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`ROBINS KAPLAN LLP
`Jake Holdreith (pro hac vice pending)
`800 LaSalle Avenue
`Minneapolis, MN 55402
`Telephone: (612) 349-8500
`Facsimile: (612) 339-4181
`Email:
`jholdreith@robinskaplan.com
`
`Scott F. Gautier (pro hac vice pending)
`2049 Century Park East, Suite 3400
`Los Angeles, CA 90067
`Telephone: (310) 552-0130
`Facsimile: (310) 229-5800
`Emails:
`sgautier@robinskaplan.com
`
`Counsel to Collegium Pharmaceutical, Inc.
`
`UNITED STATES BANKRUPTCY COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
`:
`
`In re:
`
`PURDUE PHARMA L.P., et al.,
`
`Debtors.
`
`:
`- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X
`
`:
`
`:
`
`Chapter 11
`
`Case No. 19-23649 (RDD)
`
`(Jointly Administered)
`
`RESPONSE TO DEBTORS’ OBJECTION TO COLLEGIUM PHARMACEUTICAL,
`INC.’S MOTION FOR RELIEF FROM THE AUTOMATIC STAY AND DEBTORS’
`REPLY IN SUPPORT OF DEBTORS’ MOTION FOR ORDER MODIFYING THE
`AUTOMATIC STAY TO PERMIT THE DEBTORS TO PROSECUTE CERTAIN
`PENDING PATENT LITIGATION
`
`Purdue 2047
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`TABLE OF CONTENTS
`
`
`Page
`INTRODUCTION ................................................................................................................... 1
`I.
`II. ARGUMENT........................................................................................................................... 2
`A.
`The Automatic Stay Should Be Lifted. ............................................................................ 2
`i. The Automatic Stay is Automatic. ................................................................................... 2
`ii. Cause Exists To Lift The Automatic Stay. ....................................................................... 3
`B.
`The PTAB Will Determine Issues In The PTAB Proceeding. ......................................... 5
`i. PTAB Is An Independent Tribunal. ................................................................................. 5
`ii. PTAB And The Federal Circuit Interpret PTAB’s Regulations And Orders. .................. 6
`iii.
`The PTAB Will Likely Render A Substantive Decision. ............................................. 7
`C.
`Statutory Deadlines Are Extended By The Automatic Stay. ........................................... 8
`III. CONCLUSION ..................................................................................................................... 12
`
`i
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`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`In re AP Indus., Inc.,
`117 B.R. 789 (Bankr. S.D.N.Y. 1990) .......................................................................................3
`
`Bank of America, N.A. v. Johnson,
`479 B.R. 159 (Bankr. N.D. Ga. 2012) .....................................................................................10
`
`Cooper Techs. Co. v. Dudas,
`536 F.3d 1330 (Fed. Cir. 2008)..................................................................................................6
`
`Garmin Switzerland GmbH v. FLIR Systems, Inc.,
`No. 3:17-cv-01147-SB, 2017 WL 6453346 (D. Oreg. Dec. 18, 2017) ......................................4
`
`In re Gold & Honey, Ltd.,
`410 B.R. 357 (Bankr. E.D.N.Y. 2009) .......................................................................................9
`
`Golden v. Zwickler,
`394 U.S. 103 (1969) ...................................................................................................................8
`
`Graham v. John Deere Co. of Kansas City,
`383 U.S. 1 (1966) .......................................................................................................................6
`
`In re Gronczewski,
`444 B.R. 526 (Bankr. E.D. Pa. 2011) ........................................................................................9
`
`Int’l Distribution Centers v. Walsh Trucking Co.,
`62 B.R. 723 (Bankr. S.D.N.Y. 1986) .......................................................................................11
`
`Matter of U.S. Brass Corp.,
`110 F.3d 1261 (7th Cir. 1997) .................................................................................................11
`
`Maxilinear v. Cresta,
`IPR2015-00594 (PTAB) ..........................................................................................................12
`
`Mylan Pharms. Inc. v. Pozen Inc. and Horizon Pharma USA, Inc.,
`IPR2017-01995 (PTAB) ..........................................................................................................11
`
`Personalweb Techs., LLC v. Google Inc.,
`No. 5:13-cv-01317-EJD, 2014 WL 4100743 (N.D. Cal. Aug. 20, 2014) ..................................2
`
`Purdue Pharma L.P. et al. v. Collegium Pharmaceutical, Inc.,
`335 F. Supp. 3d 149 (D. Mass. 2018)) .......................................................................................4
`
`ii
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`Redline Detection, LLC v. Star Envirotech,
`Inc., 811 F.3d 435 (Fed. Cir. 2015) ...........................................................................................6
`
`Ritzen Grp., Inc. v. Jackson Masonry, LLC,
`140 S. Ct. 582 (2020) .................................................................................................................3
`
`In re SPOverlook, LLC,
`No. 15–13018 t11, 2017 WL 3084898 (Bankr. D.N.M. Jan. 4, 2017) ......................................9
`
`In re Tribune Co. Fraudulent Conveyance Litig.,
`946 F.3d 66 (2d Cir. 2019).........................................................................................................7
`
`Twitter, Inc. v. Youtoo Technologies, LLC,
`IPR2017-00829 (PTAB) ..........................................................................................................12
`
`Zeoli v. RIHT Mortg. Corp.,
`148 B.R. 698 (Bankr. D.N.H. 1993) ..........................................................................................9
`
`Statutes
`
`11 U.S.C. §362(a)(1) ....................................................................................................................8, 9
`
`28 U.S.C. § 1295(4)(A)....................................................................................................................6
`
`28 U.S.C. § 1295(a)(4)(A) ...............................................................................................................5
`
`35 U.S.C. § 2(b)(2)(A) .....................................................................................................................6
`
`35 U.S.C. Sec. 326(a)(11) ................................................................................................................7
`
`Other Authorities
`
`U.S. Const. Art. 1, § 8, cl. 8 .............................................................................................................6
`
`iii
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`Collegium Pharmaceutical, Inc. (“Collegium”) hereby files this omnibus reply (this
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`“Reply”) to Debtors’ Omnibus Objection and Reply In Support of Debtors’ Motion for Order
`
`Modifying the Automatic Stay to Permit the Debtors to Prosecute Certain Pending Litigation (the
`
`“Objection”).
`
`I.
`INTRODUCTION
`
`1.
`
`Collegium respectfully requests this Court to lift the automatic stay from the
`
`District Court Action and the PTAB Action. The Debtors have given notice to both the District
`
`Court and the PTAB of the effectiveness of the automatic stay and the courts and all parties
`
`acquiesced to the stay in both proceedings. These two proceedings are indisputably intertwined
`
`as to one patent—the ’961 Patent—but not as to all patents that are at issue in the District Court
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`Action. Debtors now seek to move forward with the District Court Action, while raising an
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`argument of first impression—before this or any Court—that the PTAB Action terminated
`
`during the pendency of the automatic stay. Whether the PTAB issues a Final Written Decision
`
`in the PTAB Action, or decides that the PTAB Action was terminated, is irrelevant to this
`
`Court’s decision on relief from stay matters.
`
`2.
`
`Regardless of what the PTAB decides, granting parallel relief from the automatic
`
`stay in the PTAB Action and the District Court Action is in the best interest of the Estates.
`
`Granting relief in only the District Court Action is not in the interests of any party because it
`
`would require the District Court to decide identical issues that were before the PTAB. In this
`
`case, the PTAB presided over a trial on the validity of the ’961 patent and was prepared to issue
`
`its Final Written Decision when the automatic stay was imposed. Lifting the stay in the District
`
`Court Action alone runs counter to the purpose of creating post-grant review proceedings at the
`
`PTAB, which is to provide efficient and expert decisions on key issues in patent litigation. See,
`
`1
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`e.g., Personalweb Techs., LLC v. Google Inc., 5:13-cv-01317-EJD, 2014 WL 4100743, at *5 (N.D.
`
`Cal. Aug. 20, 2014) (“Indeed, allowing these invalidity arguments to be determined once,
`
`employing the specialized expertise of the PTAB, produces the exact results—avoiding
`
`duplicative costs and efforts and averting the possibility of inconsistent judgments—intended by
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`the AIA and previous procedures.”).
`
`3.
`
`The Debtors’ arguments regarding the PTAB procedural rules and interpretation
`
`of the PTAB’s orders, actions and powers are both incorrect and irrelevant to the matter before
`
`the Court. The PTAB is an independent tribunal and will interpret its own orders and address the
`
`status of its own proceedings once it is no longer subject to the automatic stay. This Court need
`
`not wade into the application of PTAB law and grapple with the Debtors’ argument that the
`
`PTAB action “no longer exists.” Any such issues are for the PTAB, and, if necessary, the U.S.
`
`Court of Appeals for the Federal Circuit (“Federal Circuit”), to decide.
`
`II.
`ARGUMENT
`
`A.
`
`The Automatic Stay Should Be Lifted.
`
`4.
`
`The automatic stay in the PTAB Action should be lifted so that the PTAB can
`
`take whatever actions the PTAB deems appropriate.
`
`i. The Automatic Stay is Automatic.
`The PTAB Action remains pending and subject to the automatic stay. As Debtors
`
`5.
`
`and their counsel are well aware, the automatic stay arises automatically upon the filing of a
`
`voluntary petition under chapter 11 of the Bankruptcy Code. The PTAB Action Order, while
`
`recognizing the automatic stay, was not necessary to give the stay effect.
`
`6.
`
`Having given notice of the stay, which the PTAB and all parties having
`
`recognized and complied with, Debtors are estopped from implying that the stay did not apply.
`
`2
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`7.
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`Moreover, Debtors cannot argue that Collegium was compelled to seek relief
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`from the automatic stay to preserve the stayed proceedings. Bankruptcy favors the continuance
`
`of the automatic stay, particularly early in chapter 11 proceedings. Bankruptcy Courts are not
`
`required to give relief from stay, and creditors are encouraged to follow the stay. See Ritzen Grp.,
`
`Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582, 589 (2020) (“The [automatic] stay serves to
`
`maintain the status quo and prevent dismemberment of the estate during the pendency of the
`
`bankruptcy case.”) (internal quotation marks omitted); In re AP Indus., Inc., 117 B.R. 789, 798–
`
`99 (Bankr. S.D.N.Y. 1990) (the automatic stay was enacted to ensure that creditors are prevented
`
`from initiating and maintaining separate lawsuits.”).
`
`ii. Cause Exists To Lift The Automatic Stay.
`Lifting the automatic stay in the PTAB Action permits the PTAB to issue a Final
`
`8.
`
`Written Decision on the merits of the ’961 patent and/or to address Debtors’ argument that the
`
`action “no longer exists.” There is no valid reason to make the PTAB wait to act in either
`
`capacity.
`
`9.
`
`Even before the Debtors’ chapter 11 cases, the District Court was waiting for the
`
`PTAB to act in the PTAB Action.1 It is likely that the District Court will voluntarily continue to
`
`stay the District Court Action pending a decision in the PTAB Action because Debtors seek
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`damages from Collegium for infringing the ’961 patent, and the PTAB Action has already
`
`considered Collegium’s defenses that the ’961 patent is invalid. This efficiency—reducing
`
`
`1 Collegium moved for a stay of the District Court proceedings pending the PTAB action on October 16, 2018.
`Debtors opposed the stay motion. The District Court has not ruled on the 2018 stay motion, but no further
`proceedings have occurred since briefing of the PTAB Action Stay Motion in the District Court (save a reply brief
`and several stipulations), apparently while the District Court awaited the outcome of the PTAB action. The District
`Court entered an order staying the District Court action on September 20, 2019, following notice of the Debtors’
`bankruptcy. The foregoing proceedings are all found in Purdue Pharma LP et al v. Collegium Pharmaceutical, Inc.
`DMA-1-15-cv-13099 in the District of Massachusetts, which is the lead action into which the ’961 patent case in the
`District Court was consolidated for pretrial management and discovery only.
`
`3
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`litigation costs, conserving judicial resources, and deferring to the expertise of the PTAB—is
`
`why district courts typically stay infringement actions when the PTAB institutes a post-grant
`
`review proceeding like the one in this case. See, e.g., Garmin Switzerland GmbH v. FLIR
`
`Systems, Inc., No. 3:17-cv-01147-SB, 2017 WL 6453346, at *5 (D. Oreg. Dec. 18, 2017). The
`
`PTAB was formed precisely so that it could decide, based on the expertise of its ALJs, the same
`
`issues as the District Court in a more timely and efficient way.2 Hence, Debtors’ argument to
`
`deny stay relief or terminate the PTAB Action results in the least efficient outcome with no
`
`explanation how proceeding in that manner would benefit the Estates.
`
`10.
`
`The PTAB’s decision is critical to the District Court Action. If the PTAB finds
`
`that the ’961 patent is invalid, pending appeal, the District Court Action concerning the ’961
`
`patent is moot,3 saving the parties millions of dollars in litigation fees even if the other actions
`
`proceed.4 If the PTAB decides the ’961 patent is not invalid, then the District Court does not
`
`need to redo the work already done by the PTAB. Finally, if the PTAB deems its action
`
`concluded without a substantive ruling then the District Court will be able to lift its stay and
`
`
`2 See, e.g., https://www.ptab-blog.com/2015/11/13/the-cost-effectiveness-of-ptab-proceedings/ and
`https://www.finnegan.com/en/insights/articles/ptab-basics-key-features-of-trials-before-the-uspto.html.
`3 The ’961 patent is the sole patent asserted in a civil action pending in the United States District Court for the
`District of Massachusetts and captioned as Purdue Pharma L.P. et al. v. Collegium Pharmaceutical, Inc., 1-17-cv-
`11814, filed September 21, 2017. On December 13, 2017, that case was consolidated, for case management and
`discovery purposes only, with pending litigation captioned as Purdue Pharma L.P. et al. v. Collegium
`Pharmaceutical, Inc., 1-15-cv-13099 (D. Mass., filed Aug. 6. 2015).
`4 While there are patents-in-suit in addition to the ’961 patent asserted in separate cases consolidated for discovery
`and case management, Debtors’ statement that “the ’933 Patent has withstood Collegium’s best defenses … that
`were the subject of its failed summary judgment motion” (Objection ¶ 22) is disingenuous. Collegium’s summary
`judgment motion targeted three patents-in-suit, and successfully knocked out two of them. As for the ’933 patent,
`the Court denied Collegium’s motion despite “considerable misgivings.” Purdue Pharma L.P. v. Collegium Pharm.,
`Inc., 335 F. Supp. 3d 149, 165 (D. Mass. 2018). The Court further held that “the materiality of the 8α limitation in
`the product claims is very much in doubt, and therefore casts doubt on the validity of claims 1 and 16” and that there
`was “substantial doubt as to whether the 95% limitation has any real significance.” Id. at 168. The Court’s
`“substantial doubts” and “considerable misgivings” indicate that the ’933 patent did not “withstand” summary
`judgement (as Debtors characterize in their Objection); instead, a more objective characterization would be that the
`’933 patent barely survived summary judgement.
`
`4
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`make other arrangements to reach a finding on the ’961 patent validity issues (discovery,
`
`proceedings, etc…).
`
`11.
`
`Hence, regardless of the PTAB’s actions, relief from stay facilitates the complete
`
`resolution of disputed matters related to the ’961 patent in the District Court Action and
`
`promotes judicial economy. Lifting the stay to permit the PTAB Action to proceed will promote
`
`the efficient use of the Debtors’ limited assets and will not prejudice the interests of other
`
`creditors. Conversely, lifting the District Court Action stay and not the PTAB Action stay will
`
`unduly delay the resolution of a key issue in the matter: the validity of the ’961 patent. For the
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`foregoing reasons, Collegium’s motion for relief from the automatic stay to permit the PTAB
`
`Action to proceed should be granted.
`
`B.
`
`The PTAB Will Determine Issues In The PTAB Proceeding.
`
`12.
`
`The interpretation and application of the PTAB procedures and regulations are
`
`matters within the expertise and jurisdiction of the PTAB and the U.S. Court of Appeals for the
`
`Federal Circuit (“Federal Circuit”). The PTAB is an independent adjudicative body that issues its
`
`own orders, including, when necessary, the interpretation of USPTO regulations and procedures.
`
`The PTAB’s interpretations are generally accepted and are only reviewed by the Federal Circuit.
`
`See 28 U.S.C. § 1295(a)(4)(A) (exclusive jurisdiction of the CAFC over appeals form the
`
`PTAB). The PTAB—not this Court—should consider and decide any motion Debtors wish to
`
`make with regard to the status of the PTAB Action, from which an appeal will lie to the Federal
`
`Circuit.
`
`i. PTAB Is An Independent Tribunal.
`The extent of the PTAB’s authority, and the effect of any statutory deadlines or
`
`13.
`
`limits on PTAB’s authority, are not issues that the Bankruptcy Court has cause or authority to
`
`consider or determine.
`
`5
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`14.
`
`The legal authority to issue patents originates in Article I, § 8 of the United States
`
`Constitution. Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5 (1966). This authority
`
`was given to the legislative branch of the Federal Government. Art. 1, § 8, cl. 8. Congress
`
`delegated plenary authority related to issuing and regulating patents to the United States Patent
`
`and Trademark Office (“USPTO”). Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1335-36 (Fed.
`
`Cir. 2008). The USPTO has authority to establish regulations and procedures to govern the
`
`conduct of proceedings in the Office. Id.; see also 35 U.S.C. § 2(b)(2)(A). Congress also formed
`
`the PTAB as an independent adjudicative body within the USPTO. One of the responsibilities of
`
`the PTAB is to conduct trials under the America Invents Act to determine the validity of issued
`
`patents.
`
`ii. PTAB And The Federal Circuit Interpret PTAB’s Regulations And
`Orders.
`
`15.
`
`Congress granted exclusive jurisdiction over all patent matters to the Federal
`
`Circuit. As part of this jurisdiction, Congress also granted the Federal Circuit exclusive
`
`jurisdiction to hear all appeals from PTAB decisions. 28 U.S.C. § 1295(4)(A). The Federal
`
`Circuit generally accepts the PTAB’s interpretation of USPTO and PTAB regulations and
`
`procedures. Redline Detection, LLC v. Star Envirotech, Inc., 811 F.3d 435, 441–42 (Fed. Cir.
`
`2015). The Federal Circuit will review the PTAB’s decision of how it manages its permissive
`
`rules of trial proceedings for an abuse of discretion. Id. This review is limited to the Federal
`
`Circuit under its exclusive Jurisdiction.
`
`16.
`
`As such, the extent of the PTAB’s authority and the effect of any statutory
`
`deadlines or limits on PTAB’s authority are under the exclusive jurisdiction of the PTAB and the
`
`Federal Circuit. On the other hand, this Court has no interest in determining these issues and it
`
`lacks the authority or jurisdiction to bind the PTAB or the Federal Circuit as to interpretation of
`
`6
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`the PTAB’s orders, statutes and regulations. Debtor’s arguments are squarely within the PTAB
`
`and the Federal Circuit’s jurisdiction to decide.
`
`17. With respect to the relief from stay issues, the only relevant portion of the PTAB
`
`Order is that the PTAB recognized that the Automatic Stay was in effect “pursuant to the
`
`Automatic Stay provision of 11 U.S.C. Sec. 362(a)(1), (3).” PTAB Action Order p. 4 (emphasis
`
`added). Having recognized the Automatic Stay, the PTAB could neither (i) conduct further
`
`proceedings, nor (ii) affirmatively require the parties to do anything. In re Tribune Co.
`
`Fraudulent Conveyance Litig., 946 F.3d 66, 76 (2d Cir. 2019) (When a bankruptcy action is
`
`filed, any action or proceeding against the debtor is automatically stayed by Section 362(a)).
`
`18.
`
`Upon relief from the stay, if there are issues related to the PTAB proceedings,
`
`then the PTAB, and Federal Circuit, if necessary, will decide the PTAB action, including any
`
`relevant issues related to PTAB procedure, the interpretation of PTAB Orders, and rules and
`
`regulations governing PTAB proceedings.
`
`iii. The PTAB Will Likely Render A Substantive Decision.
`Collegium maintains that this Court should not wade into interpreting the effect of
`
`19.
`
`the PTAB’s statutes, rules, and orders on the PTAB Action. But to complete the record,
`
`Collegium believes termination would contravene the language and the policy of the PTAB’s
`
`statutes and rules that require the PTAB to issue a Final Written Decision after a notice of
`
`institution. 35 U.S.C. Sec. 326(a)(11). Although the statute imposes a deadline by which the
`
`PTAB will issue a substantive decision (35 U.S.C. Sec. 326(a)(11)) (the “Decision Date”), the
`
`Decision Date is provided to promote the efficiency for which the tribunal was created. The
`
`Decision Date is not, as Debtors’ suggest, the sword of Damocles hanging over the head of the
`
`petitioner that extinguishes the petitioner’s rights if the PTAB is unable, for whatever reason, to
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`render its substantive decision by the Decision Date.
`
`7
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`C.
`
`Statutory Deadlines Are Extended By The Automatic Stay.
`
`20.
`
`The PTAB is the proper tribunal to rule on the status of its proceedings. The
`
`Bankruptcy Court need not issue an opinion regarding the tolling of statutory deadlines as
`
`advisory opinions are not favored under federal law. Golden v. Zwickler, 394 U.S. 103, 108
`
`(1969).
`
`21.
`
`But if the Court is inclined to address the issue of whether all deadlines in stayed
`
`proceedings are impliedly tolled or continued pending the release of the automatic stay, the
`
`Court must recognize that section 362(a)(1) clearly stops the entire PTAB process and that the
`
`“PTAB process” must encompass all actions and deadlines to act by the parties and the PTAB.
`
`There must be a baseline understanding of a stay of the “process” so that: (i) the automatic stay
`
`does not unfairly prejudice parties in interest; and (ii) Bankruptcy Courts are not overrun with
`
`relief from stay motions during the early stages of a bankruptcy case by litigants that are
`
`uncertain as to whether all deadlines in a stayed action are suspended.
`
`22.
`
`Debtors’ arguments that the legislative history of section 108(c) supports the
`
`proposition that deadlines in a civil action in a court are stayed, but that deadlines in an
`
`administrative proceeding are somehow excepted from the stay is entirely without merit. The
`
`Debtors’ dissection of section 108(c) is a red-herring; section 108(c) addresses the ability to
`
`commence (i.e., begin a new suit) or continue (i.e., commence an appeal) civil actions; it does
`
`not address deadlines and due dates that are wholly within any type of action that was pending
`
`on the Petition Date. A discussion of why section 108(c) does not mention, and whether it
`
`applies, to administrative proceedings is entirely irrelevant to this matter. Together, Bankruptcy
`
`Code sections 108 and 362 work to protect the rights of both types of creditors, those that have
`
`not yet brought claims and those with pending actions.
`
`8
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`23.
`
`The relevant issue here is that Section 362(a)(1), by its plain terms stays “the
`
`employment of process of [an] … administrative … proceeding.” The “employment of process”
`
`would have no meaning if it did not include procedural actions within the administrative
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`proceeding, including both: (i) the rendering of a final decision by the PTAB; and (ii) the
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`imposition or enforcement of any deadlines that would otherwise govern the proceedings. 11
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`U.S.C. §362(a)(1).
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`24.
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`The purpose of § 362(a)(1) is to “preserve the status quo” in pending matters and
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`the power of the automatic stay, to preserve and maintain the status quo in the PTAB proceeding,
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`is as large as its purpose–to shield the bankruptcy estate from the costs and demands of
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`continuing litigation. See, e.g., In re Gronczewski, 444 B.R. 526, 531 (Bankr. E.D. Pa. 2011)
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`(citing Taylor v. Slick, 178 F.3d 698, 702 (3d Cir.1999)); see also, In re Gold & Honey, Ltd., 410
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`B.R. 357, 369 (Bankr. E.D.N.Y. 2009) (the automatic stay is designed to effect an immediate
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`freeze of the status quo at the outset of the chapter 11 proceedings); Zeoli v. RIHT Mortg. Corp.,
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`148 B.R. 698, 700 (Bankr. D.N.H. 1993) (quoting In re New American Food Concepts, 70 B.R.
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`254, 258 (Bankr. N.D.Ohio 1987)); c.f., In re SPOverlook, LLC, 2017 WL 3084898, at *2
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`(Bankr. D.N.M. Jan. 4, 2017) (bankruptcy filing “stayed all deadlines in the… state
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`court action against the Debtor, including any appellate deadlines…”) (noting that the deadlines
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`to continue the matter in the appellate court were stayed by section 108(c)).
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`25.
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`The automatic stay would not preserve the status quo if it acted to absolutely
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`freeze the “employment of” the PTAB’s process but, as the Debtors’ argue, time limits and
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`deadlines continue to run in the stayed proceedings. Indeed, instead of preserving the status quo
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`and providing the relief from litigation that the automatic stay is intended to provide, the result of
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`the Debtors’ argument would be to interject a new level of litigation gamesmanship into
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`proceedings and burden debtors and bankruptcy courts with endless requests for relief from stay
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`motions to avoid the risk that time limits and deadlines expire in stayed actions. Bankruptcy
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`courts would, thus, be forced to unnecessarily interject and re-set deadlines and time-limits on all
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`routine matters in every forum and tribunal in which any matter is pending against a
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`debtor. Particularly in large chapter 11 cases, this result would be untenable and could unduly
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`burden bankruptcy courts during the initial months of a case.
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`26.
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`It must be evident that the broad scope and immense power of the automatic stay
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`not only stops all parties, courts and tribunals from taking affirmative actions, but also tolls the
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`imposition of all deadlines, both statutory and non-statutory, that would otherwise require them
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`to take action in a stayed proceeding. Certainly, the imposition of any deadline or sanction (or
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`the termination of a matter) is part of the “employment of the process” itself. Many courts have
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`noted that the automatic stay does not function in the piecemeal fashion that the Debtors assert;
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`rather, the automatic stay suspends the proceedings, and any deadlines in those proceedings, so
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`as to preserve the status quo of the proceeding in its entirety. See, e.g., Bank of America, N.A. v.
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`Johnson, 479 B.R. 159 (Bankr. N.D. Ga. 2012) (holding that the automatic stay suspended the
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`obligation of the debtor to file an answer because “the automatic stay means nothing if it does
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`not operate to stay the proceeding in its entirety.”) (emphasis added).
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`27.
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`Collegium’s request for relief from stay is warranted particularly under the
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`circumstances of this case. The Debtors filed their bankruptcy cases on the eve of the PTAB
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`rendering its Final Written Decision as to the validity of the ’961 patent. Collegium, in good
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`faith, abided by the automatic stay5 to enable the Debtors to focus on their reorganization efforts.
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`5 Collegium, when asked by the PTAB panel at a status conference called by the panel, advised that Collegium
`believed the PTAB panel could make a determination as to whether the automatic stay applied to the PTAB
`Proceedings. When the PTAB issued its order recognizing the automatic stay, Collegium then abided by the
`automatic stay.
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`The Debtors cannot argue that the stay has provided them with a litigation advantage. Matter of
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`U.S. Brass Corp., 110 F.3d 1261, 1265 (7th Cir. 1997) (“The use of the Bankruptcy Code to
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`obtain a favorable forum should not be encouraged.”); Int’l Distribution Centers v. Walsh
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`Trucking Co., 62 B.R. 723 (Bankr. S.D.N.Y. 1986) (“[a]lthough section 362 is a shield to protect
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`the debtor to provide for a fresh start, the automatic stay was not intended by Congress to be
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`used as a sword.”).
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`28.
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`Accepting the Debtors’ arguments that deadlines are not part of the “employment
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`of process” that is stayed pursuant to 362(a)(1) leads to results that are absolutely antithetical to
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`the spirit of the Automatic Stay as a “shield” to promote a level playing field. For example, if
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`the Debtors had filed chapter 11 on the eve of the last possible statutory extension of the
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`Decision Date, Collegium would have had no opportunity at all to continue the stayed
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`proceeding. By the Debtors’ reasoning, even though Collegium would have had absolutely no
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`opportunity to seek relief from the stay, the stay would have terminated the PTAB Action by
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`preventing action prior to the Decision Date. Such a result is antithetical to basic Bankruptcy
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`jurisprudence. Obviously, accepting the Debtors’ novel argument that a “stay” does not really
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`stay the entire proceeding, including any applicable deadlines, could lead to the type of
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`automatic stay “sword-play” that must not be permitted.
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`29.
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`The cases cited in the Objection do not warrant a different conclusion. In each of
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`the cases relied on by Debtors, the automatic stay terminated prior to the Decisi