throbber

`
`Paper No.
`Filed: April 30, 2014
`
`
`Filed on behalf of: VirnetX Inc.
`By:
`Joseph E. Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow,
` Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Telephone: 571-203-2700
`Facsimile: 202-408-4400
`E-mail: joseph.palys@finnegan.com
`
` naveen.modi@finnegan.com
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`
`
`
`
`
`
`MICROSOFT CORPORATION
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`
`
`
`
`
`
`Case IPR2014-00558
`Patent 6,502,135
`
`
`
`
`
`
`
`
`
`
`
`
`PATENT OWNER’S OPPOSITION TO
`MICROSOFT’S MOTION FOR JOINDER
`
`
`
`
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`
`TABLE OF CONTENTS
`
`
`INTRODUCTION ........................................................................................... 1
`
`PRECISE RELIEF REQUESTED .................................................................. 2
`
`I.
`
`II.
`
`III. STATEMENT OF FACTS .............................................................................. 2
`
`IV. ARGUMENT ................................................................................................... 4
`
`A.
`
`B.
`
`C.
`
`Joinder Is Unavailable for Petitions That Do Not Warrant
`Institution ............................................................................................... 4
`
`Joinder Does Not Avoid Microsoft’s Section 315(b) Bar..................... 6
`
`Joinder Will Increase the Complexity and Duration of the
`Proceedings and Prejudice VirnetX ...................................................... 9
`
`D. Microsoft Will Not Be Prejudiced if the Board Denies Joinder .........11
`
`E.
`
`RPX’s ’171 Petition Should Be Denied, Rendering Moot
`Microsoft’s Petition .............................................................................11
`
`V. CONCLUSION ..............................................................................................12
`
`
`
`
`
`
`
`
`
`
`i
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Federal Cases
`
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348, Paper No. 14 (Dec. 13, 2013) .................................................... 5
`
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348, Paper No. 18 (Feb. 12, 2014) .................................................... 5
`
`Dell, Inc. v. Network-1 Sec. Solutions, Inc.,
`IPR2013-00071, Paper No. 17 (July 29, 2013) .................................................... 8
`
`Macauto USA v. BOS GMBH & KG,
`IPR2012-00004, Paper No. 18 (Jan. 24, 2013) ..................................................... 6
`
`Microsoft Corp. v. Proxyconn, Inc.,
`IPR2013-00109, Paper No. 15 (Feb. 25, 2013) .................................................... 6
`
`Motorola Mobility LLC v. Softview LLC,
`IPR2013-00256, Paper No. 10 (June 20, 2013) .................................................... 9
`
`Samsung Elecs., Co. Ltd. v. Fractus, S.A.,
`IPR2014-00008, Paper No. 22 (Feb. 26, 2014) .................................................... 5
`
`Universal Remote Control, Inc. v. Universal Elecs., Inc.,
`IPR2013-00168, Paper No. 9 (Aug. 26, 2013) ..................................................... 5
`
`Federal Statutes
`
`35 U.S.C. § 311 .......................................................................................................... 8
`
`35 U.S.C. § 312 ................................................................................................ 2, 8, 11
`
`35 U.S.C. § 315 .................................................................................................passim
`
`35 U.S.C. § 325 ........................................................................................................ 11
`
`37 C.F.R. § 42.104 ................................................................................................... 11
`
`Regulations
`
`
`
`ii
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`
`INTRODUCTION
`
`I.
`
`Microsoft seeks joinder in the event its Petition is barred under 35 U.S.C.
`
`§ 315(b). Because its Petition is barred, it cannot be joined under 35 U.S.C.
`
`§ 315(c), which permits joinder only if a petition “warrants the institution of an
`
`inter partes review under section 314.” Microsoft’s request is based on a partial
`
`quotation of 35 U.S.C. § 315(c), which omits the above language, and is also
`
`contrary to the broader statutory framework of the America Invents Act.
`
`Microsoft’s requested joinder would also add unnecessary complexity and
`
`the likelihood of delay to the proceedings. Though Microsoft contends that joinder
`
`will allow for “efficient” and “timely” resolution (Paper No. 3 at 3), the fact is that
`
`joinder would substantively and procedurally complicate the RPX proceeding
`
`because different declarants are involved in each proceeding. And Microsoft
`
`apparently anticipates presenting divergent arguments from RPX’s, claiming that
`
`“Microsoft’s interests will not be fully and fairly represented in the RPX IPR”
`
`absent joinder. (Id. at 8.) Although one may question that claim given that RPX’s
`
`website identifies Microsoft as an RPX client (Ex. 2001), Microsoft’s argument
`
`foreshadows differing positions that will necessarily complicate the proceedings.
`
`Joinder is also inappropriate because the Board should not institute RPX’s
`
`IPR2014-00171 for the reasons discussed in Patent Owner’s Preliminary Response
`
`in that proceeding, including that RPX’s ’171 Petition fails to name a real party-in-
`
`
`
`1
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`interest in violation of 35 U.S.C. § 312(a)(2), is time-barred under § 315(b), and
`
`has a number of other substantive and procedural defects. (IPR2014-00171, Paper
`
`No. 35 at 2-17.) Not instituting RPX’s ’171 proceeding would moot Microsoft’s
`
`request for joinder.
`
`Accordingly, VirnetX respectfully requests that the Board deny Microsoft’s
`
`request to join its IPR2014-00558 with RPX’s IPR2014-00171.
`
`II.
`
`PRECISE RELIEF REQUESTED
`
`VirnetX requests that the Board deny Microsoft’s motion for joinder.
`
`III. STATEMENT OF FACTS
`VirnetX first served Microsoft with a complaint alleging infringement of
`
`U.S. Patent No. 6,502,135 (“the ’135 patent”) on February 15, 2007. (Ex. 2002.)
`
`That litigation, VirnetX, Inc. v. Microsoft Corp., No. 6:07-cv-00080 (E.D. Tex.)
`
`(“the 2007 Litigation”) proceeded to a jury trial, in which Microsoft was found to
`
`willfully infringe the ’135 patent and Microsoft’s invalidity arguments were
`
`rejected. (Ex. 2003.)
`
`On March 17, 2010, VirnetX filed a separate suit against Microsoft alleging
`
`infringement of the ’135 patent by different products—VirnetX, Inc. v. Microsoft
`
`Corp., No. 6:10-cv-00094 (E.D. Tex.) (“the 2010 Litigation”). Microsoft’s counsel
`
`accepted service of the complaint on March 22, 2010 (Ex. 2004) and Microsoft
`
`filed an agreed motion to extend its deadline to respond to the complaint based on
`
`
`
`2
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`such service (Ex. 2005). Microsoft and VirnetX jointly settled the 2007 and 2010
`
`Litigations in an agreement dated May 14, 2010. (Ex. 1075.) VirnetX granted
`
`Microsoft a limited license with a field of use restriction. Under the field of use
`
`provision, Microsoft is not licensed to practice VirnetX’s patent technology in
`
`certain ways, such as by using it across non-Windows platforms (Ex. 2006 at 4,
`
`¶ 19.)
`
`Microsoft now offers products using VirnetX’s technology that operate
`
`across non-Windows platforms, outside the scope of the license, so VirnetX filed a
`
`third suit against Microsoft. In that case, VirnetX, Inc. v. Microsoft Corp., No.
`
`6:13-cv-00351 (E.D. Tex.) (“the 2013 Litigation”), VirnetX served Microsoft with
`
`a complaint alleging infringement of the ’135 patent on April 23, 2013. (Ex.
`
`2007.) The 2013 Litigation remains pending.
`
`The ’135 patent has been challenged in three inter partes reexaminations.
`
`Microsoft filed the first (Control No. 95/001,269), where the Office confirmed all
`
`challenged claims and new claim 18. (Ex. 1001.) Later, Apple Inc. and Cisco
`
`Systems, Inc. initiated Control Nos. 95/001,679 and 95/001,682, respectively,
`
`which the Office merged and which remain pending.
`
`In addition to these three inter partes reexaminations, six petitions for inter
`
`partes review have been filed against the ’135 patent. Apple filed two (IPR2013-
`
`00348 and IPR2013-00349); New Bay Capital, LLC filed one (IPR2013-00375);
`
`
`
`3
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`RPX filed two (IPR2014-00171 and IPR2014-00172); and Microsoft filed the
`
`present Petition. The Board declined to institute the two Apple petitions and
`
`terminated the New Bay petition. (IPR2013-00348, Paper No. 14; IPR2013-
`
`00349, Paper No. 14; IPR2013-00375, Paper No. 16.)
`
`Microsoft’s Petition relies on a declaration from Dr. Roch Guerin. (Ex.
`
`1003.) RPX’s ’171 Petition, however, relies on a declaration from Mr. Michael
`
`Fratto. (’171 Petition, Ex. 1003.)
`
`IV. ARGUMENT
`Joinder Is Unavailable for Petitions That Do Not Warrant
`A.
`Institution
`
`Joinder is only permitted if a petition warrants institution. Specifically, the
`
`Board has discretion to grant joinder to “any person who properly files a petition
`
`under section 311 that the Director . . . determines warrants the institution of an
`
`inter partes review under section 314.”). See 35 U.S.C. § 315(c) (emphasis added).
`
`Here, Microsoft seeks joinder only in the event that Board determines that its
`
`Petition is barred under § 315(b). (Paper No. 3 at 3, 11.) In that situation, by
`
`definition the Petition would not “warrant[] the institution of an inter partes
`
`review,” so joinder is unavailable based on the plain language of the statute.
`
`Microsoft’s Petition should be denied for several reasons that will be
`
`addressed in Patent Owner’s Preliminary Response, including that institution is
`
`
`
`4
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`precluded by the one-year time bar of 35 U.S.C. § 315(b) because Microsoft was
`
`served with two complaints alleging infringement of the ’135 patent more than one
`
`year before it filed the Petition. See supra Section III.
`
`Microsoft asks the Board to ignore the service of the complaints in the 2007
`
`and 2010 Litigations, and instead allow the complaint in the 2013 Litigation to
`
`reset the one-year bar. The Board has rejected this argument in other proceedings
`
`and should do so here. See, e.g., Samsung Elecs., Co. Ltd. v. Fractus, S.A.,
`
`IPR2014-00008, Paper No. 22 (Feb. 26, 2014); Apple Inc. v. VirnetX Inc.,
`
`IPR2013-00348, Paper No. 14 (Dec. 13, 2013), Paper No. 18 (Feb. 12, 2014);
`
`Universal Remote Control, Inc. v. Universal Elecs., Inc., IPR2013-00168, Paper
`
`No. 9 (Aug. 26, 2013).
`
`The Board should likewise reject Microsoft’s argument that the manner in
`
`which the parties resolved the 2007 and 2010 cases “nullifies” the service of the
`
`complaints in those cases. Section 315(b) hinges only on service of a complaint
`
`for infringement and does not provide for any nullification exception, so
`
`Microsoft’s argument should be rejected based on the language of the statute. To
`
`the extent the Board has applied a narrow nullification exception,1 that exception
`
`
`1 VirnetX respectfully disagrees that a “nullification” exception to the plain
`
`language of 35 U.S.C. § 315(b) should be recognized or applied by the Board. In
`
`
`
`5
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`does not apply here because the court dismissed several issues with prejudice.
`
`These include VirnetX’s infringement claims directed to the products within the
`
`scope of the parties’ license that were at issue in the 2007 and 2010 Litigations, as
`
`well as Microsoft’s dismissed defenses, counterclaims, and allegations regarding
`
`unenforceability. Thus, the dismissal did not leave the parties in the same legal
`
`position “as though the action had never been brought,” so the Board’s narrow
`
`nullification exception does not apply. See Macauto USA v. BOS GMBH & KG,
`
`IPR2012-00004, Paper No. 18 at 15 (Jan. 24, 2013).
`
`Joinder Does Not Avoid Microsoft’s Section 315(b) Bar
`
`B.
`Prior Board panels have interpreted the last sentence of § 315(b) to mean
`
`that “the one-year time bar does not apply” if a party filing a time-barred petition
`
`requests joinder. See, e.g., Microsoft Corp. v. Proxyconn, Inc., IPR2013-00109,
`
`Paper No. 15 at 3-4 (Feb. 25, 2013). VirnetX respectfully disagrees with this
`
`interpretation.
`
`
`particular, § 315(b) refers only to when the “petitioner, real party in interest, or
`
`privy of the petitioner is served with a complaint alleging infringement of the
`
`patent.” No limitations or conditions are expressed regarding how the complaint is
`
`“served,” and thus the plain language of the statute should control.
`
`
`
`6
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`The last sentence of 35 U.S.C. § 315(b) states that “[t]he time limitation set
`
`forth in the preceding sentence shall not apply to a request for joinder under
`
`subsection (c).” The AIA, and indeed § 315 itself, distinguishes between petitions
`
`for inter partes review and requests for joinder. The last sentence of § 315(b),
`
`however, provides an exception to the one-year bar only for a request for joinder,
`
`not for a petition for inter partes review. Thus, the one-year bar continues to apply
`
`to all petitions, even in the joinder context. The request-for-joinder exception of
`
`§ 315(b) applies only when two timely petitions are filed, but the request for
`
`joinder is made more than a year after being served with a complaint.
`
`This reading makes sense because joinder is not available until after an IPR
`
`has been instituted. 35 U.S.C. § 315(c). Since it can take up to six months for an
`
`institution decision, it is likely that many requests for joinder will occur more than
`
`one year after being served with a complaint. The statutory language addresses
`
`this concern. It does not, however, provide a backdoor for time-barred petitions to
`
`be instituted through joinder. Such a view is contrary to Congress’s intent to avoid
`
`serial harassment of patent owners, which particularly applies to parties like
`
`Microsoft who have already had ample opportunity to present validity challenges
`
`in both district court and reexamination. (Ex. 2008 at 72 (a goal of the inter partes
`
`review laws is to “prevent[ ] the serial harassment of patent holders.”).)
`
`
`
`7
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`Permitting untimely petitions to be instituted through joinder is also contrary
`
`to the joinder statute. Under 35 U.S.C. § 315(c), “the Director, in his or her
`
`discretion, may join as a party to that inter partes review any person who properly
`
`files a petition under section 311.” (Emphasis added.) Senator Kyl addressed the
`
`meaning of the term “properly files,” stating that “time deadlines for filing
`
`petitions must be complied with in all cases.” (Ex. 2009, 154 Cong. Rec. S9982,
`
`S9988 (daily ed. Sep. 27, 2008) (emphasis added).) Section 315(c) is consistent
`
`with this view because it requires compliance with § 311, which in turn requires
`
`compliance with the other provisions of Title 35, Chapter 31 of the U.S. Code,
`
`including the timeliness provisions. See 35 U.S.C. § 311 (“Subject to the
`
`provisions of this chapter, a person who is not the owner of a patent may file with
`
`the Office a petition to institute an inter partes review of the patent.”) (emphasis
`
`added).
`
`The Board has recognized that § 311 limits joinder under § 315(c), but
`
`disregards the portion of § 311 that also requires compliance with other provisions
`
`of Chapter 31. See Dell, Inc. v. Network-1 Sec. Solutions, Inc., IPR2013-00071,
`
`Paper No. 17 at 5 (July 29, 2013) (“Section 315(c) refers only to ‘section 311,’ not
`
`to any other portions of the statute or portions of the statute referenced in Section
`
`311.”). This interpretation is incorrect, as it disregards the plain statutory language
`
`and would also mean that other provisions of Chapter 31 do not apply to petitions
`
`
`
`8
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`when joinder is requested, such as the petition requirements of § 312(a). There is
`
`no indication that Congress intended to apply only portions of its statutory
`
`framework in the context of joinder, so the Board’s interpretation is incorrect. The
`
`plain language of §§ 315(b) and (c) prohibit joinder of Microsoft’s Petition.
`
`C.
`
`Joinder Will Increase the Complexity and Duration of the
`Proceedings and Prejudice VirnetX
`
`Even if the Board were statutorily permitted to join an instituted trial with a
`
`time-barred proceeding, the Board should decline to do so here given the
`
`complexity joinder would introduce. “In exercising its discretion to grant joinder,
`
`the Board considers the impact of both substantive issues and procedural matters
`
`on the proceedings, as well as other considerations.” Motorola Mobility LLC v.
`
`Softview LLC, IPR2013-00256, Paper No. 10 at 4 (June 20, 2013). Microsoft
`
`emphasizes the similarities between this Petition and the ’171 Petition (Paper No. 3
`
`at 7-9), but the significant differences between the petitions cannot so easily be
`
`overlooked. Indeed, the differences would impact both substantive and procedural
`
`issues.
`
`Substantively, joining the two proceedings would mean considering different
`
`declarant testimony, as the ’171 Petition is accompanied by a declaration from Mr.
`
`Fratto while Microsoft’s Petition is accompanied by a declaration from Dr. Guerin.
`
`Any time different declarants opine on similar subject matter, there is a likelihood
`
`
`
`9
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`of divergent views resulting. Microsoft apparently believes that either its expert or
`
`Microsoft itself will offer divergent views than those provided by RPX and its
`
`expert, as it contends that “Microsoft’s interests will not be fully and fairly
`
`represented in the RPX IPR” absent joinder. (Paper No. 3 at 8.) Addressing these
`
`different views and interests in a single trial will substantively complicate the
`
`proceeding beyond any efficiency that might be gained through joinder.
`
`Procedurally, joinder here would require the deposition of a new declarant
`
`with a separate declaration. It would also add Microsoft as an additional party,
`
`further complicating the proceedings at least by requiring coordination between
`
`Microsoft and RPX to address the large number of issues without duplication. Part
`
`of Microsoft’s proposal to ameliorate these procedural difficulties is that “the
`
`Patent Owner’s Preliminary Response period can be reasonably shortened,”2 but
`
`this will only exacerbate the prejudice to VirnetX in having to deal with different
`
`petitioners pursuing unpatentability based on the testimony of different experts.
`
`(Paper No. 3 at 9.)
`
`
`2 To the extent the proceedings are joined, the Board should set an extended
`
`schedule, not a shortened schedule, due to the addition of Microsoft’s declarant
`
`and the likelihood of divergent views that Microsoft plans to assert.
`
`
`
`10
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`Because of the substantive and procedural complexities and burdens
`
`involved in joinder here, Microsoft’s request should be denied.
`
`D. Microsoft Will Not Be Prejudiced if the Board Denies Joinder
`Microsoft faces no prejudice if the Board declines to join its Petition with
`
`the ’171 Petition. Microsoft already had an opportunity to challenge the validity of
`
`the patent in inter partes reexamination, in a proceeding that reached a final
`
`decision confirming the patentability of every challenged claim. In addition,
`
`Microsoft had two previous opportunities to challenge the validity of the ’135
`
`patent in district court, one of which proceeded all the way to a jury verdict against
`
`Microsoft. Further, Microsoft is currently challenging the validity of the ’135
`
`patent in district court. Denying Microsoft’s requested joinder, therefore, will not
`
`prejudice Microsoft.
`
`E. RPX’s ’171 Petition Should Be Denied, Rendering Moot
`Microsoft’s Petition
`
`As explained in detail in VirnetX’s Preliminary Response to RPX’s ’171
`
`Petition, that petition should be denied. In particular, the ’171 Petition should not
`
`be considered under 35 U.S.C. §§ 312(a)(2) and 315(b) because it fails to name a
`
`real party-in-interest and is time-barred. (IPR2014-00171, Paper No. 35 at 2-17.)
`
`Further, the ’171 Petition fails to comply with 35 U.S.C. § 312(a)(3) and 37 C.F.R.
`
`§ 42.104(b) (id. at 18-21), contravenes 35 U.S.C. § 325(d) (id. at 22-24),
`
`
`
`11
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`mischaracterizes “Aventail” as a single reference amenable to an anticipation
`
`analysis (id. at 24-26), offers redundant grounds of alleged unpatentability (id. at
`
`26-31), and is premised on flawed claim constructions (id. at 32-59). Because the
`
`’171 Petition should be denied for these reasons, Microsoft’s request for joinder
`
`should be denied as moot.
`
`V. CONCLUSION
`For these reasons, the Board should deny Microsoft’s motion for joinder.
`
`
`Respectfully submitted,
`
` /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
`
`
`
`
`
`
`
`12
`
`

`

`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
`
`
`CERTIFICATE OF SERVICE
`
`Pursuant to 37 C.F.R. § 42.6(e), I hereby certify that I caused to be served on
`
`the counsel for Petitioner a true and correct copy of the foregoing Patent Owner’s
`
`Opposition to Microsoft’s Motion for Joinder and supporting materials by
`
`electronic means on April 30, 2014 at the following address of record:
`
`
`
`
`Counsel for Microsoft Corporation:
`
`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
`
`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
`
`IPR38868-0004IP1@fr.com
`
`
`
`Dated: April 30, 2014
`
`
`
`
`
`
`
`Respectfully submitted,
`
` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
`
`
`
`
`
`

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