UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________________
`
`AQUESTIVE THERAPEUTICS, INC.,
`Petitioner,
`
`v.
`
`NEURELIS, INC.,
`Patent Owner.
`____________________
`
`Case IPR2019-00451
`Patent 9,763,876
`____________________
`
`NEURELIS, INC. REQUEST FOR REHEARING
`37 CFR §42.71(d)(1)
`
`

`

`TABLE OF CONTENTS
`
`Pages
`
`I. Precise Requested Relief ...................................................................................... 1
`
`II. Statement of Reasons ............................................................................................ 1
`
`A. Background ..................................................................................................... 1
`
`1. The decision misapprehends the statutory requirements for
`claiming priority ......................................................................................... 2
`
`2. The decision misapprehends the scope and applicability of the rule ......... 5
`
`a. No applicability to issued patents ......................................................... 5
`
`b. No applicability to provisional applications ......................................... 6
`
`3. The decision overlooks the due-process requirements of the
`invoked rule, the relevant statutes, and norms of due process ................... 9
`
`4. Neurelis had no obligation to address a mistaken theory of
`unpatentability without notice .................................................................. 11
`
`III.Conclusion ..........................................................................................................11
`
`Certificate of Service ...............................................................................................13
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`TABLE OF AUTHORITIES
`
`CASES
`
`Pages
`
`Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed.
`Cir. 2010) (en banc) .....................................................................................3, 4
`Aristocrat Techs. v. Int’l Game Tech., 543 F.3d 657 (Fed. Cir. 2008) ...................... 6
`Atmel Corp. v. Information Storage Devices, Inc., 198 F.3d 1374
`(Fed. Cir. 1999) ............................................................................................4, 5
`Exela Pharma Sciences, LLC v. Lee, 781 F.3d 1349 (Fed. Cir. 2015) ...................... 6
`Exxon Corp. v. Phillips Petroleum Co., 265 F.3d 1249 (Fed. Cir.
`2001) ................................................................................................................ 6
`Harari v. Hollmer, 602 F.3d 1348 (Fed. Cir. 2010) .................................................. 8
`Magnivision, Inc. v. Bonneau Co., 115 F.3d 956 (Fed. Cir. 1997) ........................... 6
`MaziereEx parte Maziere, 27 USPQ2d 1705 (BPAI 1993) ................................................... 7
`McDonnell v. United States, 579 U.S. _, 136 S.Ct. 2355 (2016) ............................10
`SAS Inst. v. Iancu, 584 U.S. _, 138 S.Ct. 1348 (2018) .............................................. 4
`Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555 (Fed. Cir. 1991) .................................... 3
`
`STATUTES
`
`5 U.S.C. 557 .............................................................................................................10
`35 U.S.C. 111 .................................................................................................... 3, 4, 7
`35 U.S.C. 112, first paragraph .......................................................................... 3, 4, 5
`35 U.S.C. 119 ................................................................................................ 2, 4, 7, 9
`35 U.S.C. 120 ............................................................................................................. 9
`35 U.S.C. 132(a) ..................................................................................................5, 10
`35 U.S.C. 312(a)(3) .................................................................................................... 2
`35 U.S.C. 314 .......................................................................................................2, 10
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`35 U.S.C. 316 .................................................................................................. 2, 9, 11
`35 U.S.C. 318(a) ........................................................................................................ 2
`
`RULES
`
`37 CFR §1.57 ................................................................................................... passim
`37 CFR §42.2 ............................................................................................................. 9
`37 CFR §42.3 ............................................................................................................. 9
`37 CFR §42.71(d)(1) .................................................................................................. 1
`
`OTHER AUTHORITIES
`
`Manual of Patent Examining Procedure §608.01(p), I.B .......................................... 9
`U.S. Const., amend. V ..............................................................................................10
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`PRECISE REQUESTED RELIEF
`I.
`The patent owner (“Neurelis”) requests rehearing of the institution decision
`
`and denial of institution.
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`STATEMENT OF REASONS
`
`II.
`A. BACKGROUND
`The Board instituted inter partes review (“IPR”) of the involved claims
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`because it concluded that the involved claims are not entitled to their claimed
`
`priority for failure to comply with a prosecution formality. Paper 8, 8-9, citing
`
`37 CFR §1.57 (“Rule 57”). Neither the petitioner (“Aquestive”) nor the decision
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`provide any other theory why the asserted Gwozdz and Cartt’784 references would
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`otherwise qualify as prior art. However, the decision (1) misapprehends the
`
`statutory requisites for claiming priority, (2) misapprehends the scope and
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`applicability of the rule invoked in reaching this conclusion, and (3) overlooks the
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`due-process requirements of the invoked rule. Because the merits of the priority
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`claim are unchallenged and the decision’s sua sponte formal objection to priority is
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`incorrect and improper, no reasonable likelihood of unpatentability consistent with
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`any controlling law has been demonstrated and thus no basis for institution exists.
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`35 U.S.C. 314(a). The Board should replace its institution decision with a decision
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`denying institution. To the extent the decision represents the new policy of the
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`Office, the Director should promulgate a rule or at least issue a Precedential Order
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`Panel decision to put patent owners on notice regarding this exceptional departure
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`from currently controlling law and Office guidance.
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`B. INSTITUTION OF TRIAL IS LEGAL ERROR
`The standard for instituting IPR is “a reasonable likelihood that the
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`petitioner will prevail with respect to at least 1 of the claims challenged in the
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`petition.” 35 U.S.C. 314(a). Prevailing in an IPR requires challenging
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`“patentability” in the petition. 35 U.S.C. 318(a); 35 U.S.C. 312(a)(3) (requiring the
`
`petitioner to state the bases for unpatentability “with particularity” in the petition).
`
`Rather than rely on a theory Aquestive argued “with particularity” in the petition,
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`the decision sua sponte raises an inapplicable formality objection. Neither the
`
`petition nor the decision explains how an inapplicable formality even affects
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`patentability, much less supports a reasonable likelihood that at the end of the trial
`
`the petitioner will prevail on a patentability challenge. Moreover, institution of trial
`
`to address a formality that cannot change patentability is at best an inefficient use
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`of Office and party resources. Cf. 35 U.S.C. 316(b) (requiring consideration of
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`efficiency).
`
`1. The decision misapprehends the statutory requirements
`for claiming priority
`By statute, a patentee may claim priority to a provisional application if the
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`priority document satisfies the requirements of 35 U.S.C. 119(e)(1). The only
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`requirement at issue here is whether a provisional application satisfied the written-
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`description requirement of 35 U.S.C. 112, first paragraph,1 as incorporated by
`
`reference into section 119(e)(1). See also 35 U.S.C. 111(b)(1)(A). The Federal
`
`Circuit has explained that “the description must ‘clearly allow persons of ordinary
`
`skill in the art to recognize that [the inventor] invented what is claimed.’” Ariad
`
`Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en
`
`banc), quoting Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1562-63 (Fed. Cir.
`
`1991). Neither the petition nor the decision even suggests that a person of ordinary
`
`skill in the art would have failed to understand the provisional specification
`
`(including the specifically and precisely incorporated biological detergents from
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`six pages of the commercially-available 1988 SIGMA catalog, EX2006) or
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`appreciate from the specification what the inventors had invented. Indeed, the
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`petition does not address the issue at all.
`
`Rather than address the statutory written-description requirement, the
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`decision sua sponte applies 37 CFR §1.57 (“Rule 57”)—a rule that facially applies
`
`to a nonprovisional application during prosecution rather than to a provisional
`
`application or to granted patent—to hold that the disclosure violates a formality for
`
`1 All statutory citations refer to the statutes in effect on 15 September 2012. See
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`EX1001, cover, claiming priority before the relevant AIA effective date.
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`incorporating “essential material” by reference. The decision, however, assumes
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`1) compliance with the rule is a condition of patentability, 2) the rule applies to
`
`patented claims, 3) the rule applies to provisional applications, 4) application in
`
`this context of the rule is consistent with controlling precedent, and 5) the rule may
`
`be enforced without notice and an opportunity to cure. Each of these assumptions
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`is wrong, and here led to legal error.
`
`Neither section 112 nor the other statutes invoking it specifies any particular
`
`manner for making a legally sufficient disclosure. See 35 U.S.C. 111(b)(1)(A),
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`112, first paragraph, and 119(e)(1). Case law has supplied a functional answer that
`
`asks whether a person of skill in the art would have appreciated what is now being
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`claimed. Ariad, 598 F.3 at 1351. By sua sponte adding an extra-legal requirement
`
`for priority, the decision misapprehends the proper scope of the test and legally
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`errs, significantly prejudicing Neurelis. It is well established that the Office may
`
`not alter a statute by rule without statutory authorization. E.g., SAS Inst. v. Iancu,
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`584 U.S. _, 138 S.Ct. 1348, 1356-57, 1360 (2018).2 Indeed, the rule itself does not
`
`2 In Atmel Corp. v. Information Storage Devices, Inc., the court in dicta considered
`
`whether incorporation might be inappropriate for the corresponding structure of a
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`means-plus-function claim, but ultimately held that the specification had sufficient
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`purport to alter the statute, but simply imposes a “requirement” regarding form to
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`be enforced during prosecution rather than purporting to create a substantive basis
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`for rejection. Cf. 35 U.S.C. 132(a) (distinguishing between rejection and
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`requirement, but mandating notice and an opportunity to cure in either case).
`
`Whether the provisional application complied with Rule 57 does not change
`
`whether the involved patent complied with the statute, which is all that governs
`
`patentability.
`
`2. The decision misapprehends the scope and applicability
`of the rule
`Rule 57 only applies during prosecution and, in any case, does not apply to
`
`provisional applications.
`
`a. No applicability to issued patents
`
`Nothing on the face of the rule applies to issued patents. Indeed, the very
`
`description. 198 F.3d 1374, 1381 (Fed. Cir. 1999) (explaining that “that these
`
`requirements of §112 are revealed by its language and purpose, and we consider
`
`the issue in the context of the disclosure requirements of the statute rather than
`
`utilize the concept of incorporation by reference.”). The dissent utterly rejects the
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`relevance of incorporation practice to the sufficiency of the disclosure. Id. at 1384.
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`In any case, the issue here is not a means-plus-function limitation construction.
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`language the decision quotes from the rule emphasizes that it must be enforced “in
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`no case later than the close of prosecution”. Paper 8, 9, quoting Rule 57(h). It is
`
`well-established that formalities—no matter how substantive during examination—
`
`are not substantive bases for invalidity once the patent has issued. See, e.g.,
`
`Magnivision, Inc. v. Bonneau Co., 115 F.3d 956, 960 (Fed. Cir. 1997):
`
`Procedural lapses during examination, should they occur, do not
`provide grounds of invalidity. Absent proof of inequitable conduct,
`the examiner's or the applicant's absolute compliance with the internal
`rules of patent examination becomes irrelevant after the patent has
`issued.
`See also Aristocrat Techs. v. Int’l Game Tech., 543 F.3d 657, 663 (Fed. Cir. 2008)
`
`(declining to enforce an improper revival); Exxon Corp. v. Phillips Petroleum Co.,
`
`265 F.3d 1249, 1254 (Fed. Cir. 2001) (declining to enforce a rule-based estoppel);
`
`Exela Pharma Sciences, LLC v. Lee, 781 F.3d 1349, 1353 (Fed. Cir. 2015)
`
`(Newman, J., concurring) (applying to inter partes review). Enforcing Rule 57(h)
`
`after the issuance of a patent departs from, and even contravenes, controlling
`
`precedent.
`
`b. No applicability to provisional applications
`
`The purported formality defect does not appear in the disclosure of the
`
`involved patent or in the application from which the patent issued. Instead, it
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`appears in a provisional application. Yet neither the petition nor the decision
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`provides any basis for applying Rule 57(h) to a provisional application. Indeed,
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`nothing in Rule 57 facially applies to a provisional application. Subsection (a) of
`
`the rule expressly applies to applications under 35 U.S.C. 111(a), which are
`
`nonprovisional applications. Subsection (b) only applies to applications that can
`
`claim benefit or priority, which excludes provisional applications. Subsections (c)
`
`and (i) refer to applications covered by subsections (a) and (b) . The remaining
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`subsections do not expressly include or exclude provisional applications, but do
`
`presuppose examination, which implicitly excludes provisional applications
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`because they are not examined and need not even include a claim.3 Neither an
`
`examiner nor an applicant have reason or opportunity to address the formalities of
`
`incorporation in a provisional application during its pendency.4 Cf. Ex parte
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`Maziere, 27 USPQ2d 1705, 1706-07 (BPAI 1993) (rejecting break in benefit
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`3 Section 119 covers priority claims for both foreign and provisional applications.
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`No authority suggests that Rule 57(h) applies to foreign applications or that failure
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`to comply with an unenforced USPTO rule formality would render a foreign-
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`priority claim under §119 defective.
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`4 Indeed, the Office has indicated that amendment of provisional applications is
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`unusual. 37 CFR §1.121(k).
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`because incorporation was not an issue for parent application in which
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`incorporation occurred). As noted previously, a Rule 57(h) requirement begins
`
`with the Office setting a time for response bounded by close of prosecution or
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`abandonment, neither of which apply to a provisional application. In sum, nothing
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`in the rule indicates any intent on the part of the Office to apply the rule to
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`provisional applications, and much of the rule only contemplates application to
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`nonprovisional applications.
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`Moreover, precedent indicates that a putative Rule 57 defect in a parent
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`application does not automatically impair a child application, if the child
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`application has been corrected. Harari v. Hollmer, 602 F.3d 1348, 1354 (Fed. Cir.
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`2010) (reversing unpatentability based on misplaced incorporation requirement)
`
`(footnote omitted):
`
` It makes no difference that the clarifying amendment was made for
`the first time by a preliminary amendment to a continuation
`application, rather than during prosecution of the now abandoned
`initial parent application. Presented with the application and
`accompanying documents in this case, no reasonable examiner would
`be confused as to what document was being identified in the
`incorporation by reference statement, nor would he be unable to
`determine on the merits whether the newly presented claims were
`supported by the originally filed … disclosure.
`Similarly, examining corps practice bars examiners from applying the decision’s
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`sua sponte construction of Rule 57. Manual of Patent Examining Procedure
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`§608.01(p), I.B:
`
`The limitations on the material which may be incorporated by
`reference in U.S. patent applications which are to issue as U.S. patents
`do not apply to applications relied on only to establish an earlier
`effective filing date under 35 U.S.C. 119 or 35 U.S.C. 120.
`Neither the petition nor the decision ascribes a faulty incorporation or lack of
`
`written description to the involved patent. Only a provisional application relied on
`
`to establish priority is implicated in the decision’s sua sponte theory. Case law and
`
`Office policy militate against stripping priority in the absence of a statutory defect.
`
`3. The decision overlooks the due-process requirements of
`the invoked rule, the relevant statutes, and norms of due
`process
`If the decision were correct that Rule 57(h) is not just a formality, but is a
`
`substantive requirement for patentability such that it applies to the challenged
`
`claims, it is not apparent from the decision how Neurelis would be permitted to
`
`cure the defect during the trial. The Board only has jurisdiction over an “involved”
`
`application or patent, not a provisional application in the priority chain. 37 CFR
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`§§42.2 (definition of “involved”) & 42.3(a) (Board jurisdiction). Even if the Board
`
`had jurisdiction over the provisional application, the decision does not explain how
`
`Neurelis could amend the provisional application. Cf. 35 U.S.C. 316(d) (expressly
`
`providing for amendment of patent claims but not of disclosures provisional or
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`otherwise).
`
`Worse yet, the decision creates a Catch-22, because IPRs only apply to a
`
`patent but any cure to a Rule 57 defect purportedly must occur before the patent
`
`issues. Springing a Catch-22 in an IPR violates norms of federal due process as
`
`codified in the Administrative Procedure Act, in the Patent Code, and even in
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`Rule 57(h) itself. U.S. Const., amend. V (“nor be deprived of … property, without
`
`due process of law”); 5 U.S.C. 557(c) (“Before a recommended, initial, or tentative
`
`decision, … the parties are entitled to a reasonable opportunity to submit for the
`
`consideration … (1) proposed findings and conclusions; or (2) exceptions to the …
`
`recommended decisions … or to tentative agency decisions; and (3) supporting
`
`reasons….”); 35 U.S.C. 132(a); 37 CFR §1.57(h). A construction of the rule that
`
`would create a constitutional or statutory violation is to be avoided if possible.
`
`E.g., McDonnell v. United States, 579 U.S. _, 136 S.Ct. 2355, 2373 (2016)
`
`(construing statute narrowly to avoid unconstitutional due-process violation). The
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`only proper course here is to recognize (as binding precedent requires) that
`
`unenforced formalities like Rule 57, even if applicable, cannot control a
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`substantive patentability decision under §314(a).
`
`Because the Board has no jurisdiction over the provisional application, and
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`because the time limitation of Rule 57(h) does not apply to provisional
`
`applications, Neurelis can (and may yet) petition the Director ex parte to amend
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`the provisional application’s disclosure—not because it must but simply to avoid
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`further questions in pending applications. Because the only remedy (amending the
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`provisional application) is one that the Board itself does not purport to have the
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`authority to grant, and in which Aquestive has no right to participate, instituting
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`trial in this IPR serves no useful purpose, wasting Board and party resources.
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`35 U.S.C. 316(b).
`
`4. Neurelis had no obligation to address a mistaken theory
`of unpatentability without notice
`Neither the petition nor the Board provided Neurelis with advance notice
`
`that Rule 57 would be invoked. As explained above, the rule on its face, and as
`
`understood in the context of controlling authority, does not apply. Neurelis cannot
`
`be faulted for not anticipating a facially inapplicable (and mistaken) argument.
`
`III. CONCLUSION
`The compliance of the involved claims with all statutory requirements is
`
`unquestioned. The formal objection raised sua sponte in the decision
`
`misapprehends a patentee’s legal obligations and the scope of the invoked rule, and
`
`overlooks contrary case law, Office guidance, and due-process requirements.
`
`Under proper application of controlling law, the involved claims are entitled to
`
`their claimed priority. Hence, the institution decision identifies no reasonable
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`likelihood of unpatentability. A trial to address a formality outside the Board’s
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`jurisdiction would be improper and wasteful. The Board should withdraw its
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`decision on institution and enter a new decision denying institution.
`
`Date: 27 August 2019
`
`Respectfully,
`
`/Richard Torczon/
`Richard Torczon
`Reg. No. 34,448
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`CERTIFICATE OF SERVICE
`I certify that on 27 August 2019 this paper was served via email as follows:
`
`Daniel A. Scola, Jr.
`
`dscola@hbiplaw.com
`
`Michael I. Chakansky
`
`mchakansky@hbiplaw.com
`
`James F. Harrington
`
`jharrington@hbiplaw.com
`
`Matthew J. Solow
`
`msolow@hbiplaw.com
`
`Hoffmann & Baron, LLP
`
`876IPR@hbiplaw.com
`
`Date: 27 August 2019
`
`/Richard Torczon/
`Richard Torczon
`Reg. No. 34,448
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