UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`REACTIVE SURFACES LTD., LLP
`
`Petitioner
`
`v.
`
`TOYOTA MOTOR CORPORATION
`
`Patent Owner
`
`
`
`CASE
`
`IPR2016-01914 (Patent 8,394,618 B2)
`
`
`
`PETITIONER’S RESPONSE IN OPPOSITION TO PATENT OWNERS’
`MOTION TO DISMISS BASED ON SOVEREIGN IMMUNITY
`
`
`
`

`

`TABLE OF CONTENTS
`TABLE OF CONTENTS ......................................................................................... ii
`TABLE OF AUTHORITIES ................................................................................... iii
`SUMMARY OF THE ARGUMENT ....................................................................... 1
`OBJECTIONS TO PATENT OWNERS' EVIDENCE ............................................ 2
`ARGUMENT & AUTHORITIES ............................................................................ 3
`I. Patent Owners Have Failed to Prove That the Regents of the
`University of Minnesota is Sovereign ....................................................... 3
`II. An IPR Is Not a Suit Against a State .......................................................... 8
`A. The Eleventh Amendment of The United States Constitution
`Only Applies to Suits Against the States .............................................. 8
`B. What Is a "Suit" Against a State? ......................................................... 8
` C. There Are Numerous, Relevant Differences Between and IPR
`Proceeding and Civil Litigation in Federal Court ............................... 9
` i. A Patent Owner's Participation in an IPR Is Not Required ........... 10
` ii. There is No Consequence for a Patent Owner Who Chooses
`Not to Respond to an IPR Petition ................................................ 12
`iii. The Board Has the Power to Determine the Validity of a
`Patent Without Participation from the Patent Owner .................... 13
` D. An IPR Proceeding Does Not Bear a Remarkably Strong
` Resemblance to Civil Litigation in Federal Court, Thus
` Sovereign Immunity Does Not Apply. ............................................ 14
`III. Patent Owners Lack the Procedural Basis to Extend Sovereign
`Immunity to Non-Sovereigns .................................................................. 17
`CONCLUSION ....................................................................................................... 20
`
`
`
`
`
`
`ii  
`
`  
`  
`
`

`

`TABLE OF AUTHORITIES
`
`Cases
`A123 Sys. v Hydro-Quebec,
` 626 F.3d 1213 (Fed. Cir. 2010) ........................................................................... 19
`
`Baxter v. Vigo County Sch. Corp.,
` 26 F.3d 728 (7th Cir. 1994) .................................................................................... 4
`
`Christy v. Pa. Turnpike Comm’n,
` 54 F. 3d 1140 (3rd Cir. 1995) ................................................................................. 4
`
`Cohens v. Virginia,
` 19 U.S. 264 (1821) ................................................................................................ 9
`
`Covidien LP v. Univ. of Fla. Research Found. Inc.,
` IPR2016-01274, -01275, -01276, Paper 21 at 28 (Jan. 25, 2017) ................... 1, 20
`
`Cyanotech Corp. v. United States Nutraceuticals, LLC,
` 2013 WL 504862 (D. Haw. Feb. 7, 2013) ........................................................... 19
`
`Dainippon Screen Manufacturing Co., Ltd. et al v. CFMT, Inc., et al.,
` 142 F. 3d 1266 (Fed. Cir. 1998) .......................................................................... 19
`
`Davis v. U.S.,
` 192 F.3d 951 (10th Cir. 1999) ............................................................................. 17
`
`Delano Farms Co. v. Cal. Table Grape Comm’n,
` 623 F. Supp. 2d 1144, 1164 (E.D. Cal. 2009) ..................................................... 19
`
`Doe v. Lawrence Livermore National Laboratory,
` 65 F. 3d 771 (9th Cir. 1995) ............................................................................... 4, 6
`
`Enter. Mgmt. Consultants, Inc. v. United States,
` 883 F.2d 890 (10th Cir. 1989) ............................................................................. 19
`
`Faibisch v. University of Minnesota,
` 304 F. 3d 797 (8th Cir. 2002) ................................................................................. 5
`
`iii  
`
`
`
`  
`
`

`

`Federal Maritime Comm’n v. S.C. State Ports Auth.,
` 535 U.S. 743 (2002) ............................................................................ 9, 11, 12, 13
`
`Gragg v. Ky. Cabinet for Workforce Dev.,
` 289 F.3d 958 (6th Cir. 2002) .................................................................................. 4
`
`Greenwood v. Ross
` 778 F. 2d 448 (8th Cir. 1985) ............................................................................ 5, 6
`
`Hoeffner v. Univ. of Minn.,
` 948 F. Supp. 1380 (D. Minn. 1996) ...................................................................... 5
`
`In Re Barrett Refining Corp.,
` 221 B.R. 795 (Bankr. W.D. Okla. 1998) ............................................................... 9
`
`In re Hechinger Inv. Co of Delaware, Inc.,
` 254 B.R. 306 (2000) .............................................................................................. 8
`
`In Re Pitts,
` 241 B.R. 862 (Bankr. N.D. Ohio 1999) ................................................................ 9
`
`Issaenko v. Univ. of Minn.,
` 57 F. Supp. 3d 985 (D. Minn. 2014) ..................................................................... 6
`
`ITSI TV Prod., Inc., v. Agricultural Ass’ns,
` 3 F.3d 1289 (9th Cir. 1993) .................................................................................... 4
`
`Miller et al., v Chou,
` 257 N.W. 2d 277 (Minn. 1977) ............................................................................. 3
`
`Phillipines v. Pimentel,
` 553 U.S. 851 (2008) ............................................................................................ 17
`
`Raygor et al., v Regents of the University of Minnesota, et al.,
` 534 U.S. 533 (2002 ............................................................................................... 6
`
`Regents of the Univ. of California v. Doe,
`
` 519 U.S. 425 (1997) ............................................................................................. 6
`Shire Dev. LLC v. Lucerne Biosciences, LLC,
`
` IPR2014-00739 .................................................................................................. 10
`
`  
`
`iv  
`
`

`

`
`Skelton v. Camp,
` 234 F. 3d 292 (5th Cir. 2000) ................................................................................. 4
`
`SourceOne Global Partners, LLC v. KGK Synergize, Inc.,
` No. 08-C-7403, 2009 WL 1346250 (N.D. Ill. May 13, 2009) ............................ 18
`
`Star Tribune Co. v. Univ. of Minn. Bd. of Regents,
` 683 N.W.2d 274 (Minn. 2004) .............................................................................. 7
`
`Trevelen v. University of Minnesota,
` 73 F. 3d 816 (8th Cir. 1996) .............................................................................. 5, 7
`
`Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften
`E.V., 734 F.3d 1315 (Fed. Cir. 2013) ............................................................ 19, 20
`
`
`Vas-Cath, Inc. v Curators of the Univ. of Mo.,
` 473 F.3d 1376 (Fed. Cir. 2007) ..................................................................... 15, 16
`
`Walstad v. Univ. of Minn. Hosps.,
` 442 F.2d 634 (8th Cir. 1971) ................................................................................. 5
`
`Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ.,
` 466 F. 3d 232 (2d Cir. 2006) ................................................................................. 3
`
`Yahoo! Inc., v. CreateAds L.L.C,
`
` IPR2014-00200 .................................................................................................. 13
`Statutes
`35 U.S.C. § 135 ....................................................................................................... 16
`35 U.S.C. § 311 ................................................................................................. 10, 15
`35 U.S.C. § 312(a)(5) ............................................................................................. 11
`35 U.S.C. § 314 ................................................................................................. 12, 15
`35 U.S.C. § 314(b)(1)-(2) ....................................................................................... 12
`35 U.S.C. §§ 317(a) and 318(a) .............................................................................. 14
`35 U.S.C. §316(a)(6) .............................................................................................. 15
`
`
`
`Regulations
`
`  
`
`v  
`
`

`

`37 C.F.R § 42.12 ............................................................................................... 13, 15
`37 C.F.R. § 41.200(a) ............................................................................................. 16
`37 C.F.R. § 42.107 .................................................................................................. 12
`37 C.F.R. § 42.120 ............................................................................................ 12, 15
`37 C.F.R. § 42.72 .................................................................................................... 13
`37 C.F.R. § 42.9(b) ................................................................................................. 14
`37 C.F.R. §§ 42.73(b)(1) – (4) ................................................................................ 11
`37 C.F.R. §§42.72 and 42.9(b) ............................................................................... 15
`Rules
`F.R.E. 402 ............................................................................................................. 3, 4
`F.R.E. 801 ................................................................................................................. 3
`Federal Rule of Civil Procedure 19(b) .............................................................. 17, 20
`
`  
`
`vi  
`
`

`

`
`
`Petitioner, Reactive Surfaces, Ltd., LLP (“Reactive Surfaces”), submits this
`
`Response in Opposition to Patent Owners’ Motion to Dismiss IPR2016-01914
`
`(“914 IPR”) which is a challenge to U.S. Patent No 8,394,618 B2 (“Challenged
`
`Patent”).
`
`SUMMARY OF THE ARGUMENT
`
`
`
`Toyota Motor Corporation (“TMC”) and the Regents of the University of
`
`Minnesota (the “RUM”) (collectively, alleged “Patent Owners”)1 are the alleged
`
`joint co-owners of the Challenged Patent. (914 IPR, Paper 23 at 1.) Despite it being
`
`a private, for-profit corporation, TMC, an alleged co-owner with allegedly
`
`identical interests in the Challenged Patent, nonetheless claims the 914 IPR should
`
`be dismissed based on sovereign immunity. While doing so, TMC relies almost
`
`exclusively on an inapplicable, non-precedential inter partes review decision
`
`whereby the United States Patent Trial and Appeal Board (“Board”) found the
`
`University of Florida Research Foundation Incorporated, the sole owner of the
`
`patent at issue, was immune from litigation and dismissed the pending cases before
`
`the Board based on sovereign immunity. See Covidien LP v. Univ. of Fla. Research
`
`Found. Inc., IPR2016-01274, -01275, -01276, Paper 21 at 28 (Jan. 25, 2017)
`
`(“Covidien”). TMC’s argument here is inapposite of the law and, as a result, fails.
`
`                                                                                                                
`  
`
`1  
`
`1 Actual ownership of the Challenged Patent is questionable as the identified
`assignments appear to have assigned greater ownership than what each respective
`assignor may have actually owned as each inventor claims to be the sole owner.
`
`

`

`This Board can and should deny Patent Owners’ Motion to Dismiss (“Motion”) on
`
`the following grounds:
`
`• Patent Owners failed to prove sovereignty;
`• The Eleventh Amendment only applies to a suit against the state, and an IPR
`proceeding does not “bear a remarkably strong resemblance to civil
`litigation in federal court”; and
`• Patent Owners lack the procedural basis to dismiss the action against TMC,
`a non-sovereign.
`
`OBJECTIONS TO PATENT OWNERS’ EVIDENCE
`
`Petitioner objects to the evidence attached to Patent Owners’ Motion to
`
`
`
`Dismiss, as follows. Petitioner objects to Patent Owners’ Exhibit Nos. 2003, 2004,
`
`2005, and 2006 for lack of authentication because Patent Owners failed to submit
`
`sufficient evidence to support a finding that the items are what the Patent Owners
`
`claims they are. Additionally, Petitioner objects to Exhibits 2003-2006 pursuant to
`
`F.R.E. 402 for lack of relevance because (1) there is no testimony to place the
`
`exhibits in context (e.g., were the assignments effectuated), and (2) there is no
`
`testimony establishing that the documents were not usurped if they became
`
`effectual. Moreover, Petitioner objects to Exhibits 2005-2006 pursuant to F.R.E.
`
`801 as the exhibits are hearsay – Patent Owners failed to establish any exception to
`
`the hearsay rule. Further, Petitioner objects to Patent Owners’ Exhibit Nos. 2007
`
`and 2008 for lack of authentication because Patent Owners failed to submit
`
`sufficient evidence to support a finding that the items are what the Patent Owners
`
`claims they are. Further, Petitioner objects to Exhibits 2007-2008 pursuant to
`
`  
`
`2  
`
`

`

`F.R.E. 402 for lack of relevance. The documents standing alone do not establish an
`
`evidentiary point for which it is offered because Patent Owners have represented to
`
`the Board that one of the alleged joint owners of the U.S. Patent 8,394,618 B2 is
`
`the Regents of the University of Minnesota and Exhibits 2007-2008 are documents
`
`that appear to be from the University of Minnesota, which is a separate and distinct
`
`entity from the Regents of the University of Minnesota. Miller et al., v Chou, 257
`
`N.W. 2d 277 (Minn. 1977)2. Additionally, Petitioner objects to Exhibits 2007-2008
`
`pursuant to F.R.E. 402 for lack of relevance as no evidence was submitted to
`
`establish that the documents have not been usurped or made effectual. Moreover,
`
`Petitioner objects to Exhibits 2007-2008 pursuant to F.R.E. 801 as the exhibits are
`
`hearsay as they purport to be documents from another entity. Patent Owners have
`
`failed to establish any exception to the hearsay rule.
`
`
`ARGUMENT & AUTHORITIES
`
`
`
`Patent Owners Have Failed to Prove That the Regents of the
`University of Minnesota Is Sovereign.
`
`
`
`The sine quo non of a sovereign immunity defense is sovereignty. The
`
`
`I.
`
`
`
`
`burden to establish sovereignty is on the party claiming to be an instrumentality of
`
`the State. See Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ., 466 F. 3d
`
`                                                                                                                
`2  Patent Owners provide no evidence to show that RUM and the University of
`  
`3  
`
`Minnesota are the same entity or that the activities performed by RUM are
`governmental.
`
`
`

`

`232, 237 (2d Cir. 2006).3 The question of whether a particular state entity is an arm
`
`of the State is a question of federal law, but that federal question can be answered
`
`only after considering the provisions of state law that define the states agency’s
`
`character. See Regents of the Univ. of California v. Doe, 519 U.S. 425, 429 -30
`
`(1997). To determine whether an entity is an instrumentality of the state, courts
`
`must look at factors that “include: (1) whether the action is in reality an action
`
`against the state as a result of the entity’s ‘powers and characteristics’ under state
`
`law; (2) whether the entity is autonomous and exercises a significant degree of
`
`control over its own affairs; and (3) ‘whether the funds to pay any award will be
`
`derived from the state treasury.’” Trevelen v. University of Minnesota, 73 F. 3d
`
`816, 818 (8th Cir. 1996) (citing Greenwood v. Ross 778 F. 2d 448 (8th Cir. 1985)).
`
`Patent Owners failed to meet their burden – Patent owners categorically failed to
`
`establish that RUM is an instrumentality of the State either “as a matter of law” or
`
`by competent evidence.
`
`
`
`As to each factor, RUM, at best, failed to carry its burden and, at worst,
`
`actively attempted to mislead the Board by conflating the “University of
`
`Minnesota” (which is not a patent owner of the Challenged Patent by Patent
`
`                                                                                                                
`3  See also Gragg v. Ky. Cabinet for Workforce Dev., 289 F.3d 958, 963 (6th Cir.
`F.3d 1289, 1292 (9th Cir. 1993).  
`  
`4  
`
`2002); Skelton v. Camp, 234 F. 3d 292, 297 (5th Cir. 2000); Christy v. Pa. Turnpike
`Comm’n, 54 F. 3d 1140, 1144 (3rd Cir. 1995); Baxter v. Vigo County Sch. Corp., 26
`F.3d 728, 734 n.5 (7th Cir. 1994); ITSI TV Prod., Inc., v. Agricultural Ass’ns, 3
`
`

`

`Owners’ own admission (Mot. at 1)) and “Regents of the University of Minnesota”
`
`(which is an alleged patent co-owner) by defining “Regents of the University of
`
`Minnesota” as “the University.” Instead, RUM attempts to establish its
`
`sovereignty “as a matter of law” by citing to a litany of inapplicable cases.4 In none
`
`of these cases, however, did the respective court perform the three-factor analysis
`
`articulated in Trevelen v. University of Minnesota much less hold or find that
`
`“Regents of the University of Minnesota” was entitled sovereign immunity based
`
`on that three-factor analysis. Further, in many of these cases, RUM is not the
`
`object of the sovereign immunity defense.5 Indeed, Patent Owners’ proposition,
`
`that the Board must accept sovereignty as a matter of law, would imply that an
`
`                                                                                                                
`
`4 Richmond v. Bd. of Regents of Univ. of Minn., 957 F.2d 595, 598-99 (8th Cir.
`1992); Faibisch v. Univ. of Minn., 304 F.3d 797, 800 (8th Cir. 2002); Raygor v.
`Regents of the Univ. of Minn., 534 U.S. 533, 536 (2002); Star Tribune Co. v. Univ.
`of Minn. Bd. of Regents, 683 N.W.2d 274, 280 (Minn. 2004); Walstad v. Univ. of
`Minn. Hosps., 442 F.2d 634, 641-42 (8th Cir. 1971); Trevelen v. University of
`Minnesota, 73 F. 3d 816 (8th Cir. 1996); Issaenko v. Univ. of Minn., 57 F. Supp. 3d
`985, 1003 (D. Minn. 2014).
`
`5  See Trevelen v. University of Minnesota, 73 F. 3d at 819 (found the University of
`
`Minnesota an instrumentality of the state, not RUM); Hoeffner v. Univ. of Minn.,
`948 F. Supp. 1380, 1390 (D. Minn. 1996)(finding that the University of Minnesota
`was instrumentality of the State, not RUM); Walstad,, 442 F.2d at 641-42 (8th Cir.
`1971)(finding that the University of Minnesota Hospitals were an instrumentality
`of the State, not RUM). “‘Each [entity]… must be considered on the basis of its
`own particular circumstances’
`in determining
`if
`the [entity]
`is a state
`instrumentality that enjoys the protection of the eleventh amendment.” Greenwood
`at 453. As a result, Patent Owners’ reliance on Trevelen, Hoeffner, and Walstad is
`misplaced and fails because such cases bolster the position that the University of
`Minnesota may be an instrumentality of the state, NOT RUM, which is the alleged
`
`operative co-owner of the Challenged Patent in this proceeding.  
`  
`5  
`
`

`

`alleged instrumentality of the State is always immune from suit in federal court
`
`once the alleged instrumentality was found to be immune in the past. Courts have
`
`squarely rejected this proposition. See e.g., Doe v. Lawrence Livermore National
`
`Laboratory 65 F. 3d 771, 774-76 (9th Cir. 1995) (District Court erred in ruling “that
`
`the University is always immune from suit in federal court” in particular where the
`
`alleged sovereign was being indemnified by a private entity). 6
`
`
`
`The cases cited by Patent Owners, which actually relate to RUM, do not
`
`even indicate that RUM is an instrumentality of the state, nor do they indicate that
`
`the plaintiff
`
`in
`
`those cases challenged whether RUM was actually an
`
`instrumentality of the State. See generally Richmond v. Board of Regents of
`
`University of Minnesota, 957 F. 2d 595 (8th Cir. 1992) (no challenge to the
`
`assertion that the RUM was an instrumentality of the state); Faibisch v. University
`
`of Minnesota, 304 F. 3d 797, 800 (8th Cir. 2002) (plaintiff did not contest RUM’s
`
`sovereignty and instead alleged that RUM had waived its immunity); Raygor et al.,
`
`v Regents of the University of Minnesota, et al., 534 U.S. 533, 537 (2002) (plaintiff
`
`did not contest RUM’s sovereignty and instead asked the court to exercise
`
`supplemental jurisdiction over the state law claims); Issaenko, 57 F. Supp. 3d at
`
`1003 (plaintiff did not contest RUM’s sovereignty and instead claimed that
`
`                                                                                                                
`  
`
`6 Patent Owners provide no evidence that describes the relationship between TMC
`and RUM to negate any indemnification by TMC to RUM.
`
`6  
`
`

`

`Congress abrogated the Eleventh Amendment with respect to the Copyright Act).7
`
`At the very least, none of the courts in those decisions performed the three factor
`
`test and found or held that RUM was entitled to sovereign immunity.
`
`
`
`Moreover, Patent Owners failed to marshal evidence to establish that RUM
`
`is entitled to sovereign immunity based on the three factor test articulated in
`
`Trevelen v. University of Minnesota. Indeed, Patent Owners failed to present any
`
`competent evidence to support the theory that RUM is an instrumentality of the
`
`state. Instead, Patent Owners actively mislead the Board by attaching, as evidence,
`
`documents to establish that the University of Minnesota, a separate and distinct
`
`entity from RUM, may be an instrumentality of the state. (Mot. Exhibit Nos. 2007
`
`and 2008). During the conference call conducted on February 17, 2017, the Board
`
`informed Patent Owners that it was Patent Owners’ burden to attach competent
`
`evidence showing that RUM was actually an instrumentality of the state. Patent
`
`Owners disregarded the Board’s instruction and failed to attach sufficient evidence
`
`to show that RUM, as opposed to the University of Minnesota, is an
`
`instrumentality of the state. As a result, this Board can and should deny the Motion
`
`outright for failure to make an evidentiary showing that RUM actually enjoys
`
`sovereignty.
`
`                                                                                                                
`  
`
`7 Star Tribune Co. v. Univ. of Minn. Bd. of Regents, 683 N.W. 2d 274 (Minn.
`2004)(court did not address Eleventh Amendment immunity because the lawsuit
`was in state court for state mandated law).
`
`7  
`
`

`

`II. An IPR Is Not a Suit Against a State.
`
`
`
`As per the respective petition, Petitioner did not sue RUM by demanding
`
`that RUM be compelled to appear and answer. For this and the reasons below, the
`
`subject IPR proceeding is not a suit against the State.
`
`A. The Eleventh Amendment of The United States Constitution
`Only Applies to Suits Against the States.
`
`
`The Eleventh Amendment states, “[t]he Judicial power of the United States
`
`
`
`
`
`shall not be construed to extend to any suit in law or equity, commenced or
`
`prosecuted against one of the United States by Citizens of another State, or by
`
`Citizens or Subjects of any Foreign State.” U.S. Const. Amend. XI. (emphasis
`
`added.). “The immunity granted by the Eleventh Amendment is not absolute. Most
`
`fundamentally, it only applies to ‘suits against a State.’” In re Hechinger Inv. Co of
`
`Delaware, Inc., 254 B.R. 306, 311 (2000).
`
`B. What Is a “Suit” Against a State?
`
`In Federal Maritime Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 757
`
`
`
`
`
`(2002), the Supreme Court held that a “suit” against a state is one that “walks,
`
`talks, and squawks very much like a lawsuit.” Id.8 More specifically, the Court
`
`held that for an administrative proceeding to constitute a “suit,” it must “bear a
`
`                                                                                                                
`  
`
`8  
`
`8 The Court mimicked or adopted this phrase from the underlying Fourth Circuit
`Court of Appeals’ decision.
`
`

`

`remarkably strong resemblance to civil litigation in Federal Courts 9 .” Id.
`
`(emphasis added).
`
`
`
`Over the years, lower courts have developed various factors to consider
`
`when determining whether an action is a suit against the state for purposes of the
`
`Eleventh Amendment, including, “1) whether the proceeding is adversarial; 2)
`
`whether the proceeding arose as a result of a deprivation or injury; 3) whether there
`
`are at least two parties involved in the proceeding; 4) whether the attendance of the
`
`parties is required; 5) whether one of the parties is prosecuting a claim against the
`
`other; [and] 6) whether the injured party is demanding the restoration of something
`
`from the defending party.” In Re Barrett Refining Corp., 221 B.R. 795, 803
`
`(Bankr. W.D. Okla. 1998) (citing Cohens v. Virginia, 19 U.S. 264 (1821); see also
`
`In Re Pitts, 241 B.R. 862, 869 (Bankr. N.D. Ohio 1999). As shown below, an IPR
`
`is not a “suit” against a State.
`
`C.
`
`There Are Numerous, Relevant Differences Between an IPR
`Proceeding and Civil Litigation in Federal Court.
`
`
`“[A] person who is not the owner of a patent may file with the Office a
`
`
`
`petition to institute an inter partes review of the patent.” 35 U.S.C. § 311.
`
`                                                                                                                
`
`9 Patent Owners attempt in vain to argue that the differences between an IPR
`proceeding and a federal lawsuit are irrelevant. (Mot. at 8). But, unfortunately for
`Patent Owners, the “strong resemblance” must be to “civil litigation in federal
`courts,” not some ambiguous litigation outside that context. Federal Maritime
`Comm’n, 535 U.S. at 757. Patent Owner’s attempted reliance of Federal Maritime
`Comm’n ultimately dooms their Motion.
`
`  
`
`9  
`
`

`

`(emphasis added). The explicit language of the statute indicates that the challenge
`
`alone is a challenge to the patent, not the patent owner. To that extent, it is a
`
`proceeding in rem, not in personam. Indeed, a patent owner’s participation is
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`completely unnecessary and explicitly not required. The scope of the available
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`remedy in an IPR proceeding is seeking “to cancel, as unpatentable, 1 or more
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`claims of a patent only on a ground that could be raised under section 102 or 103
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`and only on the basis of prior art consisting of patents or printed publications.” Id.
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`(emphasis added).
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`i.
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`A Patent Owner’s Participation in an IPR Is Not
`Required.
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`
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`In arguing that an IPR proceeding is a suit against the state, Patent Owners
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`contend that an IPR proceeding is similar to a civil lawsuit because the Board can
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`issue an adverse judgment. (Motion at 5). This argument is misplaced. Although
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`the Board can issue an adverse judgment, adverse judgments are limited to
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`requests by a participating patent owner in the proceeding who has made an
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`affirmative assertion that he/she no longer wishes to continue the proceeding. 37
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`C.F.R. §§ 42.73(b)(1) – (4) (emphasis added). Patent Owners’ reliance on Shire
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`Dev. LLC v. Lucerne Biosciences, LLC, IPR2014-00739 is also misplaced because
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`in that case, the participating patent owner made such a request, sending an email,
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`which was placed before the Board stating, “Patent Owner has determined that in
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`order to best protect its interest it is foregoing any further involvement in the IPR
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`10  
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`process so that it can take the appropriate actions….” (IPR2014-00739, Paper 14 at
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`2). Such a procedure for issuing adverse judgments bears no resemblance
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`whatsoever to civil litigation in federal court. See Federal Maritime Comm’n, 535
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`U.S. at 757.
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`
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`Also bearing no resemblance to federal civil litigation is the fact that an IPR
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`does not require the participation of two (or more) parties. Indeed, although the
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`petitioner is required to provide a copy of the petition to the patent owner, the
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`patent owner has no obligation to respond. 35 U.S.C. § 312(a)(5). The practice
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`amounts to nothing more than providing notice that the patent is being challenged.
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`Although, “the patent owner[s] shall have the right to file a preliminary response to
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`the petition” 35 U.S.C. 313, such response is optional, not required. 37 C.F.R.
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`42.107. Moreover, a patent owner is not even required to file a response after the
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`Board institutes an IPR. 37 C.F.R. 42.120 (“A patent owner may file a response to
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`the petition addressing any ground for unpatentabilty not already denied” in the
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`institution.). Only when “a state is required to defend itself in an adversarial
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`proceeding against a private party before an impartial federal officer” will
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`sovereign immunity apply. See Federal Maritime Comm’n, 535 U.S. at 760 - 61.
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`Here, in an IPR, there is no requirement that the Patent Owners defend the
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`patent—much less themselves. An IPR then is not adversarial on its face.
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`11  
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`ii.
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`There Is No Consequence for a Patent Owner Who
`Chooses Not to Respond to an IPR Petition.
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`
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`A patent owner who chooses not to file a response to an IPR challenge
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`suffers no consequence. As identified above, the right of a patent owner to file a
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`preliminary response, or any response, is optional. 37 C.F.R. § 42.107. See also 37
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`C.F.R. § 42.120. The Board will decide to institute the IPR challenge to the patent
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`“within 3 months after receiving a preliminary response to the petition under
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`section 313; or if no such preliminary response is filed, the last date on which such
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`response may be filed.” 35 U.S.C. § 314(b)(1)-(2). So even if the patent owner
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`chooses not to file a preliminary response to the IPR, the Board will still make a
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`decision to institute the IPR challenge to the patent. 35 U.S.C. § 314
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`The same is true for the Board proceeding to trial on an instituted IPR absent
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`a response from the patent owner. 37 C.F.R. § 42.120. Unlike an IPR, should a
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`party fail to respond to a petition in district courts, the non-responding party would
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`be subject to a default judgment under rule 55(a) of the Federal Rules of Civil
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`Procedure. There is no default judgment in an IPR proceeding. As such, the rules
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`“governing pleadings”—to the extent they even exist—are anything but “quite
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`similar to those found in the Federal Rules of Civil Procedure.” See Federal
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`Maritime Comm’n, 535 U.S. at 757. This further illustrates the lack of a “strong
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`resemblance to civil litigation in federal courts.” Id.
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`12  
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`Further, the Board lacks the ability to sanction a patent owner for non-
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`participation, such as not responding to a petition. See 37 C.F.R § 42.12. To the
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`extent the Board has limited sanction power under 37 C.F.R § 42.12, it can wield
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`that power upon a patent owner only when such owner has voluntarily chosen to
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`participate in the IPR. Yet again, this is far from a “strong resemblance” to civil
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`litigation in federal court, where a party is compelled to answer a lawsuit or suffer
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`the consequences of default judgment. See Federal Maritime Comm’n, 535 U.S. at
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`
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`iii. The Board Has the Power to Determine the Validity of a
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`Patent Without Participation from the Patent Owner.
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`Although the Board lacks the ability to compel a patent owner’s
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`757.
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`participation in a