IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`In re Patent of: Munger et al.
`U.S. Patent No.: 6,502,135 Attorney Docket No.: 38868-0004IP1
`Issue Date:
`Dec. 31, 2002
`Appl. Serial No.: 09/504,783
`Filing Date:
`Feb. 15, 2000
`Title:
`AGILE NETWORK PROTOCOL FOR SECURE COMMUNICATIONS
`
`WITH ASSURED SYSTEM AVAILABILITY
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`
`
`
`
`
`PETITION FOR INTER PARTES REVIEW OF UNITED STATES PATENT NO. 6,502,135
`PURSUANT TO 35 U.S.C. §§ 311–319, 37 C.F.R. § 42
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`
`TABLE OF CONTENTS
`
`I. 
`
`II. 
`III. 
`
`IV. 
`
`V. 
`
`2. 
`
`MANDATORY NOTICES UNDER 37 C.F.R § 42.8(a)(1) ........................................... 1 
`A.  Real Party-In-Interest Under 37 C.F.R. § 42.8(b)(1) ............................................ 1 
`B.  Related Matters Under 37 C.F.R. § 42.8(b)(2) .................................................... 1 
`C.  Lead And Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3) ................................. 2 
`D.  Service Information .............................................................................................. 2 
`PAYMENT OF FEES – 37 C.F.R. § 42.103 ................................................................ 2 
`REQUIREMENTS FOR IPR UNDER 37 C.F.R. § 42.104 .......................................... 3 
`A.  Grounds for Standing Under 37 C.F.R. § 42.104(a) ............................................ 3 
`1. 
`Voluntarily dismissal of invalidity without prejudice of the 2007 and 2010
`VirnetX litigations nullifies service of corresponding complaints for
`purposes of 35 U.S.C. § 315(b). ................................................................ 4 
`Independent of considerations relating to dismissal of the 2007 and 2010
`VirnetX litigations, proper interpretation of 35 U.S.C. § 315(b) permits this
`IPR under the present circumstances ....................................................... 7 
`Identification of Claims Being Challenged (37 C.F.R. § 42.104(b)) ................... 13 
`B. 
`Relevant Information Concerning the Contested Patent ........................................... 14 
`A.  Effective Filing Date and Prosecution History of the ’135 patent ....................... 14 
`B.  Construction of Terms Used in the Claims ........................................................ 15 
`1. 
`Virtual Private Network (VPN) (Claims 1, 10, and 13) ............................. 16 
`2. 
`DNS Proxy Server (Claims 10, 8) ............................................................ 19 
`MANNER OF APPLYING CITED PRIOR ART TO EVERY CLAIM FOR WHICH AN
`IPR IS REQUESTED, THUS ESTABLISHING A REASONABLE LIKELIHOOD THAT
`AT LEAST ONE CLAIM OF THE ‘135 PATENT IS UNPATENTABLE ..................... 19 
`A. 
`[GROUND 1] – Claims 1, 3, 4, 7, 8, 10, 12, and 13 Are Anticipated By Aventail
`(Ex. 1007) .......................................................................................................... 19 
`1. 
`Aventail Anticipates Claim 1 .................................................................... 20 
`2. 
`Aventail Anticipates Claim 10 .................................................................. 22 
`3. 
`Aventail Anticipates Claim 13 .................................................................. 25 
`4. 
`Aventail Anticipates Claim 3 .................................................................... 28 
`5. 
`Aventail Anticipates Claim 4 and 12 ........................................................ 28 
`6. 
`Aventail Anticipates Claim 7 .................................................................... 29 
`7. 
`Aventail Anticipates Claim 8 .................................................................... 30 
`[GROUND 2] – Aventail Connect In View of Aventail Extranet Center Renders
`Claims 1-10, 12-15 and 18 Obvious .................................................................. 30 
`[GROUND 3] – Aventail In View of RFC 1035 Renders Claim 4 Obvious ......... 31 
`
`B. 
`
`C. 
`
`i
`
`

`
`D. 
`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`[GROUND 4] – Claims 1-4, 7, 8, 10, and 12 Are Anticipated by Kiuchi (Ex. 1066)
` ........................................................................................................................... 32 
`1. 
`Kiuchi Anticipates Claim 1 ....................................................................... 33 
`2. 
`Kiuchi Anticipates Claim 3 ....................................................................... 36 
`3. 
`Kiuchi Anticipates Claim 4 ....................................................................... 36 
`4. 
`Kiuchi Anticipates Claim 7 ....................................................................... 37 
`5. 
`Kiuchi Anticipates Claim 8 ....................................................................... 38 
`6. 
`Kiuchi Anticipates Claim 10 ..................................................................... 39 
`7. 
`Kiuchi Anticipates Claim 12 ..................................................................... 40 
`[GROUND 5] – Kiuchi In View of RFC 1034 Renders Claim 8 Obvious ............ 41 
`E. 
`REDUNDACY ............................................................................................................ 43 
`VI. 
`VII.  CONCLUSION .......................................................................................................... 43 
`
`
`ii
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`
`EXHIBITS
`
`
`MSFT-1001
`
`MSFT-1002
`
`U.S. Patent No. 6,502,135 to Munger et al. (“the ‘135 patent”)
`
`Excerpts from the Prosecution History of the ‘135 Patent (“the Prose-
`cution History”)
`
`MSFT-1003
`
`Declaration of Dr. Roch Guerin re ’135
`
`MSFT-1004
`
`(Reserved)
`
`MSFT-1005
`
`Declaration of Chris A. Hopen re ’135
`
`MSFT-1006
`
`Declaration of James Chester re ’135
`
`MSFT-1007
`
`Aventail Connect v3.01/2.51 Administrator’s Guide and Aventail Ex-
`traNet Server v3.0 Administrator’s Guide (UNIX and Windows NT)
`(1996-1999)
`
`MSFT-1008
`
`(Reserved)
`
`MSFT-1009
`
`(Reserved)
`
`MSFT-1010
`
`(Reserved)
`
`MSFT-1011
`
`(Reserved)
`
`MSFT-1012
`
`(Reserved)
`
`MSFT-1013
`
`(Reserved)
`
`MSFT-1014
`
`(Reserved)
`
`MSFT-1015
`
`(Reserved)
`
`iii
`
`

`
`MSFT-1016
`
`MSFT-1017
`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`Mockapetris, P., RFC 1034, “Domain Names – Concepts and Facili-
`ties,” November 1987
`
`Mockapetris, P., RFC 1035, “Domain Names – Implementation and
`Specification,” November 1987
`
`MSFT-1018
`
`(Reserved)
`
`MSFT-1019
`
`(Reserved)
`
`MSFT-1020
`
`(Reserved)
`
`MSFT-1021
`
`Aventail AutoSOCKS v2.1 Administration and User’s Guide, 1996-
`1997
`
`MSFT-1022
`
`Aventail Connect v3.1/v2.6 Administrator’s Guide, 1996-1999
`
`MSFT-1023
`
`(Reserved)
`
`MSFT-1024
`
`(Reserved)
`
`MSFT-1025
`
`(Reserved)
`
`MSFT-1026
`
`(Reserved)
`
`MSFT-1027
`
`(Reserved)
`
`MSFT-1028
`
`(Reserved)
`
`MSFT-1029
`
`(Reserved)
`
`MSFT-1030
`
`(Reserved)
`
`MSFT-1031
`
`(Reserved)
`
`MSFT-1032
`
`(Reserved)
`
`MSFT-1033
`
`(Reserved)
`
`iv
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`
`MSFT-1034
`
`(Reserved)
`
`MSFT-1035
`
`(Reserved)
`
`MSFT-1036
`
`(Reserved)
`
`MSFT-1037
`
`(Reserved)
`
`MSFT-1038
`
`(Reserved)
`
`MSFT-1039
`
`(Reserved)
`
`MSFT-1040
`
`(Reserved)
`
`MSFT-1041
`
`Bradner, S., RFC 2026, “The Internet Standards Process – Revision
`3,” October 1996
`
`MSFT-1042
`
`(Reserved)
`
`MSFT-1043
`
`(Reserved)
`
`MSFT-1044
`
`(Reserved)
`
`MSFT-1045
`
`MSFT-1046
`
`Memorandum Opinion in VirnetX, Inc. v. Microsoft Corporation, 6:07-
`CV-80 (7/30/09) (EDTX)
`
`VirnetX’s Opening Claim Construction Brief in VirnetX Inc. v. Cisco
`Systems, Inc., et al., 6:10-CV-417 (11/4/11) (EDTX)
`
`MSFT-1047
`
`(Reserved)
`
`MSFT-1048
`
`MSFT-1049
`
`VirnetX’s Reply Claim Construction Brief in VirnetX Inc. v. Cisco Sys-
`tems, Inc., et al., 6:10-CV-417 (12/19/11) (EDTX)
`
`Memorandum Opinion and Order in VirnetX Inc. v. Cisco Systems,
`Inc., et al., 6:10-CV-417 (4/25/12) (EDTX)
`
`MSFT-1050
`
`(Reserved)
`
`v
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`
`MSFT-1051
`
`(Reserved)
`
`MSFT-1052
`
`(Reserved)
`
`MSFT-1053
`
`(Reserved)
`
`MSFT-1054
`
`(Reserved)
`
`MSFT-1055
`
`(Reserved)
`
`MSFT-1056
`
`(Reserved)
`
`MSFT-1057
`
`Curriculum Vitae of Chris Hopen
`
`MSFT-1058
`
`MSFT-1059
`
`MSFT-1060
`
`“Aventail Ships the First Standards-Based Virtual Private Network
`Software Solution,” PR Newswire, PR Newswire Association LLC, May
`2, 1997
`
`Szeto, L., “Aventail delivers highly secure, flexible VPN solution,” In-
`foWorld Media Group, June 23, 1997
`
`“Aventail Introduces the First Extranet-Ready Platform; Aventail Pre-
`views its Latest Solution, Aventail ExtraNet Center, at Net-
`world+Interop in Atlanta,” PR Newswire, PR Newswire Association
`LLC, October 12, 1998
`
`MSFT-1061
`
`(Reserved)
`
`MSFT-1062
`
`Curriculum Vitae of James Chester
`
`MSFT-1063
`
`(Reserved)
`
`MSFT-1064
`
`(Reserved)
`
`MSFT-1065
`
`(Reserved)
`
`vi
`
`

`
`MSFT-1066
`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`Takahiro Kiuchi and Shigekoto Kaihara, “C-HTTP - The Development
`of a Secure, Closed HTTP-based Network on the Internet,” published
`by IEEE in the Proceedings of SNDSS 1996
`
`MSFT-1067
`
`(Reserved)
`
`MSFT-1068
`
`D. Eastlake, RFC 2535, “Domain Name System Security Extensions,”
`(March 1999)
`
`MSFT-1069
`
`IPR2013-00348, Patent Owner’s Preliminary Response
`
`MSFT-1070
`
`(Reserved)
`
`MSFT-1071
`
`(Reserved)
`
`Dismissal without prejudice with regard to invalidity of VirnetX Inc.
`v.Microsoft Corp., Docket No. 6:07CV80
`Dismissal from VirnetX Inc. v. Microsoft Corp., Docket No. 6:10CV94
`
`Copy of Docket from VirnetX Inc. v. Microsoft Corp., Docket No.
`6:10CV94
`
`Redacted Settlement Agreement between VirnetX Inc. and Microsoft
`Corporation (Exhibit 10.1 from VirnetX SEC filing)
`
`MSFT-1072
`
`MSFT-1073
`
`
`
`MSFT-1074
`
`MSFT-1075
`
`
`
`
`
`vii
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`Microsoft Corporation (“Petitioner” or “Microsoft”) petitions for Inter Partes Review
`
`(“IPR”) under 35 U.S.C. §§ 311–319 and 37 C.F.R. § 42 of claims 1, 3, 4, 7, 8, 10, 12, and
`
`13 (“the Challenged Claims”) of U.S. Patent No. 6,502,135 (“the ‘135 patent”). As explained
`
`in this petition, there exists a reasonable likelihood that Microsoft will prevail with respect to
`
`at least one of the Challenged Claims.
`
`The Challenged Claims are unpatentable based on teachings set forth in at least the
`
`references presented in this petition. Microsoft respectfully submits that an IPR should be
`
`instituted, and that the Challenged Claims should be canceled as unpatentable.
`
`I.
`
`MANDATORY NOTICES UNDER 37 C.F.R § 42.8(a)(1)
`
`Real Party-In-Interest Under 37 C.F.R. § 42.8(b)(1)
`A.
`Petitioner, Microsoft Corporation, is the real party-in-interest.
`
`
`
`Related Matters Under 37 C.F.R. § 42.8(b)(2)
`B.
`The ’135 patent is the subject of a number of civil actions including: (i) Civ. Act. No.
`
`6:13-cv-00211-LED (E.D. Tex.), filed February 26, 2013; (ii) Civ. Act. No. 6:12-cv-00855-
`
`LED (E.D. Tex.), filed November 6, 2012; (iii) Civ. Act. No. 6:10-cv-00417-LED (E.D. Tex.),
`
`filed August 11, 2010; (iv) Civ. Act. No. 6:11-cv-00018-LED (E.D. Tex), (iv) Civ. Act. No.
`
`6:13-cv-00351-LED (E.D. Tex), filed April 22, 2013 (“the 2013 VirnetX litigation”); (v) Civ.
`
`Act. No. 6:10-cv-00094 (E.D. Tex); and (vi) Civ. Act. No. 6:07-cv-00080 (E.D. Tex).
`
`The ’135 patent is the subject of two petitions for inter partes review filed by RPX
`
`Corporation, which have been designated as IPR2014-00171 and IPR2014-00172. The
`
`1
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`’135 patent is also the subject of merged inter partes reexamination nos. 95/001,679 and
`
`95/001,682. In the merged proceedings, the Office recently issued a Non-Final Action re-
`
`jecting all 18 claims of the ’135 patent, including rejections based on, inter alia, Ex. 1007
`
`(Aventail) and Ex. 1066 (Kiuchi). The ’135 patent also was subject to reexamination no.
`
`95/001,269, which concluded on June 7, 2011 with an inter partes reexamination certificate
`
`confirming all claims and adding new claim 18.
`
`Concurrently with this petition, Microsoft is filing another petition for IPR (identified
`
`with attorney docket number 38868-0003IP2) of the ‘135 patent. The relationship between
`
`the limited grounds presented in these two petitions is discussed in Section VI.
`
`Lead And Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3)
`C.
`Microsoft provides the following designation of counsel.
`
`LEAD COUNSEL
`W. Karl Renner, Reg. No. 41,265
`3200 RBC Plaza
`60 South Sixth Street
`Minneapolis, MN 55402
`T: 202-783-5070
`F: 202-783-2331
`
`
`BACKUP COUNSEL
`Kevin E. Greene, Reg. No. 46,031
`3200 RBC Plaza
`60 South Sixth Street
`Minneapolis, MN 55402
`T: 202-626-6376
`F: 202-783-2331
`
`Service Information
`D.
`Please address all correspondence and service to counsel at the address provided
`
`in Section I(C). Microsoft also consents to electronic service by email at IPR38868-
`
`0004IP1@fr.com.
`
`PAYMENT OF FEES – 37 C.F.R. § 42.103
`II.
`Microsoft authorizes the Patent and Trademark Office to charge Deposit Account No.
`
`2
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`06-1050 for the fee set in 37 C.F.R. § 42.15(a) for this Petition and further authorizes pay-
`
`ment for any additional fees to be charged to this Deposit Account.
`
`III.
`
`REQUIREMENTS FOR IPR UNDER 37 C.F.R. § 42.104
`
`Grounds for Standing Under 37 C.F.R. § 42.104(a)
`A.
`Microsoft certifies that the ‘135 Patent is eligible for IPR. The present petition is be-
`
`ing filed within one year of service of a complaint against Microsoft in the 2013 VirnetX liti-
`
`gation.1
`
`VirnetX has asserted the ‘135 patent against Microsoft. Under the plain language of
`
`the statute, Microsoft’s petition is timely. Out of an abundance of caution, however, Mi-
`
`crosoft explains herein why VirnetX’s prior assertions do not impact Microsoft’s ability to
`
`bring the current IPR. Chief among these, (1) dismissal of Microsoft’s validity challenges in
`
`the prior disputes was without prejudice to Microsoft’s rights to challenge again; and (2) Mi-
`
`crosoft agreed to the prior dismissals were based on VirnetX’s dismissal, settlement, re-
`
`lease and license (all of which VirnetX has ignored to sue Microsoft again).
`
`Contextually, in two prior instances, VirnetX asserted the ‘135 patent against Mi-
`
`crosoft: VirnetX Inc. v. Microsoft Corp., Docket Nos. 6:07CV80 and 6:10CV94 (“the 2007
`
`
`1The complaint in the 2013 VirnetX litigation was served on April 23, 2013.
`
`3
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`VirnetX litigation” and “the 2010 VirnetX litigation,” respectively)2. Neither these litigations
`
`nor service of corresponding complaints bar Microsoft from petitioning for IPR of the ‘135
`
`patent under 35 U.S.C. § 315(b) for at least the following reasons.
`
`1) In agreeing to voluntarily dismiss the 2007 and 2010 VirnetX litigations, both par-
`
`ties stipulated that Microsoft’s defense of invalidity was dismissed without preju-
`
`dice, nullifying effect of the service of corresponding complaints for purposes of
`
`the applicable rules. See Ex. 1075, § 5.1. And, based on the “without prejudice”
`
`language, as well as on the licenses, releases, and other language of the settle-
`
`ments, Microsoft withdrew its challenges to the patent without prejudice to the
`
`right to bring them in the future.
`
`2) Independent of considerations relating to dismissal and nullification of the service
`
`in the 2007 and 2010 VirnetX litigations, proper interpretation of 35 U.S.C. §
`
`315(b) permits this IPR under the present circumstances.
`
`1. Voluntarily dismissal of invalidity without prejudice of the
`2007 and 2010 VirnetX litigations nullifies service of corre-
`sponding complaints for purposes of 35 U.S.C. § 315(b).
`In the 2007 and 2010 VirnetX litigations, VirnetX voluntarily dismissed its infringe-
`
`ment actions, pursuant to Fed. R. Civ. P. 41, before entry of a final judgment. The Board
`
`
`2 The 2007 and 2010 VirnetX litigations accused Microsoft of infringement of both U.S. Pa-
`
`tent Nos. 6,502,135 and 7,188,180.
`
`4
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`has previously found that, in appropriate circumstances, “a voluntary dismissal of an in-
`
`fringement action [nullifies] the effect of the alleged service of the complaint on the petition-
`
`er.” IPR2013-00175 (BAE Systems Information and Electronic Systems Integration, Inc. v.
`
`Cheetah Omni, LLC), Paper 15 at 3. Even voluntary dismissal of an infringement action
`
`with prejudice – a situation that indicates a far more definitive resolution of an invalidity chal-
`
`lenge – has been found to nullify the legal effect of service of a corresponding complaint so
`
`long as there is a reason “why the dismissal with prejudice should be treated as a dismissal
`
`without prejudice.” IPR2013-00168 (Universal Remote Control, Inc. v. Universal Electron-
`
`ics, Inc.), Paper 9 at 6. Based on the facts of this case, the dismissals of the infringement
`
`actions in the 2007 and 2010 VirnetX litigations should indeed be treated as dismissals
`
`without prejudice as to invalidity for purposes of 35 U.S.C. § 315(b).
`
`Here, the Court dismissed the 2007 and 2010 VirnetX litigations pursuant to a set-
`
`tlement agreement that expressly preserved Microsoft’s ability to later challenge the validity
`
`of the patents-in-suit. The settlement agreement states, “Microsoft’s affirmative defenses
`
`and counterclaims of (i) non-infringement and invalidity shall be dismissed without preju-
`
`dice”. Ex. 1075, at § 5.1. Consistent with this, the Court dismissed the 2007 case, com-
`
`plementing its indication that “[a]ll claims asserted [by VirnetX] against Microsoft . . . are
`
`dismissed with prejudice” with overt recognition of Microsoft’s continued ability to challenge
`
`validity. Ex. 1072, at p. 1 (“dismissal is without prejudice to Microsoft’s ability to assert, in
`
`future actions, (i) affirmative defenses and/or counterclaims of invalidity or non-
`
`5
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`
`infringement.” (emphasis added)).
`
`With regard to the 2010 case, invalidity had not yet been raised, as Microsoft had not
`
`yet filed an answer to VirnetX’s complaint at the time of its dismissal. See Ex. 1074, at pp.
`
`2-3. Without any affirmative defenses and/or counterclaims having been asserted by Mi-
`
`crosoft, the Court had no basis to include the defenses and counterclaims in its dismissal
`
`order. Rather, the Court properly left untouched Microsoft’s ability to later raise invalidity
`
`challenges in accordance with the settlement agreement (which unambiguously recognizes
`
`that the voluntary dismissal was without prejudice on invalidity in both the 2007 and 2010
`
`VirnetX litigations). Congruently, the settlement agreement adds that Microsoft “does not
`
`release or discharge (or grant a covenant or hold harmless as to) its Claims that the Li-
`
`censed Patents are invalid.” Ex. 1075, § 3.2.
`
`In exchange for retaining its right to later challenge the validity of the ‘135 patent, Mi-
`
`crosoft agreed to discontinue all of its then-pending challenges to the patents-in-suit in the
`
`Patent Office. Microsoft agreed to stop its participation in the then pending inter partes
`
`reexamination of the ‘135 patent that Microsoft had requested. See Ex. 1075, § 7.16. To
`
`that end, and in accordance with the agreement, Microsoft filed “with the United States Pa-
`
`tent and Trademark Office notifications in the then-current reexamination proceedings of the
`
`Patents-In-Suit indicating that Microsoft Corporation will not participate in those reexamina-
`
`tion proceedings.” Ex. 1075, § 7.16. And, Microsoft has not challenged the validity of the
`
`‘135 patent since the settlement of the 2007 and 2010 VirnetX litigations. Only now, in re-
`
`6
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`sponse to VirnetX once again suing Microsoft, does Microsoft seek to exercise the right that
`
`it earlier preserved to challenge the validity of the ‘135 patent.
`
`Importantly, the “without prejudice” manner in which Microsoft’s affirmative defenses
`
`and counterclaims were dismissed placed Microsoft and VirnetX in the same position as to
`
`invalidity that they would have been had the earlier invalidity action never been brought.
`
`See IPR2013-00168 (Universal Remote Control, Inc. v. Universal Electronics, Inc.), Paper 9
`
`at 6 Microsoft does not seek a broad ruling that automatically treats every voluntary dismis-
`
`sal as nullifying the effect of service for inter partes review purposes. Rather, Microsoft re-
`
`spectfully submits that the particular circumstances of this case simply warrant such treat-
`
`ment. Because the prior dismissals did not prejudice Microsoft’s right to challenge validity,
`
`and because VirnetX can hardly claim harassment by way of administrative challenges un-
`
`coordinated with litigation, the circumstances here – where a patentee has sued on the
`
`same patents again after settling prior disputes and granting a license – justify allowing Mi-
`
`crosoft to test the validity of the patents. Microsoft presently faces a third assertion by Vir-
`
`netX of the ‘135 patent, and Microsoft earlier withdrew its validity challenge based on an
`
`agreement in which VirnetX overtly acknowledged (and thus, preserved) Microsoft’s ability
`
`to later challenge the ‘135 patent. These facts make it appropriate to treat the dismissal of
`
`the 2007 and 2010 VirnetX litigations as nullifying earlier service for purposes of § 315(b),
`
`making IPR available to Microsoft in this instance.
`
`2. Independent of considerations relating to dismissal of the
`2007 and 2010 VirnetX litigations, proper interpretation of 35
`
`7
`
`

`
`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`U.S.C. § 315(b) permits this IPR under the present circum-
`stances
`If for any reason the Board decides that the dismissal of the prior litigations does not
`
`nullify the effect of service, the Board should nevertheless interpret 35 U.S.C. § 315(b) as
`
`permitting this IPR since the Petition is being filed within one year of service of a complaint.
`
`Notably, § 315(b) does not specify a one-year deadline that runs from the date of the first
`
`complaint served on a petitioner. Rather, it states “[a]n inter partes review may not be insti-
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`tuted if the petition requesting the proceeding is filed more than 1 year after the date on
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`which the petitioner, real party in interest, or privy of the petitioner is served with a complaint
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`alleging infringement of the patent.” 35 U.S.C. § 315(b).
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`Microsoft appreciates that the Board may have found otherwise in Universal Remote
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`Control (IPR2013-00168), but Microsoft seeks further consideration of the issue because
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`statutory inclusion of the indefinite article “a” before the subject—“complaint”—creates an
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`ambiguity in the application of § 315(b) to the current situation – where an IPR is filed within
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`one year of service of a subsequent complaint alleging infringement of the patent, but after
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`one year from service of an initial complaint(s) alleging infringement of the same patent.
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`See IPR2013-00168 (Universal Remote Control, Inc. v. Universal Electronics, Inc.), Paper 9
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`at 5. Here, multiple complaints alleging infringement by Microsoft of the same patent un-
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`questionably creates multiple dates of service from which the preclusive effect of § 315(b)
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`may be measured, and the later date is within one year of the present Petition in compliance
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`with §315(b), if the most recent complaint is recognized as “a complaint alleging infringe-
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`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
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`ment of the patent.”
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`The Universal Remote Control Board acknowledged that “the plain language of the
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`statute does not address the subject of multiple lawsuits involving the same patent.” Id. at
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`p. 4. Yet, that Board declined an invitation to interpret the statute, suggesting to the contra-
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`ry that statute was in fact not subject to interpretation, despite the ambiguity inherent in the
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`language of § 315(b).
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`In as much as the § 315(b) language is open to competing interpretations that mate-
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`rially impact its application to the present case, Microsoft believes that § 315(b) is neces-
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`sarily open to interpretation, and Microsoft hereby requests the same. In doing so, Mi-
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`crosoft advances the potential for at least the following two interpretations, while submitting
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`that the second is more appropriate under the circumstances:
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`(1) If “a complaint” is interpreted to mean “a first complaint,” then § 315(b) would be
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`read: “An inter partes review may not be instituted if the petition requesting the
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`proceeding is filed more than 1 year after the date on which the petitioner, real
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`party in interest, or privy of the petitioner is served with a first complaint alleging
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`infringement of the patent.”
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`(2) If “a complaint” is interpreted to mean “any complaint” including “a latest filed
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`complaint,” then § 315(b) would be read: “An inter partes review may not be insti-
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`tuted if the petition requesting the proceeding is filed more than 1 year after the
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`date on which the petitioner, real party in interest, or privy of the petitioner is
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`9
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`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`served with a latest complaint alleging infringement of the patent.”
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`In any event, as can be seen from each potential interpretation, “a complaint” leaves
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`§ 315(b) open to various competing interpretations, and thus, is not sufficient to avoid the
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`need for interpretation.
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`It has been noted that “because most of the elements of these new proceedings are
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`required to be implemented through regulations, the USPTO also has substantial discretion
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`in construing and applying the statutory text of chapters 31 and 32.” Joe Matal, A Guide to
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`the Legislative History of the America Invents Act: Part II of II, 21 Fed. Cir. Bar J. 539, 604-5
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`(2012). Given this authority, the Board should adopt the second potential interpretation of §
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`315(b), which would permit institution of an IPR where the petition is filed within one year of
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`service of any complaint alleging infringement of the patent. This interpretation is consistent
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`with the legislative history, which reveals Congresses mutual goals of preventing “abusive
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`serial challenges to patents” while “coordinat[ing] inter partes and post-grant review with liti-
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`gation.” 157 Con. Rec. S1041 (daily ed. Mar. 1, 2011) (statement of Sen. Kyl). Indeed, un-
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`der this proposed interpretation, a patentee would only be subject to challenge when bring-
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`ing a complaint against a party, leaving them in full control over the situation, and preventing
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`the kind of abusive challenges that Congress intended to shut down. To the point, when
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`considering the various post-grant challenges included in the proposed legislation, the
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`House of Representatives’ Committee on the Judiciary more specifically reported:
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`The Committee recognizes the importance of quiet title to patent owners to
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`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`ensure continued investment resources. While this amendment is intended to
`remove current disincentives to current administrative processes, the chang-
`es made by it are not to be used as tools for harassment or a means to pre-
`vent market entry through repeated litigation and administrative attacks on the
`validity of a patent. Doing so would frustrate the purpose of the section as
`providing quick and cost effective alternatives to litigation. Further, such ac-
`tivity would divert resources from the research and development of inven-
`tions. As such, the Committee intends for the USPTO to address potential
`abuses and current inefficiencies under its expanded procedural authority.
`H.R. Rep. No. 112-98, 112th Cong., at 76 (2011).
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`And yet, the patentee’s interests were not the only interests of Congressional con-
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`cern. Congress also clearly intended to provide a quick and cost effective tool for defend-
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`ants to use as an alternative to litigation. Congress didn’t express any intent to limit the use
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`of this tool by defendants, other than to prevent the aforementioned harassment of patent-
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`ee. Thus, the Board should interpret the statutory limits on IPRs (e.g., the limits imposed by
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`§ 315(b)) as safe guards against abusive challenges aimed at harassing a patent owner and
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`not as a means of precluding defendants from using otherwise available tools when con-
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`fronted with new assertions of infringement, especially when patentees can hardly proclaim
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`harassment when their new complaint of infringement triggers the availability of the tool.
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`Adopting the proposed interpretation of § 315(b) satisfies these legislative goals. In
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`particular, the proposed interpretation would prevent an IPR from being instituted more than
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`one year after service of a first complaint, unless patentee brings new allegations of in-
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`11
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`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`fringement against a defendant. By barring an IPR more than a year after service of a first
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`complaint, without regard to service of subsequent complaints, a third party is disincentiv-
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`ised from settling in a manner that promotes dismissal with prejudice; indeed, since such a
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`bar may prevent a party seeking to settle with prejudice from being able to settle without
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`jeopardizing their ability to later use USPTO tools to defend themselves if patentee dishon-
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`ors the settlement terms. On the other hand, allowing an IPR to be filed within a year of
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`service of any subsequent complaints would coordinate IPR with subsequent litigation and
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`provide the third party with the cost-effective alternative intended by Congress.
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`Applying the proposed interpretation of § 315(b) to the facts of this case provides a
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`model of how the proposed interpretation aligns with Congressional intent. As described
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`above, the settlement agreement that was mutually reached by the parties in the 2007 and
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`2010 VirnetX litigations specifically preserved Microsoft’s right to challenge the validity of
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`the ‘135 patent in future proceedings. In other words, the Patent Owner in this case specifi-
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`cally consented to future challenges to the validity of the ‘135 patent. Therefore, the institu-
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`tion of an IPR as a result of this petition cannot be considered abusive or harassing, be-
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`cause the patent owner has implicitly consented to such a challenge.
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`One can easily imagine other situations that unjustly frustrate Congressional intent if
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`§315(b) were interpreted inconsistent with Microsoft’s proposed interpretation. For exam-
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`ple, consider a situation in which a patent owner brings a first complaint alleging infringe-
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`ment of a patent by a defendant’s first product. The defendant determines that it has a very
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`Attorney Docket No. 38868-0003IP1
`IPR of U.S. Patent No. 6,502,135
`strong argument for non-infringement with regard to the first product. To conserve re-
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`sources, the defendant decides to focus its defense exclusively on non-infringement. How-
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`ever, the patent owner subsequently brings a second complaint alleging infringement of the
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`same patent by a second product produced by the defendant. In analyzing the patent with
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`regard to the second product, the defendant determines that it does not have a strong ar-
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`gument for non-infringement this time. In this situation, the defendant would not be barred
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`from asserting invalidity of the patent at the second trial, and, for similar reasons, the de-
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`fendant should not be precluded from pursuing an IPR of the patent owner’s patent.
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`For at least these reasons, Microsoft submits that §315(b) is ambiguous when ap-
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`plied to the situation where multiple lawsuits involve the same patent and therefore should
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`be interpreted as permitting this Petition in light of congressional intent.
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`Identification of Claims Being Challenged (37 C.F.R. § 42.104(b))
`B.
`Claims 1, 3, 4, 7, 8, 10, 12, and 13 of the ’135 patent are unpatentable as being an-
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`ticipated under 35 U.S.C. § 102(a), (b), & (e), and/or for being obvious over the prior art un-
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`der 35 U.S.C. § 103. Specifically:
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`GROUND 1 - Claims 1, 3, 4, 7, 8, 10, 12, and 13 are anticipated under § 102(b) by
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`Aventai