Trials@uspto.gov
`Tel: 571-272-7822
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`Paper 24
`Entered: February 12, 2014
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX, INC. and SCIENCE APPLICATION INTERNATIONAL
`CORPORATION
`Patent Owner
`
`
`Case IPR2013-00354
`Patent 7,490,151
`
`
`
`Before SALLY C. MEDLEY, KARL D. EASTHOM, and STEPHEN C.
`SIU, Administrative Patent Judges.
`
`EASTHOM, Administrative Patent Judge.
`
`DECISION
`Request for Rehearing
`37 C.F.R. § 42.71(d)
`
`
`
`
`
`
`
`
`Tel: 571-272-7822
`
`
`
`
`
`Paper 24
`Entered: February 12, 2014
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX, INC. and SCIENCE APPLICATION INTERNATIONAL
`CORPORATION
`Patent Owner
`
`
`Case IPR2013-00354
`Patent 7,490,151
`
`
`
`Before SALLY C. MEDLEY, KARL D. EASTHOM, and STEPHEN C.
`SIU, Administrative Patent Judges.
`
`EASTHOM, Administrative Patent Judge.
`
`DECISION
`Request for Rehearing
`37 C.F.R. § 42.71(d)
`
`
`
`
`
`
`
`
`
`Case IPR2013-00354
`Patent 7,490,151
`
`
`
`
`
`Petitioner, Apple Inc., requests rehearing of the Decision on
`Institution (Paper 20), which denies institution of inter partes review of
`claims 1–16 of U.S. Patent No. 7,490,151 under 35 U.S.C. §§ 311-319.
`Rehear. Req. 1, 15 (Paper 21). Petitioner requests the Board to reverse its
`decision. Id. The request is denied.
`BACKGROUND
`In its Decision on Institution, the Board determined that the Petition,
`challenging claims 1–16, was not filed timely within the statutory period of
`35 U.S.C. § 315(b). Dec. on Inst. 5. Therefore, the Board declined to
`institute an inter partes review.
`Section 315(b) follows:
`(b) PATENT OWNER’S ACTION.—An inter partes review
`may not be instituted if the petition requesting the proceeding is
`filed more than 1 year after the date on which the petitioner,
`real party in interest, or privy of the petitioner is served with a
`complaint alleging infringement of the patent. The time
`limitation set forth in the preceding sentence shall not apply to a
`request for joinder under subsection (c).
`In denying review, the Board found that Petitioner was served with a
`complaint alleging infringement of the ’151 Patent during two relevant
`occasions––the “2010 litigation” and the “2012 litigation.”1 Dec. on Inst. 3.
`The Board also found that the former complaint was served more than one
`year before Petitioner filed the present Petition, the latter, less than one year.
`Id. The Board further found that a jury upheld the validity of the asserted
`claims in the 2010 litigation, and the district court entered judgment finding
`
`1 VirnetX Inc. v. Cisco Systems, Inc. et al., Civ. Act. No. 6:10-cv-00417-
`LED (E.D. Tex., filed Aug. 11, 2010) (the “2010 litigation”), and VirnetX
`Inc. v. Apple Inc., Civ. Act. No. 6:12-cv-00855-LED (E.D. Tex., filed Nov.
`6, 2012) (the “2012 litigation”).
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`2
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`Case IPR2013-00354
`Patent 7,490,151
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`those claims valid. Id. The verdict form involving Petitioner, defendant
`Apple Inc. in the 2010 litigation, shows that the jury upheld the validity of
`claims 1 and 13 of the ’151 patent, claims challenged in the Petition. See
`Ex. 2002.
`Applying the plain meaning to “a complaint” in 35 U.S.C. § 315 (b),
`the Board determined that the Petition was time barred under the statute:
`“the Petition ‘was filed more than 1 year after the date on which the
`[P]etitioner . . . [wa]s served with a complaint alleging infringement of the
`patent.’ See 35 U.S.C. § 315 (b). Therefore, according to the statute, ‘[a]n
`inter partes review may not be instituted.’” Dec. on Inst. 4 (quoting § 315
`(b)).
`
`ANALYSIS
`Petitioner argues in its rehearing request that the Board
`
`“misapprehended Petitioner’s arguments and incorrectly applied § 315 (b).”
`Rehear. Req. 1. Petitioner maintains that the Board’s statutory interpretation
`“is illogical . . . and contrary to clearly expressed legislative intent.” Id. at 2.
`
`The Board summarized Petitioner’s arguments as follows:
`Petitioner argues that its Petition is timely because it was
`filed less than one year after the date on which it was served
`with “any complaint”—i.e., the complaint in the 2012
`litigation. Pet. 2. Petitioner argues that under the plain
`language of section 315(b), filing a petition within one year of
`“any complaint,” such as the December 2012 complaint,
`nullifies the effect of the earlier, August 2010 complaint, on the
`timeliness of this Petition.
`Dec. on Inst. 3 (quoting the Petition).
`Petitioner now maintains, contrary to the Board’s characterization set
`forth above, that Petitioner did not argue in its Petition that the 2012
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`3
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`Case IPR2013-00354
`Patent 7,490,151
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`complaint effectively nullifies the 2010 complaint. Rehear. Req. 1. This
`argument is misplaced because Petitioner argued that “[t]he August 2010
`complaint does not foreclose the present petition, as Patent Owner served a
`new complaint on Petitioner asserting infringement of the ’151 patent in
`December of 2012.” Pet. 1–2 (Paper 5). Focusing on the “new” 2012
`complaint, Petitioner attempted to equate “a complaint” in the statute with
`“any complaint,” arguing as follows: “a petition filed within 1 year of the
`date any complaint alleging infringement of the patent is served on a
`petitioner is timely under the plain statutory language of § 315(b).” Pet. 2.
`Petitioner also argued that “Congress designed the IPR authority to be an
`option to contest validity of a patent concurrently with district court
`proceedings [i.e., the 2012 litigation] involving the same patent.” Id. at 2.
`
`The Board addressed Petitioner’s arguments, and determined, as noted
`above, that under the plain meaning of “a complaint” under § 315(b), the
`2010 complaint qualifies as “a complaint” that time bars the Petition. The
`Board also determined that “Petitioner does not explain persuasively how
`allowing a review outside the statutory one year limit based on the filing of
`another complaint corresponds to a ‘clearly expressed legislative intent’ that
`prevails over the plain meaning.” Dec. on Inst. 4.
`In its Rehearing Request, Petitioner presents selected segments from
`the legislative history to buttress its argument that the statute only applies to
`concurrent litigation, in this case, the 2012 litigation. See Rehear. Req. 3–6.
`Petitioner also asserts, for the first time, that the statute “is plainly
`ambiguous.” Id. at 9. This appears contrary to the arguments made in the
`Petition, wherein Petitioner urged the Board to follow the plain meaning,
`thereby indicating it is not ambiguous: “Rather than attempting to decipher
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`Case IPR2013-00354
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`which scenarios would be improper, the Board should follow the plain
`meaning of § 315 (b), and find a petition timely if it is filed within 1 year of
`the date any complaint alleging infringement of the patent is served on a
`Petitioner.” Pet. 3.
`These new rehearing arguments are improper. See 37 C.F.R.
`§ 42.71(d). The Board could not have misapprehended or overlooked an
`argument presented for the first time in a rehearing request. Moreover,
`Petitioner has not shown that the Board abused its discretion by erring in
`determining that the plain meaning of the statute bars the Petition. See 37
`C.F.R. § 42.71(c) (“a panel will review the [rehearing] decision for an abuse
`of discretion”).2
`Expanding its Petition argument, Petitioner now asserts that the
`legislative history provides a simple reason for restricting the time bar to
`concurrent litigation, i.e., “litigation-simplifying benefits,” as follows: “The
`statutory design of the IPR authority envisions that IPR proceedings will be
`conducted concurrently with district court litigation involving the same
`patent. The reason is simple – an IPR, once completed, will reduce the
`number of issues the district court must ultimately resolve.” Rehear. Req. 4.
`Contrary to Petitioner’s new argument, even if Congress intended to
`reduce issues in district courts, this does not overcome the plain meaning
`involved in Congress’s carefully balanced statutory scheme that applies the
`time bar to “a complaint.” Petitioner effectively urges the Board to read the
`
`
`2 An abuse of discretion may be determined if a decision is based on an
`erroneous interpretation of law, if a factual finding is not supported by
`substantial evidence, or if the decision represents an unreasonable judgment
`in weighing relevant factors. Arnold Partnership v. Dudas, 362 F.3d 1338,
`1340 (Fed. Cir. 2004).
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`5
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`Case IPR2013-00354
`Patent 7,490,151
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`following exception into the statute: the time limitation shall not apply to
`patent infringement litigation unless it is concurrent with the filing of the
`petition. Petitioner’s arguments do not account for the specific exception
`that Congress expressly created: “The time limitation set forth in the
`preceding sentence shall not apply to a request for joinder under subsection
`(c).” 35 U.S.C. § 315 (b).
`This express joinder exception signifies that Congress did not intend
`to create another implied exception to the time bar for concurrent district
`court litigation. Despite this clear statutory scheme, Petitioner cites to
`different portions of the legislative history to support its view. For example,
`Petitioner quotes Senator Kyl: “[T]he present bill does coordinate inter
`partes . . . review with litigation . . . setting a time limit for seeking . . .
`review if the petitioner . . . is sued for infringement of the patent.’” Rehear.
`Req. 6 (quoting H.R. RPT. 112-98, at 45, emphasis by Petitioner).
`Petitioner also points to Congress’s “‘fundamental purpose’ of replacing part
`of the litigation.” Rehear. Req. 5 (citing 157 Cong. Rec. S1364 (Mar 8,
`2011)).
`Although Congress intended to create a cost-efficient alternative to
`district court litigation, it does not follow that the time bar only applies to
`concurrent litigation. See id. (describing a “fundamental purpose . . . to
`provide a cost-efficient alternative to litigation”). As quoted above, the
`legislative history generally describes time limits for petitions after suits “for
`infringement of the patent,” without restriction to concurrent litigation. As
`another example, a representative discussed a “deadline for a party to file a
`petition for an IPR . . . after it is sued for infringement of the same patent.”
`Transcript of Markup of H.R. 1249, 79, House of Rep. Comm. on the
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`Case IPR2013-00354
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`Judiciary (April 14, 2011) (emphasis added). Again, the deadline (i.e. time
`bar) applies after a suit for infringement of the same patent (i.e., like the
`2010 litigation at issue here). Similarly, the statute applies the time bar after
`“a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b)
`(emphasis added).
`Congress did not intend to allow a defendant to lose a patent
`infringement suit in district court, and then file an IPR petition challenging
`the same patent after the one year time bar expires. In addition to running
`counter to the statute’s plain meaning, that would thwart several of
`Congress’s intents. Such a petition would not be in the alternative to the
`terminated litigation. In addition, it would thwart Congress’s intent to
`ensure “quiet title”: Congress “recognizes the importance of quiet title to
`patent owners to ensure continued investment resources.” Report on HR
`1249, 48 (June 1, 2011). Changes to the statutory structure “are not to be
`used as tools for harassment or a means to prevent market entry through
`repeated litigation and administrative attacks . . . . Doing so would frustrate
`the purpose of the section as providing quick and alternatives to litigation.”
`Id. A “quiet title” allows a patent holder who has won a district court
`infringement suit to obtain investment funding, see id., and, if necessary,
`enforce its patent by suing a serial infringer (i.e., after the first suit) without
`fear of a later administrative attack that challenges the same patent.
`Contrary to Petitioner’s related arguments, Congress did not limit the
`reach of the time bar in § 315(b) to asserted claims in a patent. Rehear. Req.
`6 (arguing that § 315(b) does not apply to “unasserted claims”).3 Rather, as
`
`
`3 Petitioner’s point here is not clear––the claims asserted in the 2010
`litigation are challenged in the Petition, as noted above. See Ex. 2002.
`7
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`Case IPR2013-00354
`Patent 7,490,151
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`noted, Congress imposed a time limit that runs from “a complaint” in a suit
`for infringement of “the patent.” As discussed above, if Congress intended
`to exempt certain infringement suits involving the same patent from the one
`year time bar, it would have added another exception to the existing joinder
`exception.
`Petitioner also argues that it would have been “impossible to satisfy”
`
`the Board’s reading of § 315(b), because that reading forces Petitioner to
`“fil[e] a petition before the IPR law was even enacted.” See Rehear. Req. 4;
`accord id. at 11–12. According to Petitioner, the Board’s “application of §
`315(b) is . . . illogical,” because Congress did not intend to “unconditionally
`bar” a whole class of patents involved in “pre-AIA lawsuits”––i.e., lawsuits
`involving “patents that had been asserted against a petitioner prior to the
`enactment of the AIA.” See Rehear. Req. 11.
`Petitioner’s reading, which apparently does not apply to terminated
`law suits, only bars concurrent litigants whose district court cases had been
`pending for over a year prior to the AIA effective date. In both situations, it
`would have been impossible to comply with the time bar. Contrary to
`Petitioner’s approach, the Board applies the time bar evenly to “a
`complaint,” according to the statute, in concurrent and terminated litigation,
`whether filed pre- or post-AIA.
`
`Petitioner alternatively suggests in a footnote that the Board may
`resolve any ambiguities involving multiple lawsuits by “simply reading §
`315(b) as applying only to actions commenced after the date the IPR
`authority was enacted.” Rehear. Req. 12, n. 2. Petitioner does not point the
`Board to support for this interpretation, which amounts to creating a new
`effective AIA date for patents involved in the AIA. Chapter 31, which
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`Case IPR2013-00354
`Patent 7,490,151
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`includes 35 U.S.C. 315, “applies to any patent issued before, on, or after
`Sept. 16, 2012.” PATENT TRADEMARK AND COPYRIGHT LAWS, 145, n. 33
`(Samuels, June 13, ed.)(Inter Partes Review). Creating a new effective date
`also runs contrary to the plain meaning of § 315(b), which applies the time
`bar in an even fashion to “a complaint” served in past and concurrent
`litigation, served pre-AIA or post-AIA.4
`
`Petitioner raises other arguments regarding the speedy resolution of
`concurrent reexamination proceedings in the office. See Rehear. Req. 12–
`15. The Board remains sympathetic to Petitioner’s concerns about obtaining
`just and speedy results before the PTO. Nevertheless, these concerns about
`concurrent reexamination proceedings do not show that the Board
`misapprehended the plain meaning of 35 U.S.C. § 315(b).
`
`Deciding, at this late rehearing stage, that the time bar does not apply
`to various litigant classes pursuant to Petitioner’s alternative interpretations,
`or creating a new effective date for the AIA, would circumvent the careful
`balance underlying the plain meaning of the statute and would be unfair to
`Patent Owner, other patent holders, and various other stakeholders.
`
`DECISION on REHEARING
`Petitioner’s sought-after relief is DENIED.
`
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`4 Even if a basis exists to alter the effective date of the AIA for some patents,
`this alternative reading would force the Board to allow petitions to be
`instituted even when certain pre-AIA filed infringement lawsuits had
`transpired for several years after the AIA effective date, lawsuits ranging
`from those filed years prior to the enactment, up to those filed one day prior
`to the enactment.
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`Case IPR2013-00354
`Patent 7,490,151
`
`For Petitioner Apple Inc.:
`Jeffrey P. Kushan
`Joseph A. Micallef
`SIDLEY AUSTIN LLP
`jkushan@sidley.com
`jmicallef@sidley.com
`
`For Patent Owner VirnetX, Inc.:
`Joseph E. Palys
`Naveen Modi
`FINNEGAN, HENDERSON, FARABOW
`GARRETT & DUNNER, L.L.P.
`joseph.palys@finnegan.com
`naveen.modi@finnegan.com
`
`10
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