`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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`Paper No.
`Filed: May 28, 2014
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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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`APPLE INC.
`Petitioner
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`v.
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`VIRNETX INC.
`Patent Owner
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`Case IPR2014-00238
`Patent 8,504,697
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`Patent Owner’s Request for Rehearing Under 37 C.F.R. § 42.71(d)(1)
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`Case IPR2014-00238
`Patent 8,504,697
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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 ........................ 1
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`A. VirnetX’s Arguments Under 37 C.F.R. § 42.104(b) and 35
`U.S.C. § 312(a)(3) Were Misapprehended or Overlooked ................... 3
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`1.
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`2.
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`3.
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`Failing to Cite Asserted Prior Art Violates 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3) ....................................... 3
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`Vague Grounds Without Explanation Violate 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3) ....................................... 5
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`Apple’s Citations to the Prior Art Through a Declaration
`Render the Petition Overlength ................................................... 8
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`B.
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`VirnetX Requests an Expanded Panel on Rehearing .......................... 10
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`IV. CONCLUSION .............................................................................................. 11
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`i
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`Case IPR2014-00238
`Patent 8,504,697
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`TABLE OF AUTHORITIES
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`Cases
`Apple Inc. v. Evolutionary Intelligence, LLC,
`IPR2014-00079, Paper No. 8 (Apr. 24, 2014) ............................................ 6, 7, 11
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`CaptionCall, LLC v. Ultratec, Inc.,
`IPR2013-00549, Paper No. 20 (Apr. 28, 2014) .............................................. 4, 11
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`CLIO USA, Inc. v. The Procter and Gamble Co.,
`IPR2013-00450, Paper No. 19 (Feb. 4, 2014) ..................................................... 1
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`Gracenote, Inc. v. Iceberg Indus. LLC,
`IPR2013-00552, Paper No. 6 (May 7, 2014) .............................................. 6, 7, 11
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`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.,
`CBM2012-00003, Paper No. 7 (Oct. 25, 2012) .................................................. 10
`
`Tasco, Inc. v. Pagnani,
`IPR2013-00103, Paper No. 6 (May 23, 2013) ................................................ 4, 11
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`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054, Paper No. 16 (July 13, 2013) .............................................. 4, 11
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`Statutes
`35 U.S.C. § 312(a)(3) ........................................................................................passim
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`Regulations
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`37 C.F.R. § 42.24(a)(1) .............................................................................................. 8
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`37 C.F.R. § 42.71(c) ................................................................................................... 1
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`37 C.F.R. § 42.71(d) .................................................................................................. 1
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`37 C.F.R. § 42.104(b)(4) ...................................................................................passim
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`ii
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`I.
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`Case IPR2014-00238
`Patent 8,504,697
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`STATEMENT OF THE PRECISE RELIEF REQUESTED
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`Patent Owner VirnetX Inc. requests rehearing of the Patent Trial and Appeal
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`Board’s Decision entered May 14, 2014 (“Decision”), instituting an inter partes
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`review of U.S. Patent No. 8,504,697. As explained in VirnetX’s Preliminary
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`Response (Paper No. 12), Apple Inc.’s Petition (Paper No. 1, the “Petition”)
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`contravenes 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3) and should be
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`denied.
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`II. LEGAL STANDARD
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`“A party dissatisfied with a decision may file a request for rehearing.” 37
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`C.F.R. § 42.71(d). “The request must specifically identify all matters the party
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`believes the Board misapprehended or overlooked, and the place where each
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`matter was previously addressed in a motion, an opposition, or a reply.” Id.
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`Institution decisions are reviewed on rehearing for an abuse of discretion.
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`37 C.F.R. § 42.71(c). “An abuse of discretion occurs when a ‘decision was based
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`on an erroneous conclusion of law or clearly erroneous factual findings, or . . . a
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`clear error of judgment.’” CLIO USA, Inc. v. The Procter and Gamble Co.,
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`IPR2013-00450, Paper No. 19 at 2 (Feb. 4, 2014) (quoted source omitted).
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`III. STATEMENT OF REASONS FOR RELIEF REQUESTED
`Apple’s Petition represents a clear violation of 37 C.F.R. § 42.104(b)(4) and
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`35 U.S.C. § 312(a)(3), for it only seldomly cites the Wesinger reference upon
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`1
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`the Board
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`instituted IPR.
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` The Board has repeatedly enforced
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`Case IPR2014-00238
`Patent 8,504,697
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`which
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`§ 42.104(b)(4)’s mandate that a “petition must specify where each element of the
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`claim is found in the prior art patents or printed publications relied upon.”
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`Recognizing a petitioner’s burden of proof, the Board has refused to piece together
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`grounds of unpatentability that are not adequately set forth in a petition.
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`VirnetX’s Preliminary Response explained why Apple’s Petition fails to
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`comply with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3), and evades the
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`page limit for petitions. These arguments appear to have been misapprehended or
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`overlooked in the Decision, which makes reference to 37 C.F.R. § 42.104(b)(5)
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`and other requirements, but never discusses the distinct requirements of 37 C.F.R.
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`§ 42.104(b)(4) and 35 U.S.C. § 312(a)(3). Because the Petition fails to comply
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`with these provisions and the Board’s precedent applying them, and effectively
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`exceeds 60 pages, the Petition should be denied.
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`VirnetX respectfully requests rehearing of the Decision. If the Board is
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`inclined to deny such relief, VirnetX requests rehearing by an expanded panel so
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`that the Board’s jurisprudence in this important areathe basic substantive
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`requirements for petitionscan provide clear guidance to petitioners and patent
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`owners.
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`A. VirnetX’s Arguments Under 37 C.F.R. § 42.104(b) and 35 U.S.C.
`§ 312(a)(3) Were Misapprehended or Overlooked
`1.
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`Failing to Cite Asserted Prior Art Violates 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3)
`VirnetX explained that the Petition fails to cite Wesinger for all of the
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`features of any challenged claim in its purported application of the reference to the
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`claims. (Prelim. Resp. at 4-5.) For example, the Petition cites Wesinger only for
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`the “initiating” step of claim 1, not for any other feature of the claim. (See Pet. at
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`16-21.) Instead, the Petition requires the Board and VirnetX to search Apple’s
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`voluminous record and construct grounds of unpatentability on their own. (Id. at
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`3-5.)
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`This is no small task. For just independent claim 1, Apple cites 74
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`paragraphs of an accompanying declaration as its support for alleging anticipation
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`based on Wesinger. (See Pet. at 16-21 (citing Ex. 1003 ¶¶ 262-265, 267-275, 275-
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`280, 282-303, 305-308, 317, 322-328, 331-337, 339-343, 345-348, 350-354).) As
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`VirnetX explained, this approach shifts Apple’s burden to the Board and VirnetX,
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`asking them to parse the record “by (i) collecting the Petition’s declaration
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`citations for each claim feature, (ii) ascertaining the various arguments the
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`declarant makes for each feature, (iii) comparing those arguments to the disclosure
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`of the cited references, and (iv) determining whether referenced portions of the
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`prior art correspond to the features of the claims.” (Prelim. Resp. at 5 (emphases
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`3
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`added).)
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`Apple’s kitchen sink approach cannot be reconciled with the Board’s
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`instruction that the “petitioner has the burden to identify and explain the specific
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`evidence that supports its arguments in the petition” and “[t]hus, the petition itself
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`must identify ‘[h]ow the construed claim is unpatentable’ and must identify
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`‘specific portions of the evidence that support the challenge.’” CaptionCall, LLC
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`v. Ultratec, Inc., IPR2013-00549, Paper No. 20 at 5 (Apr. 28, 2014) (emphasis in
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`original). As the Board has explained, a “[p]etitioner should not expect the Board
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`to search the record and piece together any evidence or arguments that may support
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`[the p]etitioner’s ultimate conclusion.” Id. Because Apple’s Petition forces the
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`Board and VirnetX to do exactly thatcompare the petition to the declaration, the
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`declaration to the prior art, and the prior art to the claims, all while citing more
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`than 70 paragraphs of declarant testimony for a single claimit fails to comply
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`with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3), and should be denied
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`based on that substantive defect. (See Prelim Resp. at 3 (citing Wowza Media Sys.,
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`LLC et al. v. Adobe Sys., Inc., IPR2013-00054, Paper No. 16 at 3 (July 13, 2013);
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`Tasco, Inc. v. Pagnani, IPR2013-00103, Paper No. 6 at 22 (May 23, 2013).)
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`VirnetX respectfully submits that its arguments concerning 37 C.F.R.
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`§ 42.104(b)(4) and 35 U.S.C. § 312(a)(3) were overlooked or misapprehended in
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`the Decision. While the Decision acknowledges VirnetX’s argument that “the
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`Petition cites almost exclusively to a declaration instead of the prior art
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`references,” the Decision nowhere addresses 37 C.F.R. § 42.104(b)(4), 35 U.S.C.
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`§ 312(a)(3), or its case law applying those provisions, including the cases cited by
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`VirnetX. (Decision at 13.) Indeed, those cases present factual records less
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`egregious in many respects than the one present here, yet the Board denied
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`institution in those other cases. VirnetX thus requests rehearing on the ground that
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`the Petition fails to comply with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C.
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`§ 312(a)(3).
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`2.
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`Vague Grounds Without Explanation Violate 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3)
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`VirnetX also explained that, by citing large swaths of declarant testimony
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`without mapping specific elements of the prior art to the specific elements in the
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`challenged claims, the Petition is critically deficient in explanation. For example,
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`the Petition fails to explain how Wesinger discloses “determining, in response to
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`the request, whether the second network device is available for a secure
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`communications service,” as recited in claim 1 and similarly in claim 16. (Prelim.
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`Resp. at 5-6.) The Petition does not even attempt to map Wesinger’s disclosure to
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`these claim features. (Id. (citing Pet. at 18, 19, 21).) Instead, the Petition cites the
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`declaration for general features of Wesinger, and then concludes without
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`explanation that Wesinger “thus shows” the entire claimed feature. (Id.) The
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`5
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`Decision appears to recognize the Petition’s absence of explanation, finding that
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`Patent 8,504,697
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`“Petitioner presumably contends” the claimed “determining” step is satisfied by
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`the features of Wesinger that it cites. (Decision at 16 (emphasis added).)
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`The Petition’s lack of analysis, leaving the Board and VirnetX to presume
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`what grounds of unpatentability are being advanced, is improper under Board
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`precedent applying 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3). For
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`example, in Gracenote, Inc. v. Iceberg Indus. LLC, IPR2013-00552, Paper No. 6 at
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`20-21 (May 7, 2014), the Board considered a situation where the petitioner
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`“present[ed] limited, if any, arguments in its petition apart from the various
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`citations to the references and to [an expert] Declaration [] provided in the claim
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`charts.” The Board denied institution, finding that “[t]o the extent that such
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`unexplained citations qualify as argument, they are inadequate to demonstrate that
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`elements of the challenged claims are inherent in the cited references.” Id. at 21.
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`The Board further instructed that “parties requesting inter partes review should
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`‘avoid submitting a repository of all the information that a judge could possibly
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`consider, and instead focus on concise, well organized, easy-to-follow arguments
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`supported by readily identifiable evidence of record.’” Id. at 20 (quoted source
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`omitted).
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`Similarly, in Apple Inc. v. Evolutionary Intelligence, LLC, IPR2014-00079,
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`Paper No. 8 at 17 (Apr. 24, 2014), the Board considered a petition that “refer[red]
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`generally” to features of a prior art reference but did “not identify specifically what
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`Case IPR2014-00238
`Patent 8,504,697
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`Petitioner regards as the [claim element] as recited in claim 1.” Citing
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`§ 42.104(b)(4) and other rules, the Board found the petitioner’s discussion “vague”
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`for “failing to identify” how the claim element was satisfied by the prior art. Id.
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`The Board also found the “Petitioner’s numerous citations to the [expert]
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`declaration [] equally unpersuasive.” Id.
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`The Gracenote and Evolutionary Intelligence decisions, which issued after
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`VirnetX filed its Preliminary Response, are consistent with the cases cited by
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`VirnetX, in which deficient petitions were rejected. (See Prelim. Resp. at 3.)
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`Here, as in Gracenote, the Petition offers no explanation of how a claim feature
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`(e.g., the “determining” step) is met, apart from the various citations to an
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`accompanying declaration. Indeed, the present Petition is more deeply flawed than
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`that in Gracenote, for it only rarely cites the asserted reference (Wesinger) itself.
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`And as in Evolutionary Intelligence, the Petition fails to explain how the asserted
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`prior art corresponds to a specific claim element (the “determining” step). Just as
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`the Board found the petition in Evolutionary Intelligence “vague” and therefore
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`defective, here the Board has recognized that the Petition requires an assessment of
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`what “Petitioner presumably contends” in its discussion of the prior art. (Decision
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`at 16 (emphasis added).) The principle applied in both Gracenote and
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`Evolutionary Intelligence, which derives from 37 C.F.R. § 42.104(b)(4) and 35
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`7
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`U.S.C. § 312(a)(3), is that a petitioner has the burden of clearly articulating where
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`Case IPR2014-00238
`Patent 8,504,697
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`in the prior art each claim element is found. Because Apple’s Petition fails to
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`fulfill this substantive requirement for a petition, it should be denied.
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`These arguments concerning 37 C.F.R. § 42.104(b)(4) and 35 U.S.C.
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`§ 312(a)(3) were also overlooked or misapprehended in the Decision. The
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`Decision notes VirnetX’s argument that the Petition contains no explanation of
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`where Wesinger discloses the recited “determining” step of claim 1, but the
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`Decision nowhere addresses 37 C.F.R. § 42.104(b)(4) or 35 U.S.C. § 312(a)(3), or
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`the Board’s case law applying those provisions, including the cases cited by
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`VirnetX. (Decision at 13, 16.) The Decision also states that “Patent Owner does
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`not dispute Petitioner’s contentions,” which is factually incorrect in view of
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`VirnetX’s arguments noted above. (Decision at 21.)
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`3.
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`Apple’s Citations to the Prior Art Through a Declaration
`Render the Petition Overlength
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`VirnetX explained that the Petition’s reliance on sprawling citations to
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`declarant testimony, rather than specific portions of the prior art itself, circumvents
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`the page limit for petitions. (Prelim. Resp. at 5.) Apple’s Petition stands at 60
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`pages—the limit for a petition. 37 C.F.R. § 42.24(a)(1)(i). As noted above, for
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`just the ground based on Wesinger and claim 1, the Petition relies on 74 paragraphs
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`of declarant testimony. The Decision notes VirnetX’s concern that Apple’s
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`8
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`citation scheme disregards the 60-page limit for petitions, but concludes that the
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`Patent 8,504,697
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`Petition nonetheless complies with “prescribed page limits.” (Decision at 13.)
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`As an illustration of VirnetX’s concern, after VirnetX filed its Preliminary
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`Response in this matter, the Board issued an Order in other IPRs involving patents
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`in the same family as the ’697 patent. (Order in RPX Corp. v. VirnetX Inc.,
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`IPR2014-00171-IPR2014-00177, Paper No. 37 (Mar. 17, 2014).) The Order
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`explained that the petitions “cite to [the] declarant instead of the prior art,” and
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`“[i]n turn, the declarant cites to the prior art.” (Id. at 3-4.)1 The Board required the
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`petitioner to file substitute petitions containing the missing citations. In response,
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`by attempting to import the declarations’ citations to the prior art into the body of
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`the petitions themselves, six of the seven petitions became overlength, with the
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`largest totaling 78 pages. 2
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` (IPR2014-00173, Ex. 1078.)
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` By merely
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`importing citationsnot to mention substantive discussion in the declarations that
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`1 As explained in VirnetX’s Requests for Rehearing in each matter at issue,
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`the petitions are substantively defective under 37 C.F.R. § 42.104(b) and should be
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`denied, not subject to correction midstream. (See, e.g., IPR2014-00171, Paper No.
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`44 (Mar. 26, 2014).)
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`2 Apple requested Board authorization to follow the same procedure here,
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`but the Board decided that a conference call to discuss the issue was unnecessary.
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`9
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`was missing in the petitionsthey almost all became overlength. For a 60-page
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`Case IPR2014-00238
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`petition such as the present Petition, exceeding the 60-page limit would be certain
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`if the same exercise were required of Apple here.
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`The Petition’s disregard for the 60-page limit also appears to have been
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`misapprehended or overlooked in the Decision. In particular, the Decision does
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`not appear to appreciate the practical problem of importing a massive number of
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`declaration citations into the body of the Petition, not to mention the missing
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`substantive discussion.
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`B. VirnetX Requests an Expanded Panel on Rehearing
`To the extent that the Board declines to grant this Request for Rehearing,
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`VirnetX respectfully requests an expanded panel on rehearing to consider the
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`applicability of 37 C.F.R. § 42.104(b) and 35 U.S.C. § 312(a)(3) in situations
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`where petitions either (1) cite almost exclusively to declarant testimony or (2)
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`provide inadequate explanation of proposed grounds such that the Board must
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`presume the substance of grounds in a petition. The Office has assembled
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`expanded panels in the past when setting substantive rules on the content of
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`petitions, and VirnetX believes an expanded panel would permit the Office to
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`clarify its policy on this important issuethe basic substantive requirements for
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`petitions. See, e.g., Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.,
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`CBM2012-00003, Paper No. 7 (Oct. 25, 2012) (expanded panel promulgating rules
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`10
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`on redundant rejections). This is especially true here where different panels appear
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`to be applying different standards to petitions. Compare Decision at 13, 16, with
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`CaptionCall, IPR2013-00549, Paper No. 20 at 5; Wowza, IPR2013-00054, Paper
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`No. 16 at 3; Tasco, IPR2013-00103, Paper No. 6 at 22; Gracenote, IPR2013-
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`00552, Paper No. 6 at 20-21; and Evolutionary Intelligence, IPR2014-00079, Paper
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`No. 8 at 17.
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`IV. CONCLUSION
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`For the foregoing reasons, VirnetX respectfully requests rehearing of the
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`Board’s May 14, 2014 Decision instituting inter partes review. Apple’s Petition
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`should be denied.
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`Dated: May 28, 2014
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`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Reg. No. 46,508
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`Counsel for Patent Owner
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`11
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`Certificate of Service
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`Case IPR2014-00238
`Patent 8,504,697
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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)(1) by electronic means on May
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`28, 2014 at the following address of record:
`
`Jeffrey P. Kushan
`jkushan@sidley.com
`Sidley Austin LLP
`1501 K Street, N.W.
`Washington, D.C. 20005
`
`Joseph A. Micallef
`jmicallef@sidley.com
`Sidley Austin LLP
`1501 K Street, N.W.
`Washington, D.C. 20005
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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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`
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`Dated: May 28, 2014