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`Case No. IPR2014-00173
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`Paper No.
`Filed: March 6, 2014
`
`
`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
`
`
`
`
`
`RPX CORPORATION
`Petitioner
`v.
`VIRNETX INC.
`Patent Owner
`
`
`
`Case IPR2014-00173
`Patent 7,490,151
`
`
`
`
`
`Patent Owner’s Preliminary Response
`to Petition for Inter Partes Review
`of U.S. Patent No. 7,490,151
`
`
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`

`

`Table of Contents
`Introduction ...................................................................................................... 1
`The Petition Fails to Meet the Requirements for Instituting an
`Inter Partes Review ......................................................................................... 2
`A.
`The Petition Should Not Be Considered Under 35 U.S.C.
`§§ 312(a)(2) and 315(b) ........................................................................ 3
`1.
`There Is a Long-Standing Relationship Between RPX
`and Apple .................................................................................... 4
`a)
`RPX and Apple Worked Jointly to Challenge
`VirnetX Patents ................................................................. 4
`RPX and Apple Have Tried to Hide Apple’s
`Involvement ...................................................................... 6
`The Petition Fails to Name a Real Party-in-Interest ................... 8
`a)
`RPX and Apple Violated the First Guan Factor .............10
`b)
`RPX and Apple Violated the Second Guan Factor ........10
`c)
`RPX and Apple Violated the Third Guan Factor ...........11
`d)
`RPX Is Like the Requester in Guan ...............................13
`Trial May Not Be Instituted Under 35 U.S.C. § 315(b) ...........14
`a)
`Apple Is a Time-Barred Real Party-in-Interest ..............14
`b)
`Apple Is a Time-Barred Privy ........................................15
`Policy Considerations Support Denying the Petition ...............17
`4.
`The Petition Fails to Comply with 35 U.S.C. § 312(a)(3) and
`37 C.F.R. § 42.104(b)(4) .....................................................................19
`RPX’s Petition Should Be Denied Under 35 U.S.C. § 325(d) ............23
`The Proposed Grounds Treat Aventail as a Single Document
`Instead of Two Separate Documents ...................................................26
`
`b)
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`2.
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`3.
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`Case No. IPR2014-00173
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`I.
`II.
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`B.
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`C.
`D.
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`i
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`Case No. IPR2014-00173
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`E.
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`E.
`
`F.
`G.
`H.
`I.
`J.
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`The Board Should Not Institute Based on the Petition’s
`Redundant Grounds .............................................................................28
`III. The Petition’s Claim Constructions Are Flawed and Should Be
`Rejected .........................................................................................................33
`A. Overview of the ’151 Patent ................................................................34
`B.
`Level of Ordinary Skill in the Art .......................................................36
`C.
`“DNS Request” (Claims 1, 4, 7, 10, 13, and 16) ................................37
`D.
`“Domain Name” (Construe as Part of “Domain Name Server
`(DNS) Proxy Module” or “Domain Name Server (DNS)
`Module”) .............................................................................................38
`“Domain Name Server” (Construe as Part of “Domain Name
`Server (DNS) Proxy Module” or “Domain Name Server (DNS)
`Module”) .............................................................................................40
`“Domain Name Server (DNS) Proxy Module” (Claims 1 and 7) .......42
`“Domain Name Server (DNS) Module” (Claim 13) ...........................43
`“Secure Server” (Claims 1-3, 5-9, and 11-15) ....................................44
`“IP Address Hopping Scheme” (Claims 5 and 11) .............................45
`“Automatically Initiating an Encrypted Channel” /
`“Automatically Creating a Secure Channel” (Claims 1, 5-7, and
`11-13) ..................................................................................................47
`“Client” (Claims 1-16) ........................................................................48
`“Determining” (Claims 1, 2, 7, 8, 13, and 14) ....................................51
`“Forwarding the DNS Request” (Claims 1, 7, and 13) .......................52
`“Intercepts DNS Requests / Intercepting a DNS Request /
`Intercepted DNS Request” (Claims 1, 7, and 13) ...............................52
`If Trial Is Instituted, VirnetX Requests an 18-Month Schedule ...................52
`Conclusion .....................................................................................................53
`
`K.
`L.
`M.
`N.
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`IV.
`V.
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`ii
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`Case No. IPR2014-00173
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`TABLE OF AUTHORITIES
`
` Page(s)
`
`Federal Cases
`Apple Inc. v. Int’l Trade Comm’n,
`725 F.3d 1356 (Fed. Cir. 2013) .......................................................................... 26
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348 (June 12, 2013) Paper No. 1 ....................................................... 4
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00349 (Sept. 17, 2013) Paper No. 10 .................................................. 26
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00354 (Sept. 19, 2013) Paper No. 15 ............................................ 20, 32
`Asahi Glass Co. v. Toledo Eng’g Co.,
`505 F. Supp. 2d 423 (N.D. Ohio 2007) .............................................................. 16
`CallCopy, Inc. v. Verint Ams., Inc.,
`IPR2013-00486 (Feb. 5, 2014) Paper No. 11 ..................................................... 27
`Chef Am., Inc. v. Lamb-Weston, Inc.,
`358 F.3d 1371 (Fed. Cir. 2004) .......................................................................... 51
`EMC Corp. v. Personal Web Techs., LLC,
`IPR2013-00087 (June 5, 2013) Paper No. 25 ..................................................... 29
`Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC,
`IPR2012-00001 (Jan. 9, 2013) Paper No. 15 ...................................................... 34
`Graham v. John Deere Co. of Kansas City,
`383 U.S. 1 (1966) ................................................................................................ 28
`Gustafson v. Alloyd Co., Inc.,
`513 U.S. 561 (1995) ............................................................................................ 15
`Idle Free Sys., Inc. v. Bergstrom, Inc.,
`IPR2012-00027 (June 11, 2013) Paper No. 26 ................................................... 29
`
`iii
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`Case No. IPR2014-00173
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`
`In re Guan et al. Inter Partes
`Reexamination Proceeding, Control No. 95/001,045, Decision
`Vacating Filing Date (Aug. 25, 2008) .........................................................passim
`Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd.,
`IPR2013-00324 (Nov. 21, 2013) Paper No. 19 .................................................. 24
`LaRose Indus., LLC v. Capriola Corp.,
`IPR2013-00120 (July 22, 2013) Paper No. 20 ............................................ 29, 33
`Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co.,
`CBM2012-00003 (Oct. 25, 2012) Paper No. 7 ................................. 28, 29, 30, 33
`Motorola Solutions, Inc. v. Mobile Scanning Techs., LLC,
`IPR2013-00093 (Apr. 29, 2013) Paper No. 28 ................................................... 34
`Phelps v. Hamilton,
`122 F.3d 1309 (10th Cir. 1997) .......................................................................... 16
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) (en banc) .................................................... 34, 41
`SAP Am., Inc. v. Versata Dev. Group, Inc.,
`CBM2012-00001 (June 11, 2013) Paper 70 ....................................................... 39
`SAP Am., Inc. v. Pi-Net Int’l, Inc.,
`CBM2013-00013 (Sept. 19, 2013) Paper No. 15 ............................................... 15
`ScentAir Techs., Inc. v. Prolitec, Inc., Case
`IPR2013-00180 (Aug. 26, 2013) Paper No. 18 .................................................. 30
`Tasco, Inc. v. Pagnani,
`IPR2013-00103 (May 23, 2013) Paper No. 6 ..................................................... 19
`Taylor v. Sturgell,
`553 U.S. 880 (2008) ............................................................................................ 17
`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054 (July 13, 2013) Paper No. 16 ................................................... 19
`In re Zletz,
`893 F.2d 319 (Fed. Cir. 1989) ............................................................................ 33
`
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`Case No. IPR2014-00173
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`State Cases
`Arpadi et al. v. First MSP Corp. et al.,
`68 Ohio St. 3d 453 (Sept. 21, 1993) ................................................................... 17
`Federal Statutes
`35 U.S.C. § 311 .......................................................................................................... 8
`35 U.S.C. § 311(b) ................................................................................................... 21
`35 U.S.C. § 312(a) ................................................................................................. 1, 2
`35 U.S.C. § 312(a)(2) ................................................................................. 3, 8, 14, 53
`35 U.S.C. § 312(a)(3) ................................................................................. 1, 3, 19, 23
`35 U.S.C. § 313 .......................................................................................................... 1
`35 U.S.C. § 314(a) ................................................................................................... 18
`35 U.S.C. § 315 ........................................................................................................ 14
`35 U.S.C. § 315(b) ............................................................................................passim
`35 U.S.C. § 315(e) ................................................................................................... 18
`35 U.S.C. § 316(a)(1) ............................................................................................... 53
`35 U.S.C. § 325(d) ............................................................................................passim
`Rules
`Fed. R. Civ. P. 17(a)................................................................................................. 18
`Regulations
`37 C.F.R. § 42.8 ....................................................................................................... 52
`37 C.F.R. § 42.100(b) .............................................................................................. 33
`37 C.F.R. § 42.100(c) ............................................................................................... 53
`37 C.F.R. § 42.104(b)(4) ...................................................................................passim
`
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`Case No. IPR2014-00173
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`37 C.F.R. § 42.107 ..................................................................................................... 1
`Other Authorities
`77 Fed. Reg. 48680, Changes to Implement Inter Partes Review
`Proceedings (Aug. 14, 2012) .............................................................................. 23
`77 Fed. Reg. 48756, Office Patent Trial Practice Guide
`(Aug. 14, 2012) ............................................................................................passim
`157 Cong. Rec. S1041-42 (daily ed. Mar. 1, 2011) ................................................. 24
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`I.
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`Case No. IPR2014-00173
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`Introduction
`Patent Owner VirnetX Inc. respectfully submits this Preliminary Response
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`in accordance with 35 U.S.C. § 313 and 37 C.F.R. § 42.107, responding to the
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`Petition for Inter Partes Review (the “Petition”) filed by RPX Corporation.
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`VirnetX requests that the Board not institute inter partes review for several
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`reasons.
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`First, Apple Inc. contracted with RPX to file several inter partes review
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`petitions on its behalf, including the petition in this inter partes review. Apple is
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`time-barred from challenging VirnetX’s U.S. Patent No. 7,490,151 (“the ’151
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`patent”) under 35 U.S.C. § 315(b), and it cannot hire RPX to challenge the ’151
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`patent in its place. Apple is a real party-in-interest in this proceeding, and Apple
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`and RPX are privies. Thus, the case should be dismissed under 35 U.S.C.
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`§§ 312(a) and 315(b).
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`Second, the Petition fails to comply with several rules and regulations
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`regarding the content of petitions. The Petition either never or rarely cites the
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`asserted prior art references, violating the particularity requirements of 35 U.S.C.
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`§ 312(a)(3) and 37 C.F.R. § 42.104(b)(4). The Petition attempts to combine two
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`references in an anticipation analysis, in violation of Federal Circuit case law, and
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`its backup obviousness argument lacks any analysis, in violation of Supreme Court
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`precedent. The Petition also proposes horizontally and vertically redundant
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`grounds without identifying how any one ground improves on any other, violating
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`Board precedent requiring petitioners to identify differences in the proposed
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`rejections.
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`Third, the proposed rejections here are duplicative of the proposed rejections
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`in copending reexaminations of the ’151 patent, which rely on many of the same
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`references and rejections proposed by RPX. The Board should decline to institute
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`this duplicative proceeding under 35 U.S.C. § 325(d).
`
`Finally, RPX proposes a series of incorrect claim constructions. Because its
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`unpatentability challenges are premised on incorrect claim constructions, RPX has
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`not met its burden of demonstrating a reasonable likelihood of prevailing in
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`proving unpatentability of any ’151 patent claim.
`
`II. The Petition Fails to Meet the Requirements for Instituting an
`Inter Partes Review
`Trial should not be instituted because RPX’s Petition does not comply with
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`numerous statutes and regulations that must be satisfied for institution. Violations
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`include:
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`(1) not identifying all real parties in interest under 35 U.S.C. § 312(a);
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`(2) being barred under 35 U.S.C. § 315(b) because a real party in interest or
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`privy of RPX was served with a complaint alleging infringement of the ’151 patent
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`more than one year before the Petition was filed;
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`Case No. IPR2014-00173
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`(3) failing to comply with 35 U.S.C. § 312(a)(3)’s particularity requirement
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`and 37 C.F.R. § 42.104(b)(4)’s requirement to “specify where each element of the
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`claim is found in the prior art patents or printed publications relied upon” by citing
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`almost solely to expert declarations, which often generalize the references, as
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`opposed to citing the references themselves;
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`(4) relying on references already at issue in other proceedings, resulting in
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`cumulative proceedings that warrant dismissing this Petition under 35 U.S.C.
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`§ 325(d);
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`(5) impermissibly combining two separate references in an anticipation
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`rejection and offering a backup obviousness position without any analysis; and
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`(6) proposing redundant grounds without identifying how any one ground
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`improves on any other.
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`A. The Petition Should Not Be Considered Under 35 U.S.C.
`§§ 312(a)(2) and 315(b)
`The Petition fails to identify at least Apple as a real party-in-interest (“RPI”),
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`as required by 35 U.S.C. § 312(a)(2), and is barred under § 315(b) because Apple
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`is RPX’s privy and is time-barred from challenging the ’151 patent. Several policy
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`considerations also support denial of the Petition.
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`3
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`Case No. IPR2014-00173
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`1.
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`There Is a Long-Standing Relationship Between RPX and
`Apple
`RPX and Apple Worked Jointly to Challenge VirnetX
`a)
`Patents
`RPX is a defensive patent services provider that, by its own admission,
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`“serves as an extension of a client’s in-house legal team,” acts as a “trusted
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`intermediary” for its clients, and “selectively clear[s its] clients” from litigation.
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`(Exs. 2006, 2007 at 3, 2008.) To fund these services, RPX receives yearly
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`subscription fees from clients like Apple. (Ex. 2007 at 9.)
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`In 2010, and intermittently through late 2013, RPX and Apple discussed
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`creating an Apple-funded program to challenge specific patents through post-grant
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`proceedings at the U.S. Patent and Trademark Office (“USPTO”), but no program
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`was created during those three years. (Ex. 2039 at 15.) Following a series of
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`setbacks against VirnetX, however, Apple reversed course.
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`After a district court ordered Apple to pay VirnetX approximately $368M in
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`damages, (Ex. 2009), Apple filed a series of IPR petitions against VirnetX’s
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`patents. (See, e.g., Apple Inc. v. VirnetX Inc., IPR2013-00348, Paper No. 1 (June
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`12, 2013).) But in an August 5, 2013, Board call, it became clear that Apple’s IPR
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`petitions would likely be found time-barred under 35 U.S.C. § 315(b), and the
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`discussion turned to whether Apple could properly seek joinder with a series of
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`Case No. IPR2014-00173
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`IPR petitions filed by New Bay Capital. (Ex. 2031 at 3-5.) Seeing its chance to
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`challenge VirnetX’s patents in inter partes review slipping away, Apple
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`immediately contacted RPX to discuss setting up a means for RPX to challenge
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`VirnetX’s patents. (Ex. 2039 at 15 (discussing VirnetX and “challeng[ing] patents
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`of questionable quality” on Aug. 8, 2013); see also Exs. 2042-2044.)
`
`In response to Apple’s inquiries regarding VirnetX, RPX proposed that
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`Apple join a “Premium Services” plan in which RPX would, among other things,
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`initiate a “proactive IPR program” in exchange for an increase in Apple’s yearly
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`membership fees. (Ex. 2045 at 11-13.) Apple and RPX discussed the plan and
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`Apple agreed to a one-time payment of $500,000 with the express purpose of
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`targeting so-called “questionable” patents through the filing of IPRs. (Ex. 2047.)
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`The VirnetX patents were identified as part of RPX’s “Premium Services”
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`presentation. (Ex. 2045 at 16.)
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`On October 18, New Bay informed the Board of its intent to terminate its
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`IPR proceedings, ending Apple’s hopes of joining New Bay’s petitions and setting
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`off a flurry of activity by Apple and RPX. (Ex. 2032; Exs. 2034-37.) That same
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`day, Apple contacted RPX to finalize their agreement. (Ex. 2046 (emailing RPX
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`to set up a call); Ex. 2047 (emailing RPX a revised agreement).) Apple also gave
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`RPX consent to use its attorneys at Sidley Austin for challenging VirnetX’s
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`5
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`patents. (Ex. 2041 at 5.) And within days, Apple, through its attorneys at Sidley
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`Case No. IPR2014-00173
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`Austin, formally objected to terminating New Bay’s IPR petitions. (Ex. 2033.)
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`RPX, in turn, on October 21, retained Apple’s same team of Sidley Austin
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`attorneys who filed Apple’s IPR petitions. (Ex. 2041.) The next day, Apple and
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`RPX signed an “Addendum Agreement” allowing RPX to file IPR petitions on
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`behalf of Apple in exchange for an initial contribution of $500,000 to finance the
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`petitions. (Ex. 2050; Ex. 2051; Ex. 2052; Ex. 1073 at 1-2.) Within a month,
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`RPX—represented by Apple’s counsel at Sidley Austin (Ex. 1074 at 13:12-18:11,
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`Ex. 2001 at 71:11-22)—filed this Petition and six others, raising grounds
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`“substantially identical” or “substantially similar” to those raised by Apple.1 (See
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`e.g., Pet. at 6; Ex. 2001 at 53:12-54:3.) Apple also gave RPX access to its expert.
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`(See Ex. 2039 at 14.)
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`b) RPX and Apple Have Tried to Hide Apple’s
`Involvement
`Despite the undisputed relationship between Apple and RPX and Apple’s
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`involvement with the Petition, Apple and RPX have attempted to give the
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`impression throughout this proceeding that they are unconnected entities and that
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`1 While the petitions are similar, there are differences as well. For instance,
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`RPX’s petitions respond to certain arguments made by VirnetX in its preliminary
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`responses in the earlier Apple cases.
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`Apple is not an RPI or a privy of RPX. For instance, neither party disclosed
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`RPX’s relationship with Apple’s counsel—even when asked directly by the Board
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`whether Apple’s counsel aided RPX in preparing its petitions. (Ex. 2001 at 69:6-
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`71:4.) RPX and Apple only admitted that they shared counsel after VirnetX
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`disclosed the existence of metadata within RPX’s petitions revealing Sidley
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`Austin’s involvement. (Ex. 2001 at 71:11-22.) Even then, RPX and Apple limited
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`their disclosure to select facts. (Ex. 1074 at 6:13-9:13.)
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`Similarly, in opposing VirnetX’s motion for additional discovery, Apple and
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`RPX continued to assert that there were no communications between Apple and
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`RPX regarding the RPX petitions. (See, e.g., Paper No. 23 at 2.) The facts
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`discussed above, however, show otherwise. (See, e.g., Ex. 2039 at 14.) Likewise,
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`just three days ago, Apple represented to the Board that no pre-filing
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`communications exist between Sidley Austin and Apple regarding the RPX IPRs.
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`(Ex. 2053 at 27:6-28:8; 29:19-30:8.) But Apple’s communication regarding
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`consent for RPX to use Sidley Austin in the IPRs calls into question this
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`representation. (Ex. 2041 at 5.)
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`Apple and RPX also rely on the Addendum Agreement they carefully
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`crafted to assert that they did not have any pre-filing communications and Apple is
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`not an RPI or privy of RPX. They point to the provision in the agreement stating
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`that “[i]n no event will RPX disclose to Member [Apple] any nonpublic
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`information regarding any planned or filed petitions or proceedings before the
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`USPTO pursuant to Section 1.” (Ex. 1073 at 2.) But the facts show that RPX did
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`disclose to Apple nonpublic information regarding its planned petitions (e.g., that
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`RPX was retaining Apple’s expert “to support the RPX IPR petitions”), thus not
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`adhering to the terms of the Addendum Agreement. (Ex. 2039 at 14.)
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`Apple and RPX continue to provide only select information regarding
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`communications between them. (See, Ex. 2039 at 15-17; Ex. 2054.) Nevertheless,
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`as discussed below, the facts still reveal that Apple is an unnamed RPI and a time-
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`barred privy of RPX.
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`The Petition Fails to Name a Real Party-in-Interest
`2.
`35 U.S.C. § 312(a)(2) states that “[a] petition filed under section 311 may be
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`considered only if . . . the petition identifies all real parties in interest.” 35 U.S.C.
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`§ 312(a)(2). Because this Petition fails to do so, it must be denied.
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`The “‘real party-in-interest’ is the party that desires review of the patent.”
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`Office Patent Trial Practice Guide, 77 Fed. Reg. 48759 (hereinafter, “TPG”).
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`While this may include the petitioner itself, it also includes “the party or parties at
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`whose behest the petition has been filed.” Id. The TPG instructs that generally, “a
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`party that funds and directs and controls an IPR . . . petition or proceeding
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`constitutes a ‘real party-in-interest.” Id. at 48760. While actual control or having
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`the “opportunity to control” are two ways to establish that a party is an RPI, these
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`are not the only ways. See id. RPI determinations are handled on a “case-by-case
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`Case No. IPR2014-00173
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`basis” and should involve a “deeper consideration of the facts.” Id.
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`In re Guan, which the TPG approvingly cites as providing “additional
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`guidance” on RPI issues (id. at 48759), identifies, among other things, three
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`prohibitions that, if any one is violated, results in a party being an RPI:
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`[A party] cannot do any of the following and not identify
`the other entity as real party in interest:
`
`1). Accept payment from another group, pay the
`requester
`to
`file
`the
`request
`for
`inter partes
`reexamination . . . .
`
`2). Obtain money for foundation grants, file a “quid pro
`quo” request for an inter partes reexamination where the
`foundation wants reexamination on a specific patent the
`foundation deems anti-competitive . . . .
`
`3). Allow another entity to direct or control the content,
`(e.g., provide the prior patents/printed publications on
`which the reexam is to be based) of the request . . . .
`
`In re Guan et al. Inter Partes Reexamination Proceeding, Control No. 95/001,045,
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`Decision Vacating Filing Date at 8 (Aug. 25, 2008) (emphasis added). While
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`violating any one of the three Guan prohibitions requires finding that Apple is an
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`RPI, Apple and RPX have violated each of them.
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`Case No. IPR2014-00173
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`RPX and Apple Violated the First Guan Factor
`a)
`RPX and Apple violated the first Guan prohibition—“accept[ing] payment
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`from another group, pay[ing] the requester to file the request for inter partes
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`[review]”—when RPX accepted Apple’s $500,000 payment to file this Petition and
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`the others pending before the Board. Guan at 8. RPX admits that the terms of the
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`Addendum Agreement apply to this particular IPR proceeding (see Pet. at 2-3), so
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`it cannot selectively contend that Apple’s payment for services under the same
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`agreement does not pertain to this proceeding.
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`While RPX states that after receiving the funds from Apple, it is “solely
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`responsible for payment of any expenses of preparing and filing petitions” (Pet. at
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`3; see also Ex. 2001 64:15-65:5), this cannot negate that Apple gave the funds to
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`RPX to file the petitions on its behalf and RPX used those funds to file the Petition.
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`(See Ex. 1073 at 1-2; see also Ex. 2049 (Apple expressing concern that its funds
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`would not be entirely used up by a specific end date); Ex. 2048.) Similarly, Apple
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`would remain an RPI even if others also paid RPX to challenge VirnetX’s patents.
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`b) RPX and Apple Violated the Second Guan Factor
`RPX and Apple also violated the second Guan prohibition—“obtain[ing]
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`money for foundation grants, fil[ing] a ‘quid pro quo’ request for inter partes
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`[review] where the foundation wants reexamination on a specific patent that the
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`foundation deems anti-competitive.” Guan at 8. The Addendum Agreement
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`characterizes Apple’s payment as contributing to an internal RPX “Innovation
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`Case No. IPR2014-00173
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`Promotion Fund” (“Fund”) where RPX would “use reasonable efforts to collect
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`additional contributions from other RPX members.” (Ex. 1073.) This is
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`indistinguishable from Guan’s “foundation” where the funds were paid, and the
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`“foundation grants” the petitioner sought. Guan at 3, 8. Indeed, similar to Guan,
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`the Addendum Agreement states that the Fund will be used for “[f]iling with the
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`United States Patent and Trademark Office . . . requests for . . . inter partes review
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`with respect to patents of [alleged] questionable quality.” (Ex. 1073 at 1.)
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`The Office rightly saw through this arrangement in Guan and found that the
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`party paying the petitioner was an RPI. Guan at 8. Apple’s contribution to the
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`Fund for RPX’s IPR program is no different. Indeed, regardless of how the
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`“Fund” is characterized, it cannot be disputed that Apple engaged RPX to provide
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`services that include filing this Petition for a fee of $500,000.
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`RPX and Apple Violated the Third Guan Factor
`c)
`RPX and Apple also violated Guan’s third prohibition—“[a]llow[ing]
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`another entity to direct or control the content, (e.g., provid[ing] the prior
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`patents/printed publications on which the reexam is to be based) of the request.”
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`Guan at 8. Guan expands on what it means to direct or control content by
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`explaining that boilerplate statements by a requester that it “controlled the content”
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`of a request fail to satisfy the RPI inquiry where there is ambiguity. Id. at 2, 5, 8.
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`Looking to the requester’s actions, the Office determined that if the requester
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`Case No. IPR2014-00173
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`received the “prior patents/printed publications on which the reexam is to be
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`based” from another party or allowed that party to conduct a “technical review,”
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`even if only to ensure accuracy, the other party has directed and controlled the
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`filing to such an extent that it must be named as an RPI. Id. at 2, 8. Guan also
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`explains that an entity cannot be named as the sole real party in interest if it
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`receives funding and even a “suggestion” from another party that a particular
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`patent should be challenged. Id. at 7-8.
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`Here, RPX and Apple have done all of this. They had discussions about
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`VirnetX only three days after Apple discussed with the Board the time-bar issues
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`with its petitions pending last year. (See supra Section II.A.1) RPX received
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`Apple’s prior art, Apple’s experts, and the patents and claims to be reviewed. (Id.)
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`And Apple’s team of attorneys at Sidley Austin helped review, prepare, and file
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`RPX’s IPR petitions. (Id.) Apple was complicit in these activities, expressly
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`consenting to having RPX retain Apple’s attorneys at Sidley Austin regarding
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`VirnetX’s patents, and providing RPX access to its expert “to support the RPX IPR
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`petitions.” (Ex. 2041 at 5; Ex. 2039 at 14.) The self-serving statements in the
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`Petition and the Addendum Agreement regarding control cannot change these
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`facts. Thus, under the third Guan factor, Apple is an RPI.
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`Case No. IPR2014-00173
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`d) RPX Is Like the Requester in Guan
`RPX offers the same services to Apple that the requester offered in Guan. In
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`Guan, the Office said the requester provides “freedom to operate services” and
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`“undertake[s] ‘projects’ to file reexaminations to open up market competition and
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`broaden competition.” Guan at 2. RPX similarly states that it “is the leading
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`provider of patent risk solutions” and pursues efforts such as its IPR program that
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`has targeted VirnetX’s patents. (Pet. at 2; Ex. 2045 at 11; see also Exs. 2006-2008,
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`describing RPX’s business model). As a company that makes no products and has
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`no risk itself regarding VirnetX’s patents, RPX had no incentive to file these IPR
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`petitions other than to be paid to act on Apple’s behalf. Indeed, once Apple
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`initiated a discussion with RPX regarding challenging VirnetX patents at the
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`USPTO (Ex. 2039 at 15; Ex. 2042), RPX quickly filed IPR petitions on the same
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`patents as Apple’s time-barred petitions (see generally, Pet.).
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`As the Office noted, entities like the Guan requester and RPX cannot be
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`used to “act as a ‘shill’ in an inter partes [review petition] to shield the identity of
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`the real party or parties in interest” and/or to circumvent estoppel provisions.
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`Guan at 7. Consistent with this view, the TPG identifies the “nature of the entity
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`filing the petition” as a “relevant factor” in assessing RPI issues. TPG at 48760.
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`Because RPX’s business model is to be paid to act on behalf of its clients (in
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`this case Apple), and because RPX and Apple engaged in each of the three
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`prohibited activities in Guan, Apple is an RPI in these proceedings. Indeed, RPX
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`Case No. IPR2014-00173
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`“serves as an extension of a client’s in-house legal team” (Ex. 2006) and is no
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`different than a law firm that is retained to prepare and file IPR petitions. An
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`entity, such as Apple, would not be able to hide behind a law firm, and it should
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`not be allowed to hide behind RPX. Accordingly, RPX’s Petition should be denied
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`under 35 U.S.C. § 312(a)(2) for failing to name all real parties-in-interest.
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`Trial May Not Be Instituted Under 35 U.S.C. § 315(b)
`3.
`Under 35 U.S.C. § 315 “[a]n inter partes review may not be instituted if the
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`petition requesting the proceeding is filed more than 1 year after the date on which
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`the petitioner, real party in interest, or privy of the petitioner is served with a
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`complaint alleging infringement of the patent.” 35 U.S.C. § 315(b) (emphasis
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`added). Because the Board previously found that Apple was time-barred from
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`challenging the ’151 patent in inter partes review, § 315(b) also bars this Petition.
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`Apple Is a Time-Barred Real Party-in-Interest
`a)
`On April 5, 2011, VirnetX served a complaint against Apple, alleging
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`infringement of the ’151 patent. (Ex. 2035.) Over two years later, Apple filed a
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`series of IPR petitions challenging a number of VirnetX patents, including the ’151
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`patent. These were denied by the Office as time-barred under § 315(b). (See, e.g.,
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`Exs. 2010-2016.) Because Apple is an RPI, as dis