`Filed: August 28, 2013
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`
`Filed on behalf of: VirnetX Inc.
`By:
`Joseph E. Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow,
` Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Telephone: 571-203-2700
`Facsimile: 202-408-4400
`E-mail: joseph.palys@finnegan.com
`
` naveen.modi@finnegan.com
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE INC.
`Petitioner
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`v.
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`VIRNETX INC.
`Patent Owner
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`Case IPR2013-00348
`Patent 6,502,135
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`VIRNETX’S OPPOSITION TO APPLE’S
`MOTION FOR JOINDER
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
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`PRECISE RELIEF REQUESTED .................................................................. 2
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`I.
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`II.
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`III. STATEMENT OF FACTS .............................................................................. 2
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`IV. ARGUMENT ................................................................................................... 4
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`A.
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`Joinder Will Significantly Increase the Complexity and
`Duration of the New Bay IPR Proceeding and Prejudice
`VirnetX .................................................................................................. 4
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`B. Apple Will Not Be Prejudiced if the Board Denies Joinder ................. 7
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`C. Granting Apple’s Motion for Joinder Is Statutorily Barred .................. 7
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`V.
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`CONCLUSION ..............................................................................................10
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`i
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`TABLE OF AUTHORITIES
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`Page(s)
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`PATENT TRIAL AND APPEAL BOARD DECISIONS
`ABB Inc. v. Roy-G-Biv Corp.,
`IPR2012-00282, Paper 6 (May 30, 2013) ............................................................. 6
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`Ariosa Diagnostics v. ISIS Innovation, Ltd.,
`IPR2012-00022, Paper 35 (May 1, 2013) ............................................................. 7
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`Dell, Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00071, Paper 17 (July 29, 2013) ..................................................... 8, 10
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`Dell, Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00385, Paper 17 (July 29, 2013) ........................................................... 6
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`Microsoft Corp. v. Proxyconn, Inc.,
`IPR2013-00109, Paper 14 (Feb. 25, 2013) ........................................................... 6
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`Motorola Mobility LLC v. Softview LLC,
`IPR2013-00256, Paper 10 (June 20, 2013) ........................................................... 4
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`Sony Corp. of America et al. v. Network-1 Security Solutions, Inc.,
`IPR2013-00386, Paper 16 (July 29, 2013) ........................................................... 6
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`FEDERAL STATUTES
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`35 U.S.C. § 311 ................................................................................................ 4, 8-10
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`35 U.S.C. § 315 ................................................................................................ 4, 8-10
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`LEGISLATIVE HISTORY
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`Meeting of the H. Comm. on Judiciary,
`Transcript of Markup of H.R. 1249 (Apr. 14, 2011) ............................................ 9
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`Statement of Senator Kyl,
`154 Cong. Rec. S9988 (daily ed. Sep. 27, 2008) .................................................. 9
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`ii
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`I.
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`INTRODUCTION
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`Patent Owner VirnetX Inc. respectfully requests that the Board deny Apple
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`Inc.’s motion requesting joinder of IPR2013-00348 and IPR2013-00349 (“Apple
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`IPRs”) with IPR2013-00375 (“New Bay IPR”).1 The Apple IPRs and the New
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`Bay IPR each concern U.S. Patent No. 6,502,135 (“the ’135 patent”).
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`The Board should deny Apple’s motion because joinder will add several new
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`substantive issues to the New Bay IPR, require additional discovery and expert
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`testimony, prevent a timely conclusion of the New Bay IPR, and prejudice
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`VirnetX. New Bay identified similar reasons for opposing joinder in its petition.
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`IPR2013-00375, Paper No. 4 at 4. In addition, joinder of Apple’s untimely IPRs is
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`statutorily barred.
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`Denying joinder will not prejudice Apple, which has a pending validity
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`challenge to the ’135 patent in inter partes reexamination (control no. 95/001,682),
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`and has previously challenged claims of the ’135 patent in district court. Apple
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`argues that joining its IPRs with the New Bay IPR “will minimize any duplication
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`of effort by the Board and the Court” (Apple Mot. at 4), but Apple itself has
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`invited duplication by first seeking inter partes reexamination and then seeking
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`1 Apple also asks the Board to join its own IPR2013-00348 and -00349 with
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`each other. Apple Mot. at 1. The Board did not authorize Apple to move for this
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`type of joinder, and it should be denied for the reasons stated in this opposition.
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`VirnetX’s Opposition to Apple’s Motion for Joinder
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`two inter partes reviews based on the same primary references. The Board and the
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`Patent Owner should not be tasked with minimizing the burden of Apple’s
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`duplicative proceedings.
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`II.
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`PRECISE RELIEF REQUESTED
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`VirnetX requests that the Board deny Apple’s motion for joinder.
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`III. STATEMENT OF FACTS
`On August 18, 2010, VirnetX served Apple with a complaint, alleging that
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`certain Apple products infringe claims 1, 3, 7-10, and 12 of the ’135 patent. Ex.
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`2001 (Complaint, VirnetX Inc. v. Cisco Systems, Inc. et al., No. 6:10-cv-417 (E.D.
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`Tex. Aug. 11, 2010)). A jury found that those products infringe and that the tried
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`claims of the ’135 patent are valid. Ex. 2002.
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`On July 11, 2011, Apple initiated an inter partes reexamination of all claims
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`1-18 of the ’135 patent. The Office assigned that proceeding control no.
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`95/001,682 (“the ’1,682 reexamination”). On December 13, 2012, the Office
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`merged the ’1,682 reexamination with an inter partes reexamination of the ’135
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`patent initiated by Cisco Systems, Inc. The Office issued a non-final Office Action
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`in the merged proceedings on March 11, 2013 (Ex. 1056), to which VirnetX
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`responded on June 11, 2013. The parties await further action by the Office.
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`On December 31, 2012, VirnetX served Apple with another complaint,
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`alleging that additional Apple products infringe claims 1, 3, 7-10, and 12 of the
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`’135 patent. Ex. 1050 (Complaint, VirnetX Inc. v. Apple Inc., No. 6:12-cv-855
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`(E.D. Tex. Nov. 6, 2012)). The case remains pending.
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`Apple filed two inter partes review petitions on June 12, 2013, requesting
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`cancellation of claims 1-10, 12-15, and 18 of the ’135 patent. Apple’s first IPR
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`petition (IPR2013-00348) proposed eleven grounds of unpatentability based on
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`five references, including Beser, RFC 2401, Blum, Aventail, and Hoke. Apple also
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`submitted three supporting declarations totaling 246 pages. Exs. 1003, 1005, 1006.
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`Apple’s second IPR petition (IPR2013-00349) sought cancellation of the
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`same set of claims by proposing an additional five grounds of unpatentability
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`based on four references, including Aventail, RFC 1035, Reed I, and BinGO.
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`Apple submitted three supporting declarations totaling 307 pages. Exs. 1003,
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`1005, 1006.
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`Apple now proposes to limit the grounds of rejection to those based on
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`Aventail and Beser as primary references, plus four other secondary references.
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`Apple Mot. at 5-6. Even with this limitation, the Apple IPRs will still include
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`eight separate grounds of unpatentability based on six references and 488 pages of
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`declarations that discuss Aventail and Beser. See id. at 6, n.3.
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`New Bay filed its IPR petition on June 23, 2013. The New Bay IPR
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`(IPR2013-00375) requested review of claims 1, 3, 7, and 8 of the ’135 patent,
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`based on two references, Kiuchi and Dalton, and proposed 12 separate grounds of
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`rejection. New Bay submitted a 105-page supporting declaration. Id., Ex. 1009.
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`On August 14, 2013, the Board authorized Apple to file a motion for joinder
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`of the Apple IPRs with the New Bay IPR. Paper 6 at 5. Additionally, the Board
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`authorized VirnetX and New Bay to file oppositions to Apple’s motion. Id.
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`IV. ARGUMENT
`The Board should not grant Apple’s motion because it will significantly
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`increase the complexity and duration of the New Bay IPR, Apple will not be
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`prejudiced without joinder, and § 315(b) statutorily prohibits joinder of Apple’s
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`untimely IPRs.
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`A.
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`Joinder Will Significantly Increase the Complexity and Duration
`of the New Bay IPR Proceeding and Prejudice VirnetX
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`Subject to other statutory provisions, under 35 U.S.C. § 315(c), the Board
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`has discretion to “join as a party to [an] inter partes review any person who
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`properly files a petition under section 311.” 35 U.S.C. § 315(c). “In exercising its
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`discretion to grant joinder, the Board considers the impact of both substantive
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`issues and procedural matters on the proceedings, as well as other considerations.”
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`IPR2013-00256, Paper 10 at 4. Here, despite Apple’s offer to trim down its two
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`petitions, joinder will significantly impact both substantive and procedural issues.
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`Substantively, joining Apple’s proposed grounds will more than triple the
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`number of claims at issue in the New Bay IPR (from 4 to 15), will quadruple the
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`number of references at issue (from 2 to 8), and will nearly double the number of
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`grounds of rejection (from 12 to 20). Procedurally, it will require the depositions
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`of at least three additional witnesses covering at least 488 pages of declarant
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`testimony. It will also add Apple as a party, further complicating the New Bay
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`IPR. New Bay identified similar concerns with joinder in its petition. See
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`IPR2013-00375, Paper 4 at 4.
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`Apple recognizes these problems but offers no satisfactory response.
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`Regarding the burden joinder would cause, Apple misleadingly argues that “in a
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`joined IPR proceeding, it is anticipated that only one expert witness per petitioner
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`. . . will present testimony.” Apple Mot. at 8, emphasis added. Apple fails to point
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`out that it has submitted six declarations related to the Aventail and Beser
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`references from three declarants, which do not overlap with New Bay’s
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`declaration. Joinder, therefore, will require discovery and depositions from at least
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`three additional witnesses. Apple also neglects to mention that its purported
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`simplification of the issues scarcely reduces the body of declarant testimony it
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`relies on, as over 488 pages of its original 553 pages of declarations relate to its
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`narrowed issues.
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`Apple also argues that briefing and discovery can be streamlined, and that it
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`is “willing to accept reasonable restrictions on discovery” and “willing to limit its
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`comments to issues raised by its prior art.” Apple Mot. at 9. The Board has
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`rejected general statements like these, which do not explain what procedures
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`should be followed to reduce discovery, to reduce the number of depositions, or
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`how such procedures would minimize the impact on the schedule for the New Bay
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`IPR. See IPR2013-00386, Paper 16 at 9.
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`Regarding the increased number of claims, Apple contends that the
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`additional claims “present the same or highly similar concepts and limitations and
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`do not raise unique patentability questions.” Apple Mot. at 6. But Apple’s
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`petitions demonstrate that it will inject significant complexity to the claim
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`construction process, as Apple’s additional claims raise new claim construction
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`issues not raised in New Bay’s IPR (e.g., “virtual private link,” “secure web
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`computer,” and “IP address hopping scheme”). Even for the few claims that
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`overlap with New Bay’s IPR, Apple’s petitions raise distinct claim construction
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`issues and frequently offer divergent claim constructions from those offered by
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`New Bay. Compare IPR2013-00375, Paper 4 at 11, with IPR2013-00348, Paper 1
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`at 8-15. The Board has recognized that complicating claim construction weighs
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`against joinder. IPR2013-00385, Paper 17 at 3.
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`Apple also cites the Board’s decisions in IPR2013-00109 and -00282 as
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`permitting joinder of petitions challenging different claims based upon different
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`references. Apple Mot. at 7. But in both of those proceedings, the patent owner
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`did not oppose joinder and agreed that there would be no impact to the schedule.
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`That is not the case here, where VirnetX opposes joinder and joinder will
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`undoubtedly impact the schedule. See IPR2012-00022, Paper 35 at 2 (delaying an
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`IPR based on the addition of new references).
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`Lastly, VirnetX will be prejudiced by Apple’s significant expansion of the
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`substantive issues in the New Bay IPR, the burden of conducting additional
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`discovery, and the page limits imposed by the Office’s rules for responding to the
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`proposed grounds of rejection.
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`B. Apple Will Not Be Prejudiced if the Board Denies Joinder
`Contrary to Apple’s arguments, Apple does not have “a need to use [the
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`IPR] process as a cost-effective alternative to district court litigation.” See Apple
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`Mot. at 9. Apple already challenged the ’135 patent in district court and lost.
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`Apple also sought and is participating in the ’1,682 reexamination, which remains
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`pending before the Office and involves every claim of the ’135 patent. That
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`reexamination also involves all of the same references Apple asserts in the Apple
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`IPRs. Thus, the ’1,682 reexamination already provides Apple with a mechanism
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`distinct from district court litigation to challenge the validity of all claims of the
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`’135 patent. Denying the motion for joinder, therefore, will not prejudice Apple.
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`C. Granting Apple’s Motion for Joinder Is Statutorily Barred
`For the reasons discussed with the Board on August 5, 2013, and to be
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`explained in more detail in Patent Owner’s Preliminary Response, institution of
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`Apple IPRs is barred by 35 U.S.C. § 315(b) because Apple was served with a
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`complaint more than one year before it filed its IPRs. Joinder is only permitted if
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`the Board first determines that Apple’s petition warrants institution. 35 U.S.C. §
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`315(c) (“the Director, in his or her discretion, may join . . . any person who
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`properly files a petition under section 311 that the Director . . . determines warrants
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`the institution of an inter partes review under section 314”). Because Apple’s
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`untimeliness precludes institution under § 315(b), it also precludes joinder under §
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`315(c). The Board, however, has interpreted the last sentence of § 315(b) to mean
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`that “the one-year time bar does not apply” if a party filing a time-barred petition
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`requests joinder. See IPR2013-00071, Paper 17 at 5. VirnetX respectfully
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`disagrees with this statutory interpretation.
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`The last sentence of 35 U.S.C. § 315(b) states that “[t]he time limitation set
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`forth in the preceding sentence shall not apply to a request for joinder under
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`subsection (c).” The AIA, and indeed § 315 itself, distinguishes between petitions
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`for inter partes review and requests for joinder. The last sentence of § 315(b),
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`however, provides an exception to the one-year bar only for a request for joinder,
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`not for a petition for inter partes review. Thus, the one-year bar continues to apply
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`to all petitions, even in the joinder context. The request-for-joinder exception of
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`§ 315(b) applies only when two timely petitions are filed, but the request for
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`joinder is made more than a year after being served with a complaint.
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`This reading makes sense because joinder is not available until after an IPR
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`has been instituted. 35 U.S.C. § 315(c). Since it can take up to six months for an
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`institution decision, it is likely that many requests for joinder will occur more than
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`one year after being served with a complaint. The statutory language addresses
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`this concern. It does not, however, provide a backdoor for time-barred petitions to
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`be effectively instituted through joinder. Such a view is contrary to Congress’s
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`intent to avoid serial harassment of patent owners, which particularly applies to
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`parties like Apple who have already had ample opportunity to present validity
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`challenges in both district court and reexamination. Ex. 2003 at 72 (a goal of the
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`inter partes review laws is to “prevent[ ] the serial harassment of patent holders.”).
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`Permitting untimely petitions to be instituted through joinder is also contrary
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`to the joinder statute. Under 35 U.S.C. § 315(c), “the Director, in his or her
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`discretion, may join as a party to that inter partes review any person who properly
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`files a petition under section 311.” (Emphasis added.) Senator Kyl addressed the
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`meaning of the term “properly files,” stating that “time deadlines for filing
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`petitions must be complied with in all cases.” Ex. 2004, 154 Cong. Rec. S9988
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`(daily ed. Sep. 27, 2008). Section 315(c) is consistent with this view because it
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`requires compliance with § 311, which in turn requires compliance with the other
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`provisions of Title 35, Chapter 31 of the U.S. Code, including the timeliness
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`provisions. 35 U.S.C. § 311 (“Subject to the provisions of this chapter, a person
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`VirnetX’s Opposition to Apple’s Motion for Joinder
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`who is not the owner of a patent may file with the Office a petition to institute an
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`inter partes review of the patent.”).
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`The Board has recognized that § 311 limits joinder under § 315(c), but
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`disregards the portion of § 311 that also requires compliance with other provisions
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`of Chapter 31. IPR2013-00071, Paper No. 17 at 5 (“Section 315(c) refers only to
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`‘section 311,’ not to any other portions of the statute or portions of the statute
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`referenced in Section 311.”). This interpretation is incorrect, as it disregards the
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`plain statutory language. The Board’s interpretation would also mean that other
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`provisions of Chapter 31 do not apply to petitions when joinder is requested, such
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`as the petition requirements of § 312(a). This is not what the statutory language
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`permits, and is certainly not what Congress intended, yet it is what the Board’s
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`statutory interpretation would permit.
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`Under the plain language of §§ 315(b) and (c), joinder of untimely Apple’s
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`IPRs is prohibited.
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`V. CONCLUSION
`For these reasons, the Board should deny Apple’s motion for joinder.
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` Respectfully submitted,
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`/Joseph E. Palys/
`
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`APPENDIX - LIST OF EXHIBITS
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`Exhibit No.
`2001
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`2002
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`2003
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`2004
`
`Description
`VirnetX’s Complaint in VirnetX Inc. v. Cisco Systems, Inc. et
`al., No. 6:10-cv-417 (E.D. Tex. Aug. 11, 2010)
`Jury Verdict Form Against Apple in VirnetX Inc. v. Cisco
`Systems, Inc. et al., No. 6:10-cv-417 (E.D. Tex. Nov. 6,
`2012)
`Excerpt from Meeting of the H. Comm. on Judiciary,
`Transcript of Markup of H.R. 1249 (April 14, 2011)
`154 Cong. Rec. S9982-93 (daily ed. Sep. 27, 2008)
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`Case No. IPR2013-00348
`VirnetX’s Opposition to Apple’s Motion for Joinder
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 28th day of August 2013, a copy of VirnetX’s
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`Opposition to Apple’s Motion for Joinder and supporting materials were served by
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`electronic mail, as agreed by the parties, upon the following:
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`Counsel for Apple Inc.:
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`Jeffrey P. Kushan (jkushan@sidley.com)
`Joseph A. Micallef (jmicallef@sidley.com)
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
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`Counsel for New Bay Capital, LLC:
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`Robert M. Asher (rasher@sunsteinlaw.com)
`Jeffrey Klayman (jklayman@sunsteinlaw.com)
`Sunstein Kann Murphy & Timbers LLP
`125 Summer Street
`Boston, MA 02110-1618
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`Dated: August 28, 2013
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`Respectfully submitted,
`
`/Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.