UF motion to dismiss - PTAB Trial Insights · SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 13...
Transcript of UF motion to dismiss - PTAB Trial Insights · SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 13...
Filed on behalf of Patent Owner By: Richard F. Giunta Paper No. __
Gerald B. Hrycyszyn WOLF, GREENFIELD & SACKS, P.C. 600 Atlantic Avenue Boston, MA 02210 Tel: (617) 646-8000 Fax: (617) 646-8646 [email protected]
UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD
_____________
COVIDIEN LP, Petitioner,
v.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION INCORPORATED,
Patent Owner. _____________
Case No. IPR2016-01274 Case No. IPR2016-01275 Case No. IPR2016-01276
Patent No. 7,062,2511 _____________
PATENT OWNER’S MOTION TO DISMISS
1 This word-for-word identical paper is filed in each proceeding identified in the
heading pursuant to the Board’s oral authorization.
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TABLE OF CONTENTS
I. SUMMARY OF MOTION ............................................................................. 1
II. PROCEDURAL BACKGROUND ................................................................. 1
III. ARGUMENTS AND AUTHORITY .............................................................. 2
A. States Are Immune from Adjudicative Administrative Proceedings. .......................................................................................... 2
B. IPRs Are adjudicatory. .......................................................................... 4
1. Congress Created IPRs as Adjudicatory Proceedings. ............... 5
2. The Office Established and Conducts IPRs as Adjudicatory Proceedings. .......................................................... 6
3. The Courts Recognize IPRs as Adjudicatory Proceedings. ........ 7
4. IPRs Resemble Litigation. .......................................................... 8
C. UFRF Is an Arm of the State of Florida Entitled to Sovereign Immunity. ............................................................................................ 11
1. Legal Standard .......................................................................... 12
2. UFRF Is an arm of the State of Florida. ................................... 13
D. Nothing About IPRs Excuses the Board from Respecting UFRF’s Immunity. .............................................................................. 16
1. Congress Has Not Abrogated States’ Immunity from IPRs ........................................................................................... 17
2. UFRF Has Not Waived Its Immunity ....................................... 18
IV. CONCLUSION .............................................................................................. 20
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TABLE OF AUTHORITIES
CASES
Abbott Labs. v. Cordis Corp., 710 F.3d 1318 (Fed. Cir. 2013) ............................................................................. 7
Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064 (Fed. Cir. 2015) .........................................................................5, 8
Biomedical Patent Mgmt. Corp. v. California, Dept. of Health Services, 505 F.3d 1328 (Fed. Cir. 2007) ...........................................................................20
Butz v. Economou, 438 U.S. 478 (1978) ...................................................................................... 3, 8, 9
Byron v. Univ. of Florida, 403 F. Supp. 49 (N.D. Fla. 1975) ........................................................................14
College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999) .............................................................................................19
Ditta v. Maryland Nat. Capital Park and Planning Com’n, 822 F.2d 456 (4th Cir. 1987) ...............................................................................13
Federal Maritime Commission v. South Carolina State Ports Authority (“FMC”), 535 U.S. 743 (2002) ..................................................................................... passim
Florida Prepaid Postsecondary Educ. Expense Bd. v. College Sav. Bank, 527 U.S. 627, 636-637 (1999) ..................................................................... 18, 19
Gnosis S.P.A. v. S. Alabama Med. Sci. Found., IPR2013-00118, Paper 64(PTAB June 20, 2014) ...........................................7, 10
Google Inc. v. Jongerius Panoramic Techs., LLC, IPR 2013–00191, Paper No. 50 (PTAB, Feb. 13, 2014) ............................ 4, 7, 10
Gunn v. Minton, 133 S.Ct. 1059 (2013) ..........................................................................................19
Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997) .............................................................................................18
In re Magnum Oil Tools Int’l, Ltd., ___ F.3d ___ 2016 WL 3974202 (Fed. Cir. 2016) ............................... 7, 8, 10, 11
Kimel v. Fla. Bd. Of Regents, 528 U.S. 62 (2000) ...............................................................................................17
Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391 (1979) ...................................................................................... 13, 15
Landry v. F.D.I.C., 204 F.3d 1125 (D.C. Cir. 2000) ............................................................................. 9
Manders v. Lee, 338 F.3d 1304 (11th Cir. 2003) ...........................................................................13
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Maryland Stadium Authority v. Ellerbe Beckett Inc., 407 F.3d 255 (4th Cir. 2005) ...............................................................................15
Plancer v. UCF Athletics Ass’n Inc., 175 So. 3d 724 (Fla. 2015) ........................................................................... 14, 15
Regents of the Univ. of California v. Doe, 519 U.S. 425 (1997) ...................................................................................... 12, 14
SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341 (Fed. Cir. 2016) ............................................................................. 8
Smith v. Reeves, 178 U.S. 436 (1900) .............................................................................................19
Speedco, Inc. v. Estes, 853 F.2d 909 (Fed. Cir. 1988)..............................................................................19
Stryker Spine v. Bidermann Motech, 684 F.Supp.2d 68 (2010) ....................................................................................... 9
Tegic Commc’n Corp. v. Board of Regents of University of Tex. Sys., 458 F.3d 1335 (Fed. Cir. 2006) ...........................................................................18
Univ. of Fla. Res. Found., Inc. v. Medtronic PLC, Case No. 1:16CV183-MW/GRJ, D.I. 46 (N.D. Fla. July 15, 2016)... 2, 12, 13, 14
Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007) .......................................................................9, 19
Xechem Int’l Inc. v. The Univ. of Texas, 382 F.3d 1324 (Fed. Cir. 2004) ...........................................................................19
Yagley v. Hawthorne Ctr. of Northville, ARB Case No. 06-042, 2008 WL 2265205 (DOL Adm. Rev. Bd. May 29, 2008) ................................................................................................................................ 4
STATUTES
35 U.S.C. § 23 ..........................................................................................................11 35 U.S.C. § 311(a) ..................................................................................................... 5 35 U.S.C. § 312(a) ..................................................................................................... 5 35 U.S.C. § 314(a) ..................................................................................................... 5 35 U.S.C. § 315 .......................................................................................................... 6 35 U.S.C. § 316(a) ..................................................................................................... 6 35 U.S.C. § 317 .......................................................................................................... 6 35 U.S.C. § 318(a) ..................................................................................................... 9 35 U.S.C. § 6 .............................................................................................................. 8 35 U.S.C. §§ 311 ........................................................................................................ 9 35 U.S.C. §§ 312 ..................................................................................................9, 10 35 U.S.C. §§ 313 ..................................................................................................9, 10 35 U.S.C. §§ 314 ........................................................................................................ 9
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35 U.S.C. §24 .......................................................................................................6, 11 5 U.S.C. § 556 ............................................................................................................ 9 5 U.S.C. § 556(b) ....................................................................................................... 8 5 U.S.C. §§ 554 .......................................................................................................... 7 5 U.S.C. §§ 556 .......................................................................................................... 7 5 U.S.C.A. § 556(e)..................................................................................................10 FLA. STAT. § 1000.21 ............................................................................................14 FLA. STAT. § 768.28 ..............................................................................................14 U.S. CONST. Amend. XI ............................................................................................. 2
OTHER AUTHORITIES
157 Cong. Rec. S1366 (Mar. 8, 2011) (Repub. Pol. Comm. Leg. Notice S.23 (Feb. 28, 2011 entered by Sen. Kyl) ............................................................................... 5
H.R.Rep. No. 112–98, pt. 1, at 46, 2011 U.S.C.C.A.N. 45 ...................................4, 5 U.S. CONST (Art. I, § 8, cl. 8) ...................................................................................17 U.S. CONST. Amend. XIV, § 5 .................................................................................18
REGULATIONS
37 C.F.R. § 42.100 ...................................................................................................10 37 C.F.R. § 42.12 .....................................................................................................11 37 C.F.R. § 42.120 ...................................................................................................10 37 C.F.R. § 42.2 ......................................................................................................... 6 37 C.F.R. § 42.51 .............................................................................................. 10, 11 37 C.F.R. § 42.52 .....................................................................................................11 37 C.F.R. § 42.53 .................................................................................................9, 11 37 C.F.R. § 42.63 .....................................................................................................10 37 C.F.R. § 42.73 .....................................................................................................10 37 C.F.R. § 42.80 .....................................................................................................10 37 C.F.R. §§ 41.152(a) .............................................................................................11 37 C.F.R. §§ 42.1 .....................................................................................................10 37 C.F.R. §§ 42.51 ..................................................................................................... 9 37 C.F.R. §§ 42.52 ..................................................................................................... 9 37 C.F.R. §§ 42.54 ..................................................................................................... 9 37 C.F.R. §§ 42.55 ..................................................................................................... 9 37 C.F.R. §§ 42.56 ..................................................................................................... 9 37 C.F.R. §§ 42.62 ...................................................................................................11
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APPENDIX LISTING OF EXHIBITS
Exhibit Description 2001 Transcript of August 31, 2016 Conference Call 2002 University of Florida Research Foundation, Inc. v. Medtronic PLC et al.,
Civ No. 1:16-cv-00183-MW-GRJ, Doc. No. 23 (ND. Fla. June 10, 2016) (Declaration of David P. Norton in support of UFRF Motion to Dismiss Covidien LP’s Counterclaims)
2003 2014-2015 University of Florida Annual Financial Report (available on The State of Florida’s Auditor General website at http://www.myflorida.com/audgen/pages/subjects/university.htm).
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I. SUMMARY OF MOTION
As a federal court found in a related dispute between the same parties, Patent
Owner (UFRF) is an arm of the State of Florida entitled to sovereign immunity.
The United States Supreme Court (USSC) has held that sovereign immunity
applies to adjudicatory proceedings before federal agencies and bars them from
adjudicating an action brought by a private party against a nonconsenting State.
Inter partes reviews (IPR) are adjudicatory proceedings - they have been
explicitly characterized as such by Congress that created them, the Patent Trials
and Appeals Board (“Board”) that conducts them, and the Federal Circuit that
provides judicial review.
As an arm of the State of Florida, UFRF is immune from being brought
before this federal tribunal to adjudicate private citizen Covidien’s challenge to the
‘251 patent. UFRF has not and will not waive its immunity; it will not consent to
being brought before this federal tribunal. Thus, the Board must grant this motion
to dismiss Covidien’s challenge to UFRF’s patent.
II. PROCEDURAL BACKGROUND
Covidien was licensed under the ‘251 patent. UFRF sought an accounting
and audit under the license but Covidien refused. UFRF sued Covidien in Florida
state court for breach of the license and sought an accounting of royalties due.
Covidien counterclaimed for a declaratory judgment that it does not infringe the
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‘251 patent and removed the action to federal court under the Patent Act. Upon
UFRF’s motion, the United States District Court for the Northern District of
Florida remanded the action to state court. Univ. of Fla. Res. Found., Inc. v.
Medtronic PLC, Case No. 1:16CV183-MW/GRJ, D.I. 46 at 4-10 (N.D. Fla. July
15, 2016) (“UFRF v. Medtronic”).2 In doing so, the court found that UFRF was an
arm of the State of Florida entitled to sovereign immunity. Id.
III. ARGUMENTS AND AUTHORITY
A. States Are Immune from Adjudicative Administrative Proceedings.
States are sovereigns immune from suits brought by private citizens. The
Eleventh Amendment explicitly limits the judicial power of the federal government
by precluding adjudication of suits brought by a private citizen against a State.
U.S. CONST. Amend. XI.
The USSC has held that “the sovereign immunity enjoyed by the States
extends beyond the literal text of the Eleventh Amendment” and extends to
proceedings before a federal agency that are of a “type from which the Framers
would have thought the States possessed immunity when they agreed to enter the
2 Covidien has appealed that ruling. “Covidien” refers herein collectively to the
RPIs identified in the petition, including co-defendants in the state court action
Medtronic PLC and Medtronic, Inc.
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Union.” Federal Maritime Commission v. South Carolina State Ports Authority
(“FMC”), 535 U.S. 743, 754-756 (2002). The USSC has considered the features of
an agency proceeding in determining whether the proceeding is adjudicatory and
therefore of the type from which States are immune. Features probative of the
proceeding being adjudicatory include whether it: (1) is presided over by an
administrative law judge (“ALJ”) having a role “functionally comparable” to that
of an Article III judge (e.g., ruling on proffers of evidence, regulating the course of
the proceeding, exercising independent judgment, power to issue subpoenas); (2) is
adversary in nature; (3) is conducted by a trier of fact immune from political
influence; (4) allows parties to present oral or documentary evidence; (5) is
decided exclusively on a record comprising testimony, exhibits and pleadings and
(6) involves parties entitled to know the findings and conclusions on all issues on
the record. Id. at 756-57 (citing Butz v. Economou, 438 U.S. 478 (1978)).
In FMC, the Court found that “the similarities identified in Butz between
administrative adjudications and trial court proceedings are present here” and
noted that the parties did not dispute that the proceeding “walks, talks and squawks
very much like a lawsuit.” Id. at 757.3 Given the similarities between the agency
3 Internal citations are omitted and emphasis is added unless otherwise stated.
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proceedings and civil litigation, the USSC was unequivocal - “we hold that state
sovereign immunity bars the FMC [federal agency] from adjudicating
complaints filed by a private party against a nonconsenting State. Simply put,
if the Framers thought it an impermissible affront to a State’s dignity to be required
to answer the complaints of private parties in federal courts, we cannot imagine
that they would have found it acceptable to compel a State to do exactly the same
thing before the administrative tribunal of an agency.” Id. at 761.
Federal agencies have followed FMC and dismissed actions brought before
them against a State. See e.g., Yagley v. Hawthorne Ctr. of Northville, ARB Case
No. 06-042, 2008 WL 2265205 at *3 (DOL Adm. Rev. Bd. May 29, 2008)
(upholding dismissal and citing agency cases). The Board must respect UFRF’s
sovereign immunity and do the same here.
B. IPRs Are Adjudicatory.
There can be no doubt that IPRs are adjudicatory agency proceedings.
Congress, the Board, and the Federal Circuit have all explicitly characterized IPRs
as such. See H.R.Rep. No. 112–98, pt. 1, at 46, 2011 U.S.C.C.A.N. 45 (“The Act
converts inter partes reexamination from an examinational to an adjudicative
proceeding”); Google Inc. v. Jongerius Panoramic Techs., LLC, IPR 2013–00191,
Paper No. 50, at 4 (PTAB, Feb. 13, 2014) (“An inter partes review is … a trial,
adjudicatory in nature and constitutes litigation.”); Belden Inc. v. Berk-Tek LLC,
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805 F.3d 1064, 1080 (Fed. Cir. 2015) (a final written decision in an IPR is a
“formal adjudication” subject to the Administrative Procedure Act (APA)).
1. Congress Created IPRs as Adjudicatory Proceedings.
In the AIA, Congress replaced inter partes reexaminations with IPRs, which
are adjudicatory proceedings where the agency adjudicates a dispute between two
parties rather than perform an examination. See H.R.Rep. No. 112–98, pt. 1, at 46,
2011 U.S.C.C.A.N. 45 (“The Act converts inter partes reexamination from an
examinational to an adjudicative proceeding”); 157 Cong. Rec. S1366 (Mar. 8,
2011) (Repub. Pol. Comm. Leg. Notice S.23 (Feb. 28, 2011 entered by Sen. Kyl)
(“converting the [inter partes] reexamination into an adjudicative proceeding
to be known as ‘inter partes review’”). Congress’ intent to create IPRs as
adjudicatory proceedings is clear, and the enabling legislation does just that.
An IPR is initiated by a “person” filing a petition and paying a fee to have
the Board adjudicate the petition. 35 U.S.C. § 311(a). The petition must identify
the RPIs on whose behalf the petition is filed and must specify with particularity
the grounds and supporting evidence. 35 U.S.C. § 312(a). Congress explicitly
limited the Board’s authority to adjudicating the merits of the petitioner’s case. 35
U.S.C. § 314(a) (“Director may not authorize an inter partes review to be
instituted” unless the petitioner has demonstrated that it is reasonably likely to
prevail on at least one claim). Congress also required the Director to promulgate
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regulations for IPR proceedings that enact many features common to judicial
proceedings, including discovery, depositions, protective orders, the imposition of
sanctions, and an oral hearing. 35 U.S.C. § 316(a). Congress authorized
settlement and required that the Office “shall terminate” settled proceedings except
for the limited circumstance where the Office has decided the merits before the
parties request termination. 35 U.S.C. § 317.
Congress’s intent to form an adjudicatory proceeding that provides parties
with an alternative to district court litigation also is clear from the interplay
Congress built into the AIA, including barring the Office from instituting an IPR if
a petitioner or RPI has filed a civil action challenging the patent, requiring the
district court to stay any civil action filed by the petitioner or RPI challenging the
validity of the patent after filing an IPR petition, and barring a petitioner, RPI, or
privy of the petitioner from challenging in a civil action the validity of a claim that
survives an IPR that advances to final written decision. 35 U.S.C. § 315.
2. The Office Established and Conducts IPRs as Adjudicatory Proceedings.
As required by the enabling legislation, the Patent Office regulations created
IPRs as adjudicatory “trials” that are “contested cases” between a petitioner and
patent owner. 37 C.F.R. § 42.2 (“Trial means a contested case instituted by the
Board based upon a petition. … The term trial specifically includes … an inter
partes review under Chapter 31 of title 35”); see 35 U.S.C. §24 (requiring district
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courts to issue subpoenas for witnesses to provide testimony “to be taken for use in
any contested case in the Patent and Trademark Office”); cf. Abbott Labs. v.
Cordis Corp., 710 F.3d 1318, 1327 (Fed. Cir. 2013) (even appeals of inter partes
reexaminations were not contested cases). At the Federal Circuit, the PTO has
argued that an IPR is not an examination but “an adjudicatory process between the
petitioner and the patent owner, conducted before the Board.” Brief for Intervenor
at 30, 2015 WL 5920112 (2015), In re Magnum Oil Tools Int’l, Ltd. (“Magnum
Oil”), ___ F.3d ___ 2016 WL 3974202 (Fed. Cir. 2016).
The Board has consistently, repeatedly, and correctly characterized IPRs as
adjudicatory proceedings in which the Board does not examine the patentability of
the challenged patent, but adjudicates the challenge brought by the petitioner. See
e.g., Google, IPR 2013–00191, Paper No. 50 at 4 (“An inter partes review is
neither a patent examination nor a patent reexamination. Rather, it is a trial,
adjudicatory in nature and constitutes litigation.”); Gnosis S.P.A. v. S. Alabama
Med. Sci. Found., IPR2013-00118, Paper 64 at 43 (PTAB June 20, 2014) (the
Board is “a non-jury tribunal” that is “similar to a district court”).
3. The Courts Recognize IPRs as Adjudicatory Proceedings.
The Federal Circuit has held that an IPR is a “formal adjudication” subject
to the protections of the APA, including 5 U.S.C. §§ 554 (“adjudications”) and
556. SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir.
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2016); Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015). The
Federal Circuit has made clear that the Board’s role is limited to adjudicating
the petitioner’s challenge. See Magnum Oil, 2016 WL 3974202 at *10 (the
Board is not “free to adopt arguments on behalf of petitioners that could have been,
but were not, raised by the petitioner during an IPR. Instead, the Board must base
its decision on arguments that were advanced by a party, and to which the
opposing party was given a chance to respond … [the PTO’s] authority is not so
broad that it allows the PTO to raise, address, and decide unpatentability theories
never presented by the petitioner and not supported by record evidence.”).
4. IPRs Resemble Litigation.
IPRs are similar to civil litigation and meet the USSC’s test for determining
“whether they are the type of proceedings from which the Framers would have
thought the States possessed immunity.” FMC, 535 U.S. at 756. IPRs possess all
the Butz factors the court considered in FMC. Id. at 756-57; § II.A above.
Impartial Trier - IPR trials are routinely held before panels of three
impartial officers (administrative patent judges or “APJs”) that serve a role
“functionally comparable” to that of an Article III judge, including ruling on
proffers of evidence, regulating the course of the proceeding, exercising
independent judgment and having the power to compel testimony. FMC, 535 U.S.
at 756-57; 35 U.S.C. § 6; 5 U.S.C. § 556(b); see Belden Inc., 805 F.3d at 1080
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(applying 5 U.S.C. § 556 to IPRs); 37 C.F.R. §§ 42.51-42.74 (APJs compel
testimony, rule on evidence, and control the proceeding); Vas-Cath, Inc. v.
Curators of Univ. of Missouri, 473 F.3d 1376, 1382 (Fed. Cir. 2007) (explaining
that an APJ is an “impartial federal adjudicator”).
Trier immune from political influence - APJs are immune from political
influence. See Stryker Spine v. Bidermann Motech, 684 F.Supp.2d 68, 84 (2010)
(“Appointments Clause provides that administrative patent judges” are “inferior
officers of the United States.”); Landry v. F.D.I.C., 204 F.3d 1125, 1143 (D.C. Cir.
2000) (Randolph, J., concurring) (quoting Butz, 438 at 513 (“[T]he ALJ in this case
is an inferior officer . . . the role of the modern administrative law judge ‘is
functionally comparable to that of a judge’”); see also FMC, 535 U.S. at 757.
Adversarial - IPRs are contested cases between a patent owner and a
petitioner in which the petitioner bears the burden of proof and initiates the
proceeding by filing a petition requesting that the Board institute a trial against the
patent owner. 35 U.S.C. §§ 311-314; see § III.B above; FMC, 535 U.S. at 757.
Evidentiary Record - parties to an IPR may present oral or documentary
evidence (including testimony) that, together with the “pleadings” that advance the
parties’ arguments, establishes an exclusive record the Board evaluates in
rendering a final written decision, and the parties are entitled to know the Board’s
findings and conclusions on all issues on the record. 35 U.S.C. § 318(a); 37 C.F.R.
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§ 42.51, 42.63, 42.73; 5 U.S.C.A. § 556(e); Magnum Oil, 2016 WL 3974202 at
*10; FMC, 535 U.S. at 756.
In addition to the Butz factors discussed above, in determining that the
agency proceeding in FMC was one from which States were immune, the USSC
noted that the agency proceeding possessed features that resulted in it bearing “a
remarkably strong resemblance to civil litigation in federal courts.” FMC, 535
U.S. at 757. As discussed below, the trial practices and procedures the PTAB
applies to IPRs include virtually all the same features shared with federal court
litigation. 37 C.F.R. §§ 42.1 – 42.80 and 42.100; Google, IPR 2013–00191, Paper
50 at 4 (IPR “is a trial, adjudicatory in nature and constitutes litigation.”); Gnosi,
IPR2013-00118, Paper 64 at 43 (the Board is “similar to a district court”).
Pleadings - IPRs are governed by pleadings similar to those in civil
litigation. FMC, 535 U.S. at 757. The petitioner establishes its case via a petition
and the patent owner has the opportunity to file a written response demonstrating
failures of the petition to meet the statutory requirements for institution. 35 U.S.C.
§§311-313. Post-institution, the patent owner may file a written patent owner
response, and the Board’s scheduling orders routinely warn the patent owner that it
waives any argument not raised therein. 37 C.F.R. § 42.120; e.g., Nanoco Techs.,
Ltd., IPR2015-00528, Paper 7. If a party fails to respond, the Board may enter
adverse judgment against it. 37 C.F.R. § 42.73(b)(4). The Board’s final decision
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is limited to issues raised by the parties. Magnum Oil, 2016 WL 3974202 at *10
(“the Board must base its decision on arguments that were advanced by a party”).
Discovery - is available in IPRs, including, inter alia, depositions and
requests for documents. 37 C.F.R. §§ 42.51 and 42.53; see FMC, 535 U.S. at 758
(discovery including ability to take depositions is similar to federal court
litigation). Deposition officers for IPR depositions have the same qualifications as
their counterparts in a federal court proceeding. 35 U.S.C. § 23. The Board may
impose sanctions for discovery abuses and other conduct, including entry of
judgment against a party. 37 C.F.R. § 42.12; see FMC, 535 U.S. at 758 (ability to
impose sanctions mirrors control by courts in federal litigation).
Subpoena - the IPR’s classification as a “contested case” means that parties
can seek subpoenas for documents and witness testimony, which are governed by
the Federal Rules of Civil Procedure. 35 U.S.C. § 24; see 37 C.F.R. § 42.52.
FRE apply - the Federal Rules of Evidence apply to IPRs. 37 C.F.R. §§
42.62 and 41.152(a); FMC, 535 U.S. at 759 fn. 10.
IPRs meet all the requirements the Court evaluated in FMC. An IPR “walks,
talks and squawks very much like a lawsuit.” FMC, 535 U.S. at 757. It is an
adjudicatory proceeding of a federal agency from which States are immune.
C. UFRF Is an Arm of the State of Florida Entitled to Sovereign Immunity.
UFRF was established to monetize the University of Florida’s (UF) patent
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portfolio and is “operated exclusively for the benefit of” UF. Articles4 Art. III, §1.
As a federal court found, UFRF is an arm of the State of Florida that enjoys
sovereign immunity. UFRF v. Medtronic, D.I. 46 at 4-10.
1. Legal Standard.
Whether a state entity is “an arm of the State, and therefore ‘one of the
United States’ within the meaning of the Eleventh Amendment, is a question of
federal law.” Regents of the Univ. of California v. Doe, 519 U.S. 425, 429 n. 5
(1997). In determining whether an entity is an arm of the State, courts evaluate a
number of factors and have consistently found the following factors as probative of
an entity’s status as an arm of the State: (1) the State defines the entity as an arm
of the State, (2) the State exercises control over the entity, (3) the entity is involved
primarily in state-wide rather than local concerns, and (4) the entity’s finances
impact the State’s (e.g., if the entity is funded by the State or the state treasury is
responsible for paying any judgment against the entity). See id. at 429-430; Lake
Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 401-402
(1979); see also Manders v. Lee, 338 F.3d 1304, 1308 (11th Cir. 2003) (en banc) 4 See Ex. 2002, Ex. B (hereinafter “Articles”). The exhibits filed in these three
cases are identical. Citations are to the exhibit numbers in IPR2016-01274 per the
Board’s oral suggestion.
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(analyzing the factors discussed above); Ditta v. Maryland Nat. Capital Park and
Planning Com’n, 822 F.2d 456, 457-58 (4th Cir. 1987) (same). These factors are
considered in the aggregate and each need not be met to establish that the entity is
an arm of the State. Ditta, 822 F.2d at 460 (explaining that the test for immunity
involves “balancing all of these criteria”).
2. UFRF Is an Arm of the State of Florida.
A district court has already determined that UFRF is an arm of the State of
Florida in a dispute between the same parties. UFRF v. Medtronic, D.I. 46 at 4-10.
Florida Law – Florida law makes clear UFRF is an arm of the State. UFRF
is a “University Direct-Support Organization” (“DSO”) established under FLA.
STAT. § 1004.28; see also UFAFR5 (identifying UFRF as a DSO); see also
generally Bylaws;6 Articles. As a DSO, UFRF is a “not-for-profit Florida
corporation ‘[o]rganized and operated exclusively to receive, hold, invest, and
administer property and to make expenditures to or for the benefit of a state
5 See Ex. 2003, 2014-2015 University of Florida Annual Financial Report
(hereinafter, “UFAFR”) (available on the State of Florida’s Auditor General
website at http://www.myflorida.com/audgen/pages/subjects/university.htm).
6 See Ex. 2002, Ex. A (hereinafter “Bylaws”).
14
university in Florida.’” Plancer v. UCF Athletics Ass’n Inc., 175 So. 3d 724, 726
(Fla. 2015) (quoting FLA. STAT. § 1004.28(1)); see also Articles, Arts. II and III.
The Florida Supreme Court has held that a university DSO is an arm of the State of
Florida. See id. at 729; see also Regents, 519 U.S. at 430 n. 5 (“whether a
particular state agency … is … an arm of the State … can be answered only after
considering the provisions of state law that define the agency’s character.”).
Degree of Control Exercised By Florida – UFRF is controlled by the
University of Florida (UF), which is itself an arm of the State of Florida.7 UFRF’s
bylaws provide that University officials “shall serve as ex officio voting members
by virtue of their University positions.” Bylaws Art. I, § 1. The President of the
University or President’s appointee is “an ex officio voting Director.” Id. The
University President or the Chair of the Board of Trustees of the University
appoints another voting Director, and the University President nominates three
additional directors for election by the Board, which contains only University 7 FLA. STAT. § 1000.21 (defining UF as a state university); FLA. STAT. § 768.28
(stating that State universities have sovereign immunity); UFRF v. Medtronic, D.I.
46 at 9 (UF “is indisputably an arm of the state”); Byron v. Univ. of Florida, 403 F.
Supp. 49, 51 (N.D. Fla. 1975) (“University [of Florida] is a political
instrumentality of the State of Florida.”).
15
employees or appointees. Id. The Board exercises all management functions. Id. at
§ 3. The University President nominates all elected officers, who receive no
compensation “other than their usual salaries as employees of the University of
Florida.” Id. Art. II, §§ 1, 3. Cf. Lake Country Estates, 440 U.S. at 401
(considering, in assessing sovereign immunity, whether an entity’s governing
members are appointed by the State). In Plancer, the Florida Supreme Court held
that a DSO established by a state university (UCF) was an arm of the State entitled
to sovereign immunity because (1) its bylaws defined the DSO board voting
members as members selected from or by UCF; (2) its bylaws provided that the
DSO reported to UCF’s president; (3) UCF controlled the DSO’s budget and
finances; and (4) FLA. STAT. § 1010.62 constrained the DSO’s ability to pursue
financing mechanisms for its operations. Id. at 728-29. UFRF is a DSO with a
structure that is nearly identical to the DSO that the Florida Supreme Court found
to be an arm of the State of Florida.
Statewide Concerns – UFRF is involved primarily with state-wide
concerns. UFRF is operated “exclusively for scientific and educational purposes”
and “exclusively for the benefit” of UF. Articles, Art. III, § 1; Cf. Maryland
Stadium Authority v. Ellerbe Beckett Inc., 407 F.3d 255, 265 (4th Cir. 2005)
(education is a statewide concern). UFRF provides a means by which the
University’s discoveries and inventions are monetized to generate funds that are
16
provided back to the University to pursue its scientific and educational purposes
which are statewide and not local concerns. Id.
UFRF’s Finances – UFRF’s finances are closely tied to UF. In fact,
UFRF’s financial statements are included in the University’s financial statements
because UFRF is one of the “component units of the University of Florida.” See
UFAFR at 17, Table 33. UFRF’s assets and liabilities are considered to be, and are
presented as, part of the University’s assets and liabilities. Id. at Table 33. Indeed,
the University’s financial statements specifically identify UFRF among the
University’s component units that are “required to be included within the
University reporting” because of the “significance of their relationship with the
University.” Id. at 17. Therefore, a judgment impacting UFRF’s finances would
necessarily impact the University of Florida, and because the University of Florida
is in turn a component unit of the State of Florida, any judgment against UFRF in
turn would impact the State of Florida. See id.
As the federal court found, UFRF is an arm of the State entitled to sovereign
immunity. UFRF v. Medtronic, D.I. 46 at 6.
D. Nothing About IPRs Excuses the Board from Respecting UFRF’s Immunity.
The Board cannot adjudicate Covidien’s challenge to UFRF’s patent because
Congress has not abrogated sovereign immunity for IPRs and UFRF has not and
will not waive its immunity.
17
1. Congress Has Not Abrogated States’ Immunity from IPRs.
Congress can only abrogate the States’ sovereign immunity by
“unequivocally express[ing] its intent to abrogate that immunity” and “act[ing]
pursuant to a valid grant of constitutional authority.” Kimel v. Fla. Bd. Of Regents,
528 U.S. 62, 73 (2000). Congress expressed no intent to abrogate sovereign
immunity for IPRs - the AIA does not reference the States or sovereign immunity.
Thus, UFRF’s sovereign immunity has not been abrogated for IPRs. Id. (no
abrogation where Congress does not express an intent to abrogate
"'unequivocally”).
Congress could not abrogate state sovereign immunity for IPRs by use of its
Article I powers because even where Congress has “complete lawmaking authority
over a particular area, the Eleventh Amendment prevents congressional
authorization of suits by private parties against unconsenting States.” Id. at 78.
Thus, while Congress has the power to create the patent system (including IPRs)
pursuant to Article I, Congress has no Article I power to abrogate sovereign
immunity in connection with the patent system. U.S. CONST (Art. I, § 8, cl. 8);
Florida Prepaid Postsecondary Educ. Expense Bd. v. College Sav. Bank (“Florida
Prepaid”), 527 U.S. 627, 636-637 (1999) (Congress has no authority to abrogate
sovereign immunity and make States liable for patent infringement).
The USSC has found Congressional abrogation of state sovereign immunity
18
to be “pursuant to a valid exercise of power” only when Congress acts through the
Fourteenth Amendment’s Enforcement Clause. U.S. CONST. Amend. XIV, § 5. Id.
The AIA does not refer to the Enforcement Clause or the Fourteenth Amendment.
That Congress did not abrogate sovereign immunity for IPRs is clear.
2. UFRF Has Not Waived Its Immunity.
A State can waive its sovereign immunity by statute or conduct. Tegic
Commc’n Corp. v. Board of Regents of University of Tex. Sys., 458 F.3d 1335,
1340 (Fed. Cir. 2006); Idaho v. Coeur d’Alene Tribe, 521 U.S. 261, 267 (1997)).
The State of Florida has done neither.
No Florida law waives the State’s sovereign immunity from proceedings
initiated by a private entity before the PTO challenging a state-owned patent.
UFRF has not waived its immunity by conduct. UFRF has not declared any
intention to waive its immunity, in fact it has steadfastly asserted it. UFRF did not
invoke the Board’s jurisdiction. Tegic Communication, 458 F.3d at 1340.
Filing suit in state court to enforce a license agreement’s audit provisions is
not a voluntary waiver of sovereign immunity, and is not consent to a costly
challenge to UFRF’s patent before this federal tribunal. College Sav. Bank v.
Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 676 (1999) (“a
State does not consent to suit in federal court merely by consenting to suit in the
courts of its own creation.”); see Smith v. Reeves, 178 U.S. 436, 441 (1900)
19
(California’s waiver of sovereign immunity extended only to California state
courts). Even if “patent issues are relevant under state contract law to the
resolution of a contract dispute” that does not “convert a suit for breach of contract
into one arising under the patent laws.” Speedco, Inc. v. Estes, 853 F.2d 909, 913
(Fed. Cir. 1988); Gunn v. Minton, 133 S.Ct. 1059, 1068 (2013) (“Federal courts
have exclusive jurisdiction of all cases arising under the patent laws, but not of all
questions in which a patent may be the subject-matter of the controversy”).
UFRF did not voluntarily appear before this Board. Covidien initiated this
proceeding. UFRF’s actions in obtaining the ‘251 patent, licensing it and seeking
an audit did not waive its immunity from challenges to the ‘251 patent before a
federal tribunal. A State does not constructively consent to federal jurisdiction by
engaging in an act governed by Congress’s Article I powers. College Sav. Bank,
527 U.S. at 680-683; Florida Prepaid, 527 U.S. at 635 (citing same). Thus,
Florida’s participation in the patent system does not waive its sovereign immunity
for federal actions involving the patent. Vas-Cath, Inc.,473 F.3d at 1381 (“a state’s
participation in the federal patent system does not of itself waive immunity”);
Xechem Int’l Inc. v. The Univ. of Texas, 382 F.3d 1324, 1331 (Fed. Cir. 2004) (in
upholding dismissal of a § 256 action filed against a State challenging inventorship
of a state-owned patent, the Federal Circuit held that USSC precedent forecloses
“the broad ruling that by obtaining patents the state constructively waived its
20
Eleventh Amendment immunity as to any federal proceeding involving those
patents”). Even a State that has engaged in prior patent litigation does not waive
its sovereign immunity in connection with other actions. Biomedical Patent Mgmt.
Corp. v. California, Dept. of Health Services, 505 F.3d 1328, 1343 (Fed. Cir.
2007) (“[t]his argument merits little discussion” and “must be rejected.”)
IV. CONCLUSION
UFRF’s sovereign immunity bars the Board from adjudicating Covidien’s
challenge to UFRF’s patent. The Board must grant this motion to dismiss.
Respectfully Submitted,
University of Florida Research Foundation Inc. By /Richard Giunta/ _ Richard F. Giunta Registration No.: 36,149 [email protected] Gerald B. Hrycyszyn Registration No.: 50,474 [email protected]
WOLF, GREENFIELD & SACKS, P.C. 600 Atlantic Avenue Boston, MA 02210 Tel: (617) 646-8000 Fax: (617) 646-8646
CERTIFICATE OF SERVICE UNDER 37 C.F.R. § 42.6 (e)(4)
I certify that on September 14, 2016, I will cause a copy of the foregoing
document, including any exhibits or appendices referred to therein, to be served via
electronic mail, as previously consented to by Petitioner, upon the following:
[email protected] [email protected] [email protected]
Date: September 14, 2016 /MacAulay S. Rush / MacAulay S. Rush Paralegal WOLF GREENFIELD & SACKS, P.C.