Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 1 of 11 PageID #: 15197
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`SEAGEN INC.,
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`Plaintiff,
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`v.
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`DAIICHI SANKYO CO., LTD.,
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`Defendant, and
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`ASTRAZENECA PHARMACEUTICALS
`LP and ASTRAZENECA UK LTD.,
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`Intervenor-Defendants.
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`CASE NO. 2:20-cv-00337-JRG
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`DEFENDANTS’ MOTION TO STAY PENDING POST-GRANT REVIEW
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`The Patent Office has determined that “it is more likely than not that claims 1-5, 9, and
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`10” of U.S. Patent No. 10,808,039 (the “’039 Patent”) are invalid. Ex. 1 at 25-26.1 It has
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`therefore instituted post-grant review of each of the claims asserted in this action. If the post-
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`grant review results in the cancellation of the asserted claims, this proceeding will be moot and
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`no further action required. Although the jury has returned its verdict, numerous post-trial
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`proceedings must still take place before this Court, including a bench trial on the equitable
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`defense of prosecution laches and the resolution of the parties’ post-trial motions. Conversely, if
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`the post-grant review confirms any of the asserted claims, and that finding is affirmed on appeal,
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`statutory estoppel under 35 U.S.C. § 325(e)(2) will attach. A stay pending the conclusion of the
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`post-grant review will therefore greatly reduce the burden of this litigation on the Court and the
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`1 “Ex.” refers to the exhibits attached to the April 25, 2022 Declaration of Preston K. Ratliff II
`submitted in support of Defendants’ Motion to Stay Pending Post-Grant Review.
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 2 of 11 PageID #: 15198
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`parties. Accordingly, the Defendants respectfully request a stay of this case until a final decision
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`on the post-grant review of the ’039 Patent is issued.2
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`I.
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`BACKGROUND
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`Seagen filed the application that issued as the ’039 Patent in June 2019. It “wrote the
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`’039 Patent claims to cover” Daiichi Sankyo’s drug, Enhertu. Dkt. 374, Trial Tr. (Day 1) at 178-
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`79. The patent issued on October 20, 2020 and Seagen sued immediately. As Seagen’s counsel
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`put it, “this is a case over money damages, whether [Daiichi Sankyo] owes a reasonable royalty
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`to Seagen for patent infringement[.]” Dkt. 377, Trial Tr. (Day 4) at 57. This litigation has no
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`effect on the marketplace. Seagen has forsaken any request for injunctive relief, and it
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`emphasized to the jury that “Enhertu is an available treatment and will continue to be an
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`available treatment.” See id. at 58.
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`Seagen’s complaint in this action accused Daiichi Sankyo Company, Limited (“Daiichi
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`Sankyo Japan”) of infringing claims 1-4. Dkt No. 1 at 7-9. Following issuance of the ’039
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`Patent, Daiichi Sankyo Inc. and AstraZeneca Pharmaceuticals LP (collectively, “Petitioners”)
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`petitioned the Patent Office to institute post-grant review of claims 1-5, 9, and 10 in PGR2021-
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`0030, filed December 23, 2020. Ex. 2.3 On January 6, 2021, Seagen served contentions in this
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`action accusing Daiichi Sankyo Japan of infringing all of claims 1-10. Ex. 3. Following
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`Seagen’s expansion of this case to include claims 6-8, Petitioners promptly filed a second
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`petition for post-grant review seeking cancellation of those claims too in PGR2021-0042, filed
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`on January 22, 2021. Ex. 4.
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`2 If any appeal from the Patent Office’s decision is sought, the Court can reassess duration of the
`stay.
`3 While defendants Daiichi Sankyo Japan and AstraZeneca UK are not parties to the post-grant
`review petitions, they are named as real parties-in-interest and would be equally bound by
`estoppel if any claims were confirmed.
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 3 of 11 PageID #: 15199
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`Seagen opposed institution of the petitions for post-grant review, arguing that the Patent
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`Office should exercise its discretion not to adjudicate the petitions in favor of this case
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`proceeding to trial. The Patent Office recognized that “the present record shows that there may
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`be merit to Petitioner’s scope of enablement challenges,” Ex. 5 at 19, but nevertheless exercised
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`its discretion not to institute, id. at 2; see also Ex. 6.
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`Less than a month after having used its assertion of claims 6-8 in this litigation to defeat
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`institution of the petition for post-grant review, Seagen abandoned its contentions that those
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`claims are infringed. Dkt. 121 at 3 n.2.
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`Petitioners promptly sought rehearing of the Patent Office’s denial of institution. Exs. 7-
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`8. Among other arguments, Petitioners noted that the validity of claims 6-8 would not be
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`adjudicated in the Texas case in view of Seagen’s decision to abandon its infringement
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`contentions. Petitioners also emphasized Congress’ purpose in creating post-grant review as an
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`alternative to litigation:
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`Congress did so in order to incentivize “early challenges to patents,” and it
`believed that “[t]his new, but time-limited, post-grant review procedure will
`provide a meaningful opportunity to improve patent quality and restore
`confidence in the presumption of validity that comes with issued patents in court.”
`H.R. Rep. No. 112-98, pt. 1, at 47-48 (emphasis added). By setting forth strict
`time limits both with respect to the filing and adjudication of PGRs, Congress
`explicitly promulgated a statutory pathway to ensure review of patents “early in
`their life, before they disrupt an entire industry or result in expensive litigation.”
`157 Cong. Rec. S1326 (daily ed. Mar. 7, 2011) (statement of Sen. Sessions)
`(emphasis added).
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`Ex. 8 at 7. Petitioners also filed a civil action under the Administrative Procedure Act (“the
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`APA”) challenging the Patent Office’s policy of denying post-grant review institution due to
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`parallel district court litigation. Ex. 9.
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`On April 7, 2022, the Patent Office granted the petitions for rehearing and instituted post-
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`grant review of claims 1-10 of the ’039 Patent. In doing so, the Patent Office emphasized the
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 4 of 11 PageID #: 15200
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`“strong merits” of the petitions. Ex. 1 at 3; Ex. 10. It also noted that Seagen’s tactical
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`abandonment of claims 6-8 vitiated the Patent Office’s prior rationale for denying institution of
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`the second petition, and that it would no longer decline to adjudicate the first petition either. Ex.
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`1 at 7.
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`Since then, Seagen of its own volition disclaimed the entire remaining term of claims 6-8,
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`which depend from claim 1. Ex. 11. Using this disclaimer as a main basis, Seagen has now
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`asked the Patent Office to reconsider its decision to institute the post-grant review petition for
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`claims 1-5, 9, and 10. See Ex. 12 at 4.4 Seagen’s conduct—which sought to game the Patent
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`Office’s institution process—resulted in a considerable delay in post-grant review institution and
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`should not be rewarded.
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`In the meantime, several issues remain to be addressed in this Court. This Court needs to
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`hold trial on the equitable defense of prosecution laches, a trial that could become unnecessary if
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`the Board maintains its preliminary opinion concerning the strong merits of the invalidity
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`arguments and cancels the claims. This Court also will be asked to entertain Defendants
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`renewed motions for judgment as a matter of law on Defendants’ Section 102 and 112
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`arguments, motions that will be rendered moot if the Patent Office cancels the claims or
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`confirms the claims. Seagen’s recent motion for entry of a schedule on Defendants’ prosecution
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`laches defense and for briefing on post-trial motions underscores the necessity of a stay at this
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`juncture in the case. Dkt. 390.
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`II.
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`LEGAL STANDARD
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`A district court “has the inherent power to control its own docket, including the power to
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`stay proceedings before it.” Ericsson Inc. v. TCL Commc’n Tech. Holdings, Ltd., No. 2:15-CV-
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`4 Seagen’s rehearing request remains pending before the Patent Office as of this motion.
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 5 of 11 PageID #: 15201
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`00011-RSP, 2016 WL 1162162, at *1 (E.D. Tex. Mar. 23, 2016). This power to stay
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`proceedings includes the “authority to order a stay pending conclusion” of Patent Office
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`proceedings. See id.; Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). Courts
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`evaluating a motion to stay in view of a parallel Patent Office proceeding involving the same
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`patent will typically consider “(1) whether a stay will unduly prejudice or present a clear tactical
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`disadvantage to the nonmoving party, (2) whether a stay will simplify the issues in question and
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`trial of the case, and (3) whether discovery is complete and whether a trial date has been set.”
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`AGIS Software Dev. LLC v. Google LLC, No. 2:19-CV-00361-JRG, 2021 WL 465424, at *2
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`(E.D. Tex. Feb. 9, 2021). In particular, in the context of post-grant validity challenges before the
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`Patent Office, “special attention should be given to minimizing the burdens of litigation” when
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`considering whether a stay leads to a simplifying of the issues. See CyWee Grp., Ltd. v. Samsung
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`Elecs. Co., No. 2:17-CV-00140-WCB-RSP, 2019 WL 11023976, at *2 (E.D. Tex. Feb. 14, 2019)
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`(Bryson, J.).
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`III. ARGUMENT
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`Congress created the post-grant review system to give the Patent Office the first and final
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`say in adjudicating questions of validity. Applying the traditional three-factor test concerning
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`stays of litigation to the facts of this case makes clear that this Court should conserve its and the
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`parties’ resources and stay this proceeding until the Patent Office’s final determination.
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`1.
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`A stay will not unduly prejudice or tactically disadvantage Seagen. The Federal
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`Circuit has explained that the question of “whether the patentee will be unduly prejudiced by a
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`stay . . . focuses on the patentee’s need for an expeditious resolution of its claim.” VirtualAgility
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`Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1318 (Fed. Cir. 2014). Seagen will not suffer any
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`prejudice because this case is just about “money damages.” Courts have consistently found that
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`parties like Seagen suffer no prejudice in these circumstances because they can be compensated
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 6 of 11 PageID #: 15202
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`by damages (combined with pre- and/or post-judgment interest) in the event that the claims are
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`upheld. See, e.g., VirtualAgility, 759 F.3d at 1318 (finding no undue prejudice, since a stay
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`“only delays realization of . . . damages”); CyWee Grp., 2019 WL 11023976, at *11 (“[n]othing
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`in CyWee’s characterization of its activities suggests any reason why a damages award, with
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`pre-judgment interest, would not fully compensate it for any injury served, even if there is some
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`delay in the resolution of the litigation”); see also Stragent LLC v. BMW of N. Am, LLC, No.
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`6:16-cv-446, 2017 WL 3709083, at *2 (E.D. Tex. July 11, 2017) (“mere delay in collecting those
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`damages does not constitute undue prejudice”) (quoting Crossroads Sys., Inc. v. Dot Hill Sys.
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`Corp., No. 13-ca-1025, 2015 WL 3773014, at *2 (W.D. Tex. June 16, 2015) (internal quotation
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`marks omitted)).
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`The Court should be skeptical of any allegations by Seagen that it will be prejudiced by a
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`stay at this juncture given that it was Seagen’s gamesmanship in asserting, dropping, and
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`disclaiming claims 6-8 that extended and complicated these proceedings.5 Petitioners, on the
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`other hand, expeditiously sought the Patent Office’s review of the ’039 Patent via post-grant
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`review, which upon completion will simplify, rather than complicate, these proceedings, however
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`it resolves. This expeditious conduct by Petitioners underscore that the post-grant review
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`proceeding is not an attempt to take a “second bite of the apple” after an unfavorable verdict.
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`KAIST IP US LLC v. Samsung Elecs. Co., Ltd., 439 F. Supp. 3d 860, 872 (E.D. Tex. 2020). To
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`the contrary, the post-grant review proceeding will be Petitioners’ one and only “bite.” If
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`Petitioners prevail (and that finding is affirmed on appeal), the ’039 Patent will be slated for
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`5 Seagen’s gamesmanship in putting those claims in play and then taking them out is reminiscent
`of the childhood game of hokey pokey.
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 7 of 11 PageID #: 15203
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`cancellation. If Petitioners lose (and the Federal Circuit affirms), the ’039 Patent will be
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`confirmed and estoppel under 35 U.S.C. § 325(e)(2) will apply.
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`2.
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`As emphasized above, the requested stay will substantially simplify issues for this
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`Court, thereby conserving judicial resources. Simplification of the issues and judicial economy
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`weigh especially in favor of a stay in circumstances where, as here, all of the asserted claims are
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`being reviewed. Ultratec, Inc. v. Sorenson Commc’ns, Inc., No. 13-cv-346-bbc, 2015 WL
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`2248437, at *3-4 (W.D. Wis. May 13, 2015); VirtualAgility, 759 F.3d at 1314.
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`Although this stay comes at an advanced stage of this case, the Court still has several
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`outstanding issues to resolve, including in connection with equitable defenses and enhanced
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`damages—issues that will require additional briefing, evidentiary hearing, and consideration by
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`this Court. For instance, if the Court does not grant a stay, it will need to hold another trial on
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`the equitable defense of prosecution laches. The Court is also still to entertain the parties’ post-
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`trial motions, including potential motions for judgment as a matter of law and for a new trial. If
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`the Court stays this case and the Patent Office invalidates one or all of the asserted claims, the
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`Court and the parties will have saved significant costs, time, and resources that they would
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`otherwise expend on resolving these outstanding issues, including substantial post-trial briefing
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`on issues including enablement and written description. Seagen also intends to file post-trial
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`motions. Dkt. 390.
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`The likelihood that the Patent Office will find at least some of these claims to be
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`unpatentable is not speculation. As the Patent Office itself observed, “it is more likely than not
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`that Petitioner would prevail in showing that at least one claim of the ’039 patent is
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`unpatentable” in instituting all of the asserted claims. There is thus a high probability that
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`judicial resources will be saved here. Ex. 1 at 40. The Court’s and parties’ investment of time
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 8 of 11 PageID #: 15204
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`and energy into further proceedings have a strong likelihood of being wasted, especially if the
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`Patent Office maintains its conclusion that the “strong merits” of Petitioners’ contentions will
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`lead it to cancel the ’039 Patent’s claims.
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`3.
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`The final factor in the traditional stay analysis concerns the state of the litigation.
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`Here, the Court has held trial, but judgment has not been entered, and there remain several issues
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`to resolve before judgment can be entered.
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`*
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`*
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`*
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`The three factors weigh in favor of granting the requested stay; the potential for
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`simplification of this proceeding weighing especially strongly in favor of a stay. In
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`circumstances where the Patent Office has instituted trial as to all asserted claims, the Federal
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`Circuit has held that denying a stay was an abuse of discretion where factors such as simplifying
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`the issues and conserving judicial resources weighed especially heavily in favor of stay.
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`VirtualAgility, 759 F.3d at 1320. The Court should not similarly abuse its discretion here.
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`IV. CONCLUSION
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`For the foregoing reasons, Defendants respectfully request the Court grant Defendants’
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`motion to stay this case until a final decision on the post-grant review of the ’039 Patent is
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`issued.
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 9 of 11 PageID #: 15205
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`Dated: April 25, 2022
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`Respectfully submitted,
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`/s/ Preston K. Ratliff II
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`Deron R. Dacus
`State Bar No. 00790553
`The Dacus Firm, P.C.
`821 ESE Loop 323, Suite 430
`Tyler, Texas, 75701
`+1 (903) 705-1117
`+1 (903) 581-2543 facsimile
`ddacus@dacusfirm.com
`
`J. Mark Mann
`State Bar No. 12926150
`mark@themannfirm.com
`MANN | TINDEL | THOMPSON
`300 West Main Street
`Henderson, Texas 75652
`(903) 657-8540
`(903) 657-6003 (fax)
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`Attorneys for Defendant Daiichi Sankyo Company,
`Limited
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`Of Counsel:
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`Preston K. Ratliff II
`Ashley N. Mays-Williams
`Paul Hastings LLP
`200 Park Avenue
`New York, NY 10166
`(212) 318-6000
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`Jeffrey A. Pade
`Paul Hastings LLP
`2050 M Street NW
`Washington, DC 20036
`(202) 551-1700
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`Attorneys for Defendant Daiichi Sankyo Company,
`Limited
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 10 of 11 PageID #: 15206
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`/s/ David I. Berl
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`Jennifer Parker Ainsworth
`Texas State Bar No. 00784720
`WILSON, ROBERTSON & CORNELIUS, P.C.
`909 ESE Loop 323, Suite 400
`Tyler, Texas 75701
`Phone: (903) 509-5000
`Facsimile: (903) 509-5092
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`Attorneys for Intervenor-Defendants AstraZeneca
`Pharmaceuticals LP and AstraZeneca UK Ltd
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`Of Counsel:
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`David I. Berl
`Thomas S. Fletcher
`Jessamyn Berniker
`Jessica L. Pahl
`Kathryn Kayali
`Kevin Hoagland-Hanson
`Angela X. Gao
`WILLIAMS & CONNOLLY LLP
`725 Twelfth Street, N.W.
`Washington, DC 20005
`Phone: (202) 434-5000
`Facsimile: (202) 434-5029
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`Attorneys for Intervenor-Defendants AstraZeneca
`Pharmaceuticals LP and AstraZeneca UK Ltd
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`Case 2:20-cv-00337-JRG Document 392 Filed 04/25/22 Page 11 of 11 PageID #: 15207
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that all counsel of record who have consented to
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`electronic service are being served with a copy of this document via electronic mail on April 25,
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`2022.
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`/s/ Preston K. Ratliff II
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`CERTIFICATE OF CONFERENCE
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`On April 22, 2022, pursuant to Local Rule CV-7(h), counsel for Defendants met and
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`conferred with counsel for Plaintiff who indicated that it opposes the relief sought by this
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`Motion.
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`/s/ Preston K. Ratliff II
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