Trials@uspto.gov
`571-272-7822
`
` Paper 48
` Date: June 5, 2014
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`RPX CORPORATION
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`____________
`
`Case IPR2014-00171 (Patent 6,502,135)
`Case IPR2014-00172 (Patent 6,502,135)
`Case IPR2014-00173 (Patent 7,490,151)
`Case IPR2014-00174 (Patent 7,921,211)
`Case IPR2014-00175 (Patent 7,921,211)
`Case IPR2014-00176 (Patent 7,418,504)
`Case IPR2014-00177 (Patent 7,418,504)
`____________
`
`
`Before MICHAEL P. TIERNEY, KARL D. EASTHOM, and STEPHEN C.
`SIU, Administrative Patent Judges.
`
`EASTHOM, Administrative Patent Judge
`
`
` DECISION1
`Denial of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`1The Board exercises discretion to issue one identical Decision in each case
`using this caption style. Unless otherwise authorized, the parties are not
`permitted to use this style.
`
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`I. INTRODUCTION2
`
`
`
`
`
`Petitioner, RPX Corporation (“RPX”), filed Petitions in the above-
`
`listed cases. Patent Owner, Virnetx Inc. (“Virnetx”), submitted Preliminary
`
`Responses. Because the dispositive issues are similar, we treat IPR2014-
`
`00171 (“the ’171 proceeding”) as representative of the seven proceedings,
`
`which involve four Virnetx patents: U.S. Patent No. 6,502,135; U.S. Patent
`
`No. 7,490,151; U.S. Patent No. 7,921,211; and U.S. Patent No. 7,418,504
`
`(“the Virnetx Patents”).
`
`The seven proceedings involving the Virnetx Patents, challenged
`
`under 35 U.S.C. §§ 311–319, are summarized in the following table:
`
`Proceeding
`
`Claims
`
`IPR2014-00171
`IPR2014-00172
`IPR2014-00173
`IPR2014-00174
`
`IPR2014-00175
`
`IPR2014-00176
`
`IPR2014-00177
`
`
`
`1–10, 12–15, and 18
`1–10, 12–15, and 18
`1–16
`1, 2, 5, 6, 8, 14, 17, 19, 20, 23, 27–30, 33,
`34, 36, 47, 51, and 60
`1, 3, 15–18, 20–26, 31, 32, 35, 36, 37, 47,
`51, and 60
`1, 2, 5, 6, 8, 14, 16, 17, 19, 20, 21, 23,
`27–30, 33, 34, 36, 47, 51, and 60
`1, 2, 3, 5, 15–18, 20–27, 31, 32, 35, 36,
`47, 51, and 60
`
`Virnetx
`Patents
`6,502,135
`6,502,135
`7,490,151
`7,921,211
`
`7,921,211
`
`7,418,504
`
`7,418,504
`
`As the table reflects, in the ’171 proceeding, RPX filed a Petition
`
`requesting inter partes review of claims 1–10, 12–15, and 18 of U.S. Patent
`
`
`
`2
`After receiving the Decision, the parties jointly may request a redacted
`version of the Decision. After consideration of the joint request, or, if no
`request is filed, the Board will issue a subsequent public Decision.
`
`
`
`2
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`
`No. 6,502,135 (“the ’135 Patent”). See Paper 1 (“Pet.”).3 Virnetx submitted
`
`a Preliminary Response under 37 C.F.R. § 42.107(b). Paper 35 (“Prelim.
`
`Resp.”).
`
`We have jurisdiction under 35 U.S.C. § 314. We determine that
`
`Apple Inc. (“Apple”) is a real-party-in interest.4 We deny the Petitions
`
`because the Petitions are time-barred. Contrary to the requirements of 35
`
`U.S.C. § 315(b), the Petitions were “filed more than 1 year after the date on
`
`which the . . . real party in interest[, Apple,] . . . [wa]s served with a
`
`complaint alleging infringement of the patent.” Therefore, according to 35
`
`U.S.C. § 315(b), “[a]n inter partes review may not be instituted.”
`
`For an analysis of the time bar issue pursuant to 35 U.S.C. § 315(b),
`
`we refer to, and incorporate by reference, the Board’s previous decisions
`
`holding that earlier petitions filed by Apple, a real party-in-interest in those
`
`proceedings challenging the Virnetx Patents, were time-barred.5 As Apple is
`
`a real party-in-interest in the instant proceedings, the Petitions are time-
`
`
`3 Record citations refer to the representative ’171 proceeding.
`4 The Petitions do not list Apple, as 35 U.S.C. § 312(a)(2) requires: “A
`petition filed under section 311 may be considered only if . . . the petition
`identifies all real parties in interest.”
`5 See Apple Inc. v. Virnetx, Inc., IPR2013-00348 (PTAB Dec. 13, 2014)
`(denying Inter Partes Review of U.S. Patent No. 6,502,135), reh’g denied,
`(PTAB Feb. 12, 2014); IPR2013-00349 (same, Patent 7,490,151); IPR2013-
`00354 (same, Patent 7,490,151); IPR2013-00393 (same, Patent 7,418,504);
`IPR2013-00394 (same, Patent 7,418,504); IPR2013-00397 (same, Patent
`7,921,211); IPR2013-00398 (same, Patent 7,921,211). In the latter four
`cases, the decisions were entered on December 18, 2013, although the
`rehearing decisions were entered on the same date in all the cases, February
`12, 2014.
`
`
`3
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`barred for the same reasons as previously held. See Prelim. Resp. 3–4
`
`
`
`(discussing time-bar).
`
`II. BACKGROUND
`
`At issue here is whether RPX, notwithstanding its relationship with its
`
`client Apple, may obtain inter partes review of the Virnetx Patents. Virnetx
`
`asserts, and RPX does not dispute, that RPX filed inter partes review
`
`(“IPR”) requests against the Virnetx Patents pursuant to a newly created
`
`program in which Apple, as RPX’s client, in October 2013, paid RPX a sum
`
`of $500,000, among other things, to file IPR reviews. See Prelim. Resp. 3–
`
`4; Ex. 2049 (Premium Services Overview); Ex. 2055 (signed “Addendum”
`
`agreement between Apple and RPX, Oct. 22, 2013).
`
`In addition to RPX and Apple, another petitioner also filed a series of
`
`inter partes review petitions against the Virnetx Patents, which Apple
`
`attempted to join. Those proceedings were styled as New Bay Capital v.
`
`Virnetx (“the New Bay proceedings”): IPR2013-00375; IPR2013-00376;
`
`IPR2013-00377; and IPR2013-00378. Pursuant to New Bay’s request, the
`
`Board terminated the New Bay proceedings, and according to Virnetx,
`
`“end[ed] Apple’s hopes of joining New Bay’s petitions.” See Prelim. Resp.
`
`4; Ex. 2036 (discussing Apple’s motion for joinder in New Bay cases); Ex.
`
`2037 (New Bay email to office requesting to file motion to terminate); Exs.
`
`2039–42 (judgments terminating the New Bay proceedings).
`
`Prior and subsequent to the New Bay proceedings, RPX and Apple
`
`had discussed a general proposal “to challenge patents of questionable
`
`quality through post-grant proceedings at the U.S. Patent and Trademark
`
`4
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`Office.” Ex. 2043, 15. According to RPX, the following “Topic” of
`
`
`
`discussion between Apple and RPX occurred on August 8, 2013:
`
`Apple informed RPX that Apple had been approached by
`
`New Bay Capital (“NBC”) and that NBC had asked Apple to
`compensate NBC for NBC to continue pursuing its IPRs [now
`terminated] against VirnetX. Apple informed RPX that it was
`not interested in NBC’s offer. Apple inquired [of RPX] about
`the status of the previously-socialized RPX program to perform
`prior art searches and challenge patents of questionable quality.
`Ex. 2043, 15 (“August 8th discussion”).
`
`Subsequent to the August 8th discussion about the Virnetx Patents,
`
`Apple and RPX signed the “Addendum” agreement, pursuant to which
`
`Apple paid RPX $500,000, among other things, to “fil[e] with the United
`
`States Patent and Trademark Office (‘USPTO’) requests for reexamination,
`
`or petitions for post grant, covered business method, or inter partes review
`
`with respect to patents of questionable quality.” Ex. 2055, 2 (Addendum
`
`agreement). The Addendum agreement lists other generic activities that
`
`RPX might perform. See id. (“analyzing data . . . [about] patent assertions
`
`by non-practicing entities,” “[e]ducating the general public,” “[c]onducting
`
`prior art searches to assist with challenges against potentially invalid
`
`patents,” and “[c]reating mechanisms to increase transparency in the patent
`
`market).” The addendum states that RPX would have “complete control”
`
`over the listed activities. Id.
`
`Apple and RPX executed the Addendum agreement on October 22,
`
`2013. Id. at 3. On the same day, Apple expressed a concern that RPX
`
`“would not use all of the funds that Apple contributed to the program
`
`focused on patent quality.” Ex. 2043, 16. One day prior, RPX obtained
`
`5
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`Apple’s consent to hire Apple’s law firm, which had prepared the above-
`
`
`
`discussed time-barred petitions on behalf of Apple. See Paper 38, 4–5
`
`(citing Ex. 2045 at 5, retainer agreement); Prelim. Resp. 6–7 (discussing the
`
`sharing of counsel); Ex. 2057, 27:6–28:18–21 (transcript of Board
`
`conference call).
`
`Less than one month later, RPX served the instant Petitions on
`
`Virnetx challenging the Virnetx Patents. According to RPX, in the ’171
`
`proceeding, “[t]he grounds of Petitioner’s challenge are substantially
`
`identical to the grounds advanced by [Apple or New Bay] in IPR2013-
`
`00348, IPR2013-00349, and IPR2013-00375”––the former two proceedings
`
`involve Apple’s time-barred petitions. See Pet. 6.6
`
`III. ANALYSIS
`
`The Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759–
`
`60 (Aug. 14, 2012) (“TPG”) cites Taylor v. Sturgell, 553 U.S. 880 (2008), as
`
`informing real party-in-interest determinations. Taylor, 553 U.S. at 893–
`
`895, lists six categories that create an exception to the common law rule that
`
`normally forbids nonparty preclusion in litigation. Id. Under a category
`
`relevant here, “a party bound by a judgment may not avoid its preclusive
`
`force by relitigating through a proxy.” Id. at 895. Taylor refers to a proxy
`
`as a “representative or agent of a party who is bound by the prior
`
`adjudication.” Id. at 905. For further guidance, the TPG also cites In re
`
`
`6 According to RPX, the ’171 Petition is “substantially identical” to the
`petition in IPR2013-00349, the petition filed by Apple with respect to one
`prior art reference. For example, the ’171 Petition (Paper 1, ii) and the
`petition in IPR2013-00349 (paper 1, ii) each assert that Aventail anticipates
`claims 1-10, 12-15, and 18 of the ’135 Patent.
`
`6
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`Guan, Reexamination Control No. 95/001,045 (Aug. 25, 2008)(Decision
`
`
`
`Vacating Filing Date). TPG at 48,761. Apple is bound by the prior time-
`
`barred district court adjudications. Thus, because RPX is Apple’s proxy, the
`
`RPX Petition is also time-barred.
`
`In Guan, a “Troll Busters” website invited prospective patent
`
`challengers to “[p]ick any five Affymetrix or Symyx U.S. patents and Troll
`
`Busters will invalidate a sixth for free.” Guan at 2. The Office held that
`
`[a]n entity named as the sole real party in interest may not
`receive a suggestion from another party that a particular patent
`should be the subject of a request for inter partes reexamination
`and be compensated by that party for the filing of the request
`for inter partes reexamination of that patent without naming the
`party [as a real party-in-interest] who suggested and
`compensated the entity for the filing of a request for inter partes
`reexamination of the patent.
`
`Id. at 7–8 (emphasis added). Based on the failure to list such a real party-in-
`
`interest, the Office vacated the filing date of the reexamination request. Id.
`
`at 9.
`
`Like the unnamed real party-in-interest in Guan, Apple at least
`
`suggested that RPX file challenges to the specific Virnetx Patents by
`
`compensating RPX to perform certain generic services that included filing
`
`IPR challenges to “patents of questionable quality.” Ex. 2043, 15; Ex. 2055,
`
`2. The record shows that Apple and RPX considered the Virnetx Patents to
`
`be patents of questionable quality. See Ex. 2043, 15; Background section,
`
`above. Further, RPX does not dispute that Apple and RPX discussed
`
`“VirnetX and the filing of IPRs with RPX,” or that RPX and Apple shared
`
`counsel and Apple’s expert. Paper 46, 7.
`
`7
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`
`Other important factors also support the conclusion that Apple is a
`
`
`
`real party-in-interest. For example, as Virnetx contends, General Foods
`
`Corp. v. Massachusetts Department of Public Health, 648 F.2d 784, 788 (1st
`
`Cir. 1981), instructs that “a member of a trade association who finances an
`
`action which it brings on behalf of its members impliedly authorizes the
`
`trade association to represent him in that action.” Paper 38, 5. Several
`
`factors support a finding that Apple implicitly authorized RPX to represent
`
`Apple in the instant proceedings: Apple’s $500,000 payment to RPX; the
`
`discussions and signed agreement between Apple and RPX regarding the
`
`filing of IPRs on patents of questionable quality; Apple and RPX’s “August
`
`8th discussion” about New Bay’s request for funding to continue its IPR
`
`challenges against the Virnetx Patents combined with Apple’s interest in
`
`funding a program to challenge patents of questionable quality; and Apple’s
`
`demonstrated interest in challenging the Virnetx Patents.
`
`These factors are analogous to those that supported a finding of real-
`
`party-in-interest in General Foods, including payments by association
`
`members to instigate litigation, implicit authorization for the trade
`
`association to represent the paying member, and “challenged regulations
`
`[that] did not affect the trade association itself but only its members.” See
`
`648 F.2d at 787–788; see also Expert Electric, Inc. v. Levine, 554 F.2d 1227,
`
`1233 (2nd Cir. 1977) (trade association’s interests “were the collective
`
`interests of the individual participants”). By further analogy, Apple was the
`
`single, interested “member” of the Fund, unlike the numerous interested
`
`trade association members in General Foods.
`
`
`
`8
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`
`
`
`
`
`
`
`
`RPX argues a distinction over General Foods, wherein the trade
`
`association asserted standing based on its independent members. Here, RPX
`
`asserts independent standing through § 311(a), which confers standing on
`
`any entity that is not the patent owner. Paper 46, 4. In General Foods,
`
`however, standing was only one of several factors identified by the court that
`
`helped to show that the members implicitly authorized the suit by the
`
`association. See 648 F.2d at 787–788. We hold that, based on the record
`
`presented, the interactions between RPX and Apple show an implicit
`
`authorization to challenge the Virnetx Patents, even in the absence of the
`
`standing factor that contributed to the outcome in General Foods.
`
`Apple’s interests include potentially avoiding payment of the damages
`
`awarded for infringement of the Virnetx Patents in the district court
`
`judgment. See Prelim. Resp. 3–4; Ex. 2009. On this record, RPX is, at
`
`most, a “nominal plaintiff” with “no substantial interest” in these IPR
`
`challenges apart from those of its client, Apple, further supporting the
`
`finding that RPX is a proxy of Apple, according to the following case cited
`
`by Taylor.
`
`[W]e held [in a previous case] that the United States was bound
`by an estoppel which might have been invoked against the real
`party in interest if the suit had been brought in his name,
`because it appeared that the United States had no substantial
`interest in the controversy, and was merely a nominal plaintiff.
`
`United States v. Des Moines Valley R. Co., 84 F. 40, 44–45 (8th Cir. 1897)
`
`(emphasis added), cited in Taylor, 553 U.S. at 900 (in the context of a
`
`9
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`proxy); see also Chicago R.I. & P. Ry. Co. v. Schendel, 270 U.S. 611, 620
`
`
`
`(1926) (“Identity of parties is not a mere matter of form, but of substance.
`
`Parties nominally the same may be, in legal effect, different; and parties
`
`nominally different may be, in legal effect, the same.”)
`
`Our determination that RPX is acting as a proxy, which bars the
`
`institution of the proceeding, is also consistent with the express legislative
`
`intent concerning the need for quiet title. See 157 Cong. Rec. S1034, S1041
`
`(Mar. 1, 2011) (Sen. Kyl) (stating “the present bill does coordinate inter
`
`partes . . . review with litigation . . . setting a time limit for seeking . . .
`
`review if the petitioner . . . is sued for infringement of the patent”).
`
`Congress “recognizes the importance of quiet title to patent owners to ensure
`
`continued investment resources.” H.R. Rept. No 112-98, at 48 (2011)
`
`(Judiciary Committee Report on H.R. 1249, June 1, 2011). Changes to the
`
`statutory structure “are not to be used as tools for harassment or a means to
`
`prevent market entry through repeated litigation and administrative attacks .
`
`. . . Doing so would frustrate the purpose of the section as providing quick
`
`and cost effective alternatives to litigation.” Id. “It would divert resources
`
`from the research and development of inventions.” Id.
`
`IV. CONCLUSION
`
`Based on the foregoing discussion, Apple is an unlisted real party-in
`
`interest in the Petitions, which are time-barred under 35 U.S.C. § 315 (b).
`
`Accordingly, the following Petitions hereby are denied: IPR2014-00171
`
`(Patent 6,502,135); IPR2014-00172 (Patent 6,502,135); IPR2014-00173
`
`(Patent 7,490,151); IPR2014-00174 (Patent 7,921,211); IPR2014-00175
`
`10
`
`
`

`

`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`(Patent 7,921,211); IPR2014-00176 (Patent 7,418,504); and IPR2014-00177
`
`
`
`(Patent 7,418,504).
`
`V. ORDER
`
`It is hereby ORDERED that the Petitions filed in IPR2014-00171,
`
`IPR2014-00172, IPR2014-00173, IPR2014-00174, IPR2014-00175,
`
`IPR2014-00176, and IPR2014-00177, are denied.
`
`
`
`
`
`11
`
`
`

`

`
`
`
`
`IPR2014-00171 (Patent 6,502,135); IPR2014-00172 (Patent 6,502,135);
`IPR2014-00173 (Patent 7,490,151); IPR2014-00174 (Patent 7,921,211);
`IPR2014-00175 (Patent 7,921,211); IPR2014-00176 (Patent 7,418,504);
`IPR2014-00177 (Patent 7,418,504)
`
`
`PETITIONER:
`Oliver R. Ashe, Jr.
`ASHE, P.C.
`oashe@ashepc.com
`
`Gregory M. Howison
`HOWISON & ARNOTT, LLP
`admin@dalpat.com
`
`PATENT OWNER:
`Joseph E. Palys
`Naveen Modi
`FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP
`joseph.palys@finnegan.com
`naveen.modi@finnegan.com
`
`
`12
`
`
`