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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. AND SCIENCE APPLICATION INTERNATIONAL
`CORPORATION,
`Patent Owner
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`Patent No. 7,490,151
`Issued: Feb. 10, 2009
`Filed: Sep. 30, 2002
`Inventors: Edmund C. Munger, et al
`Title: Establishment of a Secure Communication Link Based Domain Name
`Service (DNS) Request
`____________________
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`Inter Partes Review No. IPR2013-00354
`__________________________________________________________________
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`PETITIONER’S MOTION FOR REHEARING
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`Paper No. 21
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`IPR2013-00354 – Motion for Rehearing
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`I.
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`Introduction
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`Apple Inc. (“Petitioner”) requests rehearing of the Board’s decision denying
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`institution of IPR2013-00354 concerning U.S. Patent No. 7,490,151 (the ’151
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`patent). The Board improperly denied the petition by concluding it was filed
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`outside of the one-year period specified in 35 U.S.C. § 315(b), finding that “[t]he
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`plain language of the statute does not specify that a later complaint will nullify the
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`effect of an earlier complaint for timeliness purposes of a petition.” Paper 20 at 3.
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`The Board misapprehended Petitioner’s arguments and incorrectly applied
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`§ 315(b). Petitioner never argued the second complaint served on Apple alleging
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`infringement of the ’151 patent “nullified” an earlier complaint under the patent.
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`See Paper 20 at 3. Instead, Petitioner explained it would be illogical, unjust, and
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`inconsistent with the design of the inter partes review (“IPR”) authority to read
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`§ 315(b) as barring a timely filed petition because a separate complaint for patent
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`infringement had been served on Petitioner more than a year before the IPR
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`authority was even established. Pet. at 2-3. Because the Board misapprehended
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`Petitioner’s arguments and misapplied § 315(b), it improperly refused to consider
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`the merits of the Petition. Petitioner respectfully requests the Board vacate its
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`decision denying the petition, consider the petition, and institute trial. 37 C.F.R.
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`§ 42.71(d); see IPR2013-00232, paper 13 at 2 (Dec. 6, 2013).
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`II. Argument
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`1
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`IPR2013-00354 – Motion for Rehearing
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`As the Petition explains, § 315(b) provides a petition is timely unless “it is
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`filed more than 1 year of the date on which the petitioner … is served with a
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`complaint alleging infringement of the patent.” Pet. at 2. This Petition is timely
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`because it was filed less than 1 year from the December 2012 service date of a
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`complaint that commenced litigation now scheduled for trial in October of 2015.
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`The Board nonetheless found the Petition untimely because Patent Owner failed to
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`do the impossible – file a petition by August of 2011, a date that was 13 months
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`before the inter partes review authority became law and was implemented by the
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`Office. The Board contends the “plain language” of § 315(b) mandates this result.
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`However, it clearly does not. The Board itself has held “the plain language of the
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`statute [§ 315(b)] does not address the subject of multiple lawsuits involving
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`the same patent.” IPR2013-00168, paper 9, at 4 (8/26/2013) (emphasis added).
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`The Board’s decision denying the Petition conflicts with the literal language
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`of § 315(b), and is illogical, inconsistent with the statutory structure, and contrary
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`to clearly expressed legislative intent. In this case, it will also create unjust results
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`by enabling Patent Owner to delay a final adjudication of the patentability of the
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`’151 patent claims. As Petitioner has explained, the ’151 patent is the subject of an
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`inter partes reexamination commenced in July of 2011. Unfortunately, final
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`resolution of that proceeding has been hamstrung by numerous, frivolous petitions
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`filed by Patent Owner, and by unexplained delays at the Office. The Office found
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`2
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`IPR2013-00354 – Motion for Rehearing
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`all of the ’151 patent claims unpatentable in April of 2012, but has taken no action
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`in the intervening 21 months, and it is unclear when the proceeding will end. The
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`Board’s decision frustrates the interests of justice by improperly denying Petitioner
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`access to the IPR system to resolve the patentability of the ’151 patent.
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`A. The Inter Partes Review Authority Did Not Unconditionally Bar
`Review of Patents Asserted in Litigation Before November of 2012
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`In enacting the IPR authority, Congress intentionally expanded the pool of
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`patents that could be challenged via administrative proceedings before the Office
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`to include hundreds of thousands of older patents, many of which, logically, would
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`have been asserted in litigation. See AIA at § 6(c)(2) (specifying procedures “shall
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`apply to any patent issued before, on, or after that effective date.”); H.R. RPT. 112-
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`98, at 47 (“Repeal of the 1999 limit. The limit on challenging patents issued
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`before 1999 in inter partes reexamination is eliminated; all patents can be
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`challenged in inter partes review.”); § 311(a) (“a [i.e., any] person who is not the
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`owner of a patent may file with the Office a petition to institute an inter partes
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`review of the patent”). Notably, Congress did not include a transitional provision
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`categorically excluding review of patents that had been asserted in litigation prior
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`to the date of enactment of the AIA. Instead, it authorized challenges by any party
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`to any patent in force on the date of enactment of the AIA. See Paper 22 (PTO
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`Mentor Graphics Br.) at 6 (explaining Congress expressed “an unequivocal desire
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`to limit federal district court litigation” by opening the IPR process to any patent).
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`3
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`IPR2013-00354 – Motion for Rehearing
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`In light of this clear Congressional intent, it would be unreasonable to read
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`any provision of IPR authority as unconditionally prohibiting review of a patent
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`based on events occurring before the date of enactment of the AIA. Yet, this is
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`precisely what the Board has done in its decision. It found § 315(b) to
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`unconditionally bar IPRs for an entire class of patents – those that had been first
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`asserted against a petitioner more than 1 year before the date of enactment of the
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`AIA. And it does so by reading § 315(b) as requiring compliance with a condition
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`that is impossible to satisfy – filing a petition before the IPR law was even
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`enacted. The Board’s decision thus improperly converts § 315(b) from a timing
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`condition only relevant to concurrent litigation involving the same patent into a
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`categorical exclusion from eligibility to use the new IPR authority. That is a
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`clearly illogical reading of § 315(b) and is inconsistent with Congressional intent.
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`The Board’s use of § 315(b) is also inconsistent with the extremely limited
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`purpose of this provision. The statutory design of the IPR authority envisions that
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`IPR proceedings will be conducted concurrently with district court litigation
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`involving the same patent. The reason for this is simple – an IPR, once completed,
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`will reduce the number of issues the district court must ultimately resolve. See 157
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`Cong. Rec. at S1376 (“review will completely substitute for … [a] portion of the
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`civil litigation”). Congress, however, recognized that to deliver these intended,
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`litigation-simplifying benefits, an IPR proceeding must be completed before the
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`4
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`IPR2013-00354 – Motion for Rehearing
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`concurrent litigation is completed. Congress therefore included a number of timing
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`provisions that together function to achieve this statutory purpose. First, §§ 314(b)
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`and 316(a)(11) constrain the amount of time the Board is given, respectively, to
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`determine whether to institute a petition (i.e., 3 months from completion of
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`briefing) and to complete the IPR proceeding (i.e., 1 year from institution, subject
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`to limited exceptions). Second, § 315(b) imposes a deadline for petitioners to act
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`after they have been served with a complaint for infringement of the patent;
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`namely, one year from the service date in the concurrent litigation. Through these
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`timing requirements, Congress sought to ensure that, in the context of a concurrent
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`litigation involving the patent, the IPR proceeding would be completed before the
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`litigation concludes so as to enable the IPR proceeding to fulfill its “fundamental
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`purpose” of replacing part of the litigation. 157 Cong. Rec. S1364.
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`Indeed, the legislative history shows the sole purpose of § 315(b) is to
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`coordinate an IPR with concurrent litigation of the patent. See Paper 22 Att. A
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`(PTO Mentor Graphics Br.) at 29-30 (“[T]he legislative history indicates that the
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`purpose of § 315(b) was to deal with ongoing litigation and to ensure that
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`defendants did not wait too long to seek USPTO review of any patents-in-suit.
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`H.R. RPT. 112-98, at 45 (2011) (explaining § 315(b) as ‘Time limits during
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`litigation. Parties who want to use inter partes review during litigation are required
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`to seek a proceeding within 12 months of being served with a complaint alleging
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`5
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`IPR2013-00354 – Motion for Rehearing
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`infringement of the patent’)” (emphasis added)); see 157 Cong. Rec. S1034, at
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`S1041 (Mar. 1, 2011) (Sen. Kyl) (stating “the present bill does coordinate inter
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`partes . . . review with litigation . . . setting a time limit for seeking . . . review if
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`the petitioner . . . is sued for infringement of the patent).; H.R. RPT. 112-98, at 45.
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`Also, § 315(b) plainly was not designed (as Patent Owner contends) to
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`function as a “bar” or “estoppel” provision to prevent “harassment” of patent
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`owners, much less those patent owners who voluntarily elect to file multiple
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`lawsuits against the same defendant under the same patent. Paper 15 at 11.
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`Indeed, Congress provided explicit estoppel provisions in § 315(e) for that
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`purpose. 157 Cong. Rec. at S1041 ( “The present bill … impose[s] limits on serial
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`challenges … [through its] enhanced administrative estoppel” provision). Those
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`provisions, unlike the Board’s application of § 315(b), reflect a carefully crafted
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`balance – estoppels apply only to the specific claims in the patent, and only if
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`those claims are the subject of a final written decision by the Board. § 315(e).
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`Nothing in the statutory design or legislative history of § 315(b) suggests Congress
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`intended § 315(b) to function as a far cruder estoppel, applying to unasserted
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`claims, applying regardless of the outcome of an earlier litigation, and requiring
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`performance of an impossible condition.
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`B. The AIA’s Text, Structure, and Purposes Confirm § 315(b) Does Not
`Apply to Multiple-Lawsuit Situations and the Petition Was Timely
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`6
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`IPR2013-00354 – Motion for Rehearing
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`The Board’s decision rests on its erroneous conclusion that the “plain
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`language” of § 315(b) compels a single outcome based on the facts of this Petition.
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`Specifically, the Board read the phrase “the date on which the Petitioner was
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`served with a complaint” as unambiguously meaning the first date any complaint
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`in any action for infringement of a patent is served on a petitioner. Thus, under the
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`Board’s reasoning, it is irrelevant that this Petition was filed within 1 year of the
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`service date of a complaint in a new and separate action for infringement of the
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`’151 patent, and that it was not possible for Petitioner to have filed an IPR petition
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`within one year of the service date of the complaint in an earlier-filed, separate
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`action under the same patent (i.e., because the IPR procedure did not exist then).
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`The Board’s conclusion clearly does not rest on the “plain language” of
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`§ 315(b). This is because § 315(b) by its express terms does not address multiple
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`lawsuits involving a single patent. The Board itself has recognized this fact. See
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`IPR2013-00168, paper 9, at 4 (“We agree that the plain language of [§ 315(b)]
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`does not address the subject of multiple lawsuits involving the same patent.”).
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`Thus, to reach its conclusion, the Board had to overlay its own interpretation on the
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`“plain language” of § 315(b). But that interpretation conflicts with the literal
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`language in § 315(b), its context within the IPR authority, and clear legislative
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`history. Robinson v. Shell Oil, 519 U.S. 337, 341 (1997) (must construe provision
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`in “broader context of the statute as a whole”).
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`7
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`IPR2013-00354 – Motion for Rehearing
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`The operative phrase of § 315(b) provides that an IPR “may not be instituted
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`if the petition requesting the proceeding is filed more than 1 year after the date on
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`which the petitioner … is served with a complaint alleging infringement of the
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`patent.” (emphasis added). The “plain language” of § 315(b) thus specifies a
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`petition is timely if it is filed within a one-year period measured from “the date” of
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`“a complaint” alleging infringement of the patent.
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`The only logical reading of this “plain language” requires the Board to
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`measure the filing date of a petition relative to the service date of the complaint
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`giving rise to the proceeding that may benefit from the institution and completion
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`of the requested IPR proceeding. See Pet. at 2. This is because, as explained
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`above, § 315(b) is simply a timing provision that applies to an IPR proceeding
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`requested to be conducted concurrently with a district court litigation involving
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`the same patent – it is not an estoppel provision. See Holloway v. U.S., 526 U.S. 1,
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`7 (1999) (“As [the Supreme Court] ha[s] repeatedly stated, ‘the meaning of
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`statutory language, plain or not, depends on context.’”). Thus, if a patent owner
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`elects to initiate a new litigation under a patent that was previously asserted against
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`a petitioner, and the petitioner files a petition within 1 year of the service date of
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`the complaint initiating that litigation, the petition is timely filed under § 315(b).
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`Indeed, the language of § 315(b) only becomes ambiguous when it is
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`improperly applied in multiple-suit situations as the Board has done here. This is
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`8
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`IPR2013-00354 – Motion for Rehearing
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`illustrated by the facts of this Petition, which yield two, contradictory outcomes
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`under a literal application of the language in § 315(b). First, Petitioner was served
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`with a complaint alleging infringement of the ’151 patent in December of 2012,
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`which was a date that is not “more than 1 year after the date on which the
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`petitioner” was “served with a complaint [i.e., the 2012 complaint] alleging
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`infringement of the [’151] patent.” Second, Petitioner was also served with a
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`complaint in a separate and distinct action for infringement of the ’151 patent on
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`August 11, 2010, a date that is more than one year prior to the date this Petition
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`was submitted.
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`A statutory provision that, when applied to a single set of facts, yields two
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`different and conflicting outcomes, is plainly ambiguous. Zhang v. U.S., 640 F.3d
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`1358, 1373 (Fed. Cir. 2011). Where that occurs, the legislative purpose of the
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`provision, particularly within the system of which it is part, must be considered to
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`resolve the ambiguity. If only one of the two reasonable interpretations of the
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`provision is consistent with the legislative purpose and design of the statute, that is
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`the interpretation that controls. Here, the context of § 315(b) becomes critical.
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`Indeed, even in its decision, the Board recognized that Congress’s “clearly
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`expressed legislative intent” can trump even “the plain and unambiguous meaning”
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`of statutory words. Decision at 3 (quoting Hoechst Aktiengesellschaft v. Quigg,
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`917 F.2d 522, 526 (Fed. Cir. 1990)).
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`9
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`IPR2013-00354 – Motion for Rehearing
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`As explained above, § 315(b) is simply a timing provision. Its sole purpose
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`is to ensure that, with respect to a concurrent litigation involving the same patent,
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`the IPR proceeding will be completed in time to deliver its Congressionally
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`intended benefits; namely, a reduction in the number of issues the court conducting
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`the concurrent litigation must resolve. The only reading of § 315(b) that furthers
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`this legislative purpose is the one that allows the Board to consider the Petition and
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`institute an IPR proceeding on the ’151 patent – that is the only one that will
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`reduce the number of issues the district court must resolve in the 2012 litigation.
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`Contrary to the Board’s indication, Petitioner did explain precisely how only
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`this reading of § 315(b) was consistent with the “clearly expressed legislative
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`intent.” Petitioner explained that instituting an IPR on the basis of this Petition
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`will reduce the number of issues the court must resolve in the 2012 litigation
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`because it will yield a final written decision well before the trial date in that action,
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`presently set for October of 2015. Pet. at 1-2. And it will do so based on the
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`express timing requirements in the statute. This is because Petitioner submitted the
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`present Petition on June 6, 2012, and an IPR instituted on the basis of it should be
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`completed, pursuant to the time limits specified in §§ 314(b) and 316(a)(11), by
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`December of 2014.1 A written decision in this IPR thus will reduce the number of
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`1 Even including delays associated with this request, the date the Board would
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`(Footnote continued)
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`10
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`IPR2013-00354 – Motion for Rehearing
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`issues the district court in the concurrent litigation must resolve, precisely as
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`Congress intended. The Board’s reading of § 315(b), by contrast, is contrary to
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`this clear Congressional intent – it will do nothing to simplify the concurrent
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`litigation that will go to trial in October of 2015.
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`The Board’s application of § 315(b) also runs counter to the clearly
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`expressed Congressional intent of expanding the scope of administrative
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`procedures available before the Office to contest patentability of claims. As noted
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`above, Congress intentionally expanded the pool of patents eligible to be
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`challenged in IPR proceedings beyond those that could be challenged in inter
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`partes reexaminations. When it did so, it did not unconditionally exclude any class
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`of patents from this newly expanded procedure such as patents that had been
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`asserted against a petitioner prior to enactment of the AIA. Because the Board’s
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`reading of § 315(b) would unconditionally bar petitions from certain parties based
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`on pre-AIA lawsuits, it is plainly inconsistent with this Congressional mandate.
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`The Board’s application of § 315(b) is also illogical. At its root, the Board
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`has found that this Petition is not timely because Petitioner failed to take an action
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`that was impossible to take in August of 2011, the date that is 1 year after
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`Petitioner was served with the first complaint. Petitioner could not have filed an
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`provide its written decision will be well in advance of the October 2015 trial date.
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`11
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`IPR2013-00354 – Motion for Rehearing
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`IPR petition on that date because the IPR authority was not yet law, and had not
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`been implemented by the Office. Reading § 315(b) to require compliance with an
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`impossibility is plainly unreasonable.
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`Because the present Petition was filed within 1 year of the date Petitioner
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`was served with a complaint for infringement of the ’151 patent filed after the date
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`of enactment of the IPR system, it is timely filed, and must be considered by the
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`Board. No other reading of § 315(b) makes sense, or will further the statutory
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`purpose and intent of the IPR authority.2
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`C. It Would Be Unjust to Refuse to Consider the Present Petition
`As explained in the Petition, “reading §315(b) to foreclose this petition
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`based on the August 2010 complaint would be particularly unjust in this case” as it
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`was not possible to file a petition until September 2012 – more than two years after
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`service of the complaint. Pet. at 3. Moreover, refusing to consider this Petition
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`would be unjust because the Office has failed to conclude with “special dispatch”
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`2
`If the Board believes it must resolve some ambiguity of § 315(b) in multiple-
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`lawsuit situations such as this one (i.e., multiple actions for infringement of a
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`patent, where the earlier action was filed more than a year before it was possible to
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`file an IPR petition), it can do so by simply reading § 315(b) as applying only to
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`actions commenced after the date the IPR authority was enacted.
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`12
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`IPR2013-00354 – Motion for Rehearing
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`inter partes reexamination proceedings involving the ’151 patent that Apple
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`initiated more than 28 months ago, in July of 2011.
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`Notably, in the ’151 reexamination proceeding, the Office has found all
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`claims of the ’151 patent unpatentable over prior art including the references
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`identified in the present Petition.3 However, due to delays induced by the Patent
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`Owner through its abusive and frivolous petitions practice, and due to the systemic
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`problems with the reexamination process that Congress expressly sought to fix via
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`the new IPR system, the Office has not concluded this proceeding.
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`The reexamination proceeding involving the ’151 patent is a textbook
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`example of the problems Congress was striving to fix via the inter partes review
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`authority. Apple filed its request for inter partes reexamination of the ’151 patent
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`in July of 2011. On October 21, 2011, the Office ordered the reexamination, and
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`on April 20, 2012, issued the first office action rejecting all the claims of the ’151
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`patent. However, the Office has taken no further action since that date. Thus,
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`despite having had the Patent Owner’s and the requester’s comments in hand since
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`3 Patent Owner also requested inter partes reexamination of four other patents in
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`the same patent family: U.S. Patent Nos. 6,502,135, 7,418,504, 7,921,211, and
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`8,051,181. In these various reexaminations, five different examiners have found
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`all of the claims of the five related patents unpatentable over prior art.
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`13
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`IPR2013-00354 – Motion for Rehearing
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`August 17, 2012 – over 17 months – the Office has done nothing. In other words,
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`despite finding all the claims of the ’151 patent unpatentable almost 21 months
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`ago, and despite its statutory mandate to conclude the proceeding with “special
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`dispatch,” the Office has not issued an ACP or otherwise progressed the
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`proceeding toward completion.
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`Compounding these problems, Patent Owner has engaged an aggressive
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`pattern of conduct designed to delay the conclusion of the five proceedings. In the
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`’151 proceeding alone, it has petitioned and been granted an extension of time to
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`respond to the Office action, filed a petition challenging the status of references as
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`prior art, petitioned to extend its page limits, petitioned to suspend the
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`reexamination proceedings in light of the concurrent litigation, and has even filed
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`two petitions for reconsideration/director review. In the reexaminations of the four
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`related patents, Patent Owner has taken similarly frivolous and dilatory actions.
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`Patent Owner’s conduct is a transparent attempt to delay the Office’s
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`conclusion of the reexamination proceedings. Its reasons for doing so are simple.
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`A judgment in the 2010 litigation in Texas found certain of the ’151 patent claims
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`not invalid and infringed.4 That judgment is on appeal now. If the appeal
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`4 Petitioner was unable to obtain a review of the patentability of the ’151 claims
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`at the first trial, as the parties were given only 12 hours of trial time to address
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`(Footnote continued)
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`14
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`IPR2013-00354 – Motion for Rehearing
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`concludes, and the judgment is maintained, Patent Owner will argue that the Office
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`must terminate the reexamination proceedings as to the claims that were the
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`subject of the judgment. And if the Office has not completed its role in the
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`proceedings, certain claims of the ’151 patent which the Office has twice found
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`unpatentable may not be subject to a final determination by the Office.
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`The Office has a statutory mandate to apply the IPR authority in a manner
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`that furthers “the integrity of the patent system, the efficient administration of the
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`Office, and the ability of the Office to timely complete proceedings instituted
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`under this chapter.” See 35 U.S.C. § 316(b). Dismissing this Petition based on an
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`unreasonable reading of § 315(b) while allowing the reexaminations to languish is
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`plainly contrary to that mandate.
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`III. Conclusion
`The Board’s interpretation of § 315(b) barring an IPR based on a complaint
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`filed prior to enactment of the AIA is unsupportable and contrary to the interests of
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`justice. The Board should reverse its decision, consider the present petition and
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`institute a trial on the claims contested in the Petition.
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`issues of invalidity, non-infringement, inequitable conduct, and damages for the
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`’151 patent and three other patents.
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`15
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`IPR2013-00354 – Motion for Rehearing
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`
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`Dated: January 6, 2014
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`Respectfully Submitted,
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`/Jeffrey P. Kushan/
`Jeffrey P. Kushan (Reg No. 43,401)
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`jkushan@sidley.com
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`IPR2013-00354 – Motion for Rehearing
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 6th day of January 2014, a copy of this Motion
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`for Rehearing, has been served in its entirety by e-mail and Federal Express on the
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`following counsel of record for patent owner:
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`Joseph E. Palys
`Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Phone: (571) 203-2700
`Fax: (202) 408-4400
`E-mail: joseph.palys@finnegan.com
`
`Naveen Modi
`Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.
`901 New York Avenue, NW
`Washington, DC 20001-4413
`Telephone: 202-408-4065
`Facsimile: 202-408-4400
`E-mail: naveen.modi@finnegan.com
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`
`
`Dated: January 6, 2014
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`Respectfully submitted,
`
`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Reg. No. 43,401
`Attorney for Petitioner
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