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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION EXELA PHARMA SCIENCES, LLC, ET AL. ) ) ) VS. ) 1:12-CV-469 ) ) ALEXANDRIA, VIRGINIA ) NOVEMBER 30, 2012 DAVID J. KAPPOS, ET AL. ) ) _______________________________)

_______________________________________________________________ TRANSCRIPT OF MOTION FOR RECONSIDERATION BEFORE THE HONORABLE LIAM O'GRADY UNITED STATES DISTRICT JUDGE _______________________________________________________________

Proceedings reported by stenotype, transcript produced by Julie A. Goodwin.

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A P P E A R A N C E S

FOR THE PLAINTIFF: EXELA PHARMA SCIENCES, LLC By: MR. CLARENCE EDWARD POLK, JR. 11710 Plaza America Drive Suite 2000 Reston, Virginia 20190 703.989.5397 epolk@exela.us

FOR THE DEFENDANT: UNITED STATES ATTORNEY'S OFFICE By: MR. STEPHEN J. OBERMEIER Assistant U.S. Attorney 2100 Jamieson Avenue Alexandria, Virginia 22314 703.299.3700 stephen.obermeier@usdoj.gov

FOR THE INTERVENORS: LATHAM & WATKINS LLP By: MR. MARC ZUBICK 233 South Wacker Drive Suite 5800 Chicago, Illinois 60606 312.876.7700 marc.zubick@lw.com Attorney for Cadence Pharmaceuticals, Inc. HOLLAND & KNIGHT LLP By: MR. CHARLES A. WEISS 31 West 52nd Street New York, New York 10019 212.513.3200 charles.weiss@hklaw.com Attorney for SCR Pharmatop

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A P P E A R A N C E S

OFFICIAL U.S. COURT REPORTER: MS. JULIE A. GOODWIN, CSR United States District Court 401 Courthouse Square Tenth Floor Alexandria, Virginia 22314 512.689.7587 JGoodwinEgal@gmail.com

ALSO PRESENT: JAMIE SIMPSON SYDNEY JOHNSON

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(NOVEMBER 30, 2012, 11:10 A.M., OPEN COURT.) COURTROOM DEPUTY: Civil Action 1:12-CV-469, Exela

Pharma Sciences, LLC, et al. Versus David J. Kappos, et al. Counsel, please identify yourselves for the record. MR. POLK: THE COURT: MR. POLK: Edward Polk for Exela. Good morning, Mr. Polk. Good morning, Judge O'Grady. Good morning, Your Honor. Steve

MR. OBERMEIER: Obermeier for the agency.

With me is agency counsel Jamie

Simpson and Sydney Johnson. THE COURT: All right. Good morning to each of you.

All right.

This comes on a motion to reconsider in

light of a Fourth Circuit case that was decided by Judge Motz and some fellow members of the Fourth Circuit. And in light of

that decision, the request is made to reconsider my earlier ruling. I've looked at the pleadings again. my earlier ruling. I've looked at

I've closely reviewed the Hire Order versus

Marianos decision, and why don't I hear from Mr. Polk first. And tell me why I'm not bound by Hire Order and its fairly broad implication to the facts of our own case. MR. POLK: second. As before Your Honor, I have just a handout that I think that would be helpful for the Court to -Thank you, Your Honor. The -- just one

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THE COURT: MR. POLK:

All right. -- to follow the argument today.

Thank you very much. And, Your Honor, if you could at least turn to page 1 where I talk about the governing law there. THE COURT: MR. POLK: Uh-huh. The substantive law for this case,

certainly as this Court is aware, is set forth in Section 371(d), which does not have any statute of limitations tied to it, so by default we have to go to Section 2401(a) which says that every action is going to be barred unless it's brought within six years after the right of action accrues. And certainly if you go down to Section 702, that right of action that's talked about in Section 2401(a), is the right of action that's provided under the APA Section 702. This is a person adversely affected or agreed by agency action is entitled to judicial review. Now, one thing that's important and also in -because this is, again, just an issue of statutory interpretation when you look at the limitations period. we -- I cite a case here, Crown Coat, which they explain that you -- when you look at this accrual issue, the Court certainly has to look at it in light of this underlying purpose of the statute. And I think it's fairly clear if you look at And

Section 371(d), it's aimed at protecting the public from the

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unwarranted recapture of information that has gone abandoned. So I think that has to be taken into account with the accrual decision. Certainly if you look after Aristocrat, we can't bring that now to district court litigation, so the only place that we can actually bring that claim is here because there's no other remedy at law so that has to be brought here under the APA. So that is also where you have to look at part of the And so even -- even beyond that,

accrual decision itself.

certainly that policy objected that -- that Supreme Court talks about in Crown Coat, it's just law when it says to begin with. If you look at the -- our second page of the case handout, and we start talking about the -- there is a -- and this is what the Court cited in its original decision. There

is a standard rule that applies to every single federal statute of limitations. That's without exception unless Congress steps And I'll get to that in just a second.

in and says otherwise.

So, you have this standard rule, and these cases I cite are from the Supreme Court and the Fourth Circuit well before Hire Order on pages 2 and 3. clear. So you have a standard rule. And again, these are I think that's pretty

the cases that's -- that are in the Court's original opinion. And if you go back and take the time to read these case, which I can promise you I have, the inquiry that the Court looks at

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is at what point could this person walk into the courtroom and file a civil action. THE COURT: MR. POLK: THE COURT: That's what the inquiry is. How is that different from Hire Order? Hire Order is -The IRS puts a regulation in place.

They -- you know, Hire Order comes along, you know, five years later, seven years later, whatever, and says, Well, this -this stinks. I don't like this. I'm brand new to the game and

this needs to change. And the Fourth Circuit says, Sorry, you've got to have a cutoff. agency action. And it's six years, and it's six years from the And I'm -- you know, it doesn't matter when you

came along and when you joined the party, you're stuck with six years. MR. POLK: Honor. Hire Order doesn't quite go that far, Your

Hire Order, if you go back and look at what it says, if

you turn to page 6 of the handout that I've given you, Hire Order -THE COURT: that. MR. POLK: Hire Order says, When, as here -- and I'll Well, tell me where Hire Order doesn't say

get it from here -- When, as here, plaintiffs bring a facial challenge -THE COURT: MR. POLK: Uh-huh. And that's what this law is about. Hire

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Order is about a facial challenge. anything new? Absolutely not.

And does Hire Order say

And that's why I wanted you to

turn -- if you look at page 6 of our case handout. What did the Supreme Court say in 1997? Such

facial challenges are generally ripe the moment the challenged regulation or ordinance is passed. Order said. And why is that? Because it still doesn't get you Because when you bring That's exactly what Hire

away from that ripeness or that injury.

a facial challenge, you are saying that there is no application that this could ever apply. I don't care what

situation you bring it to, it is always going to be invalid. That's not what we're bringing. And in that situation, Hire Order didn't change anything. action. If you look -- if you look at Hire Order, Hire Order cites Wind River, and Wind River is probably the best decision cited in your case, in your opinion, and it goes through why there's a distinction between these faci -- what they call in their procedural or policy-based facial challenge. When it comes to really going into substance where you're arguing that the policy or the -- the regulation itself is ultra vires. And so if you look at that, that is the big It's always been, you have six years to bring that

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distinction between the two because at that point in time -- if we were bringing a facial challenge -THE COURT: Well, they say you are bringing a facial

challenge and that you're dressing it up, but the reality is that this is nothing more than a facial challenge. MR. POLK: Your Honor, the law is -- I mean, it's It means that I

crystal clear on what a facial challenge is.

have alleged that there's no circumstance at all that this would be valid. And certainly if you turn to -- turn to page 8

in the handout that I've given you, and I've put an example in here where the regulation may exactly -- may actually apply. If you look at 35 U.S.C. 111(a)(4), it gives the director authority to revive an application under either standard, be it unavoidable or unintentional. So for that situation if they wanted to use 1.137(b), perfectly fine. whatsoever. I don't see any issue with that And again, the

That's not what we've alleged.

law -- if this is a dispute on whether what's a facial challenge, the law is clear there. We have to be saying that

there's nothing that we can possibly do in any situation where this rule would be valid. That was the continuation rules.

That was the challenge that was made to the PTO's continuation rules. They didn't say, well, if you apply it to international applications it's no good. If you apply it to

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domestic it's not good. is no good.

They said in every application, this

That's a facial challenge. There's nothing in our complaint, nothing in our

complaint that calls this a facial challenge. elephant a snake, it doesn't make it one.

I can call an

So there's nothing Sure,

in our complaint that makes this a facial challenge.

certainly that's what they allege, but the law does not support that in any way, shape, or form. THE COURT: MR. POLK: Okay. And so if you go back to, again, the -- the Every statute of

basic here accrual, when does that happen?

limitation it says it accrues at the time you can step in the courtroom and file a lawsuit. Now, their argument that they're saying, Well, in your decision you looked at the injury, but also in the case law it talks about ripeness. Same thing. I think that's what

we kind of focused more on when we had a ripe claim to actually be able to bring the cause of action. And if you look at page 3 of our handout, we cite our cases there where certainly long before Hire Order ripeness was a consideration in the accrual decisions in the Supreme Court as well as in the Fourth Circuit. If you look at Bay

Area Laundry, they talk about this ripeness, and we cite that. Turn to page 4, Bay Area, the part I've highlighted: A cause of action does not ripen until the

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circumstance here; therefore, the Court is saying it doesn't accrue. Look at what the Fourth Circuit said in Franks versus Ross, United States versus Minor, Franks versus Ross says a cause of action accrues for purposes of the statute of limitation when it's sufficiently ripe to maintain the suit on it. So Hire Order says nothing different than that had been You still have to look back at when is your

the law forever.

cause ripe, that I can come in here and actually file a lawsuit. If it's a facial challenge -- and again, this is explained very well in Wind River -- you have to bring that within six years from when their agency issues a regulation. That's the Supreme Court case we cite in here. If we were bringing a facial challenge, then certainly it would be barred, but we are not bringing a facial challenge. And to look at our complaint and say that we are,

it's just -- it's saying something in our complaint it doesn't really say. So -- and so now you're left with the situation where their basic argument is our claim accrued in 2003, and it expired in 2009. And what did the Supreme Court and the Fourth Is that's an odd result, that Congress is

Circuit call that?

going to have to tell us that you want to have have happened in the statute itself. That's in the cases that we cite.

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I believe that's page -- yes, page 5 of the handout that I've given Your Honor. It goes through a number of

Supreme Court and Fourth Circuit cases that say, If you're going to have the result where the statute of limitations starts ticking before you can actually come in and file a lawsuit, Congress has to be the one to say that in the statute itself because otherwise you're now deviating from standard rule, and I believe it was Bay Area where -- where the Supreme Court said, when Congress passes legislation, it passes it with the understanding that it's going to be applicable -- what's going to apply to this is a standard rule. And if we're going

to deviate from that, then that has to come from Congress in the text of the statute. Now, PTO has never even asserted, let alone explain, how Exela could have brought the cause of action in 2003. There's nothing in the language of the 371(d) that says

we now because of that we want to start the limitations period at a time other than the standard rule. It's not in 371(d); And if

it's not in 2401(a) that says anything about this case.

you look at Hire Order, Hire Order didn't even address 371(d), so how could it have found an exception for 371(d) in the -- to what Congress intended for the limitations to apply. So, I mean, you're basically trying to put a square peg into a round hole when it comes to Hire Order because it doesn't fit the facts of this case. And still, Hire Order does

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not divorce itself from when you can bring an action because that at the end of the day is the fundamental inquiry that you have to look at: an action. Facial challenges, again, PTO rules are the perfect example. I believe it was GSKE -- GSK that filed that, if I'm The rule hadn't been applied to them. Nothing When can I step in this courtroom and bring

not mistaken. had been done.

But they're able to come into this courtroom Why? Because they were bringing a facial

and bring a lawsuit. challenge.

After that six-year period, you no longer -- you're not barred from bringing a challenge. challenge. You can't bring a facial

You now at that point have to wait until the

statute itself or something, or something you've been -- if you go back to the language of Section 702, after that initial six-year period, you're going to have to wait until something has adversely affected you to bring that -- that APA action in the Court. So, facial challenge have no issue with Hire Order. The substantive or as-applied challenge that we're bringing here, completely different. Hire Order does not address it.

And since Hire Order -- I mean, it's pretty clear it says it's limited to facial challenges. says. That's what it

It says when as here, you're involved in a facial That's what it says. So anything you want to

challenge.

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interpret from that case relating to a substantive or as-applied challenge has to be nothing beyond pure un-nonbinding dicta because that wasn't the issue with the Court, that the Court was facing. THE COURT: MR. POLK: All right. Thank you very much. Excuse me. Good morning, Your Honor. I

MR. OBERMEIER:

Before I respond, I thing we missed some introductions here. apologize for that. Counsel for intervenors is here as well. And if it

Counsel Marc Zubick and Charles Weiss are here.

pleases the Court, they'd like a couple of minutes to respond as well, if the Court deems it necessary. THE COURT: Certainly. In responding to counsel's argument,

MR. OBERMEIER:

Your Honor, I think -- I think you hit the nail on the head right at the beginning that Hire Order addresses a broad enough situation to encompass what is happening right here. And

despite all the case law that's being thrown around and packets of case law that was -- a packet that was provided here, it doesn't change the fact that the issue here is simple. What

starts the -- the statute of limitations, is it the date of final agency action or the date of injury? And Hire Order,

they plainly held that it's the date of final agency action regardless of the date of injury. THE COURT: And as --

Well, but, you know, they do identify it

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as a facial challenge, and they state that the -- you know, plaintiff has conceded that he's making a facial challenge, and, you know, it's a three-page decision. It doesn't spend a

long time talking about facial challenges versus applied -as-applied challenges, and it doesn't -- it's not a whole lot of substance there. It's a very focused decision on a, you

know, limited set of facts. MR. OBERMEIER: I don't disagree that it's a short I

opinion and that it's directed to purely facial challenges. mean, that's -- it is what it says in the opinion.

But I -- as

our briefing says, and I think it's worth rehashing, there are several responses to that. First of all, the appellants in Hire Order raised the exact same arguments as Exela is raising here citing the exact same cases. They said that an agency action doesn't

accrue until the date of injury or when it becomes ripe or however you want to say that, and they said that it would be absurd to hold otherwise. Nevertheless, the appellants in Hire

Order, they challenge a 1969 revenue ruling about -- that affects federal firearms licensees. They don't become federal

firearms licensees until 2008, so there's no way their action accrued in the way Mr. Polk is explaining how actions accrue until 2008, yet the Court said that that argument utterly fails and then it says that none of the case law which they cite -and the Court cites Franklin. It cites Bay Area. It cites

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Crown Coat -- none of that case law supports that position. So, Hire Order does address the arguments raised here and rejects them. With regard to whether facial challenges are somehow unique from what happened here, several responses to that. First of all, counsel is arguing here -- and he says in

his brief and it's underlined -- that the distinction between facial and as applied here is crucial, yet there's very little explanation for why that's the case, other than to cite some case law that says a cause of action -- or I should say actually, an interesting complainant has a legally cognizable injury the moment the agency issues a rule. Well, that couldn't possibly have been the case for the appellant in Hire Order because like we -- I just said, they didn't become federal firearms licensees until 2008, so -so that doesn't apply. Also, Hire Order made no indication

that -- that the date of injury -- or excuse me, that because facial challenges accrue from an injury standpoint, that they -- that that's why that action was untimely. very clear. They were

They said it's the date of final agency action. That

Final agency action was promulgation on the regulation. was -- the action was beyond six years, untimely.

So -- and then finally, as Your Honor pointed out, this is not an as-applied challenge in that the rules here weren't applied to plaintiffs.

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Now, this has a couple of implications.

First of

all, plaintiffs' contention that his complaint can't be read to raise a facial challenge, I mean, the complaint itself says count four, unlawful rules and regulations. challenging rules and regulations. They're

I don't know how that

couldn't be considered facial, just reading it on its face. And Your Honor addressed facial challenge in -- in your first opinion. But also, the key about it never being applied to plaintiffs', the reasons that that's key is because just like the appellants in Hire Order, the agency action was decoupled or divorced from the injury. And so standing, finality,

timeliness, these are distinct concepts. So in this case Hire Order is saying what's key for timeliness purposes is final agency action, regardless of a date of injury. And also in terms of how you would

characterize their challenge, because it was not applied to plaintiffs, what they're really saying is they're challenging a rule as applied to all -- as applied to all PCT applicants. And what they're really saying is it wasn't applied to us, but the way it was applied to intervenors, or I should say Pharmatop, is they interpreted the line correctly, and any person in the position of Pharmatop should have gotten an unavoidable standard, not an unintentional standard. So, I'm not going to argue that they're not

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challenging that 1.137(b) isn't applicable in all circumstances because it isn't what they're arguing, but they're still challenging a rule facially in the sense that they're not challenging it in the way that it applies to them specifically. I'm sorry, Your Honor. I'm responding to everything. THE COURT: Okay. Take your time. I just want to make sure

MR. OBERMEIER:

And really, Your Honor, I mean,

counsel has provided a -- like I said a packet of cases, and I looked through it quickly. through 5 or something. And I think we went through pages 1

None of those cases are APA cases. A, if you don't have

And it's crucial because for two reasons:

an APA case, you're not addressing the -- the interest in finality, which is really what timeliness is about. And B,

the -- so the logic of decoupling finality from injury is not implicated in those cases. And frankly, if you are actually raising a true as-applied challenge such that the injury resulted from the actual application of the regulation to the party, then all that case law about accrual and injury would apply right here as well. The distinction here is that injury has been separate

from filing since the action that came after Hire Order said that doesn't make it timely. THE COURT: Okay. If Your Honor has any further

MR. OBERMEIER:

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questions, I would be happy to answer them. THE COURT: I don't. Thank you.

Do either of the intervenors want to take a moment? MR. ZUBICK: THE COURT: MR. ZUBICK: but I'm Marc Zubick. THE COURT: Yes, Your Honor. All right. I apologize for missing the introduction, I'm here for Cadence Pharmaceuticals. All right. Can you spell your last name? Thank you.

THE REPORTER: MR. ZUBICK: boy, I-C-K. THE REPORTER: MR. ZUBICK:

My last name is Z, like zebra, U-B, like

Thank you. I

Your Honor, I'll be pretty brief.

think Mr. Obermeier did a great job in addressing most of the issues. I just want to follow up on the facial versus as-applied distinction. THE COURT: MR. ZUBICK: challenge. Uh-huh. Cadence will use this as a facial

There was a lot of discussion as to whether facial

challenge needs to necessarily say that there's no permissible application of the rule. It can be subdivided. Mr. Polk made distinction between PCT applications and non-PCT applications. But what he's saying -- I think Mr. Well, we think that is the case here.

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Obermeier mentioned this -- is that every single PCT application would be invalid if addressed under this rule. That, to me, is facial. There have been a couple other -- other statements that we -- that tell us, inform us, what makes a challenge facial. The Federal Circuit in 2008 in a case called Preminger

v. Secretary of Veterans Affairs, which is 517 F.3d 1299, wrote: A facial challenge to a statute of regulation is

independent of the individual bringing the complaint and the circumstances surrounding his or her challenge. Indeed, a

facial challenge may be brought without a record or any facts at all. In contrast, an as-applied challenge is specific to

the facts of the particular individual involved in the suit. When that statement from the Federal Circuit combines with Exela's summary judgment brief, it's very clear to Cadence that this is a facial challenge. judgment brief discusses two things: The summary

The rule and the statute.

There's no discussion about whether Pharmatop could have met the standard, whether Pharmatop did meet the standard, the unintentional standard, the unavoidable standard. What it

talks about is the fact that, according to Exela, Rule 1.137(b) goes further than the congressional mandate. challenge. The other thing we know about facial challenge is, is if you bring a successful facial challenge, the rule doesn't That is a facial

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stand.

If you're to say an as-applied challenge, then the

Court would say, well this rule was applied improperly, vis--vis this particular party. asking for. Exela, I have no doubt, would be very happy if you said, Okay, this was applied incorrectly to Pharmatop. invalidated the patent. There's nothing more. They It That's not what Exela is

But that isn't really what's going on here. want you to change the rule.

They want the rule to say, it That is a facial

cannot be applied to PCT applications. challenge.

Very briefly, I want to address the fact that in these pleadings there's a lot of discussion of fairness and whether Exela is being foreclosed here from having a chance to -- to have its day in court. It's not easy to sue the

Government, and Congress created very strict limitations in methods of doing so. In this case, the rule has never been applied to Exela. It was applied to Pharmatop. And the statute of

limitations has passed. And certainly if there's any issue of fairness, it's as to patent applicants and licensees, whoever lied on congressional methods of challenging patents, never lied on patent office procedure. And the idea that now you can

challenge too late tens of thousands of patents that have

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issued according to statutes and rules, that would be the unfair result. Thank you, Your Honor. THE COURT: MR. POLK: THE COURT: MR. WEISS: All right. Thank you, Mr. Zubick.

Your Honor, if I may just -Well, let's have our other intervenor. Thank you, Your Honor. I'm Charles Weiss,

W-E-I-S-S, from Holland & Knight, and I represent defendant intervenor Pharmatop who is the owner of the patent at issue here. Thank you, Your Honor, for indulging a moment of

argument. I want to respond to Exela's point about the policy of the Patent Act in Section 371, which is where counsel began his argument. THE COURT: MR. WEISS: Uh-huh. And there was a statement to the effect

that that purpose of that is to prevent the recapture of subject matter that has entered the public domain by virtue of an application having been abandoned. Now, that is in fact right into the teeth of the Aristocrat case. The Aristocrat case says that in an

infringement action, the challenge that Exela is making here cannot be asserted as a defense of invalidity. And as the

Federal Circuit explained in that case, to allow that challenge to be brought would be contrary to Section 282 of the Patent

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Act, Title 35, where Congress limits the challenges to patent validity for substantive grounds of patentability: Anticipation, obviousness, prior art, the 102, 103 invalidity grounds in 112 that Your Honor, of course, is familiar with. The argument that 371 is part of that is absolutely foreclosed by Aristocrat in the case where it would matter most, which is in the infringement case. Now, as to the argument that this produces an odd result, there are, as counsel indicated -- there's times when you cannot get judicial review of an agency action for a variety of reasons. And I would pose the question, is the odd

result that a challenge based on this kind of procedure cannot be brought in the action where it matters most, infringement action, by the accused infringer, but instead will spawn collateral litigation in every patent case in this courthouse against the PTO. And if we are looking at odd results, I would

respectfully submit that that would be a much odder result than the proposition that alleged irregularity in the application of a rule or the promulgation of a rule, or interlocutory actions during prosecution cannot be challenged. live with Aristocrat. And that is where we

Right or wrong, that is the

determination of policy as expressed by the Federal Circuit. So unless the Court has any questions, I would end it there. THE COURT: I don't. Thank you.

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MR. WEISS: THE COURT: MR. POLK: quick points.

Thank you, Your Honor. Mr. Polk. Thank you, Your Honor. Just a couple of

I think if you wanted to really understand why -- I mean, Hire Order is just limited to facial challenges, need to look at the cases that it distinguishes, because the cases it distinguishes, Wind River, a whole host of other -- or it cites Wind River. But it distinguishes a lot of the other cases on

the sole ground, it says, because they do not bring a facial challenge as it is brought here. Now you do -- Your Honor was correct. You do have

to go back and look at some of the other opinions to really get some meaning to this case, and I think it was the District Court opinion where they said that the line was, Well, the only thing that's being challenged here are the rules themselves, and that was -- and that's where you go back and look at Hire Order. We're not just challenging the rule itself here, and I think this gets to my second point where Mr. Zubick -and I think Exela might need to pay him for his legal services because I thought he did a very good job for us of arguing what the difference between the facial and as-applied challenge is, because if you look at it, what he said was in a facial challenge what's going to happen, you're asking that the rule

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be stricken, continuation rules, ask that the rule be stricken. Exela has never asked that 1.137 be stricken. We

said, PTO, you need to use the right rule, and that right rule is 1.137(a) because that is what is consistent with the statute. That's the rule that you have to use. So if this Court -THE COURT: that your -MR. POLK: THE COURT: We're not asking -You are. You're asking that it not be Well, why isn't that -- why isn't he right

applied, and there's certain segment of cases where it is being applied. MR. POLK: No. In that situation, it would be that No one

you're asking that the rule be struck in its entirety. can ever -- you cannot use that rule ever again. facial challenge. Think of the continuation rules -THE COURT:

That's a

You're saying if -- you should be stricken Is that what you're saying?

just for some circumstances. MR. POLK:

I'm just -- yeah, as applied in this

specific group of cases you can't do that. Think of the continuation rules. Again, I keep

going back to that because it's in the patent context. Everyone is familiar with that. They didn't say, well, some of

these rules are good, and you can use them in certain circum --

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they were stricken in their entirety. challenge.

That is a facial

The rule itself, everything is gone. said that. rule here. right rule.

We've never

We -- our -- our complaint says, You used the wrong So in these circumstances, you have to use the

You have to use a rule -- I don't care what rule you use because -- well, we've got to understand, PTO never implemented any rule in conjunction with 371(d). They just

went back to their catchall provisions 1.137(a) and (b). We're just saying, Look, you need to use the right rule that's consistent with the statute, not this other one. That is not a facial challenge. what the law says. THE COURT: including 371? MR. POLK: Your Honor, we've -- again, I didn't -- I And your argument about Aristocrat, That just is not what the --

thought we were talking about Hire Order today, but -- so again, we've been down that road with Aristocrat. THE COURT: MR. POLK: we said there. Yes. I remember going back to our arguments that

Aristocrat, if you look at that -- get my old

memory back from what we said there. THE COURT: MR. POLK: Yeah. If you look at that, it's -- in the context

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of this suit, the APA provides you no guidance.

And we went

through our brief of all the issue with Aristocrat where the Court during the oral argument whose question, Well, how can you have an APA claim when the Government is not here? was the issue. And so, again, we'll rest on our brief that we said before, we think that has already been treaded, and we think that's pretty clear. One other thing again counsel said, Well, you know, Polk hasn't cited. And that's not true. Wind River is an APA That

case, but -- as this Court cited in its decision -- but it said, Polk hasn't cited any cases dealing with the APA. So in other words, what he's arguing, as we've said before, he has to be arguing that in APA cases there is an exception to the general rule of the standard rule that applies to all of the statute of limitations. He's got to be arguing

there's some exception that applies in APA cases. And the Supreme Court is one hundred percent crystal clear on this point: If there is an exception, it has And it has to be

to come from Congress, not Hire Order.

something in the statute that supports not applying the general rule in this case. That's what the Supreme Court case --

that's what the Supreme Court and the decisions of this Court say. And finally what -- what I'll rest on, if you look

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at Hire Order, if it relates to anything, it relates to paragraph E of our complaint which says -- which deals with that. Hire Order does not address any other substantive, It's a very narrow --

anything else that's in our complaint.

if it addressed anything at all, it's exceptionally narrow and provides no basis to -- to dismiss the entire suit. Again, I thank you very much for your time, Your Honor, and appreciate your consideration. THE COURT: All right. Thank you.

All right. further.

Well, we'll look at it a little bit And clearly there's

I appreciate the argument.

tension between the APA regulations and some of the lower court cases. And Hire Order is the latest one, you know, and Wind

River clearly was a case that I looked at pretty closely. The -- you-all, you know, whether you call it fairness or opportunity to grieve injuries, you know, the Court obviously is always concerned. This Court is always concerned with precluding somebody from having their day in court, and I think that could be seen in my earlier opinion. And, you know, Hire Order is

focused and quite powerful in its ruling, and certainly the judges -- Judge Motz has seen a few of these cases in her day, and her decision deserves close attention. So we'll continue to look at this a little bit longer, and we'll get you out a ruling as soon as we can. I

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appreciate the arguments today and also the briefing and much appreciate it. All right. VOICES: Thank you-all. Have a good weekend.

Thank you, Your Honor.

(PROCEEDINGS CONCLUDED AT 11:44 A.M.)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA

) )

I, JULIE A. GOODWIN, Official Court Reporter for the United States District Court, Eastern District of Virginia, do hereby certify that the foregoing is a correct transcript from the record of proceedings in the above matter, to the best of my ability. I further certify that I am neither counsel for, related to, nor employed by any of the parties to the action in which this proceeding was taken, and further that I am not financially nor otherwise interested in the outcome of the action. Certified to by me this 6TH day of DECEMBER, 2012.

__/s/___________________________ JULIE A. GOODWIN, RPR CSR #5221 Official U.S. Court Reporter 401 Courthouse Square Tenth Floor Alexandria, Virginia 22314

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