Trademark Trial and Appeal Board Electronic Filing System. https://estta.uspto.gov
`ESTTA1135845
`05/24/2021
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`ESTTA Tracking number:
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`Filing date:
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`Proceeding
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`Party
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`Correspondence
`Address
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`Submission
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`Filer's Name
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`Filer's email
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`Signature
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`Date
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`Attachments
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`91250389
`
`Plaintiff
`Align Technology, Inc.
`
`STEVEN P HOLLMAN
`SHEPPARD MULLIN RICHTER & HAMPTON LLP
`2099 PENNSYLVANIA AVENUE NW , SUITE 100
`WASHINGTON, DC 20006-6801
`UNITED STATES
`Primary Email: svtmdocketing@sheppardmullin.com
`Secondary Email(s): cbush@sheppardmullin.com, hmil-
`stein@sheppardmullin.com, shollman@sheppardmullin.com
`202-747-1941
`
`Testimony For Plaintiff
`
`Steven P. Hollman
`
`shollman@sheppardmullin.com
`
`/Steven P. Hollman/
`
`05/24/2021
`
`Ex_D_Henderson ALIGN0015453_Part6.pdf(6169293 bytes )
`Ex_D_Henderson ALIGN0015453_Part7.pdf(5854519 bytes )
`Ex_D_Henderson ALIGN0015453_Part8.pdf(6198446 bytes )
`Ex_D_Henderson ALIGN0015453_Part9.pdf(6039564 bytes )
`Ex_D_Henderson ALIGN0015453_Part10.pdf(6062559 bytes )
`Ex_D_Henderson ALIGN0015453_Part11.pdf(6165104 bytes )
`Ex_D_Henderson ALIGN0015453_Part12.pdf(3920354 bytes )
`Ex_E_Henderson ALIGN0015587_Part1.pdf(5886957 bytes )
`Ex_E_Henderson ALIGN0015587_Part2.pdf(6267359 bytes )
`Ex_E_Henderson ALIGN0015587_Part3.pdf(1214086 bytes )
`
`

`

`EXHIBIT D
`EXHIBIT D
`(Cont.)
`(Cont.)
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`

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`supervision to maintain our high quality standards, and preserving our culture and values. Our inability to
`effectively manage growth could harm our business.
`
`We rely on our direct sales force to sell our products, and any failure to maintain our direct sales force
`could harm our business.
`
`Our ability to sell our products and generate revenues depends upon our direct sales force within our
`domestic and international markets. As of December 31, 2006 our North /unerica sales organization
`consisted of 130 people of which 109 were direct sales representatives and 21 were sales administration and
`management. Internationally, we have approximately 40 people engaged in sales and sales support as
`December 31, 2006. We do not have any long-term employment contracts with the members of our direct
`sales force. The loss of the services of these key personnel may harm our business. Ifwe are unable retain
`our direct sales force personnel or replace them with individuals of equivalent technical expertise and
`qualifications, or if we are unable to successfully instill such technical expertise or if we fail to reestablish
`strong relationships with our customers within a relatively short period of time, our revenues and our
`ability to maintain market share could be materially harmed.
`
`Complying ,tith regulations enforced by the Food and Drug Administration (FDA) and other regulatory
`authorities is an expensive and time-consuming process, and any failure to comply could result in
`substantial penalties.
`
`Our products are medical devices and are subject to extensive regulation In the U.S. and
`1ntemational1y. FDA regulations are wide ranging and govern, among other things:
`
`• product design, development, manufacture and testing:
`
`• product labeling;
`
`• product storage;
`
`• pre-market clearance or approval;
`
`• advertising and promotion; and
`
`• product sales and distribution.
`
`Our failure to comply with applicable regulatmy requirements could result in enforcement action by
`the FDA or state agencies, which may Include any of the following sanctions:
`
`• warning letters, fines, injunctions, consent decrees and civil penalties;
`
`• repair, replacement, refunds, recall or seizure of our products;
`
`• operating restrictions or partial suspension or total shutdown of production;
`
`• refusing our requests for 510(k) clearance or pre-market approval of new products, new intended
`uses, or modifications to existing products;
`
`• withdrawing clearance or pre-market approvals that have already been granted; and
`
`• criminal prosecution.
`
`If any of these events were to occur, they could harm our business. We must comply with facility
`registration and product listing requirements of the FDA and adhere to applicable Quality System
`regulations. The FDA enforces its Quality System regulations through periodic unannounced inspections.
`We and IMS, our third party shelter services provider have not yet been subject to an FDA inspection, and
`we cannot assure you we or IMS will successfully pass such an inspection in the future. Our failure or the
`failure of IMS to take satisfactory corrective action in response to an adverse inspection or the failure to
`
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`comply with applicable manufacturing regulations could result in enforcement action, and we may be
`required to find alternative manufacturers, which could be a long and costly process.
`
`Before we can sell a new medical device in the U.S., or market a new use of or claim for an existing
`product we must obtain FDA clearance or approval, unless an exemption applies. Obtaining regulatory
`clearances or approvals can be a lengthy and time-consuming process. Even though the devices we market
`have obtained the necessary clearances from the FDA, we may be unable to maintain such clearances in
`the future. Furthermore, we may be unable to obtain the necessary clearances for new devices that we
`intend to market in the future. Our inability to maintain or obtain regulatory clearances or approvals could
`materially harm our business.
`
`ff the security of our customer and patient information is compromised, patient care could suffer, and we
`could be liable for related damages, and our reputation could be impaired.
`
`We retain confidential customer and patient information in our processing centers. Therefore, it is
`critical that our facilities and infrastructure remain secure and that our facilities and infrastructure are
`perceived by the marketplace and our customers to be secure. Despite the implementation of security
`measures, our infrastructure may be vulnerable to physical break-ins, computer viruses, programming
`errors, attacks by third parties or similar disruptive problems. If we fail to meet our clients' expectations
`regarding the security of healthcare information, we could be liable for damages and our reputation could
`be impaired. In addition, patient care could suffer, and we could be liable if our systems fail to deliver
`correct information in a timely manner. Our insurance may not protect us from this risk.
`
`If compliance with healthcare regulations becomes costly and difficult for our customers or for us, we may
`not be aMe to grow our l:msiness.
`
`Participants in the healthcare industry are subject to extensive and frequently changing regulations
`under numerous laws administered by governmental entities at the federal, state and local levels, some of
`which are, and others of which may be, applicable to our business. Furthermore, our healthcare provider
`customers are also subject to a wide variety of laws and regulations that could affect the nature and scope
`of their relationships with us.
`
`The healthcare market itself is highly regulated and subject to changing political, economic and
`regulatory influences. Regulations implemented pursuant to the Health Insurance Portability and
`Accountability Act (HIP Ai\), including regulations affecting the security and privacy of patient healthcare
`information held by healthcare providers and their business associates may require us to make significant
`and unplanned enhancements of software applications or services, result in delays or cancellations of
`orders, or result in the revocation of endorsement of our products and services by healthcare participants.
`The effect of HIP AA and newly enforced regulations on our business is difficult to predict, and there can
`be no assurance that we will adequately address the business risks created by HIPAA and its
`implementation or that we will be able to take advantage of any resulting business opportunities.
`
`Extensive and changing government regulation of the healthcare industry may be expensive to comply
`with and exposes us to the risk of substantial government penalties.
`
`In addition to medical device laws and regulations, numerous state and federal healthcare-related
`laws regulate our business, covering areas such as:
`
`• storage, transmission and disclosure of medical information and healthcare records;
`
`• prohibitions against the offer, payment or receipt of remuneration to induce referrals to entities
`providing healthcare se1vices or goods or to induce the order, purchase or recommendation of our
`products; and
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`• the marketing and advertising of our products.
`
`Complying with these laws and regulations could be expensive and time-consuming, and could
`increase our operating costs or reduce or eliminate certain of our sales and marketing activities or our
`revenues.
`
`We face risks related to our international sales, including the need to obtain necessary foreign regulatory
`clearance or approvals.
`
`We currently sell our products in Europe, Canada, Mexico, Brazil, Australia, Hong Kong and Japan
`and may expand into other countries from time to time. We do not know whether orthodontists, GPs and
`consumers outside our domestic market wi1l adopt Invisalign in sufficient numbers or as rapidly as we
`anticipate. In addition, sales of our products outside the U.S. are subject to foreign regulatory
`requirements that vary widely from country to country. The time required to obtain clearances or
`approvals required by other countries may be longer than that required for FDA clearance or approval,
`and requirements for such approvals may differ from FDA requirements. We may be unable to obtain
`regulatory approvals in one or more of the other countries in which we do business or in which we may do
`busin ess in the future. We may also incur significant costs in attempting to obtain and maintain foreign
`regulatory approvals. If we experience delays in receipt of approvals to market our products outside of the
`U.S., or ifwe fail to receive these approvals, we may be unable to market our products or enhancements in
`international markets in a timely manner, if at all.
`
`Our business exposes us to potential prnduct liability claims, and we may incur substantial expenses ifwe
`are subject to product liability claims or litigation.
`
`Medical devices involve an inherent risk of product liability claims and associated adverse publicity.
`We may be held liable if any product we develop or any product that uses or incorporates any of our
`technologies causes injury or is otherwise found unsuitable. Although we intend to continue to maintain
`product liability insurance, adequate insurance may not be available on acceptable terms, if at all, and may
`not provide adequate coverage against potential liabilities. A product liability claim, regardless of its merit
`or eventual outcome, could result in significant legal defense costs. These costs would have the effect of
`increasing our expenses and diverting management's attention away from the operation of our business,
`and could harm our business.
`
`In fiscal 2006 and during the first hvo months of fiscal 2007, the market price for our common stock was
`volatile.
`
`The market price of our common stock could be subject to wide price fluctuations in response to
`various factors, many of which are beyond our control. The factors include:
`
`• quarterly variations in our results of operations and liquidity;
`
`• changes in recommendations by the investment community or in their estimates of our revenues or
`operating results;
`
`• speculation in the press or investment community concerning our business and results of
`operations;
`
`• strategic actions by our competitors, such as product announcements or acquisitions;
`
`• announcements of technological innovations or new products by us, our customers or competitors;
`and
`
`• general market conditions.
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`In addition, the stock market in general, and the market for technology and medical device companies
`in particular, have experienced extreme price and volume fluctuations that have often been unrelated to or
`disproportionate to the operating performance of those companies. These broad market and industry
`factors may seriously harm the market price of our common stock, regardless of our operating
`performance. In the past, class action litigation has often been brought against the issuing company
`following periods of volatility in the market price of a company's securities. If a securities class action suit
`is filed against us in the future, we would incur substantial legal fees, and our management's attention and
`resources would be diverted from operating our business in order to respond to the litigation.
`
`·Future sales of significant amounts of our common stock may depress our stock price.
`
`A large percentage of our outstanding common stock is currently owned by a small number of
`significant stockholders. These stockholders have sold in the past, and may sell in the future, large amounts
`of common stock over relatively short periods of time. Sales of substantial amounts of our common stock
`in the public market by our existing stockholders may adversely affect the market price of our common
`stock. Such sales could create public perception of difficulties or problems with our business and may
`depress our stock price.
`
`Changes in, or interpretations of~ accounting rules and regulations, could result in unfavorable
`accounting charges.
`
`We prepare our consolidated financial statements in conformity with accounting principles generally
`accepted in the United States of America. These principles are subject to interpretation by the SI~C and
`various bodies formed to interpret and create appropriate accounting policies. A change in these policies
`can have a significant effect on our reported results and may even retroactively affect previously reported
`transactions. Our accounting policies that recently have been or may be affected by changes in the
`accounting rules are as follows:
`
`• revenue recognition;
`
`• accounting for share-based payments: and
`
`• accounting for income taxes.
`
`In particular, the FASB recently enacted SFAS No. 123 (revised 2004), "Share-Based Payment"
`("FAS 123R") which we adopted effective in the first quarter of fiscal 2006. See Note 10 "Shareholders'
`Equity" of the Notes to Consolidated Financial Statements forfurther infomzation on the impact of FAS 123R
`on our reported financial results.
`
`We have made use of a shareholders rights' plan to limit the possibility that we are acquired, which may
`mean that a transaction that shareholders are in favor of or are benefited by may be prevented.
`
`Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to
`determine the rights, preferences, privileges and restrictions of such shares without any further vote or
`action by our shareholders. To date, our board of directors has designated 200,000 shares as Series A
`participating preferred stock in connection with our shareholder rights' plan. The issuance of preferred
`stock under certain circumstances could have the effect of delaying or preventing an acquisition of the
`company or otherwise adversely affecting the rights of the holders of our stock. The shareholder rights'
`plan may have the effect of rendering more difficult or discouraging an acquisition of our company which
`is deemed undesirable by our board of directors. The shareholder rights' plan may cause substantial
`dilution to a person or group attempting to acquire us on terms or in a manner not approved by our board
`of directors, except pursuant to an offer conditioned on the negation, purchase or redemption of the rights
`issued under the shareholder rights' plan.
`
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`ITEM rn. UNRESOLVED STAFF COMMENTS
`
`None.
`
`ITEM 2. PROPERTIES
`
`Our headquarters are located in Santa Clara, California. We lease approximately 127,000 square feet
`of space where we house our customer support, operations, research and development and administrative
`personnel. We lease our Santa Clara facilities under four leases, which expire in June 2010. The combined
`monthly rent for the Santa Clara facilities is approximately $75,000. Commencing July 1, 2005 and
`continuing on the first day of each calendar month thereafter, $11,000 will be deducted from the $1.3
`million security deposit previously paid by us to the lessor and such amount will be applied against the
`monthly base rent for the Santa Clara facilities.
`
`We operate a facility in San Jose, Costa Rica. The facility comprises approximately 63,000 square feet
`of manufacturing and office space. The monthly rent for the Costa Rica facility is approximately $59,000.
`The lease for this facility expires at the end of 2008.
`
`Our European headquarters are located in Amsterdam, The Netherlands. The facility comprises
`approximately 11,000 square feet of office space. The monthly rent for the Amsterdam facility is
`approximately $33,000. The lease for this facility expires in 2014 with an option to terminate with a fee of
`$238,000 during 2009. We expect this lease will not be renewed beyond 2009.
`
`We believe that our existing facilities are adequate to meet current requirements and that additional
`or substitute space will be available as needed to accommodate any expansion of operations.
`
`ITEM 3. LEGAL PROCEEDINGS.
`
`OrthoC!ear
`
`State Action. On February 2, 2005, we filed a multi-claim lawsuit in San Francisco County Superior
`Court against defendants OrthoCJear, Inc., OrthoClear Holdings, Inc., Muhammad Ziaullah Chishti, Bao
`Tran, Peter Riepenhausen, Joe Breeland, Jeff Tunnell, Christopher Kawaja, and Charles Wen (the "State
`Action"). ,Among other things, the State Action alleged tort, contract, statutory and common law causes of
`action arising from OrthoClear and the individual defendants' alleged plan to unlawfully utilize our
`intellectual property, confidential information and employees. The State Action also alleged that
`OrthoClear, Chishti and other defendants were in breach of contractual obligations, statutory law and
`common law for attempting to intentionally interfere and disrupt our ongoing business operations and
`improperly gain access to its customer relationships and trade secrets. Subsequent to the initial filing date,
`there were extensive proceedings in the case as reported in previous Align filings.
`
`Federal Lanham Action. On July 19, 2005 and June 19, 2006, we filed a multi-claim lawsuit in the
`United States District Court for the Northern District of California against OrthoClear (the "Federal
`Lanham Action I" and "Federal Lanham Action ff', respectively). The Federal Lanham Action I and
`Federal Lanham Action II alleged numerous violations of the Federal Lanham Act (15 U.S.C. §1051 et
`seq.) by OrthoClear and its officers and employees. These violations include unfair competition, trademark
`infringement and false advertising, among other things. The Federal Lanham Action I and Federal
`Lanham Action II also alleged violations by OrthoClear of California's Unfair Practices Act (California
`Business and Professions Code §17200 et seq.).
`
`Patent Infringement ITC Complaint. On January 11, 2006, we filed a formal complaint with the
`United States International Trade Commission (ITC) against OrthoClear, seeking to halt the importation
`into the United States of infringing aligners manufactured by OrthoClear in Pakistan in violation of our
`
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`patents and other intellectual property rights (the "ITC Complaint"). The ITC instituted a formal
`investigation on February 7, 2006.
`
`Patent Jnfringe,nent Federal Action. On January 11, 2006, we filed a federal court patent infringement
`action against OrthoClear in the Western District of Wisconsin (Madison) (the "Patent Infringement
`Federal Action") asserting infringement of our U.S. Patents Nos. 6,685,469; 6,450,807; 6,394,801;
`6,398,548; 6,722,880; 6,629,840: 6,669,037; 6,318,994; 6,729,876; 6,602,070; 6,471,511 and 6,227,850.
`
`OrthoClear Agreement
`
`On October 13, 2006, Align and OrthoClear, Inc., OrthoClear Holdings, Inc., and OrthoClear
`Pakistan Pvt. Ltd. ("OrthoClear"), together ,.vith certain individuals associated with OrthoClear, executed
`a formal agreement (the "OrthoClear Agreement") that included the following terms:
`
`• OrthoClear was required to immediately discontinue al1 design, manufacture, marketing and sales
`of removable dental aligners worldwide;
`
`• OrthoClear consented to the entry of an exclusion order by the ITC, enforced by the United States
`Customs Service, which prevents OrthoClear from importing its dental aligner products into the
`U.S., either directly or through a third party and the ITC subsequently terminated its formal
`investigation on October 27, 2006;
`
`• The parties agreed to dismiss all pending lawsuits against each other, including the State Action,
`Federal Lanham Action I, Federal Lanham Action II, and Patent Infringement Federal Action,
`with prejudice, and each such action has been subsequently dismissed;
`
`• OrthoClear agreed to stop accepting new patient cases for treatment;
`
`• OrthoClear and Muhammad Ziaullah Chishti its CEO, and Charles Wen, its President, transferred
`and assigned to Align all intellectual property rights with application to the treatment of
`malocclusion;
`
`• OrthoClear principals Muhammad Ziaullah Chishti, Charles Wen, Peter Riepenhausen, and
`Christopher Kawaja signed 5-year, global non-compete agreements in the field of removable aligner
`therapy products and related software market;
`
`• OrthoClear employees Joe Breeland and Jeff Tunnell signed 5-year U.S. non-compete agreements
`and prohibiting their personal participation in the removable aligner therapy product and related
`software market;
`
`• We made Invisalign treatment available to OrthoClear patients in the United States, Canada and
`Hong Kong at no charge from Align. We implemented this program as the Patients First Program.
`See Part JI, Item 7 "Afanagement's Discussion and Analysis of Financial Condition and Results of
`Operations-Overview" for discussion of the Patients First Progranz.
`
`Tn accordance with the terms of the OrthoClear Agreement, on October 16, 2006, we made a one-time
`cash payment of $20.0 million to OrthoClear Holdings, Inc.
`
`Onnco
`
`On January 6, 2003, Ormco Corporation ("Ormco") filed suit against us in the United States District
`Court for the Central District, Orange County Division, asserting infringement of U.S. Patent Nos.
`5,447,432, 5,683,243 and 6,244,861. Ormco is a division of Sybrnn Dental Specialties. In May 2006,
`Danaher Corporation acquired Sybron Dental Specialties. The complaint sought unspecified monetary
`damages and injunctive relief. On February 18, 2003, we answered the complaint and asserted
`counterclaims seeking a declaration by the Court of invalidity and non-infringement of the asserted
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`patents. In addition, we counterclaimed for infringement of our U.S . Patent No. 6,398,548, seeking
`unspecified monetary damages and injunctive relief. Ormco filed a reply to our counterclaims on
`March 10, 2003 and asserted counterclaims against us seeking a declaration by the Court of invalidity and
`non-infringement of U.S. Patent No. 6,398,548. We amended our counterclaim to add i\llesee Orthodontic
`Appliances, Inc. ("AOA''), a wholly-owned subsidiary of Ormco, as a counterdefendant in regard to our
`counterclaim of infringement of U.S. Patent No. 6,398,548. The Court then permitted Ormco to amend its
`Complaint and permitted us to amend our counterclaim to add an additional patent each. Ormco filed a
`first amended complaint for infringement of U.S. Patent No. 6,616,444 on October 15, 2003. On
`October 27, 2003, we filed an answer to Ormco's first amended complaint and a counterclaim for invalidity
`and non-infringement of U.S. Patent No. 6,616,444 and for infringement of U.S. Patent No. 6,554,611.
`
`In connection with these claims, the Court granted five motions for summary judgment that we filed.
`First, on May 14, 2004, the Court granted our motion for summary judgment of non-infringement, finding
`that our lnvisalign system does not infringe any of the asserted Ormco patents (5,477,432, 5,683,243,
`6,244,861 and 6,616,644) . Second, on July 2, 2004, the Court granted in part our motion for summary
`judgment of infringement, finding that Ormco and AOA infringe certain, but not all, claims of our patents
`Nos. 6,398,548 and 6,554,611 through the manufacture and sale of Red, White & Blue appliances. Third,
`on August 26, 2004, the Court granted our motion for summary judgment of invalidity of Ormco's asserted
`patents claims (5,477,432, 5,683,243, 6,244,861 and 6,616,644). As noted above, the Court earlier found
`that we do not infringe these patents. In addition, the Court also denied Ormco's and AOA's motion for
`summary judgment seeking a finding of invalidity of our asserted patent claims (6,398,548 and 6,554,611).
`Fourth, the Court granted our summary judgment motion that our asserted patent claims are not invalid
`based on the evidence currently before the Court. Although the Court granted that motion, it reopened
`discovery on two additional invalidity arguments Ormco and AOA asserted. Fifth, the Court also granted
`our summary judgment motion that our patents are not unenforceable and granted Onnco's and AOA's
`summary judgment motion that Ormco and AOA did not willfully infringe our patents.
`
`On December 20, 2004, we filed a further summary judgment motion that our asserted claims are not
`invalid based on Ormco's and AOA's new evidence. Ormco and AOA filed a counter-summary judgment
`motion that our asserted claims are invalid based on this new evidence. The motions were heard by the
`Court on February 7, 2005. On February 24, 2005, the Court granted our motion in part, confirming the
`validity of all of the asserted claims of our 6,554,611 patent and two of the asserted claims of our 6,398,548
`patent. The Court also granted Ormco's and AOA's motion in part, finding certain claims of our 6,398,548
`patent to be invalid in view of prior use evidence. On March 10, 2005, Onnco and AOA moved for
`reconsideration of the Court's ruling that Claims 10 and 17 of our U.S. Patent No. 6,398,548 are not
`invalid. On April 8, 2005, the Court ruled that it would adhere to its previous ruling that Claims 10 and 17
`of our 6,398,548 patent are not invalid.
`
`On March 28, 2005, we filed a motion for permanent injunction to prevent Ormco and AOA from
`selling the infringing Red, White & Blue system. On May 26, 2005, the Court issued a permanent
`injunction (the "Permanent Injunction") to enjoin Ormco and AOA from further infringement of Claims
`10 and 17 of our 6,398,548 patent and Claims 1-3 and 7 of our 6,554,6 11 patent. On May 31, 2005, Ormco
`and AOA noticed an appeal to the Federal Circuit from the Permanent Injunction.
`
`On February 1, 2006, we entered into a settlement agreement (the "Settlement Agreement") with
`Onnco and AOA. In accordance with the terms of the Settlement Agreement, Ormco and AOA paid into
`escrow, pending the completion of the appellate process, $884,000 to resolve the issues of past damages,
`willfulness and attorneys' fees for the adjudged infringement of Align's U.S. Patent Nos. 6,398,548 and
`6,554,611 (the "Align Patents'') through the manufacture and sale of Ormco's and AOA's Red, White &
`Blue appliances. Our receipt of the payments out of escrow is contingent upon the Court, in a final, non(cid:173)
`appealable judgment, finding that Ormco or AOA infringes at least one of the claims in the Align Patents.
`If, however, the Court issues a final, non-appealable judgment of non-infringement, invalidity or
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`unenforceability with respect to each asserted claim of the Align Patents, alJ funds in the escrow account
`will be returned to 0rmco and A0A The Settlement Agreement does not affect ( a) Ormco's appeal of the
`decisions and orders of the District Court relating to 0rmco's patents; or (2) our pending cross-appeal of
`the orders of the District Court relating to our patents.
`
`There have been two appeals. After the Permanent Injunction was entered, 0rmco and A0A
`appealed that injunction and the orders of the District Court on summa1y judgment on which that order
`was based. Oral argument took place on April 3, 2006. Following oral argument, the U.S. Court of
`Appeals for the Federal Circuit ("CAFC") issued a ruling declaring hvo out of a total of seventy-one
`claims in our US Patent No. 6,398,548 and four out of a total of ten claims in US Patent No. 6,544,611 to
`be invalid as "obvious." The CL\FC's decision reverses the California District Court summary judgment
`order of validity.
`
`The 6,398,548 patent consists of seventy-one claims; only claims 10 and 17 were at issue in the appeal
`and CAFC ruling. These two claims are directed to a system of appliances and method of repositioning
`teeth from an initial to a final tooth arrangement where at least some of the appliances are marked to show
`order of use. These claims contain further limitations requiring instructions as to order in which the
`appliances are to be worn and use of the appliances in intervals of 2-20 days.
`
`The 6,544,611 patent consists of ten claims directed to a system for repositioning teeth that includes
`one or more intermediate appliances and a final appliance, provided in a single package, as well as
`instructions which set forth the order in which the appliances are to be worn. The CAFC's ruling pertains
`only to claims 1, 2, 3 and 7 in the patent.
`
`The majority of the claims in the 6,398,548 patent, including claims that address methods of
`fabricating aligners, digital data sets or computer-generated models to fabricate appliances, are unaffected
`by the appeal and the CAFC's ruling. The 6,544,611 patent does not contain claims related to digital data,
`computer-generated models, or methods of fabrication.
`
`The second appeal is from the final judgment. Once final judgment was entered, Ormco filed a Notice
`of Appeal from the final judgment and we filed a notice of cross-appeal. 0rmco has appealed the ruling of
`the District Court that its patents are not infringed by us and that the asserted claims are invalid. We
`appealed the ruling of the District Court that certain claims of our 6,398,548 patent which were found to be
`infringed by 0rmco's and A0A's Red, White & Blue appliances were invalid. Briefing on this appeal and
`cross-appeal is complete, and oral argument occurred on February 6, 2007.
`
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`Other matters
`
`lJSPTO
`
`Ex Parte Requests:
`
`During fiscal 2005 and 2006, requests were filed with the United States Patent and Trademark Office
`("USPTO") by a San Francisco, California, law firm, acting on behalf of an unnamed party, requesting Ex
`Parte re-examination of our patents as follows:
`
`U.S. Patent
`No.
`5,975,893
`
`Rc'lnest for
`Reexamination
`Granlcd?
`Yes
`
`Initial Office
`Actions
`Received?
`Yes
`
`6,398,548
`
`Yes
`
`No
`
`6,309,215
`
`Yes
`
`Yes
`
`6,705,863
`
`Yes
`
`No
`
`6,217,325
`
`Yes
`
`Yes
`
`Slatus
`On January 26, 2006, a first office action was issued rejecting
`all claims of U.S. Patent No. 5,975,893 (the '893 patent). We
`responded to this initial office action. A Final Office Action
`was issued by the USPTO on June 23, 2006 rejecting the
`pending claims of AJign's response. On August 23, 2006, we
`filed an amendment in response to this Final Office Action,
`which included claims discussed in an interview with the
`Examiners. We are awaiting further action by the USPTO.
`
`We filed a preliminary amendment on July 16, 2006. We are
`awaiting an initial office action.
`
`On July 27, 2006, after submitting amendments, affidavits,
`declarations or other documents as evidence of patentability,
`we received an action entitled "Notice of Intent to Issue Ex
`Parte Reexamination Certificate" with respect to U.S. Patent
`No. 6,309,215 (the '215 patent). With this Notice, the USPTO
`has closed prosecution on the merits in reexamination and
`affirmed the patentability of all of our claims pending in
`reexamination in the '215 patent. While the '215 patent
`entered the reexamination proceedings with 16 claims, 26
`additional claims were added in the reexamination by us and
`the '215 patent leaves the proceedings as a valid and
`enforceable patent with 42 claims.
`
`We filed a preliminary amendment on May 26, 2006. We are
`awaiting an initial office action.
`
`On July 25, 2006, we received an Office Action in U.S. Pate