Paper No.
`Filed: August 28, 2013
`
`
`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
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`
`
`
`
`
`
`
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`
`
`
`
`
`
`Case IPR2013-00397
`Patent 7,921,211
`
`
`
`
`
`
`
`
`
`
`
`
`VIRNETX’S OPPOSITION TO APPLE’S
`MOTION FOR JOINDER
`
`
`
`
`
`
`
`
`Filed: August 28, 2013
`
`
`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
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`
`
`
`
`
`
`
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`
`
`
`
`
`
`Case IPR2013-00397
`Patent 7,921,211
`
`
`
`
`
`
`
`
`
`
`
`
`VIRNETX’S OPPOSITION TO APPLE’S
`MOTION FOR JOINDER
`
`
`
`
`
`
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1
`
`PRECISE RELIEF REQUESTED .................................................................. 2
`
`I.
`
`II.
`
`III. STATEMENT OF FACTS .............................................................................. 2
`
`IV. ARGUMENT ................................................................................................... 4
`
`A.
`
`Joinder Will Significantly Increase the Complexity and
`Duration of the New Bay IPR Proceeding and Prejudice
`VirnetX .................................................................................................. 4
`
`B. Apple Will Not Be Prejudiced if the Board Denies Joinder ................. 7
`
`C. Granting Apple’s Motion for Joinder Is Statutorily Barred .................. 7
`
`V.
`
`CONCLUSION ..............................................................................................10
`
`
`
`i
`
`
`
`
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`
`
`
`
`PATENT TRIAL AND APPEAL BOARD DECISIONS
`ABB Inc. v. Roy-G-Biv Corp.,
`IPR2012-00282, Paper 6 (May 30, 2013) ............................................................. 6
`
`Ariosa Diagnostics v. ISIS Innovation, Ltd.,
`IPR2012-00022, Paper 35 (May 1, 2013) ............................................................. 6
`
`Dell, Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00071, Paper 17 (July 29, 2013) ..................................................... 8, 10
`
`Dell, Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00385, Paper 17 (July 29, 2013) ........................................................... 6
`
`Microsoft Corp. v. Proxyconn, Inc.,
`IPR2013-00109, Paper 14 (Feb. 25, 2013) ........................................................... 6
`
`Motorola Mobility LLC v. Softview LLC,
`IPR2013-00256, Paper 10 (June 20, 2013) ........................................................... 4
`
`Sony Corp. of America et al. v. Network-1 Security Solutions, Inc.,
`IPR2013-00386, Paper 16 (July 29, 2013) ........................................................... 6
`
`
`FEDERAL STATUTES
`
`35 U.S.C. § 311 ................................................................................................ 4, 8-10
`
`35 U.S.C. § 315 ................................................................................................ 4, 7-10
`
`
`LEGISLATIVE HISTORY
`
`Meeting of the H. Comm. on Judiciary,
`Transcript of Markup of H.R. 1249 (Apr. 14, 2011) ............................................ 9
`
`Statement of Senator Kyl,
`154 Cong. Rec. S9982-93 (daily ed. Sep. 27, 2008) ............................................ 9
`
`
`
`ii
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`I.
`
`INTRODUCTION
`
`Patent Owner VirnetX Inc. respectfully requests that the Board deny Apple
`
`Inc.’s motion requesting joinder of IPR2013-00397 and IPR2013-00398 (“Apple
`
`IPRs”) with IPR2013-00378 (“New Bay IPR”).1 The Apple IPRs and the New
`
`Bay IPR each concern U.S. Patent No. 7,921,211 (“the ’211 patent”).
`
`The Board should deny Apple’s motion because joinder will add several new
`
`substantive issues to the New Bay IPR, require additional discovery and expert
`
`testimony, prevent a timely conclusion of the New Bay IPR, and prejudice
`
`VirnetX. In some of its inter partes review petitions, New Bay identified similar
`
`reasons for opposing joinder. See, e.g., IPR2013-00375, Paper No. 4 at 4. In
`
`addition, joinder of Apple’s untimely IPRs is statutorily barred.
`
`Denying joinder will not prejudice Apple, which has a pending validity
`
`challenge to the ’211 patent in inter partes reexamination (control no. 95/001,789),
`
`and has previously challenged claims of the ’211 patent in district court. Apple
`
`argues that joining its IPRs with the New Bay IPR “will minimize any duplication
`
`of effort by the Board and the Court” (Apple Mot. at 4), but Apple itself has
`
`invited duplication by first seeking inter partes reexamination and then seeking
`
`1 Apple also asks the Board to join its own IPR2013-00397 and -00398 with
`
`each other. Apple Mot. at 1. The Board did not authorize Apple to move for this
`
`type of joinder, and it should be denied for the reasons stated in this opposition.
`
`
`
`1
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`two inter partes reviews based on the same primary references. The Board and the
`
`Patent Owner should not be tasked with minimizing the burden of Apple’s
`
`duplicative proceedings.
`
`II.
`
`PRECISE RELIEF REQUESTED
`
`VirnetX requests that the Board deny Apple’s motion for joinder.
`
`III. STATEMENT OF FACTS
`On August 18, 2010, VirnetX served Apple with a complaint alleging
`
`infringement of certain VirnetX patents. Ex. 2001. On April 5, 2011, VirnetX
`
`served Apple with an amended complaint, alleging that certain Apple products
`
`infringe claims 1, 2, 5, 6, 14-23, 26-28, 33-47, 49-52, and 57-60 of the ’211 patent.
`
`Ex. 2005 (Second Amended Complaint, VirnetX Inc. v. Cisco Systems, Inc. et al.,
`
`No. 6:10-cv-417 (E.D. Tex. Apr. 5, 2011)). A jury found that those products
`
`infringe and that the tried claims of the ’211 patent are valid. Ex. 2002.
`
`On October 18, 2011, Apple initiated an inter partes reexamination of all
`
`claims 1-60 of the ’211 patent. The Office assigned that proceeding control no.
`
`95/001,789 (“the ’1,789 reexamination”). On June 26, 2013, the Office issued a
`
`Right of Appeal Notice (Ex. 1071), in response to which VirnetX filed a Notice of
`
`Appeal on July 25, 2013. Briefing for the appeal is currently underway.
`
`On December 31, 2012, VirnetX served Apple with another complaint,
`
`alleging that additional Apple products infringe claims 1, 2, 5, 6, 14-23, 26-28, 33-
`
`
`
`2
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`
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`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
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`47, 49-52, and 57-60 of the ’211 patent. Ex. 1050 (Complaint, VirnetX Inc. v.
`
`Apple Inc., No. 6:12-cv-855 (E.D. Tex. Nov. 6, 2012)). The case remains pending.
`
`Apple filed two inter partes review petitions on July 1, 2013, requesting
`
`cancellation of claims 1-3, 5-8, and 14-60 of the ’211 patent. Apple’s first IPR
`
`petition (IPR2013-00397) proposed three grounds of unpatentability based on two
`
`references, Aventail and Beser. Apple also submitted three supporting declarations
`
`totaling 235 pages. Exs. 1003, 1005, 1006.
`
`Apple’s second IPR petition (IPR2013-00398) sought cancellation of the
`
`same set of claims by proposing an additional four grounds of unpatentability
`
`based on three references, Beser, RFC 2401, and Provino. Apple submitted three
`
`supporting declarations totaling 255 pages. Exs. 1003, 1005, 1006.
`
`Apple now proposes to limit the grounds of rejection to those based on
`
`Aventail and Beser as primary references, plus one other secondary reference.
`
`Apple Mot. at 6. Even with this limitation, the Apple IPRs will still include five
`
`separate grounds of unpatentability based on three new references and 448 pages
`
`of declarations that discuss Aventail and Beser. See id. at 6, n.4.
`
`New Bay filed its IPR petition on June 23, 2013. The New Bay IPR
`
`(IPR2013-00378) requested review of claims 36, 37, 47, and 51 of the ’211 patent,
`
`based on Kiuchi. New Bay submitted a 98-page supporting declaration. Id., Ex.
`
`1004.
`
`
`
`3
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`On August 14, 2013, the Board authorized Apple to file a motion for joinder
`
`of the Apple IPRs with the New Bay IPR. Paper 7 at 5. Additionally, the Board
`
`authorized VirnetX and New Bay to file oppositions to Apple’s motion. Id.
`
`IV. ARGUMENT
`The Board should not grant Apple’s motion because it will significantly
`
`increase the complexity and duration of the New Bay IPR, Apple will not be
`
`prejudiced without joinder, and § 315(b) statutorily prohibits joinder of Apple’s
`
`untimely IPRs.
`
`A.
`
`Joinder Will Significantly Increase the Complexity and Duration
`of the New Bay IPR Proceeding and Prejudice VirnetX
`
`Subject to other statutory provisions, under 35 U.S.C. § 315(c), the Board
`
`has discretion to “join as a party to [an] inter partes review any person who
`
`properly files a petition under section 311.” 35 U.S.C. § 315(c). “In exercising its
`
`discretion to grant joinder, the Board considers the impact of both substantive
`
`issues and procedural matters on the proceedings, as well as other considerations.”
`
`IPR2013-00256, Paper 10 at 4. Here, despite Apple’s offer to trim down its two
`
`petitions, joinder will significantly impact both substantive and procedural issues.
`
`Substantively, joining Apple’s proposed grounds will increase the number of
`
`claims at issue in the New Bay IPR by more than thirteen-fold (from 4 to 54), will
`
`quadruple the number of references at issue (from 1 to 4), and will increase the
`
`number of grounds of rejection (from 4 to 5). Procedurally, it will require the
`4
`
`
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`depositions of at least three additional witnesses covering at least 448 pages of
`
`declarant testimony. It will also add Apple as a party, further complicating the
`
`New Bay IPR. In some of its petitions on other VirnetX patents, New Bay
`
`identified similar concerns with joinder. See, e.g., IPR2013-00375, Paper 4 at 4.
`
`Apple recognizes these problems but offers no satisfactory response.
`
`Regarding the burden joinder would cause, Apple misleadingly argues that “in a
`
`joined IPR proceeding, it is anticipated that only one expert witness per petitioner
`
`. . . will present testimony.” Apple Mot. at 8, emphasis added. Apple fails to point
`
`out that it has submitted six declarations related to the Aventail and Beser
`
`references from three declarants, which do not overlap with New Bay’s
`
`declaration. Joinder, therefore, will require discovery and depositions from at least
`
`three additional witnesses. Apple also neglects to mention that its purported
`
`simplification of the issues scarcely reduces the body of declarant testimony it
`
`relies on, as over 448 pages of its original 490 pages of declarations relate to its
`
`narrowed issues.
`
`Apple also argues that briefing and discovery can be streamlined, and that it
`
`is “willing to accept reasonable restrictions on discovery” and “willing to limit its
`
`comments to issues raised by its prior art.” Apple Mot. at 9. The Board has
`
`rejected general statements like these, which do not explain what procedures
`
`should be followed to reduce discovery, to reduce the number of depositions, or
`
`
`
`5
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`how such procedures would minimize the impact on the schedule for the New Bay
`
`IPR. See IPR2013-00386, Paper 16 at 9.
`
`Regarding the increased number of claims, Apple contends that the
`
`additional claims “present the same or highly similar concepts and limitations and
`
`do not raise unique patentability questions.” Apple Mot. at 6. But Apple’s
`
`petitions demonstrate that it will inject significant complexity to the claim
`
`construction process, as Apple’s additional claims raise new claim construction
`
`issues not raised in New Bay’s IPR (e.g., “indication” and “secure name”). Even
`
`for the few claims that overlap with New Bay’s IPR, Apple’s petitions raise
`
`distinct claim construction issues and frequently offer divergent constructions from
`
`those offered by New Bay. Compare IPR2013-00378, Paper 4 at 15, with
`
`IPR2013-00397, Paper 1 at 9-16. The Board has recognized that complicating
`
`claim construction weighs against joinder. IPR2013-00385, Paper 17 at 3.
`
`Apple also cites the Board’s decisions in IPR2013-00109 and -00282 as
`
`permitting joinder of petitions challenging different claims based upon different
`
`references. Apple Mot. at 7. But in both of those proceedings, the patent owner
`
`did not oppose joinder and agreed that there would be no impact to the schedule.
`
`That is not the case here, where VirnetX opposes joinder, which will undoubtedly
`
`impact the schedule. See IPR2012-00022, Paper 35 at 2 (delaying an IPR based on
`
`the addition of new references).
`
`
`
`6
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`Lastly, VirnetX will be prejudiced by Apple’s significant expansion of the
`
`substantive issues in the New Bay IPR, the burden of conducting additional
`
`discovery, and the page limits imposed by the Office’s rules for responding to the
`
`proposed grounds of rejection.
`
`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
`
`IPR] process as a cost-effective alternative to district court litigation.” See Apple
`
`Mot. at 9. Apple already challenged the ’211 patent in district court and lost.
`
`Apple also sought and is participating in the ’1,789 reexamination, which remains
`
`pending before the Office and involves every claim of the ’211 patent. That
`
`reexamination also involves some of the same references Apple asserts in the
`
`Apple IPRs. Thus, the ’1,789 reexamination already provides Apple with a
`
`mechanism distinct from district court litigation to challenge the validity of all
`
`claims of the ’211 patent. Denying the motion for joinder, therefore, will not
`
`prejudice Apple.
`
`C. Granting Apple’s Motion for Joinder Is Statutorily Barred
`For the reasons discussed with the Board on August 5, 2013, and to be
`
`explained in more detail in Patent Owner’s Preliminary Response, institution of
`
`Apple IPRs is barred by 35 U.S.C. § 315(b) because Apple was served with a
`
`complaint more than one year before it filed its IPRs. Joinder is only permitted if
`
`
`
`7
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`the Board first determines that Apple’s petition warrants institution. 35 U.S.C. §
`
`315(c) (“the Director, in his or her discretion, may join . . . any person who
`
`properly files a petition under section 311 that the Director . . . determines warrants
`
`the institution of an inter partes review under section 314”). Because Apple’s
`
`untimeliness precludes institution under § 315(b), it also precludes joinder under §
`
`315(c). The Board, however, has interpreted the last sentence of § 315(b) to mean
`
`that “the one-year time bar does not apply” if a party filing a time-barred petition
`
`requests joinder. See IPR2013-00071, Paper 17 at 5. VirnetX respectfully
`
`disagrees with this statutory interpretation.
`
`The last sentence of 35 U.S.C. § 315(b) states that “[t]he time limitation set
`
`forth in the preceding sentence shall not apply to a request for joinder under
`
`subsection (c).” The AIA, and indeed § 315 itself, distinguishes between petitions
`
`for inter partes review and requests for joinder. The last sentence of § 315(b),
`
`however, provides an exception to the one-year bar only for a request for joinder,
`
`not for a petition for inter partes review. Thus, the one-year bar continues to apply
`
`to all petitions, even in the joinder context. The request-for-joinder exception of
`
`§ 315(b) applies only when two timely petitions are filed, but the request for
`
`joinder is made more than a year after being served with a complaint.
`
`This reading makes sense because joinder is not available until after an IPR
`
`has been instituted. 35 U.S.C. § 315(c). Since it can take up to six months for an
`
`
`
`8
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`institution decision, it is likely that many requests for joinder will occur more than
`
`one year after being served with a complaint. The statutory language addresses
`
`this concern. It does not, however, provide a backdoor for time-barred petitions to
`
`be effectively instituted through joinder. Such a view is contrary to Congress’s
`
`intent to avoid serial harassment of patent owners, which particularly applies to
`
`parties like Apple who have already had ample opportunity to present validity
`
`challenges in both district court and reexamination. Ex. 2003 at 72 (a goal of the
`
`inter partes review laws is to “prevent[ ] the serial harassment of patent holders.”).
`
`Permitting untimely petitions to be instituted through joinder is also contrary
`
`to the joinder statute. Under 35 U.S.C. § 315(c), “the Director, in his or her
`
`discretion, may join as a party to that inter partes review any person who properly
`
`files a petition under section 311.” (Emphasis added.) Senator Kyl addressed the
`
`meaning of the term “properly files,” stating that “time deadlines for filing
`
`petitions must be complied with in all cases.” Ex. 2004, 154 Cong. Rec. S9988
`
`(daily ed. Sep. 27, 2008). Section 315(c) is consistent with this view because it
`
`requires compliance with § 311, which in turn requires compliance with the other
`
`provisions of Title 35, Chapter 31 of the U.S. Code, including the timeliness
`
`provisions. 35 U.S.C. § 311 (“Subject to the provisions of this chapter, a person
`
`who is not the owner of a patent may file with the Office a petition to institute an
`
`inter partes review of the patent.”).
`
`
`
`9
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`The Board has recognized that § 311 limits joinder under § 315(c), but
`
`disregards the portion of § 311 that also requires compliance with other provisions
`
`of Chapter 31. IPR2013-00071, Paper No. 17 at 5 (“Section 315(c) refers only to
`
`‘section 311,’ not to any other portions of the statute or portions of the statute
`
`referenced in Section 311.”). This interpretation is incorrect, as it disregards the
`
`plain statutory language. The Board’s interpretation would also mean that other
`
`provisions of Chapter 31 do not apply to petitions when joinder is requested, such
`
`as the petition requirements of § 312(a). This is not what the statutory language
`
`permits, and is certainly not what Congress intended, yet it is what the Board’s
`
`statutory interpretation would permit.
`
`Under the plain language of §§ 315(b) and (c), joinder of untimely Apple’s
`
`IPRs is prohibited.
`
`V. CONCLUSION
`For these reasons, the Board should deny Apple’s motion for joinder.
`
`
`
`
`
`
`
`
` Respectfully submitted,
`
`
`
`/Joseph E. Palys/
`
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
`
`
`
`
`
`10
`
`
`
`Exhibit No.
`2001
`
`2002
`
`2003
`
`2004
`2005
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`APPENDIX - LIST OF EXHIBITS
`
`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)
`VirnetX’s Second Amended Complaint in VirnetX Inc. v.
`Cisco Systems, Inc. et al., No. 6:10-cv-417 (E.D. Tex. Apr. 5,
`2011)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case No. IPR2013-00397
`VirnetX’s Opposition to Apple’s Motion for Joinder
`
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on this 28th day of August 2013, a copy of VirnetX’s
`
`Opposition to Apple’s Motion for Joinder and supporting materials were served by
`
`electronic mail, as agreed by the parties, upon the following:
`
`Counsel for Apple Inc.:
`
`Jeffrey P. Kushan (jkushan@sidley.com)
`Joseph A. Micallef (jmicallef@sidley.com)
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`
`
`Counsel for New Bay Capital, LLC:
`
`Robert M. Asher (rasher@sunsteinlaw.com)
`Jeffrey Klayman (jklayman@sunsteinlaw.com)
`Sunstein Kann Murphy & Timbers LLP
`125 Summer Street
`Boston, MA 02110-1618
`
`
`
`
`
`
`
`
`Dated: August 28, 2013
`
`Respectfully submitted,
`
`/Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
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