[00:00:02] Speaker 04:
Before we begin our regular proceedings, we're going to do what promises to be the high point of the day.

[00:00:08] Speaker 04:
And I'll recognize Judge Raina for that purpose.

[00:00:11] Speaker 03:
Thank you, Chief Proach.

[00:00:16] Speaker 03:
Chief Proach, Judge Bison, I move for the admission of Anna G. Phillips.

[00:00:21] Speaker 03:
She is a member of the bar and is in good standing with the highest courts of California and Texas.

[00:00:26] Speaker 03:
I acknowledge there were credentials and I'm satisfied that she possesses the necessary qualifications.

[00:00:33] Speaker 03:
Anna, can I get you to stand?

[00:00:34] Speaker 03:
I just want to point out that time, no, just back over here.

[00:00:42] Speaker 03:
Time flies when you're having fun.

[00:00:45] Speaker 03:
It also flies when you're working hard.

[00:00:48] Speaker 03:
So time must have really flown past for you this past year.

[00:00:53] Speaker 03:
Um, it flies even faster the older you get.

[00:00:55] Speaker 03:
So this past year of you working for me has been pretty, pretty fast, but it's been marked by your work ethic, your professionalism and your high quality of work.

[00:01:09] Speaker 03:
Uh, I know that before us stands a, an excellent practitioner that we can move to the admission to the court.

[00:01:19] Speaker 04:
we're enthusiastically agreeable to granting the motion.

[00:01:24] Speaker 04:
And now if Judge Bryson will recognize me, I have a motion.

[00:01:28] Speaker 04:
I recognize you, Judge.

[00:01:31] Speaker 04:
Aaron, could you please stand?

[00:01:34] Speaker 04:
I move the admission of Erin Leach, who is a member of the bar and is in good standing with the highest court of California.

[00:01:42] Speaker 04:
I have knowledge of her credentials and am satisfied that she possesses the necessary qualifications.

[00:01:49] Speaker 04:
And you know, I've said this before.

[00:01:50] Speaker 04:
One of the weird things about being the judge is that we pick the best candidates out of a large group, and then they join us.

[00:01:59] Speaker 04:
And in cases like Erin,

[00:02:02] Speaker 04:
they nonetheless far exceed whatever high expectations we had in the first instance.

[00:02:08] Speaker 04:
And then, in the real world, you law firms or your companies work hard to keep those people for as long as you can.

[00:02:16] Speaker 04:
And in our judges' world, they leave after a year or a year and a half.

[00:02:20] Speaker 04:
We have to say goodbye temporarily.

[00:02:23] Speaker 04:
But I say to women's groups that I speak to, I tell them, I know you want to be and you will be fabulous lawyers.

[00:02:33] Speaker 04:
And I know you want to be and you will be fabulous mothers.

[00:02:37] Speaker 04:
But you can have it all, but maybe not all at once.

[00:02:41] Speaker 04:
Well, sometimes there's an exception, and we found her in Erin.

[00:02:46] Speaker 04:
Even charity is amazed at the way Erin is able to juggle her life, and that's a pretty high feat.

[00:02:55] Speaker 04:
So I'm understandably very sad that Erin and her crew, including my first set of twin grand clerks,

[00:03:05] Speaker 04:
will be moving across the country, but have no doubt for her future success personally and professionally.

[00:03:14] Speaker 04:
She's brought real joy and comfort to my chambers, and I thank her for all of her hard work, her great judgment, her mature judgment, her warmth, and just the pleasure of having her around.

[00:03:29] Speaker 04:
So thank you.

[00:03:33] Speaker 04:
Motion is granted.

[00:03:34] Speaker 04:
Now, can both candidates be sworn in please?

[00:03:57] Speaker 04:
Congratulations.

[00:04:01] Speaker 04:
All right, now back to work.

[00:04:02] Speaker 04:
The first argument this morning is an 181167 cell gene corporation versus Peter.

[00:04:11] Speaker 04:
Now, let me just say, logistically, for both sides, we've got two cases.

[00:04:15] Speaker 04:
And the patent issues are different in both cases.

[00:04:18] Speaker 04:
So we hear them separately.

[00:04:20] Speaker 04:
But there's an overlapping retroactivity constitutional argument.

[00:04:24] Speaker 04:
So we don't want to hear the same thing twice.

[00:04:26] Speaker 04:
We will be a little more generous in the time, maybe the first time out, but not so much in the second.

[00:04:31] Speaker 04:
So please proceed.

[00:04:33] Speaker 01:
Thank you, Your Honor.

[00:04:34] Speaker 01:
And may it please the court.

[00:04:35] Speaker 01:
In fact, that's where I was going to start.

[00:04:37] Speaker 01:
and explain that this case and the one that follows involve methods for delivering a teratogenic drug to patients.

[00:04:45] Speaker 01:
This first case, we have this in sort of, because we have this case in numerical order of the docket numbers, this case involves the enhanced version of Celgene's STEPS program and the patent that covers that.

[00:04:59] Speaker 01:
The second case will involve the original STEPS program which preceded that and the patent, the 501 patent that covers that.

[00:05:06] Speaker 01:
In both cases, we demonstrate in our briefs, and I'll hope to elaborate here today, that the board's rulings canceling our patent claims resulted in unconstitutional taking because of Congress's creation of the inter partes review process after the application for an issuance of those two patents.

[00:05:24] Speaker 03:
Wouldn't a determination on takings in this case involve some sort of factual finding at some point?

[00:05:31] Speaker 01:
I don't think so, because we have a complete and total taking of our patent claims in both of these cases.

[00:05:37] Speaker 01:
So there shouldn't have to be any sort of individual evaluation of the taking here.

[00:05:42] Speaker 01:
And ultimately, all we're saying to this court, Your Honor, is give us our patents back.

[00:05:48] Speaker 01:
That's the remedy we seek from this court.

[00:05:50] Speaker 03:
Is this the right court to tell, then?

[00:05:52] Speaker 03:
I mean, what about the Court of Federal Claims?

[00:05:54] Speaker 03:
Why shouldn't this case be there?

[00:05:55] Speaker 01:
The Court of Federal Claims could give us compensation if this court were to say, one, affirm the judgment of the PTAB, and then two, not rule substantively on the takings claims in this case.

[00:06:09] Speaker 01:
But I think both sides have urged

[00:06:11] Speaker 01:
the court to resolve the takings claim in this case if it does indeed become ripe.

[00:06:15] Speaker 01:
Of course, a reversal in this case will mood out the reversal, total reversal, either in each case.

[00:06:20] Speaker 04:
Well, that might be a little strong.

[00:06:22] Speaker 04:
We can ask the government, but I'm not sure they're urging.

[00:06:24] Speaker 04:
I mean, they're recognizing that we have the authority, if we wish, to take this case up, even with the board not having previously considered the constitutional question.

[00:06:34] Speaker 04:
But I think urging might be a little strong.

[00:06:36] Speaker 01:
It might be just a wee bit strong, Your Honor, but it

[00:06:40] Speaker 01:
They do argue that we have waived this by not presenting it to the agency.

[00:06:44] Speaker 01:
But in fact, an Article I agency would not be in the position to declare its own statute that created it unconstitutional.

[00:06:51] Speaker 05:
And so what is the most powerful support for that proposition?

[00:07:02] Speaker 01:
The most powerful support for?

[00:07:04] Speaker 05:
The proposition that an Article I agency cannot declare its own statute to be unconstitutional.

[00:07:10] Speaker 05:
Well, Judge Bryson, without being- Article I judges, in this case, take the same oath that we do.

[00:07:16] Speaker 05:
And if they conclude that the work that they're doing is, in fact, contrary to the Constitution, what is the reason that they can't act based on that conclusion?

[00:07:27] Speaker 01:
Well, first of all, I think I'm tempted to say without

[00:07:32] Speaker 01:
being too cute about it, that Marbury versus Madison is the answer to that.

[00:07:36] Speaker 05:
Do you have anything that's more specifically directed to the problem?

[00:07:41] Speaker 01:
Well, I think the more specific direction is both to say that separation of powers answers that question.

[00:07:47] Speaker 05:
Again, they do have- Both Marbury and separation of powers are pretty general.

[00:07:51] Speaker 05:
Do you have a case in which the Supreme Court or other courts have said, in Haikverba,

[00:07:58] Speaker 05:
An agency may not declare judges within the agency, Article 1 judges, whatever.

[00:08:07] Speaker 01:
We did not cite one in our briefs, and I cannot think of one Judge Bryson standing here.

[00:08:12] Speaker 01:
But at the same time, I would point out that in the case that is cited by the government for the proposition that we could have raised this, that was a case where the remedy that could have been granted at the agency level was the replacement of two judges who were constitutionally appointed.

[00:08:28] Speaker 01:
But it seems to me, at the very least, passing strange to ask an Article 1 agency to declare that it is itself unconstitutional or that it is unconstitutionally taking patents that were issued before.

[00:08:44] Speaker 05:
Suppose, though, that you had the temporary emergency court of appeals, I think,

[00:08:50] Speaker 05:
You and I are probably both old enough, if I can presume, to remember that august body.

[00:08:59] Speaker 05:
Article III judges were selected and put on that court.

[00:09:02] Speaker 05:
Suppose that the judges of that court had concluded that the court itself was unconstitutionally created.

[00:09:10] Speaker 05:
You wouldn't have any doubt that they could have the authority to say, we are, as a body, unconstitutional.

[00:09:16] Speaker 01:
I think that's right.

[00:09:18] Speaker 05:
Is that just because they happen to be Article III judges?

[00:09:21] Speaker 01:
I think in that case it would.

[00:09:23] Speaker 01:
That would be the distinction I'd offer.

[00:09:25] Speaker 05:
So if you created the Temporary Emergency Court of Appeals from Article I judges and start, say, one Article I judge and two Article III judges, then they couldn't do that?

[00:09:35] Speaker 01:
I think it would be a harder question than

[00:09:39] Speaker 01:
if you had Article 1 judges about their authority to do that.

[00:09:43] Speaker 01:
And in fact, I remember the oil states argument sitting there waiting to argue the SAS argument where the Chief Justice took issue with the Petitioner's Council in oil states for even referring to the administrative patent judges before the PTAB as judges.

[00:09:59] Speaker 01:
It is, if I may, I'll be certainly happy to continue with the constitutional argument.

[00:10:06] Speaker 01:
I had intended to start with the patent claims and then get to the constitutional argument on the basis of constitutional avoidance, but I certainly don't want to take this argument in a different direction.

[00:10:16] Speaker 04:
Let's do it.

[00:10:17] Speaker 04:
Well, let me ask you about the, just to follow up on Judge Bryson's point.

[00:10:20] Speaker 04:
We'll ask the government, obviously.

[00:10:22] Speaker 04:
But I know the government has argued this thing before other panels.

[00:10:27] Speaker 04:
Not me, but before other panels.

[00:10:29] Speaker 04:
And I think what they've said in terms of their authority is that, well, how do you implement that?

[00:10:36] Speaker 04:
If you find it's unconstitutional, what do you do with that?

[00:10:40] Speaker 04:
And I understand their only answer is, well, then we don't institute.

[00:10:45] Speaker 04:
because we have the authority to not institute.

[00:10:49] Speaker 04:
Do you have a better answer than the governments?

[00:10:51] Speaker 04:
Because I will ask them.

[00:10:53] Speaker 04:
But if that's their sole authority to declare something unconstitutional is to refuse to institute, that seems a little odd to me.

[00:11:01] Speaker 04:
One, because in theory, that's a nonreviewable decision.

[00:11:04] Speaker 04:
Although you'd think if mandamus still lived in that context, this would be the place to use it.

[00:11:11] Speaker 04:
But do you know anything else they could do within their authority if they viewed this statute as being unconstitutional?

[00:11:18] Speaker 01:
I think that they could either decline to institute, as they've suggested, on any patent that was issued or it perhaps applied for before the effective date of the AIA, or they could, I suppose, institute and then make a decision that is a final written decision on that very issue.

[00:11:40] Speaker 01:
and then say, we've instituted, but we regret that we instituted because we don't have the authority to do that.

[00:11:47] Speaker 01:
The IPR statute, of course, is unusual in that regard in terms of the institution decision and the final written decision, one being appealable, the other not.

[00:11:57] Speaker 04:
But of course, there's already one board decision, which I think is non-precedential, that says it's constitutional, right?

[00:12:06] Speaker 04:
Are you aware of any more?

[00:12:07] Speaker 04:
I know of one.

[00:12:09] Speaker 01:
I don't know which one you're referring to, but I don't know of any others.

[00:12:14] Speaker 01:
I don't know of any right now.

[00:12:15] Speaker 01:
Why didn't you raise it before the board?

[00:12:18] Speaker 01:
Why didn't we raise it before the board?

[00:12:19] Speaker 01:
Because honestly, our taking wasn't ripe until the board took our patents.

[00:12:24] Speaker 01:
And all we would have been able to say is, well, gee, if you do take our patents, then that might be a taking under the circumstances.

[00:12:30] Speaker 03:
Isn't your argument that the entire IPO process is unconstitutional?

[00:12:33] Speaker 01:
Oh, no.

[00:12:34] Speaker 01:
No, no.

[00:12:34] Speaker 01:
We just say that it is a taking if a patent that the property right came into being by issuance of the patent before

[00:12:45] Speaker 01:
the passage of the AIA.

[00:12:47] Speaker 01:
It's only a retroactive.

[00:12:50] Speaker 01:
And in fact, in Chief Judge Proce, there's an important point to make with regard to the comparison to inter partes reexamination, which this scheme took place of.

[00:13:01] Speaker 01:
When Congress passed the Interparties Reexamination Act,

[00:13:05] Speaker 01:
it made it prospective only.

[00:13:07] Speaker 01:
And that's an important distinction, both with regard to what Congress did later, as well as what cell genes expectations were at the time of the patent issuances with regard to any future enactments by Congress, that surely any sort of inter partes post hoc review system that might take away a patent would only be prospective, just like the expectation of the

[00:13:30] Speaker 01:
the expectation created by the way that Congress passed the Interparties Act.

[00:13:36] Speaker 05:
So the difference between the two in your view is that this is more probing higher standards in the sense of

[00:13:44] Speaker 05:
easier for you to lose your patent than would be the case, just generically speaking.

[00:13:49] Speaker 01:
Well, I could go, I could, Judge Bryson, give you a laundry list of those things.

[00:13:52] Speaker 05:
I understand.

[00:13:53] Speaker 05:
But that's the gist of it, isn't it?

[00:13:55] Speaker 05:
That it's just put you in a position that the burden is greater than it would have been under a regime that was in place at the time you applied for it.

[00:14:05] Speaker 01:
Well, that's right.

[00:14:05] Speaker 01:
And it's put our patents at risk.

[00:14:07] Speaker 05:
And indeed, you know, the- Well, let me ask you, in that light, let me ask you that, looking for an analogy here,

[00:14:14] Speaker 05:
in another area.

[00:14:16] Speaker 05:
Suppose under the Homestead Act of 1862, where people were given the right to get property in unsettled areas on the condition that they settle and farm there.

[00:14:31] Speaker 05:
Suppose that the act had had a provision that said anyone with a previous felony conviction is not eligible for the Homestead Act allocation.

[00:14:43] Speaker 05:
And Congress discovered after five years that a lot of people who had previous felonies had actually applied for and gotten grants of homestead property and decided this is causing all sorts of trouble on the frontier, a lot of violence.

[00:14:58] Speaker 05:
and decided that they would enact a statute that said the Interior Department may inquire, investigate, to whatever extent necessary, to determine whether any of these people actually had felony convictions.

[00:15:13] Speaker 05:
Would that be a taking with respect to any of the people who were on the land and who were discovered to have felony convictions?

[00:15:21] Speaker 01:
Well, when we get into the land area, as you've seen in our brief, we have... So I think the answer is probably yes to your question.

[00:15:30] Speaker 01:
When be it taken?

[00:15:31] Speaker 01:
I think probably yes, and I'm going to explain why, because...

[00:15:35] Speaker 01:
We've offered in our brief the analogy, in this case, to adverse possession.

[00:15:40] Speaker 01:
And even if the nefarious land-obtainer in your hypothetical had obtained the land even though he or she had a felony conviction, I guess in the 1860s we'd say he,

[00:15:59] Speaker 01:
The practical reality would be that at some point, even if he didn't have a claim of right at the initial time, or he should not have properly been given it, maybe in terms of investment and in terms of reliance, in terms of all of the requirements of the adverse possession law, he has a claim that he has, regardless of what the conditions were at the beginning, a claim of right as to that patent.

[00:16:27] Speaker 01:
And I think that's analogous to what we have here.

[00:16:29] Speaker 01:
But I'd also add your honor that in that case you're talking about a requirement That was in place at the very beginning of the process now You could say well the analogy is of course you were supposed to get a valid Patent one that's that's novel and non-obvious, but the difference in the case of the homestead they did have the requirement that they just didn't have a very

[00:16:54] Speaker 05:
robust enforcement, and they decided to make the enforcement more robust, and there it seems to me the analogy holds up.

[00:17:03] Speaker 01:
So that's perhaps true, but at the same time if you look at the analogy to this case, it breaks down in the following way.

[00:17:10] Speaker 01:
When Celgene received its patents, which was after it applied for one,

[00:17:15] Speaker 01:
even before the inter partes statute was passed, but both were issued after the re-examination statute, I should be clear about that, was passed.

[00:17:26] Speaker 01:
When Celgene received its property right, it had every reason to believe that the only adversarial litigation it would face to take away its patent would be conducted in district court under a strong presumption of validity, which would have to be proved by clear and convincing evidence.

[00:17:43] Speaker 01:
In this case, it is as though, to use a land analogy that I've been thinking of, I own a house in Northern Virginia.

[00:17:51] Speaker 01:
And I believe that I have the entire bundle of sticks to both my property and to my house.

[00:17:58] Speaker 01:
But let's say that the Virginia legislature decides to authorize or impose the ability of special

[00:18:08] Speaker 01:
panels of boards of zoning appeals to revisit the question of what access the public should have to my property.

[00:18:16] Speaker 01:
And after the fact, they declare that my house and my property should be open to the public.

[00:18:22] Speaker 01:
That's, in effect, what's happened here.

[00:18:24] Speaker 05:
Open to the public, but when you get into zoning and talking about takings, then you run into the Supreme Court's

[00:18:35] Speaker 05:
authority which says zoning is fine.

[00:18:36] Speaker 05:
It's not a taking.

[00:18:37] Speaker 01:
Well, zoning is generally fine.

[00:18:38] Speaker 05:
Generally fine.

[00:18:40] Speaker 01:
In the regulatory sphere.

[00:18:41] Speaker 05:
If they simply took your house as an eminent domain, which in effect is what you were saying.

[00:18:48] Speaker 05:
That's one thing.

[00:18:49] Speaker 05:
But if they said in your house you've kept pigs in the backyard, which was OK, but no more pigs.

[00:18:58] Speaker 05:
then that wouldn't be a taking.

[00:18:59] Speaker 05:
I think we'd agree on that.

[00:19:00] Speaker 01:
No, I think we could agree on that.

[00:19:02] Speaker 01:
But then I point you to Loretto, where the Supreme Court said that it is a taking to require the installation of a cable box, for example.

[00:19:10] Speaker 05:
Because that was a physical intrusion.

[00:19:13] Speaker 05:
Well, this is the only reason that case got decided.

[00:19:15] Speaker 01:
Well, that's probably right.

[00:19:16] Speaker 01:
But here, there's no possibility of a physical intrusion in the realm of intellectual property.

[00:19:21] Speaker 01:
But we do have, and the only point I was making there, Your Honor, is that in Loretto, we have a little bitty intrusion.

[00:19:28] Speaker 01:
But it is a physical one.

[00:19:30] Speaker 01:
Here, we have a total evaporation, a total evisceration of our property rights.

[00:19:34] Speaker 03:
Does it matter that pens are issued to persons?

[00:19:39] Speaker 03:
that land passes to a person, whereas a patent is a public franchise?

[00:19:45] Speaker 03:
Can you have a taking of a public franchise?

[00:19:47] Speaker 01:
Absolutely, Your Honor.

[00:19:48] Speaker 01:
In fact, if you look at oil states, Justice Thomas's opinion for the court says explicitly that a public franchise is a form of property right entitled to the same protection as any other property.

[00:19:59] Speaker 01:
And for that proposition, it cites to the Supreme Court's

[00:20:03] Speaker 01:
old decision in James V. Campbell, which was the case that was quoted in Horn, the raisin case that says that patents are property like anybody else's.

[00:20:12] Speaker 01:
So contrary to the government's submission in this case, there is a valid property interest.

[00:20:19] Speaker 01:
We had very much a reliance interest for the many years, and we built a business on it, quite frankly.

[00:20:25] Speaker 01:
without any expectation until 2011 that there was going to be a new board with new procedures that results in a 75% kill rate according to the Dolan and Manta article of patent claims as opposed to the much more modest about 12% of ex parte re-examination and of course the strictly forward looking inter partes re-examination.

[00:20:50] Speaker 01:
If I could just make a couple of other points in respect to Judge Prost.

[00:20:54] Speaker 04:
Quickly, were you going to conclude on the constitutional question?

[00:20:58] Speaker 01:
I was.

[00:20:58] Speaker 01:
Because the only other point I wanted to make was about Patlex.

[00:21:01] Speaker 01:
And Patlex has been cited by our friends on the other side as having already decided this issue.

[00:21:08] Speaker 01:
And I point out that the takings issue in Patlex was not treated with any great degree, but to the extent that it was.

[00:21:14] Speaker 01:
It relied on a standard that the Supreme Court has now made clear was only dictum from a pre-Patlex case.

[00:21:21] Speaker 01:
And in Chevron versus Lingell, the Supreme Court has said that's exactly the wrong standard.

[00:21:26] Speaker 01:
So Patlex does not stand in the way of this court revisiting the issue.

[00:21:30] Speaker 01:
And quite frankly, when this case is compared to the other cases that are either pending or have presented this issue to the court,

[00:21:37] Speaker 01:
I've looked at the briefs in those cases, and this is the case that presents this case most completely and squarely.

[00:21:44] Speaker 01:
And with that regard, we agree with the government's suggestion that this case might be an appropriate vehicle for deciding that issue.

[00:21:51] Speaker 04:
OK.

[00:21:51] Speaker 04:
Why don't we give you another three minutes or so if you need it for the merits of this?

[00:21:55] Speaker 01:
I appreciate it.

[00:21:57] Speaker 01:
Our case with regard to the enhanced steps program is relatively simple.

[00:22:02] Speaker 01:
The 720 patent really did something that was truly innovative, truly beneficial, and went actually against the grain of the state of the art in 2000.

[00:22:11] Speaker 01:
It required not just a doctor's prescription in the world of medicine, where doctors prescribing authority is viewed as not only primal, but

[00:22:21] Speaker 01:
exclusive, and it imposed a risk assessment between the doctor's prescription and the... But on the other hand, your main argument about what the PTAB did was that there was no motivation to combine.

[00:22:33] Speaker 04:
And that's right.

[00:22:34] Speaker 04:
So you're suggesting there was something really important and innovative.

[00:22:38] Speaker 04:
Doesn't that also suggest that people would have been out there hunting for that?

[00:22:43] Speaker 01:
The board in this case decided that there was a generic motivation to improve.

[00:22:50] Speaker 01:
And they say, well, that wasn't generic.

[00:22:51] Speaker 01:
It was very specific to this particular drug because of its dangers.

[00:22:55] Speaker 01:
That's true.

[00:22:56] Speaker 01:
But what the law requires is that the motivation be a motivation to create this invention, not just any improvement.

[00:23:04] Speaker 01:
And there's always a motivation to improve.

[00:23:06] Speaker 01:
And we've known that since the expression, build a better mousetrap and the rule will be a path to your door.

[00:23:12] Speaker 01:
What this case is about is taking random pieces from different pieces of prior art and saying, well, what you would do is assemble all of these in such a way that you would interfere and put a check on the doctor's prescribing primacy and require approvals before a pharmacy can issue this prescription.

[00:23:35] Speaker 05:
You said a moment ago that there's always a motivation to improve.

[00:23:39] Speaker 05:
And that seems to me to be right.

[00:23:40] Speaker 05:
But I thought that was contrary to the

[00:23:42] Speaker 05:
at least part of your submission here, which was this system worked so well that there really wasn't a motivation to improve.

[00:23:48] Speaker 01:
Well, I don't think that's contrary at all.

[00:23:50] Speaker 01:
I think that there is always a generic motivation to improve in the abstract.

[00:23:56] Speaker 05:
There wasn't, in this case, any motivation to make this better.

[00:24:00] Speaker 01:
There was not, because it was already working with 100% perfection.

[00:24:05] Speaker 01:
Well, not quite, but close.

[00:24:07] Speaker 01:
Well, at the time of the application, that's true.

[00:24:09] Speaker 05:
All right.

[00:24:10] Speaker 05:
And yet, don't you think that in an area in which the consequences of failure are so catastrophic that working towards any improvement at all, there would be a motivation that anything that could possibly make this more efficient, even if so far there hadn't been a catastrophic event,

[00:24:34] Speaker 05:
would be very desirable, if for no other reason than to avoid liability, which could be very large.

[00:24:40] Speaker 01:
Oh, absolutely.

[00:24:41] Speaker 01:
There is absolutely a case.

[00:24:43] Speaker 01:
And that's why I say there is absolutely a desire to make something better.

[00:24:48] Speaker 01:
But to make this.

[00:24:49] Speaker 05:
I'm confused, because I thought you were saying, well, in this particular instance, there really wasn't.

[00:24:54] Speaker 05:
a motivation to make this better.

[00:24:57] Speaker 01:
Well, so I'm sorry if I'm being unclear.

[00:25:01] Speaker 01:
I think my arguments are consistent.

[00:25:03] Speaker 01:
So let me start with the proposition that generically and in the abstract, everybody wants to make something better.

[00:25:11] Speaker 01:
Right.

[00:25:11] Speaker 01:
New and improved.

[00:25:12] Speaker 01:
It's been on the shelves all of my life.

[00:25:15] Speaker 01:
And that's great.

[00:25:17] Speaker 01:
But that doesn't answer the obviousness question.

[00:25:19] Speaker 01:
The obviousness question is sensitive to context.

[00:25:22] Speaker 01:
It's sensitive to the particular set of prior art and the context that the prior art finds itself in.

[00:25:28] Speaker 01:
And so yes, in fact, I'll even concede to you and concede that the government is partially right.

[00:25:35] Speaker 01:
that there there was a desire and in fact it stated in one of the cell gene publications that was cited as prior art was like we're gonna make sure that this is as good as it possibly can be that's great but that doesn't answer the obviousness question because whether or not there's a generic motivation to combine where's the motivation to make this particular invention and there

[00:25:57] Speaker 01:
And there, context is critical.

[00:26:00] Speaker 01:
Part of the context is doctor primacy in making the decisions about who gets what drug.

[00:26:07] Speaker 01:
In fact, that's recognized in the Powell reference that was cited, where Powell says the doctor prescribing thalidomide is entirely responsible for the patient's welfare.

[00:26:17] Speaker 01:
Well, that's not true under our invention.

[00:26:20] Speaker 01:
Our method is partially responsible, as well as the pharmacy responsible for the prescriber's welfare.

[00:26:29] Speaker 01:
And if I could just make one comment to conclude about, and you've been very generous on this one, and I'll try to make it up to you on the second case.

[00:26:35] Speaker 01:
Try.

[00:26:37] Speaker 01:
Dishman may be the closest reference that the government has, but it's really not all that close.

[00:26:42] Speaker 01:
That was the Clozapine program administered by the VA, but that was a program about getting the drug and monitoring the effects of getting the particular drug for several weeks before determining whether the prescription could be continued or had to be stopped.

[00:26:56] Speaker 01:
That's not an unusual thing doctors monitor the way that prescriptions are given and whether it has side effects all the time.

[00:27:03] Speaker 01:
The invention here went far beyond that.

[00:27:06] Speaker 01:
And it wasn't just adding a prescription code, which is the way the government briefs this case.

[00:27:10] Speaker 01:
It is about adding the prescription code after a risk assessment to interfere potentially with the physician's discretion in prescribing and bar a prescription from even being issued.

[00:27:25] Speaker 01:
And with that, again, thank you for your generosity of time.

[00:27:28] Speaker 01:
And I'll return if you'll have me for a brief rebuttal.

[00:27:30] Speaker 04:
Thank you.

[00:27:36] Speaker 04:
May it please the court?

[00:27:38] Speaker 04:
Now, just to be clear, you're here to discuss the last issues that Mr. Costanius did.

[00:27:43] Speaker 02:
Exactly.

[00:27:43] Speaker 02:
I'm here to discuss the merits, and then Ms.

[00:27:45] Speaker 02:
Allen will address the constitutional issues.

[00:27:48] Speaker 02:
So with respect to the merits, I want to say first that there is a lot in the reply brief.

[00:27:54] Speaker 02:
as he's making here, about this notion of overriding the doctor's decision.

[00:27:59] Speaker 02:
This was something that was raised only at the oral hearing.

[00:28:01] Speaker 02:
It wasn't in the briefing before the board.

[00:28:04] Speaker 02:
And at the page 25 of the board's decision, it addresses it and says it's a new argument.

[00:28:09] Speaker 02:
What happened was at the oral hearing, they discussed this notion.

[00:28:13] Speaker 04:
Is this the story of drunk physicians?

[00:28:14] Speaker 02:
Yes.

[00:28:14] Speaker 02:
At the oral hearing, the

[00:28:17] Speaker 02:
Seljean's counsel raised this issue about how a drunk physician could potentially unwittingly prescribe thalidomide to a patient who was intending to become pregnant.

[00:28:30] Speaker 02:
And so in the board's decision at page 25 of the record, the board says, no, that's a new argument.

[00:28:35] Speaker 02:
We're not going to consider it.

[00:28:36] Speaker 02:
And they also said there's no substantial or credible evidence, sufficient and credible evidence to support it.

[00:28:41] Speaker 02:
Although in their brief they say they have a long string site that they cite to to say that yes We did make this beat below on that long string site has sites to both the initial Well first to all three appeals to both the initial cell genes brief and as well as their responsive

[00:28:59] Speaker 02:
brief, there's essentially a handful in each of those.

[00:29:02] Speaker 02:
And if you look, for example, at the 1096, all of the arguments, the points that they cite to, it's all about this affirmative risk assessment, but nothing about this overriding the doctor.

[00:29:12] Speaker 02:
And in fact, that's not required by the claims.

[00:29:15] Speaker 02:
They never were able to cite to anything the claim that required it.

[00:29:18] Speaker 02:
nor is it supported by the specification.

[00:29:20] Speaker 02:
In fact, when they talked about this whole notion of perspective, which they talked about at the hearing along with overriding the doctor, the board asked them, where is that in the claim?

[00:29:32] Speaker 02:
And at 7223 and 7234 of the record, they basically said, well, that is required by the combination of steps C, D, and E.

[00:29:42] Speaker 02:
the board addressed those limitations in its decision.

[00:29:46] Speaker 02:
So this whole notion of overriding the doctor is simply not supported, is not something that was before the board, and in any event, it was addressed by the board in addressing the claim limitations.

[00:30:00] Speaker 02:
I also will point out that when they were talking about perspective,

[00:30:03] Speaker 02:
at 4439, one of the citations that they referenced.

[00:30:08] Speaker 02:
They actually said the difference, the distinction, the primary distinction between this patent and the earlier steps system is that duties were shifted from the pharmacist to the doctor.

[00:30:18] Speaker 02:
So it's the prescriber who's paramount.

[00:30:21] Speaker 02:
And in fact, that's supported by their specification.

[00:30:24] Speaker 02:
In the specification, they talk about it's the prescriber who is doing everything.

[00:30:28] Speaker 02:
It's the prescriber.

[00:30:30] Speaker 02:
is, that is the distinction in the 720 as compared to the 501.

[00:30:36] Speaker 05:
Why isn't it at least implicit in, and I'm looking at claims of 1E,

[00:30:46] Speaker 05:
generating a prescription approval code to be retrieved by the pharmacy before the prescription is filled.

[00:30:53] Speaker 05:
But that occurs after the prescription is written by the doctor and therefore is a check, in effect, on the doctor's prescribing conduct.

[00:31:03] Speaker 02:
Yes, the prescription approval code comes after the prescription.

[00:31:07] Speaker 02:
Right.

[00:31:08] Speaker 02:
But the claim.

[00:31:09] Speaker 05:
And presumably then, the implication, at least as I read it, was that the pharmacist was holding the prescription, which the doctor has written, and is saying, uh-oh, the code tells me that this is a no-go.

[00:31:25] Speaker 05:
Isn't that the implication of E, 1E?

[00:31:28] Speaker 02:
The implication of E is that there has been a risk assessment.

[00:31:32] Speaker 02:
But when you look to the 720 before, they actually dispensed the drug.

[00:31:37] Speaker 02:
But in the claim, there is no indication of when that risk assessment takes place.

[00:31:42] Speaker 02:
And if you look to the 720 patent, it's very clear that the doctor is the one, the physician is the one who's making all the calls.

[00:31:49] Speaker 02:
It's the physician who is deciding, who's counseling patients, who's verifying informed consent, who assigns patients to

[00:31:57] Speaker 02:
to risk groups, looking at columns 8 to 13, but in particular, and then ultimately prescribing the drug.

[00:32:07] Speaker 02:
For example, at the bottom of column 11, it talks about the patient receiving counseling as determined the drug is not indicated, and then the prescriber at the top of 12 may prescribe the drug.

[00:32:22] Speaker 02:
further down on column 12, like at lines 52, it talks about after receiving counseling of the patient survey, and a completed patient survey, and if the pregnancy tests are negative, the prescriber fills out a new prescription for the drug.

[00:32:41] Speaker 02:
So it's ultimately the prescriber after the risk assessment the prescriber is doing the risk assessment then they prescribe they send her an approval code and then the approval code is what allows the pharmacist to prescribe to administer or dispense the drug and it's very clear at the beginning of this word distinguishing the two that it talks about at the column two

[00:33:03] Speaker 02:
Which is exactly what they said in their brief that it's minimizing and simplifying the demands on the pharmacy So all the pharmacy needs is the approval code and then they administer the drug But there's nothing in here and in the specification talking about overriding the doctor's decisions the doctor who has the control here With respect to the motivation there was motivation more than sufficient motivation that all that was read

[00:33:31] Speaker 02:
required here was the addition of this approval code and Cunningham teaches an approval code in the context of these trial products.

[00:33:40] Speaker 02:
They're also pharmaceutical products and what the board found at page 20 is that it would be obvious to want to score it

[00:33:50] Speaker 02:
Ordinary skill in the art to limit dispensation of a drug that was associated with adverse risk to those at high risk to certain risk groups and further they also found at 3 to 24 of the record the board found that a person of ordinary skill would recognize that this approval code that Cunningham used for trial products could similarly be used in

[00:34:11] Speaker 02:
for controlling the administration or dispensation of pharmaceutical prescription products.

[00:34:18] Speaker 02:
And furthermore it basically said that this is in essence a combination of prior elements, these steps, they're all targeted to a known purpose of controlling drug distribution and to achieve the predictable result of avoiding distribution to high-risk patients.

[00:34:34] Speaker 03:
What do you say of your colleague's argument that there would have been no motivation to combine in this particular patent because the patent was working or the method was working at pretty much 100%?

[00:34:46] Speaker 02:
So in response to that, what the board found is that, much like Judge Bryson said, that when you're working in this world of high-risk drugs, that there would always be some motivation to improve upon existing methods, to always try to

[00:35:03] Speaker 02:
closing the polls to make sure that uh... but the drugs are not distributed to patients where there could be potential rest and as the board noted that they'll just have a motivation to combine in that situation where the success rate is let's say 100 percent verified by 100 percent

[00:35:19] Speaker 02:
Well, as the board noted, the Zeldas article that's at 501 of the record in Zeldas where it talked about steps, it indicated that Celgene was indicating a willingness to make modifications to improve on the system.

[00:35:36] Speaker 02:
But let me also just say,

[00:35:38] Speaker 02:
that the evidence that they brought forward of 100% success were two pieces of evidence.

[00:35:42] Speaker 02:
One was Mr. Freeman's declaration, which is their company representative.

[00:35:47] Speaker 02:
And the second was a confidential NDA, which is at 1511 on the record.

[00:35:51] Speaker 02:
Neither of those would have been available to a person of ordinary scale at the time of the invention, other than Celgene employees.

[00:35:58] Speaker 02:
So with respect to your ordinary person of skill in the art, there would not have been nothing to dissuade them from improving upon

[00:36:05] Speaker 02:
the existing prior art.

[00:36:10] Speaker 02:
If there's no additional reference, I'll leave Ms.

[00:36:13] Speaker 02:
Allen to address the constitutional issues.

[00:36:16] Speaker 02:
Thank you.

[00:36:28] Speaker 00:
Thank you, Your Honor.

[00:36:29] Speaker 00:
May it please the Court?

[00:36:30] Speaker 00:
I'd just like to start with the forfeiture issue and some of the discussion that was happening earlier

[00:36:35] Speaker 00:
to make clear that the Supreme Court has said in Thunder Basin and Elgin that there is no categorical bar to an agency considering constitutional issues.

[00:36:45] Speaker 00:
And so we think here the general rule that parties are required to raise arguments before agencies in order to preserve them should apply.

[00:36:52] Speaker 04:
So does the board have the authority to decide if retroactive application of IPRs is unconstitutional?

[00:37:01] Speaker 00:
Yes, Your Honor.

[00:37:02] Speaker 00:
What the board could do here, if they had raised this argument before the board and the board agreed that applying IPR to this patent would violate the Constitution, then the board could have exercised its discretion to decline to institute inter-party's review of this patent.

[00:37:18] Speaker 04:
Which is unreviewable, generally, right?

[00:37:20] Speaker 00:
That's correct, Your Honor, but I would point out that even if this court doesn't hold forfeiture, whether or not this court finds forfeiture in this case, that unreviewability problem would still exist.

[00:37:33] Speaker 00:
Because in another case, when it was raised before the agency,

[00:37:36] Speaker 00:
if the agency declined to institute on the ground that it was unconstitutional, it still wouldn't be reviewable there.

[00:37:42] Speaker 00:
So I don't think the unreviewability of the agency's decision to decline to institute really should change the court's forfeiture analysis here.

[00:37:56] Speaker 05:
It would seem, well, perhaps.

[00:37:59] Speaker 05:
You would view it differently, but it strikes me that Mandamus would be a candidate that would be an attractive means of getting non-appellate review of this question.

[00:38:12] Speaker 00:
Yes, Your Honor, I'm not going to take a position about whether in a precise case, mandamus would be appropriate.

[00:38:18] Speaker 00:
But we think that Cozzo has said that in general, the agency's decision to decline to institute is not reviewable.

[00:38:26] Speaker 00:
But potentially, mandamus might be available.

[00:38:30] Speaker 04:
Now, what's in the pipeline?

[00:38:31] Speaker 04:
I know of one case that's in the pipeline.

[00:38:35] Speaker 04:
Topgolf.

[00:38:36] Speaker 00:
Yes, that's the only case that I'm aware of in which a party did raise it before the agency.

[00:38:42] Speaker 04:
And that involves a pro se litigant.

[00:38:44] Speaker 04:
I'm just looking at all of the cases we have month to month where this question keeps coming up.

[00:38:49] Speaker 04:
Yes, Your Honor.

[00:38:50] Speaker 04:
And we've alighted it in only one presidential opinion because the briefing was not sufficient, but never really decided this question that we have here.

[00:38:59] Speaker 00:
That's correct, Your Honor.

[00:39:01] Speaker 00:
And as we've stated in our brief, we recognize that forfeiture is a discretionary choice that this court.

[00:39:07] Speaker 04:
But let me just add.

[00:39:07] Speaker 04:
So Topgolf is the only one you know of.

[00:39:09] Speaker 04:
Topgolf is a pro se case, right?

[00:39:12] Speaker 04:
That's correct.

[00:39:12] Speaker 04:
But I believe.

[00:39:13] Speaker 04:
And in that case, there was an 80 page board opinion.

[00:39:16] Speaker 04:
And the board did deal with the issue in the last two paragraphs of the opinion, in two paragraphs, right?

[00:39:22] Speaker 04:
And that was the sub and substance of what the board had to say about constitutionality?

[00:39:27] Speaker 00:
I think so, Your Honor.

[00:39:28] Speaker 00:
I'm not the attorney working on that case, but I do know that it is one example where the issue is preserved.

[00:39:33] Speaker 00:
But there are, as you recognize, there are a lot of cases raising this issue.

[00:39:37] Speaker 00:
And if the court wishes to go ahead and resolve it, we fully recognize that the court might want to exercise its discretion to do so.

[00:39:44] Speaker 03:
Most of those cases, the briefing is minimal.

[00:39:46] Speaker 03:
half a page, or maybe even just a couple of sentences in passing.

[00:39:50] Speaker 03:
What about the case of Christie Inc.

[00:39:51] Speaker 03:
versus United States in the Court of Federal Claims?

[00:39:55] Speaker 03:
They examine the issue, whether a takings clause argument in the context of a patent is a public franchise.

[00:40:03] Speaker 03:
And that case is on appeal.

[00:40:06] Speaker 03:
Should we wait until that case is?

[00:40:09] Speaker 03:
Are you familiar with that case?

[00:40:11] Speaker 00:
I think I'm not very familiar, Your Honor.

[00:40:15] Speaker 00:
I think if this court, our point is just that we want to, we feel that there's a reason to make the forfeiture argument.

[00:40:22] Speaker 00:
We think that institutionally litigants should be required to raise arguments before the agency so that the agency has the first chance to opine on the issue which can

[00:40:32] Speaker 00:
as a Supreme Court recognized in Elgin can be beneficial to courts when later reviewing it.

[00:40:37] Speaker 04:
But we were in a circumstance where, as I said, in Topgolf, it was a non-precedential two-paragraph opinion by the board.

[00:40:43] Speaker 04:
I assume that doesn't bind other PTAB boards.

[00:40:47] Speaker 04:
So we could end up with a situation where you've got six PTAB decisions, three going one way, three going the other, all of which are non-precedential, right?

[00:40:56] Speaker 04:
I mean, that's the regime we're living under.

[00:40:58] Speaker 00:
Yes, Your Honor.

[00:40:59] Speaker 00:
And for those reasons, as we stated in our brief, we recognize why you might want to go ahead and decide the issue.

[00:41:04] Speaker 00:
And we think that on the merits, it's very clear that there's no- Well, let me ask you about the merits.

[00:41:08] Speaker 04:
Is it the government's view?

[00:41:10] Speaker 04:
Are you arguing that a patent can't be a property right for purposes of the Takings Clause?

[00:41:15] Speaker 04:
Or is your argument more nuanced than that?

[00:41:17] Speaker 00:
It is more nuanced than that.

[00:41:18] Speaker 00:
We don't dispute that a valid patent is property for purposes of the Takings Clause.

[00:41:23] Speaker 04:
Our position here on the merits... So it's a valid property right subject to the Takings Clause unless and until it's invalidated?

[00:41:31] Speaker 04:
Is that your view?

[00:41:34] Speaker 00:
I think so, Your Honor.

[00:41:35] Speaker 00:
Our position is just that what happens when, you know, in this case, when the board conducts IPR and what the board is doing is it's determining that the patent holder never had a valid property interest because the patent never satisfied

[00:41:50] Speaker 00:
the substantive conditions of patentability.

[00:41:53] Speaker 00:
And then the patent isn't actually canceled until this court would affirm that determination in this proceeding.

[00:41:59] Speaker 00:
And so in that sense, it's really no different than in district court litigation, where a district court determines that a patent is invalid, and then this court affirms that determination.

[00:42:07] Speaker 04:
Well, your friend's argument, though, is on the retroactivity piece of that, that we all know when his client obtains patent,

[00:42:15] Speaker 04:
that client knows what the standards are in the district court proceeding and they can anticipate that whereas in the IPR proceeding whether we had re-exams or whatever the standards were different so the expectations when the patent owner obtained his patent have been changed.

[00:42:33] Speaker 00:
The procedures have changed somewhat.

[00:42:36] Speaker 00:
But I just want to be clear.

[00:42:38] Speaker 00:
The substantive conditions of patentability are the very same conditions that existed when this patent was issued.

[00:42:44] Speaker 00:
The patent holder was on notice of that when he applied for the patent.

[00:42:48] Speaker 00:
And this patent was subject to both ex parte re-examination and inter-parties re-examination.

[00:42:54] Speaker 00:
And the Supreme Court made clear in court also.

[00:42:56] Speaker 04:
But don't the standards matter?

[00:42:57] Speaker 04:
Because that's how you assess the risk.

[00:43:00] Speaker 04:
of your subsequent, that you might subsequently lose the patent in the proceedings.

[00:43:05] Speaker 04:
And as your friend pointed out, the risks were different under the old regime because of a different standard, different standards and so forth.

[00:43:13] Speaker 00:
Just to be clear, under inter-parties re-examination and ex-party re-examination, the same standards apply as do in this proceeding.

[00:43:20] Speaker 00:
The only difference is the

[00:43:23] Speaker 00:
the standard for initiation, which now they actually have to prove a reasonable likelihood of success, whereas before it only had to be a substantial... See, the IPR process became adversarial in nature.

[00:43:35] Speaker 00:
Well, Your Honor, it is true that there are more participation rights for... Doesn't that raise the risk?

[00:43:44] Speaker 00:
Sorry?

[00:43:44] Speaker 03:
Doesn't that raise the risk of having your pen found to be invalid if you're involved in an IPR?

[00:43:52] Speaker 00:
Well, Your Honor, it's true that both ex parte reexamination and inter-parties reexamination could be prompted by a third party filing something with the agency.

[00:44:04] Speaker 00:
And as the Supreme Court explained in Quozo, the purpose of inter-parties review is the same basic purpose as inter-parties reexamination

[00:44:12] Speaker 00:
and expertise re-examination.

[00:44:14] Speaker 00:
And then also just on the question, you know, he's also compared, so I think it's really important to keep in mind that these patents were subject to agency administrative reconsideration when they were issued.

[00:44:23] Speaker 00:
And then second, to the extent that they're complaining about the differences between district court litigation and agency reconsideration, this court held in Patlex that

[00:44:32] Speaker 00:
There is no property right in the presumption of validity.

[00:44:36] Speaker 00:
And, you know, while they criticize Patlex because they argue that, you know, Patlex in undertaking that, that the takings clause does not look to the rationality of Congress's action.

[00:44:49] Speaker 00:
The part of Patlex that they're pointing to is the court's due process analysis.

[00:44:54] Speaker 00:
And of course, the due process analysis is whether Congress had a rational basis.

[00:44:59] Speaker 00:
So that portion of the opinion has not been undermined.

[00:45:02] Speaker 00:
And then this other portion of the opinion that I'm talking about, where the court held that there was no property right in the presumption of validity, that doesn't involve the rationality analysis at all.

[00:45:14] Speaker 00:
So we think that Patlex is clearly still good law, as is Joy Technologies.

[00:45:18] Speaker 00:
and that there has been no taking here, really for the fundamental reason that once this court agrees with the board that the substantive conditions of patentability aren't met here, there is no property that is being taken away.

[00:45:35] Speaker 05:
I'm wondering how far you would go with the proposition that there's no property right in the presumption of validity.

[00:45:44] Speaker 05:
Suppose that the inter partes statute

[00:45:48] Speaker 05:
was enacted by a Congress that was vehemently opposed to patent protections.

[00:45:54] Speaker 05:
And they said that the burden was on the patentee to show by clear and convincing evidence that the patent was valid.

[00:46:04] Speaker 05:
You still think no problem?

[00:46:06] Speaker 05:
No takings problem?

[00:46:09] Speaker 00:
I'm not saying that there would be no procedures that Congress could enact that would change so much and make it unfortunately possible.

[00:46:18] Speaker 05:
Well, how about in my example?

[00:46:19] Speaker 05:
Do you think that would cross the line to being a taking?

[00:46:23] Speaker 00:
Well, Your Honor, here, I think, I mean, the point is here, what they're complaining about is that the presumption of validity doesn't apply.

[00:46:29] Speaker 00:
And this court has addressed that precise issue in PatLex.

[00:46:33] Speaker 04:
Yeah, but we're asked to answer the hypothetical, if you could, please.

[00:46:36] Speaker 00:
Sorry, if it changed the- Well, in other words, yeah.

[00:46:40] Speaker 05:
Suppose instead of the standard that was adopted in the IPR statute, Congress had decided we're really going to turn the screws on the patentees, and we're going to require them to show by clear and convincing evidence that the patents are valid.

[00:47:01] Speaker 05:
Anything less than that.

[00:47:03] Speaker 05:
patents go out.

[00:47:05] Speaker 05:
Would that constitute enough of a change in the regime to be a taking?

[00:47:10] Speaker 00:
I'm not sure, Your Honor.

[00:47:11] Speaker 00:
But here, there has been no change, because the clear and convincing evidence standard is the same standard.

[00:47:17] Speaker 00:
Sorry, the fact that you have to, sorry.

[00:47:20] Speaker 00:
The preponderance of the evidence standard that applies in interparties review is the same standard that applies in interparties re-exam and ex-parties re-exam.

[00:47:29] Speaker 00:
So there has been no change here.

[00:47:30] Speaker 05:
But not in district court.

[00:47:32] Speaker 00:
Right, to the extent we're comparing it to district.

[00:47:34] Speaker 00:
So first of all, I think it's important to realize that this patent is subject to an agency administrative reconsideration.

[00:47:40] Speaker 00:
And it was when it was issued.

[00:47:42] Speaker 00:
So there has been no change in the standard.

[00:47:46] Speaker 00:
Even though that's true, if you want to compare it to district court litigation, I agree that the standard of proof has changed.

[00:47:52] Speaker 00:
But this court held in Patlex.

[00:47:54] Speaker 00:
So in Patlex.

[00:47:55] Speaker 05:
But you don't think the change.

[00:47:57] Speaker 05:
My question was predicated on your.

[00:48:01] Speaker 05:
assertion that a change in the standard can't be a taking.

[00:48:05] Speaker 05:
And I was trying to test how broadly you were prepared to defend that proposition.

[00:48:10] Speaker 00:
Well, at least as broadly as this court held in Patlex.

[00:48:13] Speaker 05:
At least broadly enough to win this case.

[00:48:15] Speaker 00:
Which is what this court held in Patlex.

[00:48:17] Speaker 00:
Because just to be clear, in Patlex, there was no agency administrative reconsideration whatsoever.

[00:48:22] Speaker 00:
So when those patents were issued, there was no way, as this court explained, there was no way that it could be brought back before the agency for reconsideration.

[00:48:30] Speaker 00:
It could only be invalidated in district court.

[00:48:32] Speaker 00:
And by contrast here, for 40 years, there has been agency reconsideration of patents.

[00:48:37] Speaker 00:
And so if anything, this is a much easier case than Patlex.

[00:48:44] Speaker 00:
If there are no further questions.

[00:48:46] Speaker 00:
Thank you.

[00:48:46] Speaker 00:
Thank you.

[00:48:52] Speaker 01:
We'll give you two minutes of rebuttal.

[00:48:54] Speaker 01:
Thank you.

[00:48:55] Speaker 01:
I'll try not to use it all.

[00:48:58] Speaker 01:
Try.

[00:48:59] Speaker 01:
With regard to the merits of the appeal, Judge Bryce, and I think in particular, you had a colloquy with my friend on the other side about the ordering and the overriding.

[00:49:11] Speaker 01:
And the case was made that overriding was a new argument made by Celgene.

[00:49:15] Speaker 01:
It wasn't.

[00:49:16] Speaker 01:
What was a new argument was that it would interfere with a so-called drunk doctor making an erroneous prescription.

[00:49:24] Speaker 01:
That was said to be a new argument.

[00:49:25] Speaker 01:
But there's actually not an implication, but an express word of the claim that is important with regard to the timing of the approval.

[00:49:35] Speaker 01:
And that's the word upon in the claim step 1e.

[00:49:39] Speaker 01:
And it's only upon the approval code that the prescription can be issued.

[00:49:44] Speaker 01:
That's been our argument all along.

[00:49:47] Speaker 01:
My friend also referred you to a number of places in the specifications, for instance, at the bottom of column 12.

[00:49:53] Speaker 01:
That is discussing the physician's initial prescribing that has nothing to do with the generation of the approval code.

[00:49:59] Speaker 01:
If the court looks at column 13, lines 45 to about line 54, you will see that the approval code is preferably not provided, and I'm reading from the patent here, unless the prescriber, the pharmacy, the patient, the patient's risk group, and the patient's informed consent have been properly registered in the storage media.

[00:50:17] Speaker 01:
So there's a failsafe that goes above and beyond just the physician saying, OK, go ahead and prescribe the drug.

[00:50:22] Speaker 01:
With regard to the question of constitutionality and waiver, I completely forgot to mention in my opening argument the Square case, which was followed by the Hulu case at the board, where the board said we won't entertain constitutional arguments.

[00:50:39] Speaker 01:
My friend cited Thunder Basin.

[00:50:42] Speaker 01:
left out the part where the court recognized that the adjudication of the constitutionality of congressional enactments has generally been thought beyond the jurisdiction of administrative agencies, but points out that that rule is not mandatory.

[00:50:53] Speaker 01:
This court followed that in Riggins, which is cited in our briefs.

[00:50:58] Speaker 01:
And finally, I would urge the court to review the Dolan and Manta

[00:51:02] Speaker 01:
law review article, which is cited in our briefs.

[00:51:05] Speaker 01:
And I conclude by simply pointing out that the arguments that are being made about this being simply a procedural change are belied by the real world facts that 75% of claims versus 12% in ex parte re-examination are being, quote, killed, according to the Dublin and... Is not 75% after institution

[00:51:27] Speaker 05:
75% of instituted cases?

[00:51:30] Speaker 01:
I think that's right.

[00:51:31] Speaker 05:
So institution is a place where there are a lot of cases that swim right through.

[00:51:38] Speaker 01:
Well, it's not a lot of cases, but it's some cases.

[00:51:41] Speaker 01:
And in fact, one last thing I'd point out is that unlike ex parte re-examination, the inter partes review system has brought what are the so-called reverse patent, I guess I should say, non-practicing entities to not be provocative.

[00:51:56] Speaker 01:
But the term that's actually used in the literature is reverse patent trolls like CFAD, who

[00:52:01] Speaker 01:
And upon the mere petition, let alone the institution, the markets change and these reverse entities that are bringing these challenges who are not practicing at all in this space that are able to then short the stock and make money for their hedge funds.

[00:52:17] Speaker 01:
And the fact that they're making money off of the drop of our stock demonstrates beyond any reasonable case the taking that's occurring here.

[00:52:29] Speaker 05:
You cited the Square case?

[00:52:31] Speaker 01:
Square.

[00:52:32] Speaker 01:
Square and Hulu are the two cases we cited in our reply brief.

[00:52:35] Speaker 01:
They're board decisions that refused to take up the question of constitutionality.

[00:52:41] Speaker 01:
Square is the one case that existed at the time of the board decision in this case.

[00:52:45] Speaker 01:
Hulu post-dated it.

[00:52:47] Speaker 01:
And Topgolf was about a month before Hulu, if my memory is correct.

[00:52:52] Speaker 01:
Those were both in June and July of 2018.

[00:52:54] Speaker 01:
OK.