U.S. Patent No.: 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`Paper No. ___
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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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`Altaire Pharmaceuticals, Inc.
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`Petitioner
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`v.
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`Paragon BioTeck, Inc.
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`Patent Owner
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`U.S. Patent No. 8,859,623
`Issue Date: October 14, 2014
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`Entitled: METHODS AND COMPOSITIONS OF STABLE PHENYLEPHRINE
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` FORMULATIONS
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`____________________
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`Post-Grant Review No.: Case PGR2015-00011
`____________________
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`REPLY TO PATENT OWNER’S PRELIMINARY STATEMENT
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`Reply to Patent Owner’s Preliminary Statement
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`Paper No. ___
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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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`Altaire Pharmaceuticals, Inc.
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`Petitioner
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`v.
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`Paragon BioTeck, Inc.
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`Patent Owner
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`
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`U.S. Patent No. 8,859,623
`Issue Date: October 14, 2014
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`Entitled: METHODS AND COMPOSITIONS OF STABLE PHENYLEPHRINE
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` FORMULATIONS
`
`
`____________________
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`Post-Grant Review No.: Case PGR2015-00011
`____________________
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`REPLY TO PATENT OWNER’S PRELIMINARY STATEMENT
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`Petitioner hereby timely files this Reply Brief to address Patent Owner’s
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`Preliminary Statement (“Statement”). Petitioner anticipated and therefore
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`addressed many of Patent Owner’s arguments in its Statement (and is prepared to
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`address all of the arguments in the full proceedings), and limits this Reply Brief to
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`Patent Owner’s allegations that Sawaya Aquebogue (“Saw Aque”) should have
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`been identified as a real party-in-interest under 35 U.S.C. § 322(a)(2).
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`In an attempt to avoid addressing the merits of the Petition in this PGR
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`proceeding, Patent Owner purposefully misleads this Board by alleging that Saw
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`Aque and Petitioner “are closely intertwined entities” and therefore Saw Aque
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`should have been identified as a “real party-in-interest.” See Statement at 3.
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`Patent Owner’s sole basis for that assertion is its own allegation in an opposition to
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`a motion to dismiss for lack of personal jurisdiction in a district court litigation.
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`See id. (citing Ex. 2004 (Paragon’s Opposition to Motion to Dismiss)). In that
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`same paper, Patent Owner requested jurisdictional discovery1 because “[Patent
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`Owner] Paragon anticipates that any such limited and focused discovery would
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`demonstrate that [Petitioner] Altaire and Sawaya Aquebogue are not separate and
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`distinct entities” (see Ex. 2004 at 14 (emphasis added)). Patent Owner has no basis
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`1 Patent Owner’s request for jurisdictional discovery was denied as moot since the
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`underlying motion to dismiss was granted.
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`1
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`for its representations to this Board that Saw Aque and Altaire are “closely
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`intertwined” such that the Board should consider Saw Aque a real party-in-interest.
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`Indeed, the facts demonstrate that Saw Aque is a separate and distinct entity that
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`has no control over Petitioner Altaire Pharmaceuticals, Inc. or the Petition.
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`I.
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`LEGAL FRAMEWORK
`The Board “generally accept[s] a petitioner’s identification of real parties in
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`interest at the time of filing the petition.” Kapsch Trafficcom IVHS Inc. v.
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`Neology, Inc., IPR2015-00808, at 4 (Paper No. 13) (P.T.A.B. Sept. 14, 2015)
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`(Exhibit 1021). “A patent owner challenging a petitioner’s RPI disclosure must
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`provide sufficient evidence to show the disclosure is inadequate.” Id. (citing
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`Intellectual Ventures Mgmt., LLC v. Xilinx, Inc., IPR2012-00018 at 3 (Paper 12))
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`(emphasis added).
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` “[W]hether a party who is not a named participant in a given proceeding is a
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`‘real party-in-interest’ to that proceeding is a highly fact-dependent question.” Id.
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`(quoting Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (2012))
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`(citations omitted). “In general, a ‘real party-in-interest’ is ‘the party that desires
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`review of the patent,’ and ‘may be the petitioner itself, and/or it may be the party
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`or parties at whose behest the petition has been filed.’” Id.
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`Factors considered in determining whether an unnamed party is a real party-
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`in-interest are set forth in Kapsch supra. See id. at 5-6. These factors include: 1)
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`2
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`whether the “non-party exercised or could have exercised control over a party’s
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`participation in a proceeding” and 2) whether a non-party “‘funds and directs and
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`controls’ a[ PGR] petition or proceeding; the non-party’s relationship with the
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`petitioner; the non-party’s relationship to the petition itself[;] and the nature of the
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`entity filing the petition.” Id.
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`Moreover, a bedrock principal of corporate law is to respect corporate
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`distinctions. See, e.g., U.S. v. Bestfoods, 524 U.S. 51, 69 (1998) (“Bestfoods”).
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`There, the Supreme Court recognized:
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`[C]ontrol through the ownership of shares does not fuse the
`corporations, even when the directors are common to each
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`…
`This recognition that the corporate personalities remain distinct has its
`corollary in the “well established principle [of corporate law] that
`directors and officers holding positions with a parent and its
`subsidiary can and do ‘change hats’ to represent the two corporations
`separately, despite their common ownership.” Since courts generally
`presume “that the directors are wearing their ‘subsidiary hats’ and not
`their ‘parent hats’ when acting for the subsidiary.”
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`Id. (internal citations omitted). See also Kapsch supra at 5 (“A party does not
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`become a [real party-in-interest] merely through an association with another party
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`in an endeavor unrelated to the IPR proceeding.”) (citations omitted).
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`3
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`In this case, Patent Owner has failed to submit or cite to any factual evidence
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`to show that any of the required factors is present and thus fails to meet the
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`Board’s threshold showing that the Petition fails to identify any real party-in-
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`interest. As such, Patent Owner’s arguments should be dismissed and the merits of
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`this PGR proceeding should be heard.
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`II.
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`STATEMENT OF FACTS
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`After years of Petitioner selling its Phenylephrine Hydrochloride
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`Ophthalmic Solution, Petitioner and Patent Owner entered into an agreement dated
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`May 15, 2011 (“Agreement”) whereby Petitioner became Patent Owner’s
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`exclusive supplier, and Patent Owner became Petitioner’s exclusive distributor.
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`See Ex. 2001, Exhibit A at 1. Saw Aque has no obligations to either Petitioner or
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`Patent Owner under the Agreement. See Sawaya Declaration, ¶ 15 (Exhibit 1022) .
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`Indeed, Patent Owner admits that Saw Aque is a “non-party to the contract.” See
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`Letter at 1, Altaire Pharms., Inc. v. Paragon BioTeck, Inc., No. 2:15-cv-02416
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`(E.D.N.Y. Sept. 18, 2015) (Exhibit 1023). Accordingly, Saw Aque does not
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`receive any portion of the proceeds from the purchases by Patent Owner. Exhibit
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`1022, ¶ 10.
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`Contrary to the Patent Owner’s representations, Petitioner and Saw Aque are
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`separate and distinct entities that have no ownership interest in one another. See
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`Id. at ¶ 6. Further, Petitioner and Saw Aque are not under common control or run
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`4
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`by the same person; the two entities have different ownership interests with each
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`having different controlling interests. Id.
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`Moreover, Petitioner and Saw Aque maintain separate business records, pay
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`separate taxes, and have completely different business objectives. Id. at ¶ 7.
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`Petitioner Altaire Pharmaceuticals, Inc. is in the business of pharmaceutical
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`research, development, manufacturing, supply and distribution. Id. at ¶ 8.
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`In contrast, Saw Aque is a holding company that holds real property and
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` Id. at ¶ 4. It is not in the business of pharmaceutical
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`research, development, manufacturing, supply and distribution. Saw Aque and
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`Petitioner share the same address merely because Saw Aque owns property that it
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`leases to Petitioner at arm’s length rates. Id. at ¶ 13.
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`Patent Owner has transacted business with both Petitioner and Saw Aque
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`since at least 2011. Thereby, Patent Owner is cognizant of the separation of
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`entities. Nevertheless, Patent Owner makes its allegations in an attempt to deter
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`this Board from the real issue: that Patent Owner misled the USPTO and obtained
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`U.S. Patent No. 8,859,623 (“the ’623 patent”) covering products that Petitioner
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`publicly sold to Patent Owner since before the filing date of the ’623 patent.
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`In addition, and contrary to Patent Owner’s representations, Saw Aque has
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`no interest in challenging the claims of the ’623 patent because it does not make,
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`sell, manufacture, supply, or distribute any products, much less any products that
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`5
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`arguably fall within the scope of the ’623 patent claims. See id. at ¶ 8-9. Saw
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`Aque, as a holding company, does not own interest in any entity that could infringe
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`the ’623 patent. See id. Furthermore, Saw Aque does not receive any
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`consideration from Petitioner as a result of Petitioner’s sales to Patent Owner under
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`the Agreement between Petitioner and Patent Owner (see Exhibit 2001). In fact,
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`Patent Owner admits that Saw Aque is a “non-party to the contract.” Exhibit 1023
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`at 1.
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`III. ARGUMENT
`Patent Owner’s representation that Saw Aque and Petitioner are “related
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`companies” or “closely intertwined” is contradicted by the factual evidence.
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`Because Saw Aque and Petitioner are separate entities, and Patent Owner does not
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`rely on any factor other than its misguided “closely intertwined” argument to show
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`that Saw Aque is a real party-in-interest for purposes of this PGR proceeding, the
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`Board should consider the Petition on its merits.
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`Petitioner and Saw Aque are Separate Entities
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`A.
`Petitioner and Saw Aque are separate and distinct entities that have no
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`ownership interest in each other. See Exhibit 1022, ¶ 6. Patent Owner’s assertions
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`that Mr. Assad Sawaya “controls” Petitioner as President of Saw Aque and that he
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`“runs” the two companies are without merit. See id. at ¶ 6-7. Accordingly, there is
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`no parent/subsidiary relationship, and the decisions cited by Patent Owner are
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`6
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`inapposite. See Statement at 3 (citing Galderma S.A. &Q-MED AB. v. Allergan
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`Industrie, SAS, et al., IPR2014-01422 (Paper 15) and ZOLL Lifecor Corp. v.Philips
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`Elec. N. Am. Corp., IPR2013-00606 (Paper 13)); see also Statement at 5-6 (citing
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`Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453
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`(Paper 88)). In Galderma, Zoll, and Atlanta Gas, the Board found that parent
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`companies – in the same endeavor as their subsidiaries – were real parties-in-
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`interest.
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`In this case, however, the critical relationship does not exist. No
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`parent/subsidiary relationship exists because neither entity controls the other; nor
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`does either entity hold an ownership interest in the other. Exhibit 1022, ¶ 6.
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`Petitioner and Saw Aque maintain separate business records and pay separate
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`taxes. Id. at ¶ 7. The only relationship that the two entities possess is a corporate
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`relationship as landlord and tenant (an arm’s length transaction between the two
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`entities that has nothing to do with Petitioner’s PGR petition). Id. at ¶ 13; see also
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`Kapsch supra at 5 (“A party does not become a [real party-in-interest] merely
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`through an association with another party in an endeavor unrelated to the IPR
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`proceeding.”) (citations omitted).
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`Moreover, Saw Aque, unlike the entities in the Board decision cited by
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`Patent Owner, is solely engaged in business unrelated to this PGR proceeding.
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`Saw Aque is a holding company with no pharmaceutical research, development,
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`7
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`manufacturing, supply and distribution capabilities. Id. at ¶ 5. Petitioner Altaire
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`Pharmaceuticals, Inc., on the other hand, is in the pharmaceutical business.
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`The only factual evidence – presented by Petitioner – demonstrates that Saw
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`Aque and Petitioner are separate and distinct entities.
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`Saw Aque Has No Control Over This Post Grant Review.
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`B.
`As established above, Saw Aque is a holding company. Patent Owner has
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`failed to establish that the directors and officers of Saw Aque – which does not
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`have a parent/subsidiary relationship with Petitioner – are controlling this PGR
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`proceeding. In fact, Mr. Assad Sawaya is acting solely on behalf of Petitioner. See
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`Exhibit 1022, ¶ 12. Patent Owner attempts to obfuscate the record by conflating
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`and replacing Assad Sawaya for both Saw Aque and Petitioner, which is improper.
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`See Bestfoods, 524 U.S. at 69 (the ownership of shares does not fuse the
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`corporations, even when the directors are common to each).
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`Patent Owner does not and cannot establish that Saw Aque (as an
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`independent entity) exercised or could have exercised control over Petitioner’s
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`participation in this PGR. Indeed, Saw Aque did not direct, control, or fund the
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`preparation or filing of the Petition. Exhibit 1022, ¶ 12. Petitioner was solely
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`responsible for funding the preparation and filing of the Petition. Id.
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`8
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`C.
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`Saw Aque Has No Interest In The Outcome Of This Post Grant
`Review.
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`While a finding of unpatentability by the Board at the conclusion of this
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`PGR proceeding would benefit Petitioner by permitting Petitioner to continue
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`supplying products that it has been supplying since at least 2004 (nearly 8 years
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`prior to the ’623 patent’s earliest effective filing date (see e.g., Petition at 6), the
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`Board’s finding would have no impact on Saw Aque’s business. See id. at ¶ 10-11.
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`The sales by Petitioner to Patent Owner – or to any other party for that matter – are
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`irrelevant to Saw Aque. Id. Saw Aque would not benefit from increased sales by
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`Petitioner. Id. Therefore, Saw Aque is not “the party that desires review of the
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`patent.” See Kapsch supra at 4 (emphasis added).
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`Further, Saw Aque’s interests are not unified with Petitioner’s (Altaire’s)
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`interests.
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`IV. CONCLUSION
`The Patent Owner’s Preliminary Statement attempts to use the positions held
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`by Assad Sawaya in both Saw Aque and Petitioner to establish Saw Aque’s ability
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`9
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`U.S. Patent No. 8,859,623
`Reply to Patent Owner’s Preliminary Statement
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`to control Petitioner and an interest in the post grant review. As the facts above
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`clearly demonstrate, however, Saw Aque is an unaffiliated entity to Petitioner, has
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`no ability to control the post grant review, and has no interest in review of the ’623
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`patent. For these reasons, the Petition complies with 35 U.S.C. § 322(a)(2)
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`because it properly identifies all real parties—in-interest.
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`Dated: September 28, 2015
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`.
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`Respectfully submitted,
`I’
`\
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`.
`,_
`BY?"
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`-A 4 "
`_
`Dipu A. D©shi.
`Registration No.: 60,07
`Edward A. Meilman
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`4'
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`Registration No.: 24,735
`DICKSTEIN SHAPIRO LLP
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`1825 Eye Street, NW
`Washington, DC 20006-5403
`(202) 420-2200
`Attorneys for Petitioner
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`l0
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`Reply to Patent Owner’s Preliminary Statement
`Docket No.: A3996.0018
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`CERTIFICATE OF SERVICE
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`I hereby certify that a true copy of the foregoing REPLY TO PATENT
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`OWNER’S PRELIMINARY STATEMENT and supporting materials (Exhibits
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`1021-1023) have been served in its entirety this 28th day of September, 2015, by e-
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`mail on:
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`Michael T. Rosato
`Steven W. Parmelee
`WILSON, SONSINI, GOODRICH & ROSATI
`701 Fifth Avenue
`Suite 5100
`Seattle, WA 98104-7036
`mrosato@wsgr.com
`sparmelee@wsgr.com
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`
`
`/s/ Dipu A. Doshi
`Dipu A. Doshi
`Registration No. 60,073
`Attorney for Altaire Pharmaceuticals, Inc.
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`
`DICKSTEIN SHAPIRO LLP
`1825 Eye Street, NW
`Washington, DC 20006
`Tel.: (202) 420-2200
`Facsimile: (202) 420-2201
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