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`Paper No.
`Filed: March 26, 2014
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`Filed on behalf of: VirnetX Inc.
`By:
`Joseph E. Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow,
` Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Telephone: 571-203-2700
`Facsimile: 202-408-4400
`E-mail: joseph.palys@finnegan.com
`
` naveen.modi@finnegan.com
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`RPX CORPORATION
`Petitioner
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`v.
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`VIRNETX INC.
`Patent Owner
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`Case IPR2014-00173
`Patent 7,490,151
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`Patent Owner’s Request for Rehearing Under 37 C.F.R. § 42.71(d)
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`Case IPR2014-00173
`Patent 7,490,151
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`TABLE OF CONTENTS
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`STATEMENT OF THE PRECISE RELIEF REQUESTED .......................... 1
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`LEGAL STANDARD ..................................................................................... 1
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`
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`I.
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`II.
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`III.
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`STATEMENT OF REASONS FOR RELIEF REQUESTED ........................ 2
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`A.
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`B.
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`C.
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`Board Precedent Requires Denial of the Petition for Failing to
`Meet the Substantive Requirements of 37 C.F.R. § 42.104(b) ............. 2
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`The Petition Remains Defective ............................................................ 5
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`The Order Prejudices VirnetX ............................................................... 7
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`D. VirnetX Requests an Expanded Panel on Rehearing ............................ 8
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`IV. CONCLUSION ................................................................................................ 9
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`i
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`TABLE OF AUTHORITIES
`
`Cases
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`Case IPR2014-00173
`Patent 7,490,151
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`Atrium Med. Corp. v. Davol Inc.,
`IPR2013-00186, Paper 34 (Oct. 23, 2013) ....................................................... 3, 6
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`CLIO USA, Inc. v. The Procter and Gamble Co.,
`IPR2013-00450, Paper 19 (Feb. 4, 2014) ............................................................. 2
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`Heart Failure Techs., LLC v. Cardiokinetix, Inc.,
`IPR2013-00183, Paper 12 (July 31, 2013) ........................................................... 6
`
`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.,
`CBM2012-00003, Paper 7 (Oct. 25, 2012) .......................................................... 8
`
`Synopsys, Inc. v. Mentor Graphics Corp.,
`IPR2012-00041, Paper 16 (Feb. 22, 2013) ....................................................... 3, 6
`
`Tasco, Inc. v. Pagnani,
`IPR2013-00103, Paper 6 (May 23, 2013) ......................................................... 2-3
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`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054, Paper 16 (July 13, 2013) ................................................... 2-4, 7
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`
`
`Statutes
`35 U.S.C. § 312(a) ..................................................................................................... 4
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`Regulations
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`37 C.F.R. § 42.24(a) ............................................................................................... 5, 7
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`37 C.F.R. § 42.71(c) ................................................................................................... 2
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`37 C.F.R. § 42.71(d) .................................................................................................. 1
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`37 C.F.R. § 42.104(b) .......................................................................................passim
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`37 C.F.R. § 42.106(a) ................................................................................................. 4
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`ii
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`I.
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`Case IPR2014-00173
`Patent 7,490,151
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`STATEMENT OF THE PRECISE RELIEF REQUESTED
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`Patent Owner VirnetX Inc. (“VirnetX”) requests rehearing of the Patent
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`Trial and Appeal Board’s (“Board”) Order entered March 17, 2014 (“Order”).
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`Specifically, VirnetX requests rehearing of the decision1 that “RPX must file, as an
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`exhibit, a modified version of the original Petition, which has specific citations to
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`the prior art that the declarant refers to in the declaration at the appropriate places
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`in the Petition.” (Order at 4.) As discussed below, the Board should not allow
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`RPX to fix its defective Petition. It should be denied.
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`II. LEGAL STANDARD
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`“A party dissatisfied with a decision may file a request for rehearing,
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`without prior authorization from the Board.” 37 C.F.R. § 42.71(d). “The request
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`must specifically identify all matters the party believes the Board misapprehended
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`or overlooked, and the place where each matter was previously addressed in a
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`motion, an opposition, or a reply.” Id. A request for rehearing must be filed
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`within 14 days of a non-final decision. 37 C.F.R. § 42.71(d)(1).
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`When asked to review a decision on a petition, a panel looks for an abuse of
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`1 The Board also ordered the parties to further brief the real-party-in-interest
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`and privity issues. (Order at 2-4.) VirnetX does not seek rehearing of that aspect
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`of the Order.
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`1
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`discretion. 37 C.F.R. § 42.71(c). “An abuse of discretion occurs when a ‘decision
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`Case IPR2014-00173
`Patent 7,490,151
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`was based on an erroneous conclusion of law or clearly erroneous factual findings,
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`or . . . a clear error of judgment.’” CLIO USA, Inc. v. The Procter and Gamble
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`Co., IPR2013-00450, Paper 19 at 2 (Feb. 4, 2014) (quoted source omitted).
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`III. STATEMENT OF REASONS FOR RELIEF REQUESTED
`VirnetX requests rehearing for three reasons. First, the Order departs from
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`Board precedent requiring denial of a petition when it does not meet 37 C.F.R.
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`§ 42.104(b)’s substantive
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`requirements.
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` Second, despite RPX’s alleged
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`compliance with the Order, the Petition’s substantive defects remain, and other
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`defects have arisen. Third, the Order prejudices VirnetX. Because the Petition is
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`substantively defectivenot merely procedurally flawedthe Board should deny
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`the Petition as it has done in other cases.
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`A. Board Precedent Requires Denial of the Petition for Failing to
`Meet the Substantive Requirements of 37 C.F.R. § 42.104(b)
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`Petitions that contravene the substantive requirements of 37 C.F.R.
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`§ 42.104(b) are denied, not subject to correction midstream. The Board has
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`explained that “failure to point out where each element is found in the prior art is a
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`deficiency in the substantive requirements of the petition,” which warrants denial
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`under § 42.104(b)(4). Wowza Media Sys., LLC et al. v. Adobe Sys., Inc., IPR2013-
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`00054, Paper 16 at 3 (July 13, 2013) (emphasis added); see also Tasco, Inc. v.
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`2
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`Pagnani, IPR2013-00103, Paper No. 6 at 19-20 (May 23, 2013). The Board has
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`Case IPR2014-00173
`Patent 7,490,151
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`also denied petitions for failure to comply with § 42.104(b)(5), because “[t]he
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`Board may exclude or give no weight to the evidence where a party has failed to
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`state its relevance or to identify specific portions of the evidence that support the
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`challenge.” Wowza Media Sys., LLC et al. v. Adobe Sys., Inc., IPR2013-00054,
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`Paper 12 at 11 (Apr. 8, 2013); Atrium Med. Corp. v. Davol Inc., IPR2013-00186,
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`Paper 34 at 3 (Oct. 23, 2013) (same); see also Synopsys, Inc. v. Mentor Graphics
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`Corp., IPR2012-00041, Paper 16 at 14-15 (Feb. 22, 2013) (denying petition for
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`failure to comply with §§ 104(b)(4) and 104(b)(5), among other requirements).
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`Here, it appears that based on VirnetX’s Preliminary Response, the Order
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`correctly recognizes that the Petition’s invalidity analysis is flawed. (Order at 4.)
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`Nevertheless, the Order appears to have misapprehended or overlooked (1) that
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`allowing RPX to insert citations does not cure all of the Petition’s § 42.104(b)
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`defects, and (2) the Board’s case law holding that the appropriate remedy for the
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`Petition’s defects is denial of the Petition. (See Prelim. Resp. at 19-23.) For
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`example, in Wowza the Board denied a petition for inter partes review for failing
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`to comply with 37 C.F.R. §§ 42.104(b)(4) and 42.104(b)(5) because the petition
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`lacked sufficient analysis of the prior art references as applied to the specific
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`limitations of the claims. Wowza, Paper No. 12 at 11-17. In its rehearing request,
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`the petitioner asked the Board to “treat the Petition as incomplete under
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`3
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`§ 42.106(a)(1) . . . and provide one month to [allow petitioner to] correct the
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`Case IPR2014-00173
`Patent 7,490,151
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`deficiency.” Wowza, Paper No. 16 at 2. The Board rejected the petitioner’s
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`request, and refused to find that the petitioner, “having failed to meet its statutory
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`burden of proof initially, should now be given a second opportunity on the merits
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`based on supposed procedural deficiencies in the petition, as filed.” Id. The Board
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`held that treating the petition as “incomplete” under 37 C.F.R. § 42.106(b) would
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`be improper, because that “rule does not apply to a failure to meet substantive
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`statutory requirements.” Id. at 3.
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`Here, as in Wowza, the Petition’s failure to comply with 37 C.F.R.
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`§ 42.104(b) should result in denial of the Petition, not a “second opportunity” to
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`correct substantive defects. Id. at 2. VirnetX’s Preliminary Response explained
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`that the Petition fails to comply with the “particularity” requirement of 35 U.S.C.
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`§ 312(a)(3) and to “specify where each element of the claim is found in the prior
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`art patents or printed publications relied upon” as required by 37 C.F.R.
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`§ 42.104(b)(4). (Prelim. Resp. at 19-22.) First, the Petition cites almost
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`exclusively to expert declarations rather than the asserted references themselves.
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`(Id. at 19-20.) Second, the Petition lacks the required specificity in its analysis,
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`instead offering conclusory and vague commentary about the purported teachings
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`of the asserted references. (Id. at 20-22.)
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`Consistent with the Board’s application of § 42.104(b)’s substantive
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`4
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`requirements in other cases, RPX’s Petition should be denied and RPX should not
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`Case IPR2014-00173
`Patent 7,490,151
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`be allowed to correct it.
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`The Petition Remains Defective
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`B.
`RPX’s compliance with the Order has not rectified the Petition’s substantive
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`defects. RPX allegedly provided “specific citations to the prior art that the
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`declarant refers to in the declaration at the appropriate places in the Petition” (see
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`Order at 4), but the Petition remains in violation of 37 C.F.R. § 42.104(b)’s
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`substantive requirements. Moreover, by importing the large number of citations
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`from the declarations to the Petition, the Petition is now in violation of 37 C.F.R.
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`§ 42.24(a)(1)(i) for exceeding the limit of 60 pages.
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`VirnetX’s Preliminary Response explained that the Petition’s substantive
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`defects run deeper than just lacking citations to the asserted references. The
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`Petition’s proposed grounds discuss the references in generalities that paraphrase
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`the claim language and do not provide an analysis explaining which specific
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`aspects of the references purportedly disclose the claimed elements. (Prelim. Resp.
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`at 20-23.)
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`For example, VirnetX explained that RPX does not specifically identify the
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`features in Aventail, Beser, or Kiuchi that purportedly correspond to the “encrypted
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`channel” recited in the challenged claims. (Id. at 21-23.) Simply shifting the
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`declaration’s prior art citations into the Petition does not add the missing
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`5
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`explanation. Instead, the result is the Petition’s high-level commentary about the
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`Case IPR2014-00173
`Patent 7,490,151
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`references, followed by long string citations, which the Board should reject as
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`inadequate as it has done in the past. See, e.g., Heart Failure Techs., LLC v.
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`Cardiokinetix, Inc., IPR2013-00183, Paper 12 at 12 (July 31, 2013) (rejecting
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`petition that “gives no explanation as to how the cited passages meet the claim
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`limitation”); Atrium Med. Corp. v. Davol Inc., IPR2013-00186, Paper 34 at 3 (Oct.
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`23, 2013) (rejecting ground based on “long string cites to multiple references”);
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`Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00041, Paper 16 at 14-15 (Feb.
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`22, 2013) (finding that “Petitioner’s conclusory statements, without more detail,
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`fail to satisfy” 37 C.F.R. §§ 42.104(b)(4) and 42.104(b)(5), among other
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`requirements).
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`Because the Petition suffers from both lack of analysis and lack of citation to
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`the asserted references, it cannot be fixed by simply shifting the citations from the
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`expert declarations to their corresponding locations in the body of the Petition.
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`Taking just one example from RPX’s anticipation discussion of ’151 patent claim
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`1 and Aventail, the Petition discusses Aventail generally without any reference to
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`the claim language, and then abruptly concludes that Aventail discloses the “data
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`processing device” feature. (Pet. at 14-15.) But the Petition provides no analysis
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`explaining what aspects of Aventail are deemed the “data processing device,” the
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`“domain name server (DNS) proxy module,” the “intercept[ed] DNS requests,”
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`6
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`etc., for that feature. Moving citations from the expert declaration to the body of
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`Case IPR2014-00173
`Patent 7,490,151
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`the Petition does not cure this lack of analysis. The Petition remains conclusory,
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`and VirnetX and the Board remain forced to speculate as to RPX’s asserted
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`theories of invalidity. (See Prelim. Resp. at 19-23.)
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`In addition to the § 42.104(b) issues, RPX’s alleged compliance with the
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`Order introduces a new problemviolation of the 60-page limit for petitions. See
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`37 C.F.R. § 42.24(a)(1)(i). The proposed updated Petition that RPX filed totals 78
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`pages. (See Ex. 1078.) To exceed the 60-page limit, “[t]he petitioner must show in
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`the motion how a waiver of the page limits is in the interests of justice.” 37 C.F.R.
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`§ 42.24(a)(2). RPX has not filed such a motion and there has been no finding that
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`the interests of justice favor allowing RPX to file an overlength petition. To the
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`contrary, because RPX was on notice of the § 42.104(b) deficiencies but chose to
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`repeat them in its Petition, the interests of justice weigh against RPX’s attempt to
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`exceed the page limit.
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`C. The Order Prejudices VirnetX
`The Order is also prejudicial to VirnetX. It gives RPX an unwarranted
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`“second opportunity on the merits.” Wowza, Paper No. 16 at 2. RPX was
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`intimately familiar with the now-terminated Apple proceedings challenging the
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`same patent on what RPX contends are “substantially identical” grounds. (See Pet.
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`at 6, “The grounds of Petitioner’s challenge are substantially identical to the
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`7
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`grounds advanced by [Apple] in IPR2013-00348 [and] IPR2013-00349 . . . .”)
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`Case IPR2014-00173
`Patent 7,490,151
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`And in its Preliminary Responses in the corresponding Apple proceedings, VirnetX
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`raised the very same § 42.104(b) challenges to Apple’s petitions. (See Prelim.
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`Resp., IPR2013-00348, Paper 10 at 13-15; Prelim. Resp., IPR2013-00349, Paper
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`10 at 13-16.) Although RPX had notice of the § 42.104(b) deficiencies in Apple’s
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`petitions and an opportunity to correct them in this Petition, it did not do so. RPX
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`cannot now claim surprise or prejudice when its Petition is found to be deficient
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`for the same reasons.
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`D. VirnetX Requests an Expanded Panel on Rehearing
`To the extent that the Board desires to reconsider its precedent requiring
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`denial of a petition when it does not meet the substantive requirements of
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`§ 42.104(b), VirnetX respectfully requests an expanded panel on rehearing to
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`resolve the issue. The Office has assembled expanded panels in the past when
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`setting substantive rules on the content of petitions, and VirnetX believes an
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`expanded panel would permit the Office to clarify its policy on this important issue
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`and ensure consistency in future decisions. See, e.g., Liberty Mutual Ins. Co. v.
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`Progressive Casualty Ins. Co., CBM2012-00003, Paper 7 (Oct. 25, 2012)
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`(expanded panel promulgating rules on redundant rejections).
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`8
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`IV. CONCLUSION
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`Case IPR2014-00173
`Patent 7,490,151
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`For the foregoing reasons, VirnetX respectfully requests rehearing of the
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`Board’s March 17, 2014 Order that RPX file a modified Petition. RPX’s modified
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`Petition should not be accepted and should be expunged from the record.
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`Dated: March 26, 2014
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`Respectfully submitted,
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`By: /Joseph E. Palys/
`Joseph E. Palys
`Reg. No. 46,508
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`Counsel for Patent Owner
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`9
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`Certificate of Service
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`Case IPR2014-00173
`Patent 7,490,151
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`Pursuant to 37 C.F.R. §§ 42.6(e), I certify that I caused to be served on the
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`counsel for Petitioner a true and correct copy of the foregoing Patent Owner’s
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`Request for Rehearing Under 37 C.F.R. § 42.71(d) by electronic means on March
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`26, 2014 at the following address of record:
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`Oliver R. Ashe, Jr., Esq.
`Ashe, P.C.
`11440 Isaac Newton Sq. North, Suite 210
`Reston, VA 20190
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`Gregory M. Howison
`Howison & Arnott, LLP
`Lincoln Centre II
`5420 LBJ Freeway, Suite 660
`Dallas, TX 75240
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`Respectfully submitted,
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`By: /Joseph E. Palys/
`Joseph E. Palys
`Reg. No. 46,508
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`Counsel for Patent Owner
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`Dated: March 26, 2014
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