`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`NEW BAY CAPITAL, LLC,
`Petitioner,
`v.
`
`VIRNETX, INC.
`Patent Owner.
`____________
`
`Case IPR2013-00377
`Patent 7,418,504
`____________
`
`NEW BAY CAPITAL’S OPPOSITION TO MOTION FOR JOINDER
`FILED BY THIRD PARTY APPLE INC.
`
`
`
`
`
`
`
`
`I.
`
`FACTUAL BACKGROUND
`
`A. New Bay Capital Seeks a Just, Speedy and Inexpensive Review of
`the ‘504 Patent
`
`New Bay Capital, LLC (“New Bay”) has petitioned for inter partes review of
`
`U.S. Patent No. 7,418,504 (the ‘504 Patent). The petition has been strictly tailored
`
`to comply with the policy behind inter partes reviews – to provide a just, speedy
`
`and inexpensive review of a patent. 37 C.F.R. §42.1(b). The petition has been
`
`limited to a challenge of claims 1, 2, 5, 16, 21 and 27. The prior art to be
`
`considered has been limited to two references Kiuchi and Broadhurst. A single
`
`ground for cancelation has been asserted against each challenged claim.
`
`B. Apple Seeks to Add its Two Inter Partes Reviews to this
`Proceeding
`
`
`Apple has filed two inter partes reviews against the ‘504 Patent. Due to the
`
`questionable timeliness of these inter partes reviews, Apple seeks to join them with
`
`New Bay’s IPR. Even though Apple offers to limit the grounds of its IPR’s to be
`
`joined, the size of the joinder is huge. In IPR2013-00393, Apple still insists on
`
`presenting all three grounds as follows:
`
`(i) Claims 1-3, 5-8 and 14-60 are anticipated under § 102(b) by Aventail
`
`Connect v 3.01/2.5 Administrator’s Guide (“Aventail”);
`
`(ii) Claims 3, 31-32, and 55-56 are obvious under § 103 based on
`
`Aventail in view of Beser;
`
`
`
`1
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`(iii) Claims 31, 32, 55, and 56 are obvious under§ 103 based Aventail in
`
`view of a Person of Ordinary Skill in the Art.
`
`In IPR2013-00394, Apple intends to present the following two remaining
`
`grounds:
`
`(i) Claims 1-3, 5-8 and 14-60 are anticipated under § 102(e) by Beser; and
`
`(ii) Claims 1-3, 5-8 and 14-60 are obvious under § 103 based on Beser in view
`
`of RFC 2401.
`
`In support of its inter partes reviews, Apple submits a total of 74 exhibits
`
`including the declarations of Michael A. Fratto, Chris A. Hopen and James
`
`Chester.
`
`In addition to Apple’s two IPR’s, Apple is also availing itself of the
`
`resources of the PTO with its extensive challenge to the ‘504 patent in an ongoing
`
`inter partes reexamination. Indeed, the rejection of all claims of the ‘504 patent is
`
`before the Board on patent owner’s Notice of Appeal filed July 25, 2013 in
`
`Apple’s reexamination no. 95/001,788.
`
`II. Grounds for Joinder
`
`The Board has considered some or all of the following when deciding on
`
`joinder of IPR proceedings1:
`
`1. Whether the proceedings involve the same parties.
`
`
`1 See, for example, Microsoft Corp. v. Proxyconn, Inc., IPR2013-00109, Paper 15.
`
`2
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`2. Whether the proceedings involve the same patent.
`
`3. Whether the proceedings involve the same prior art.
`
`4. Whether there is a discernible prejudice to either party.
`
`5. Whether joinder will unduly delay the resolution of either proceeding.
`
`6. Whether joinder will help “secure the just, speedy, and inexpensive
`
`resolution” of the proceedings.
`
`The New Bay IPR and the Apple IPR’s should not be joined because the
`
`proceedings involve different parties with no relation to one another, the
`
`proceedings involve different claim challenges based on different prior art, joinder
`
`would be extremely prejudicial to New Bay in terms of delay and cost and dilution
`
`of its position due to the sheer size and complexity of the Apple IPR’s, joinder will
`
`certainly delay resolution of New Bay’s IPR, and joinder will not help to “secure
`
`the just, speedy, and inexpensive resolution” of the proceedings.
`
`III. Joinder Would Add Significant Complexity, Delay and Cost to New
`Bay’s IPR
`
`A. Joinder Would Add Numerous Substantive Issues
`
`While Apple’s two IPR’s include challenges to claims 1, 2, 5, 16, 21 and 27
`
`challenged by New Bay, they do so on different grounds using different prior art,
`
`and therefore joinder would not reduce the number of grounds to be addressed by
`
`the Board. No efficiency would be gained by joining the proceedings.
`
`3
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`Furthermore, the Apple IPR’s add challenges to patent claims which are not
`
`at issue in the New Bay IPR. The additional patent claims which will need to be
`
`addressed if joined include claims 3, 6, 7, 8, 14, 15, 17, 18, 19, 20, 22, 23, 24, 25,
`
`26 and all of claims 28-60. These claims present many new concepts and
`
`limitations that are not the subject of the New Bay IPR. Indeed, two new
`
`independent claims 36 and 60 will need to be addressed if joined. Moreover, the
`
`dependent claims add many further new limitations including at least the
`
`following:
`
`“non-standard top-level domain name” claims 3, 37;
`
`“Internet” claim 6;
`
`“edge router” claim 7;
`
`“the domain name service system is connectable to a virtual private
`
`network through the communication network” claim 8;
`
`“the domain name service system is configured to respond to the query
`
`for the network address” claim 14;
`
`“to provide… the network address corresponding to a domain name”
`
`claim 15;
`
`“at least one of the plurality of domain names is reserved for secure
`
`communication links” claim 18;
`
`“a server” claims 19, 43;
`
`4
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`“store the corresponding network addresses for use in establishing secure
`
`communication links” claims 22, 46;
`
`“at least one of the plurality of domain names comprises an indication”
`
`claim 24;
`
`“the secure communication link uses encryption” claims 28, 52;
`
`“supporting a plurality of services” claims 29, 53.
`
`The references asserted in the Apple IPR’s all raise new substantive issues.
`
`There is absolutely no overlap and no efficiency to be gained by joining these
`
`issues with those of the New Bay IPR. The challenges asserted by Apple make no
`
`use of Kiuchi or Broadhurst. The prior art references asserted by Apple are all new
`
`and raise new issues. The references include the following:
`
`U.S.Patent No. 6,496,867 (Beser);
`
`RFC2401, November 1998;
`
`Aventail Connect v 3.01/2.5 Administrator’s Guide;
`
`These new references are cited by Apple in five new grounds attacking the
`
`claims. There is no overlap between these five grounds and the single ground
`
`raised by New Bay against its selected claims. The chart below illustrates the
`
`expansion proposed by Apple’s joinder motion. The issues raised by the present
`
`New Bay IPR are shown in green. The additional grounds and claims that would be
`
`imposed by the Apple IPR’s are shown in red.
`
`5
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`1
`
`
`2
`
`
`3 5 6 7 8 14 15 16 17 18 19 20 21
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`22
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`‘504
`Kiuchi
`
`Kiuchi,
`Broadhurst
`Aventail
`
`Aventail,
`Beser
`Aventail
`POSITA
`Beser
`
`Beser
`RFC2401
`
`
`‘504
`cont.→
`Kiuchi
`
`Kiuchi,
`Broadhurst
`Aventail
`
`Aventail,
`Beser
`Aventail
`POSITA
`Beser
`
`Beser
`RFC2401
`
`
`
`
`
`
`
`
`23 to 26
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`27 28 29 30 31 32 33 to 54
`
`55 56 57 to 60
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`The Aventail reference adds further complications by adding the issue of
`
`whether it constitutes a printed publication. The propriety of treating Aventail as a
`
`6
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`prior art reference has been challenged by VirnetX in reexamination proceedings
`
`concerning parent patent 6,502,135, in particular, inter partes reexamination No.
`
`95/001,682. VirnetX wrote, “With respect to Aventail, the Request submitted
`
`uncorroborated declarations from three individuals whom Patent owner has no
`
`opportunity to depose in this matter, and which were not incorporated or relied on
`
`by the Office Action.” (Patent Owner’s Response to Office Action of February 15,
`
`2012, p. 14) “Patent Owner does not agree with the statements and assertions made
`
`within those declarations, and reserves the opportunity to challenge their
`
`correctness should the Examiner rely on them in subsequent proceedings.” (Id., p.
`
`14, n.6)
`
`B. Joinder Would Expand and Complicate Discovery
`
`In keeping with the Board’s interest in delivering an inexpensive resolution
`
`to an IPR, discovery is strictly limited. 37 C.F.R. §42.51(b). Nevertheless, cross
`
`examination of affidavit testimony is routine discovery. The two Apple IPR’s
`
`would add the testimony of three new witnesses - Michael A. Fratto, Chris A.
`
`Hopen and James Chester. Additional testimony from VirnetX witness(es) would
`
`also be expected. These witnesses will be asked to address all of the new issues
`
`mentioned above that would be imposed by the Apple IPR’s. To the extent, they
`
`will be addressing aspects of claims 1, 2, 5, 16, 21 and 27 being challenged in the
`
`New Bay IPR, New Bay would need to be present at the depositions to allow for
`
`7
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`further cross examination, as needed. The added difficulties of scheduling,
`
`preparing for and attending these depositions would significantly bog down and
`
`significantly increase the cost of prosecuting the instant New Bay IPR.
`
`Moreover, the addition of Apple, an unrelated third party, will complicate
`
`depositions and discovery. Unlike more suitable joinder situations in which an
`
`identical petition is filed or a co-defendant in a litigation seeks to participate, here
`
`Apple does not share any such affiliation with New Bay. To the extent, Apple
`
`takes positions to coordinate with its positions taken in litigation, New Bay faces
`
`no such similar constraints. These differences among the parties may lead to
`
`unprecedented three-way discovery and claim construction disputes.
`
`C. Joinder Would Severely Impact Scheduling
`
`Given the limited number of claims challenged and the mere use of two prior
`
`art references, New Bay had reasonable hopes of a shortened schedule or a regular
`
`schedule coordinated with co-pending IPR2013-00378 directed to continuation
`
`Patent No.7,921,211. Similarities between the challenge to the ‘504 patent and the
`
`‘211 patent would allow for judicial efficiencies. However, in view of the added
`
`claims, the new claim elements, the new prior art references, the additional party
`
`and the additional witnesses, joinder of the Apple IPR’s would impose heavy
`
`burdens on the Board and New Bay preventing a speedy and inexpensive
`
`resolution of New Bay’s pair of inter partes reviews.
`
`8
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`Rather than seeking consolidation and increased efficiency, Apple foresees
`
`limiting the participation of each petitioner to the grounds presented in its
`
`respective petitions. Given that both petitioners challenge claims 1, 2, 5, 16, 21 and
`
`27, statements by witnesses and parties regarding these claims have the potential
`
`for influencing the other party’s grounds for challenging the claims. Thus, with
`
`multiple filings relative to claims 1, 2, 5, 16, 21 and 27 by the proposed three
`
`parties, the discovery burdens and burdens of reviewing numerous filings greatly
`
`increases by joining Apple’s two disparate inter partes reviews to the New Bay
`
`IPR. A joined IPR will not be more efficient but rather more cumbersome and
`
`costly. New Bay would be greatly prejudiced by the proposed joinder.
`
`IV. Conclusion
`
`For all the foregoing reasons, Apple’s motion for joinder should be denied
`
`and the Board should proceed to an orderly and timely consideration of New Bay’s
`
`IPR simply challenging claims 1, 2, 5, 16, 21 and 27 in view of Kiuchi and
`
`Broadhurst.
`
`Dated: August 28, 2013
`
` Respectfully submitted,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` /Robert M. Asher, #30,445/
`Robert M. Asher, Reg. No. 30,445
` Jeffrey T. Klayman, Reg. No. 39,250
` Sunstein Kann Murphy & Timbers LLP
`th Floor
` 125 Summer Street, 11
` Boston, MA 02110-1618
`(617) 443-9292
`
`9
`
`
`
`Case IPR2013-00377
`Patent 7,418,504
`
`
`03959/05003 1950138.1
`
`Attorneys for Petitioner, New Bay Capital,
`LLC.
`
`10
`
`
`
`CERTIFICATE OF SERVICE
`
` I hereby certify that on this 28th day of August 2013, the foregoing NEW BAY
`
`CAPITAL’S OPPOSITION TO MOTION FOR JOINDER FILED BY THIRD
`
`PARTY APPLE INC. was served as agreed via email to counsel of record for patent
`
`owner:
`
`Joseph Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow, Garrett & Dunner LLP
`901 New York Avenue, NW
`Washington, DC 20001-4413
`Joseph.Palys@finnegan.com
`Naveen.modi@finnegan.com
`
`
`and to counsel for Apple:
`
`Jeffrey P. Kushan
`Joseph Micallef
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`jkushan@sidley.com
`jmicallef@sidley.com
`
`
`
`
`
`
`
`Dated: August 28, 2013 /Robert M. Asher, #30,445/
`Robert M. Asher
`
`
`
`
`
`
`
`
`Reg. No. 30,445
`
`
`
`
`
`
`
`
`