`
`REDACTED 4/8/2016
`
`

`
`(PTAB Mar. 3, 2015). It is, however, a “rebuttable presumption that benefits the
`
`petitioner.” Id. at 7. In Zerto, the Board went on to note that:
`
`Case PGR2015-00011
`Patent 8,859,623
`
`When, as here, a patent owner provides sufficient rebuttal
`
`evidence that reasonably brings into question the accuracy of a
`
`petitioner’s identification of [RPIs], the burden remains with
`
`the petitioner to establish that it has complied with the statutory
`
`requirement to identify all [RPIs]. This allocation of the burden
`
`for establishing whether a third party has, or has not, been
`
`identified properly as [an RPI] appropriately accounts for the
`
`fact that a petitioner is far more likely to be in possession of, or
`
`have access to, evidence relevant to the issue than is a patent
`
`owner. Id. at 7
`
`As the Trial Practice Guide recognizes, “at a general level, the ‘real party-in-
`
`interest’ is the party that desires review of the patent,” or in other words, “the party
`
`or parties at whose behest the petition has been filed.” 77 Fed. Reg. at 48759. “A
`
`common consideration is whether the non-party exercised or could have exercised
`
`control over a party’s participation in the proceeding.” Id. The non-party’s
`
`participation may be overt or covert, and the evidence may be direct or
`
`circumstantial, but the evidence as a whole must show that the non-party possessed
`
`control, or the ability to control, from a practical standpoint. Gonzalez v. Banco
`
`Cent. Corp., 27 F.3d 751, 759 (1st Cir. 1994). As the Board determined in Zerto:
`
`[Where t]he evidence of record demonstrates that . . . [two
`
`entities] are so intertwined it is difficult for both insiders and
`
`-15-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`outsiders to determine precisely where one ends and the other
`
`begins, there exists an actual measure of control or opportunity
`
`to control that reasonably might be expected between entities in
`
`such a relationship. In other words, the evidence [may] show[]
`
`that [two entities] blur the lines of corporate separation, such
`
`that in certain instances, these entities operate as a single entity.
`
`Zerto, IPR2014-01329, Paper 33 at 10.
`
`As discussed below, the Petition should be dismissed for failure to identify
`
`the Sawayas and Sawaya Aquebogue as RPIs.
`
`A. The declaration of Al Sawaya is not credible
`
`As an initial matter, in its Institution Decision, the Board noted that it
`
`“rel[ied] on [Al] Sawaya’s testimony regarding real party in interest while
`
`[Paragon had] not had an opportunity to cross-examine him on this issue.” Paper
`
`14 at 7 n.7. Following cross-examination, it is now apparent that the declaration of
`
`Al Sawaya regarding RPI is nonsense. As discussed below, the evidence of record
`
`demonstrates that the Petition was filed at the behest of the Sawayas, who have
`
`complete control over Altaire’s participation in this proceeding. Moreover, Altaire
`
`and Sawaya Aquebogue are mere alter egos of the Sawayas.
`
`The Board relied on Al Sawaya’s declaration testimony that Altaire and
`
`Sawaya Aquebogue “are not under common control.” Paper 14 at 7 (citing
`
`Ex. 1022 ¶ 6). Although Al Sawaya seemed to understand that a “controlling
`
`interest” was one that conferred control over an entity (Ex. 2034, 55:13-19 (“[A]s
`
`-16-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`far as I know, controlling interest means you have majority control of the shares or
`
`whatever the asset is.”)), he maintained that Altaire and Sawaya Aquebogue did
`
`not have the same controlling interest (see, e.g., id. at 55:20-60:13). To be clear, as
`
`discussed above, the Sawayas are the sole owners, sole directors, and sole officers
`
`of Altaire. See supra § III.D; see also Ex. 2034, 7:6-10, 16:17-21, 18:18-23, 19:5-
`
`17; Ex. 2030, p. 7. They are also the sole general partners of Sawaya Aquebogue.
`
`See supra § III.D; see also Ex. 2034, 23:15-24. In other words, Altaire and Sawaya
`
`Aquebogue are under common control.
`
`His declaration is rife with such inconsistencies. As another example, the
`
`Board relied on Al Sawaya’s declaration testimony that Sawaya Aquebogue “owns
`
`property that it leases to [Altaire] at arm’s length rates.” Paper 14 at 8 (citing
`
`Ex. 1022, ¶ 13). During his deposition, he testified that the rent was not negotiated
`
`and did not reflect arm’s length rates. Instead, Al’s wife Theresa decides for both
`
`Altaire and Sawaya Aquebogue by unilaterally setting the rent without input from
`
`Al (“Theresa Sawaya set the rent with the help of the accountant so that we can –
`
`so the bond can be paid.”) Ex. 2034, 66:3-70:22 at 66:19-25. When pressed, he
`
`stated that he could not “answer any of those questions because that's going to
`
`require more information than is available for me.” Ex. 2034, 66:12-69:2. He also
`
`acknowledged that his declaration testimony was not based on personal
`
`knowledge, but rather what “[his] accountant and the general partner [Theresa
`
`-17-
`
`REDACTED 4/8/2016
`
`

`
`Case PGR2015-00011
`Patent 8,859,623
`
`Sawaya] told [him].”Id. at 69:19-21. He was unable or unwilling to identify which
`
`other portions of his declaration testimony were based on hearsay rather than
`
`personal knowledge. Id. at 70:16-22.
`
`There are numerous examples of terms that Al Sawaya used in his
`
`declaration that he either did not know the meaning of, or had an idiosyncratic
`
`understanding of the meaning of. For example, when specifically asked, in the
`
`context of his reply declaration, what he meant by “common control” he responded
`
`as follows:
`
`Okay. While it so happens that the general partners are – in
`
`Sawaya Aquebogue happens to be the same people that also
`
`owns majority shares in Altaire Pharmaceuticals, they are two
`
`different entities with two different requirements and control.
`
`So there is – the management and the skills that are required for
`
`Sawaya Aquebogue is very limited to the real estate function,
`
`so the demand on the managerial skills and management is very
`
`minor, limited. There’s not much to do, especially for me. I’m
`
`not involved at all. And on the other hand, the skills and
`
`management that are required for Altaire Pharmaceuticals
`
`requires an awful lot of demand on me where I am involved in
`
`the day-to-day pharmaceutical management and development.
`
`And so there is no common denominator that says, today, let’s
`
`just see what Sawaya Aquebogue is going to do for Altaire, or
`
`whether Altaire is – there’s no relationship whatsoever. They’re
`
`two separate entities and it’s