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 RGiunta-PTAB@Wolfgreenfield.com

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.

i

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

-ii-

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

-iii-

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

-iv-

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

-v-

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).

1

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

2

‘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.

3

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.

4

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,

5

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

6

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

7

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.

8

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

9

(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.

10

§ 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

11

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

12

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.

13

(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 RGiunta-PTAB@Wolfgreenfield.com Gerald B. Hrycyszyn Registration No.: 50,474 Ghrycyszyn-PTAB@wolfgreenfield.com

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:

David.Cavanaugh@wilmerhale.com Mindy.Sooter@wilmerhale.com Natalie.pous@wilmerhale.com

Date: September 14, 2016 /MacAulay S. Rush / MacAulay S. Rush Paralegal WOLF GREENFIELD & SACKS, P.C.