throbber
UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`AYLA PHARMA LLC,
`Petitioner
`
`v .
`
`NOVARTIS AG,
`Patent Owner.
`
`U.S. Patent No. 9,533,053 to Gamache et al.
`Issue Date: January 3, 2017
`Title: High Concentration Olopatadine Ophthalmic Composition
`
`Inter Partes Review No.: IPR2020-00295
`
`PETITIONER’S REPLY TO PATENT OWNER’S
`PRELIMINARY RESPONSE
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`144723214v1
`
`

`

`TABLE OF CONTENTS
`
`Page
`
`B.
`
`C.
`
`I.
`
`II.
`
`INSTITUTION SHOULD NOT BE DENIED BASED ON § 325(D) .......... 1
`A.
`Petitioner’s Asserted Grounds Were Not Considered During
`Prosecution (Becton Factors (a-d)) ..................................................... 1
`Additional Evidence and Facts Presented in the Petition
`Warrant Reconsideration (Becton Factor (f)) ..................................... 3
`The Examiner Erred in Its Evaluation of the Asserted Prior Art
`(Becton Factor (e)) ............................................................................. 4
`THE APPLE FACTORS DO NOT SUPPORT DENIAL OF
`INSTITUTION UNDER § 314(A) ............................................................... 6
`A.
`Apple Factors 1 & 2 ........................................................................... 7
`B.
`Apple Factor 3 .................................................................................... 7
`C.
`Apple Factors 4 & 5 ........................................................................... 9
`D.
`Apple Factor 6 .................................................................................. 11
`III. CONCLUSION ......................................................................................... 12
`
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`
`

`

`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Apotex v. UCB Biopharma,
`IPR2019-00400, Paper 17, 24 (July 15, 2019).............................................. 1, 12
`Apple Inc. v. Fintiv, Inc.
`IPR2020-00019 Paper 11 (PTAB March 20, 2020) .................................. passum
`Apple v. Omni Medsci,
`IPR2020-00029, Paper 7, 55 (April 22, 2020) .......................................... 5, 7, 11
`Artic Cat v. Polaris Indus.,
`IPR2017-00433, Paper 17, 19 (July 5, 2017) ................................................... 12
`Clim-A-Tech v. Ebert,
`IPR2017-01863, Paper 13, 18 ............................................................................ 2
`Ex parte Ditzik,
`2018-000087, 6 (PTAB Mar. 2, 2018) ............................................................. 10
`Ethicon v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988) .......................................................................... 6
`Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha,
`IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017) ........................................... 8, 9
`Hyperbranched Medical Tech. v. Confluent Surgical,
`IPR2018-01097, Paper 14, 24 (PTAB Nov. 14, 2018) ....................................... 1
`Lowe’s. v. Nichia,
`IPR2017-02011, Paper 13, 18 (Mar. 12, 2018) ................................................. 12
`Meitzner v. Mindick,
`549 F.2d 775 (CCPA 1977) ............................................................................. 11
`Mylan Pharmaceuticals Inc. v. Almirall, LLC.
`IPR2019-01095, Paper 12 (PTAB Nov. 27, 2019) ............................................. 9
`
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`
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`
`

`

`Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp.,
`IPR2020-00040, Paper 21 (PTAB May 12, 2020) ................................ 4, 8, 9, 11
`
`NHK Spring Co., Ltd. v. Intri-Plex Techs.
`Case IPR2018-00752, Paper 8 (Sept. 12, 2018) ................................................. 6
`Novartis AG v. Noven Pharm. Inc.,
`853 F.3d 1289 (Fed. Cir. 2017) .......................................................................... 6
`Petroleum Geo-Servs. v. W. Geco,
`IPR2014-01477, Paper 18, 32 (March 17, 2015) .............................................. 12
`Steadymed LTD. v. United Therapeutics Corp.,
`IPR 2016-00006 ................................................................................................. 9
`TRW Automotive v. Magna Elecs.,
`IPR2014-00261, Paper 19, 12 (June 26, 2014) ................................................... 1
`Valve Corp. v. Elec. Scripting Prods., Inc.,
`IPR2019-00064, Paper 10 (May 1, 2019) ........................................................... 8
`ZTE v. Bell Northern Research,
`IPR2019-01365, Paper 13 (PTAB Feb. 11, 2020) .............................................. 5
`
`144723214v1
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`

`

`I.
`
`INSTITUTION SHOULD NOT BE DENIED BASED ON § 325(D)
`A.
`Petitioner’s Asserted Grounds Were Not Considered During
`Prosecution (Becton Factors (a-d))
`There is no dispute that the Examiner never put forth any prior art rejection
`
`during the prosecution of the ’053 patent, including the grounds advanced in the
`
`Petition and supporting declarations. The crux of Novartis’ argument under §
`
`325(d) is: (1) the Examiner “considered” Argentum’s IPR petition to the ’154
`
`patent because it was disclosed in an IDS during prosecution of the ’053 patent,
`
`and (2) the Examiner issued a Schneider-based rejection during the prosecution of
`
`the related ’154 patent. POPR at 31. These arguments fail for several reasons.
`
`First, Novartis presumes that its mere disclosure, in an IDS, of the Argentum
`
`IPR petition and/or the other prior art references, meant that the Examiner
`
`considered and relied on them. Presumptive awareness, however, is not enough for
`
`a § 325(d) denial. TRW Automotive v. Magna Elecs., IPR2014-00261, Paper 19,
`
`12 (June 26, 2014). “The Board has consistently declined to exercise its discretion
`
`under § 325(d) based on the mere citation of references in an IDS that were not
`
`applied by the Examiner.” Apotex v. UCB Biopharma, IPR2019-00400, Paper 17,
`
`24 (July 15, 2019); Petition, 12 (citing cases). Where, as here, the prior art is
`
`“simply being of record, but not applied in any rejection by the Examiner during
`
`examination … provides little impetus for [the PTAB] to exercise [its] discretion to
`
`deny institution under § 325(d).” Hyperbranched Medical Tech. v. Confluent
`
`144723214v1
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`1
`
`

`

`Surgical, IPR2018-01097, Paper 14, 24 (PTAB Nov. 14, 2018).1
`
`Second, recognizing that the Examiner did not apply any prior art rejection,
`
`Novartis relies on a Schneider-based rejection, made over two years prior, during
`
`the prosecution of the ’154 patent. POPR, 36-38. However, Novartis does not cite
`
`a single decision where the Board denied a petition under § 325(d), because one of
`
`the prior art references was relied upon in a related application. Rather, under such
`
`circumstances, the Board has refused to exercise discretion under § 325(d). See
`
`Petition at 39 (citing cases).
`
`Finally, Novartis concedes that Ground 3 in Ayla Pharma’s Petition is not in
`
`Argentum’s IPR petition (POPR, 31-32). Consequently, the Examiner did not
`
`consider the references, as combined in Ground 3, and as such, there is no overlap
`
`in the arguments between Ground 3 and those presented during examination.
`
`Similarly, the additional evidence and facts (identified below) were not before the
`
`Examiner and do not overlap with those presented during examination. See infra
`
`I.B. Novartis does not present any arguments or evidence to the contrary.
`
`In sum, (i) none of the references were applied in any prior art rejection, and
`
`(ii) there is no overlap between Ayla Pharma’s above-identified arguments and
`
`1 Novartis’s reliance on Clim-A-Tech v. Ebert is misplaced. POPR, 40. Unlike
`
`here, it involved a number of amendments submitted during prosecution that
`
`presented arguments related to a prior art reference. IPR2017-01863, Paper 13, 18.
`
`144723214v1
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`2
`
`

`

`those presented during prosecution. Thus, Becton factors (a)-(e) favor institution.
`
`B.
`
`Additional Evidence and Facts Presented in the Petition Warrant
`Reconsideration (Becton Factor (f))
`Given Novartis’ reliance on its IDS disclosure, the most noteworthy thing is
`
`what its disclosure omits. This is best shown through a review of the timeline of
`
`events that took place during the prosecution of the ’053 patent.
`
`As shown above, the applicant filed six IDSs. However, what is troubling is that
`
`the Board’s intervening Argentum Institution Decision (dated 07/18/2016) was
`
`never disclosed to the Examiner. EX1015. Novartis does not explain why it
`
`failed to disclose this document in its subsequent sixth IDS (dated 10/14/2016), nor
`
`is there any legitimate reason for withholding this document. Compare EX015, 1
`
`to EX2001, 617-627. Clearly, the Argentum Institution Decision is material to the
`
`patentability of the challenged claims of the ’053 patent, particularly in light of the
`
`“undisputed similarity” to the claims of the ’154 patent. See POPR at 2.
`
`Novartis cannot hide behind the veil of § 325(d) when it failed or
`
`intentionally omitted to disclose the Board’s Argentum Institution Decision. By
`
`doing so, it deprived the Examiner from gaining any meaningful insight from the
`
`Board’s analysis of the prior art and its highly material teachings, as well as the
`
`144723214v1
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`3
`
`

`

`impact on the patentability of the challenged claims, which Novartis did not
`
`challenge or dispute. In support of its Petition, Ayla Pharma submitted the
`
`Argentum Institution Decision (EX1015) and presented prior art challenges
`
`consistent with the Board’s construction and analysis. See, e.g., Petition, 6, 17, 42.
`
`This additional evidence and fact, which was not before the Examiner, warrants
`
`reconsideration of the prior art and/or arguments.
`
`Moreover, in support of its Petition, Ayla Pharma submitted the expert
`
`declarations of Dr. Laskar (EX1014) and Dr. S. Craig Dyar (EX1042)—none of
`
`which was rebutted or challenged by Novartis. These expert declarations, as well
`
`as the associated exhibits, provide volumes of additional evidence and facts that
`
`was not before the Examiner—and Novartis does not contest otherwise. For
`
`example, Dr. Laskar’s declaration, which Dr. Dyar adopts, explains, among other
`
`things, the significance of the prior art disclosures and why it would be obvious to
`
`a POSITA to combine the references. See, e.g., EX1014, 25-29 & 83-91. Thus,
`
`this evidence further warrants reconsideration of the prior art and arguments. See
`
`Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp., IPR2020-00040, Paper 21 at
`
`20 (PTAB May 12, 2020). As such, Becton factor (f) strongly favors institution.
`
`C.
`
`The Examiner Erred in Its Evaluation of the Asserted Prior Art
`(Becton Factor (e))
`Novartis accuses Ayla Pharma of failing to “acknowledge the extent to
`
`which the asserted art and arguments were evaluated during examination”. POPR
`
`144723214v1
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`
`

`

`at 39. However, the record is silent since the Examiner did not make any specific
`
`analysis of the prior art or issue any rejections based on the art during the
`
`prosecution of the ’053 patent. In similar circumstances, the Board does not
`
`require the petitioner to speculate from such a silent record. ZTE v. Bell Northern
`
`Research, IPR2019-01365, Paper 13 at 8 (PTAB Feb. 11, 2020).
`
`Regardless, the Examiner’s statement that the claims of the ’053 patent are
`
`allowable (EX2001, 634) is simply incorrect, particularly in light of the
`
`“undisputed similarity” with the claims of the ’154 patent. POPR, 2. Given the
`
`Board’s sound conclusion and analysis on the significance of the prior art in the
`
`Argentum Institution Decision, “reasonable minds cannot disagree that the Office
`
`erred in a manner material to patentability in its treatment of the art by failing to
`
`reject the claims of the [’053 patent] over the references cited in Petitioner’s
`
`challenges.” Apple v. Omni Medsci, IPR2020-00029, Paper 7, 55 (April 22, 2020).
`
`As detailed in the Argentum Institution Decision, the prior art reads directly
`
`on the undisputedly similar limitations of the related ’154 patent. Novartis does
`
`not dispute that they also read on the challenged claims of the ’053 patent. Thus,
`
`unlike Alarm.com v. Vivint, Inc., which Novartis relies on (POPR, 40), reasonable
`
`minds cannot disagree that, here, the Examiner misapprehended or overlooked the
`
`specific teachings of the relevant prior art and their impact on the patentability of
`
`the challenged claims. As such, Becton factor (e) also favors institution.
`
`144723214v1
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`
`

`

`II.
`
`THE APPLE FACTORS DO NOT SUPPORT DENIAL OF
`INSTITUTION UNDER § 314(A)
`Novartis cannot dispute some simple facts. There is no parallel district
`
`court litigation involving Ayla and Novartis involving any patent. The ’053
`
`patent was never involved in any litigation before any district court. To the extent
`
`the district court even adjudicated the validity of the ’154 patent, it only considered
`
`the validity of Claims 8–9 and 21–24 of the ’154 patent. EX1030, ¶ 8. Further,
`
`Novartis does not dispute Ayla’s position that the claims of the ’053 patent are
`
`broader than the claims of the ’154 patent (POPR at 52), this difference will make
`
`any invalidity challenge against the ’053 patent easier than the ’154 patent. POPR
`
`at 52.2 Given these facts, where the PTAB reaches a different conclusion as it
`
`relates to the validity of the ’053 patent, there would be no conflict with the district
`
`court’s decision on the ’154 patent. Novartis AG v. Noven Pharm. Inc., 853 F.3d
`
`1289 (Fed. Cir. 2017); Ethicon v. Quigg, 849 F.2d 1422, 1428–29 (Fed. Cir. 1988).
`
`Novartis’s § 314(a) arguments primarily rely on precedential decisions
`
`Apple Inc. v. Fintiv, Inc., and (to a lesser extent) NHK Spring Co., Ltd. v. Intri-Plex
`
`Techs. For the reasons discussed below, all of the Apple factors weigh in favor of
`
`institution and Novartis advances no other argument warranting a § 314(a) denial.
`
`2 Ayla notes that the district court decision was not appealed to the Federal Circuit.
`
`Thus, it is technically nonbinding on the PTAB as it relates to the ’053 patent.
`
`144723214v1
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`6
`
`

`

`Apple Factors 1 & 2
`A.
`Apple Factors 1 & 2 are premised on the existence of a concurrent district
`
`court litigation addressing the same patent. Apple at 6-9. There is no litigation
`
`between Ayla and Novartis involving the ’053 patent; the ’053 patent has never
`
`been litigated before any district court. Any other litigation involving other drug
`
`manufacturers involving the ’154 patent did not involve Ayla because Ayla was
`
`not in existence then.3 POPR at 23. Thus, Apple factors 1 and 2 favor institution.
`
`Apple Factor 3
`B.
`Apple factor 3 deals with any prior investment by the Court and the parties
`
`“at the time of the institution”. Apple, 9. As explained in Apple, this factor looks
`
`at the district courts and the parties’ efforts “related to the patent at issue in this
`
`petition.” Id. at 9-10. Neither the Court, nor any party, has invested any resources
`
`related to the ’053 patent, i.e., “the patent at issue in the petition.” To the extent
`
`Novartis “expended substantial time and resources throughout the litigation
`
`defending the validity of the ’154 patent” against other drug manufacturers, Ayla
`
`“should not, however, be foreclosed from petitioning the Board to hear its
`
`challenge based on choices of the other drug manufacturers.” Mylan, IPR2020-
`
`3 Novartis also pretends that it does not know of Ayla’s intent. POPR at 23. Ayla
`
`sought to license the patent rights for the U.S. and abroad in order to avoid
`
`needless litigation expenses, but Novartis ignored Ayla’s repeated efforts.
`
`144723214v1
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`7
`
`

`

`00040 at 29. But more importantly, Novartis does not claim that it has expended
`
`anything with respect to the ’053 patent, i.e., “the patent at issue in the petition”.
`
`According to Novartis, Ayla “spent only minimal resources preparing its
`
`petition, which is effectively a copy of Cipla’s” and Ayla’s expert (Dr. Dyar)
`
`copied Cipla’s declaration.4 POPR at 44. This fact actually supports institution
`
`and limits the import of § 314(a). Ayla is well aware that the PTAB has discussed
`
`the unfairness of subjecting a Patent Owner to serial petitions because of the
`
`potential for a second petitioner to modify and cure deficiencies in the previous
`
`petition. Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357,
`
`Paper 19 at 11 (PTAB Sept. 6, 2017) (precedential).
`
`In Cipla’s ’053 Petition, Novartis never filed a POPR and the parties settled
`
`before the Board provided its Institution Decision. Valve Corp. v. Elec. Scripting
`
`Prods., Inc., IPR2019-00064, Paper 10 (May 1, 2019) (precedential) (Valve factor
`
`3). In an effort to eliminate any argument from Novartis that Ayla had materially
`
`changed Cipla’s ’053 Petition to Novartis’s detriment, Ayla effectively copied
`
`Cipla’s ’053 Petition and the accompany declaration. POPR 44-45. By this action,
`
`Novartis found itself in the exact spot it found itself in in Cipla’s ’053 IPR neither
`
`suffering any prejudice nor receiving any advantage. Ayla, for its part, would be
`
`insulated from the Gen. Plastic/Valve § 314(a) challenge and that seems to be the
`
`4Ayla notes that Cipla was not a party to the district court action. EX1030.
`
`144723214v1
`
`8
`
`

`

`case since Novartis wisely chose not the raise such an argument. Indeed, Ayla’s
`
`actions mimic those seen where a joinder petitioner files a so-called “me too”
`
`petition thereby eliminating § 314(a) concerns. Mylan Pharmaceuticals Inc. v.
`
`Almirall, LLC. IPR2019-01095, Paper 12 (PTAB Nov. 27, 2019).
`
`Put simply, it is Ayla’s choice to use the PTAB route as opposed to the
`
`district court route. General Plastic at 16-17 (“an objective of the AIA . . . is to
`
`provide an effective and efficient alternative to district court litigation”). Ayla
`
`“cannot be faulted for wanting to chart its own course in defense of its interests by
`
`petitioning for review of the []patent in a faster forum with a different evidentiary
`
`burden.” Mylan, IPR2020-00040 at 30.
`
`Apple Factors 4 & 5
`C.
`Patent Owner’s position seems to be that, since the two sets of claims at
`
`issue in the two forums are not patentability distinct, the district court’s decision on
`
`the validity of certain claims of the ’154 patent effectively insulates the ’053 patent
`
`from a validity challenge. In a somewhat analogous situation (although some
`
`differences do exist), the PTAB has refused to transpose a validity judgment from
`
`one patent to a related patent because the claims of the two patents are not
`
`“patentability distinct”. Steadymed LTD. v. United Therapeutics Corp., IPR 2016-
`
`00006, Paper 84 at 2 (PTAB Apr. 6, 2017).
`
`Even though Novartis denies it is doing so, Novartis is trying to invoke the
`
`144723214v1
`
`9
`
`

`

`specter of issue preclusion/collateral estoppel using the district court’s (not even
`
`the Federal Circuit’s) validity determination for a handful of claims of the ’154
`
`patent to all claims of the non-asserted ’053 patent against other pharmaceutical
`
`defendants. POPR, 56.5 Ex parte Ditzik, 2018-000087, 6 (PTAB Mar. 2, 2018)
`
`(informative) (laying out the relevant factors of issue preclusion). As but one
`
`example, even if it were proper to use a validity determination for certain claims of
`
`the ’154 patent in a matter involving parties other than Petitioner and apply it to all
`
`claims of the ’053 patent, Novartis has not explained how “seeking to prove
`
`invalidity [that] failed to meet the higher standard of proof in district court, [says
`
`anything] about whether the same evidence could meet a lower standard in the
`
`PTO.” Ditzik at 9; Mylan, IPR2020-00040 at fn. 19 (explaining different burdens
`
`between the two forums).
`
`Moreover, Novartis’ reliance on the district court’s factual findings is
`
`unavailing because it fails to recognize that, to the extent such findings conflicts
`
`with the Board’s Argentum Institution Decision, the weight of such evidence is
`
`best resolved after institution and not at the institution stage, especially where Ayla
`
`provided unrebutted expert testimony while Novartis does not even address the
`
`merits of Ayla’s petition as it relates to the ’053 patent, choosing instead to focus
`
`its attention on the ’154 patent. Regardless, in its Petition and accompanying
`
`5 Issue preclusion requires the parties to be the same.
`
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`10
`
`

`

`declaration, Ayla addressed the district court’s decision, including devoting
`
`considerable space explaining that even though Yanni taught suspensions (as
`
`opposed to solutions) that this fact should not preclude a finding the claims would
`
`have been obvious. Petition, 25-28 & 62-63; POPR, 50. Ayla recognized that the
`
`district court had focused on this issue in connection with the ’154 patent which
`
`was one of the reasons Ayla provided a detailed treatment in its Petition. In this
`
`way, the evidence and arguments provided by Ayla are very different than
`
`anything that was presented before the district court. To the extent Novartis’
`
`counsel disagrees, Ayla notes that Novartis did not provide an expert declaration
`
`refuting Ayla’s expert. Meitzner v. Mindick, 549 F.2d 775, 782 (CCPA 1977)
`
`(“[a]rgument of counsel cannot take the place of evidence lacking in the record”).
`
`Finally, to the extent Novartis relies on NHK, E-One I and E-One II (POPR
`
`at 54-55), in every case the same patent and parties were before the PTAB and the
`
`district court concurrently. Apple, n. 26 (citing Nalox-1 distinguishing NHK)
`
`because Petitioner was not a party to the parallel district court litigation). Also, the
`
`FWD in those cases was expected well after trial. Mylan, IPR2020-00040
`
`(describing this fact as “one of the pivotal considerations in NHK”). None of those
`
`facts exist here. Thus, factors 4 and 5 favor institution.
`
`D.
`
`Apple Factor 6
`
`144723214v1
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`
`

`

`Here, with an unopposed expert, Ayla’s arguments are “particularly strong
`
`on the preliminary record.” Fintiv, 14, 15 n.29; Apotex, IPR2019-00400 at 18-19
`
`(noting the absence of countervailing expert testimony). Further, the goal of the
`
`AIA favors institution because Novartis’ position—once a patent is unsuccessfully
`
`challenged before the district court, all other related patents are effectively
`
`insulated from an IPR—would promote gamesmanship and encourage keeping
`
`patent families open to strategically issue related patents when disputes arise.
`
`Novartis cites no authority for this position, relying instead on authority where the
`
`same patent, same parties were before the PTAB at the same time.
`
`Finally, as to any alleged secondary considerations from the District Court
`
`litigation relating to the ’153 patent, which Novartis relies on (POPR, 56-60), it is
`
`premature to address at this stage. Lowe’s. v. Nichia, IPR2017-02011, Paper 13,
`
`18 (Mar. 12, 2018). The evidence of secondary considerations, as it relates to the
`
`’053 patent, has not been fully developed in this record, including with the support
`
`of competent expert testimony. Under analogous cases, the PTAB has refused to
`
`give much weight to the alleged secondary considerations. Artic Cat v. Polaris
`
`Indus., IPR2017-00433, Paper 17, 19 (July 5, 2017); Petroleum Geo-Servs. v. W.
`
`Geco, IPR2014-01477, Paper 18, 32 (March 17, 2015). Factor 6 favors institution.
`
`III. CONCLUSION
`Ayla Pharma respectfully requests that the Board institute the Petition.
`
`144723214v1
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`12
`
`

`

`Date: June 8, 2020
`
`Respectfully submitted,
`
`KATTEN MUCHIN ROSENMAN LLP
`
`By: /s/ Jitendra Malik
`Jitendra Malik, Ph.D.
`Reg. No. 55,823
`
`144723214v1
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`13
`
`

`

`CERTIFICATION OF SERVICE
`Pursuant to 37 C.F.R. §§ 42.6(e), 42.8(b)(4), and 42.105, the undersigned
`
`certifies that on June 8, 2020, a complete copy of the foregoing Petitioner’s Reply
`
`to Patent Owner’s Preliminary Response were served via email on the Patent
`
`Owner counsel as per below:
`
`atrask@wc.com
`
`scott.chapple@novartis.com
`
`peter.waibel@novartis.com
`
`Respectfully submitted,
`
`KATTEN MUCHIN ROSENMAN LLP
`
`By: /s/ Jitendra Malik
`Jitendra Malik, Ph.D.
`Reg. No. 55,823
`
`144723214v1
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`14
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`

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