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`Paper No.
`Filed: April 30, 2014
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`
`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
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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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`MICROSOFT CORPORATION
`Petitioner
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`v.
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`VIRNETX INC.
`Patent Owner
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`
`
`Case IPR2014-00558
`Patent 6,502,135
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`PATENT OWNER’S OPPOSITION TO
`MICROSOFT’S MOTION FOR JOINDER
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`Case No. IPR2014-00558
`Patent Owner’s Opposition to Microsoft’s Motion for Joinder
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
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`PRECISE RELIEF REQUESTED .................................................................. 2
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`I.
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`II.
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`III. STATEMENT OF FACTS .............................................................................. 2
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`IV. ARGUMENT ................................................................................................... 4
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`A.
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`B.
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`C.
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`Joinder Is Unavailable for Petitions That Do Not Warrant
`Institution ............................................................................................... 4
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`Joinder Does Not Avoid Microsoft’s Section 315(b) Bar..................... 6
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`Joinder Will Increase the Complexity and Duration of the
`Proceedings and Prejudice VirnetX ...................................................... 9
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`D. Microsoft Will Not Be Prejudiced if the Board Denies Joinder .........11
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`E.
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`RPX’s ’171 Petition Should Be Denied, Rendering Moot
`Microsoft’s Petition .............................................................................11
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`V. CONCLUSION ..............................................................................................12
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`TABLE OF AUTHORITIES
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`Page(s)
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`Federal Cases
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`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348, Paper No. 14 (Dec. 13, 2013) .................................................... 5
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`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348, Paper No. 18 (Feb. 12, 2014) .................................................... 5
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`Dell, Inc. v. Network-1 Sec. Solutions, Inc.,
`IPR2013-00071, Paper No. 17 (July 29, 2013) .................................................... 8
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`Macauto USA v. BOS GMBH & KG,
`IPR2012-00004, Paper No. 18 (Jan. 24, 2013) ..................................................... 6
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`Microsoft Corp. v. Proxyconn, Inc.,
`IPR2013-00109, Paper No. 15 (Feb. 25, 2013) .................................................... 6
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`Motorola Mobility LLC v. Softview LLC,
`IPR2013-00256, Paper No. 10 (June 20, 2013) .................................................... 9
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`Samsung Elecs., Co. Ltd. v. Fractus, S.A.,
`IPR2014-00008, Paper No. 22 (Feb. 26, 2014) .................................................... 5
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`Universal Remote Control, Inc. v. Universal Elecs., Inc.,
`IPR2013-00168, Paper No. 9 (Aug. 26, 2013) ..................................................... 5
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`Federal Statutes
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`35 U.S.C. § 311 .......................................................................................................... 8
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`35 U.S.C. § 312 ................................................................................................ 2, 8, 11
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`35 U.S.C. § 315 .................................................................................................passim
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`35 U.S.C. § 325 ........................................................................................................ 11
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`37 C.F.R. § 42.104 ................................................................................................... 11
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`Regulations
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`INTRODUCTION
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`I.
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`Microsoft seeks joinder in the event its Petition is barred under 35 U.S.C.
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`§ 315(b). Because its Petition is barred, it cannot be joined under 35 U.S.C.
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`§ 315(c), which permits joinder only if a petition “warrants the institution of an
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`inter partes review under section 314.” Microsoft’s request is based on a partial
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`quotation of 35 U.S.C. § 315(c), which omits the above language, and is also
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`contrary to the broader statutory framework of the America Invents Act.
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`Microsoft’s requested joinder would also add unnecessary complexity and
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`the likelihood of delay to the proceedings. Though Microsoft contends that joinder
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`will allow for “efficient” and “timely” resolution (Paper No. 3 at 3), the fact is that
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`joinder would substantively and procedurally complicate the RPX proceeding
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`because different declarants are involved in each proceeding. And Microsoft
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`apparently anticipates presenting divergent arguments from RPX’s, claiming that
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`“Microsoft’s interests will not be fully and fairly represented in the RPX IPR”
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`absent joinder. (Id. at 8.) Although one may question that claim given that RPX’s
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`website identifies Microsoft as an RPX client (Ex. 2001), Microsoft’s argument
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`foreshadows differing positions that will necessarily complicate the proceedings.
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`Joinder is also inappropriate because the Board should not institute RPX’s
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`IPR2014-00171 for the reasons discussed in Patent Owner’s Preliminary Response
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`in that proceeding, including that RPX’s ’171 Petition fails to name a real party-in-
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`interest in violation of 35 U.S.C. § 312(a)(2), is time-barred under § 315(b), and
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`has a number of other substantive and procedural defects. (IPR2014-00171, Paper
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`No. 35 at 2-17.) Not instituting RPX’s ’171 proceeding would moot Microsoft’s
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`request for joinder.
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`Accordingly, VirnetX respectfully requests that the Board deny Microsoft’s
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`request to join its IPR2014-00558 with RPX’s IPR2014-00171.
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`II.
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`PRECISE RELIEF REQUESTED
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`VirnetX requests that the Board deny Microsoft’s motion for joinder.
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`III. STATEMENT OF FACTS
`VirnetX first served Microsoft with a complaint alleging infringement of
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`U.S. Patent No. 6,502,135 (“the ’135 patent”) on February 15, 2007. (Ex. 2002.)
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`That litigation, VirnetX, Inc. v. Microsoft Corp., No. 6:07-cv-00080 (E.D. Tex.)
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`(“the 2007 Litigation”) proceeded to a jury trial, in which Microsoft was found to
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`willfully infringe the ’135 patent and Microsoft’s invalidity arguments were
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`rejected. (Ex. 2003.)
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`On March 17, 2010, VirnetX filed a separate suit against Microsoft alleging
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`infringement of the ’135 patent by different products—VirnetX, Inc. v. Microsoft
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`Corp., No. 6:10-cv-00094 (E.D. Tex.) (“the 2010 Litigation”). Microsoft’s counsel
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`accepted service of the complaint on March 22, 2010 (Ex. 2004) and Microsoft
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`filed an agreed motion to extend its deadline to respond to the complaint based on
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`such service (Ex. 2005). Microsoft and VirnetX jointly settled the 2007 and 2010
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`Litigations in an agreement dated May 14, 2010. (Ex. 1075.) VirnetX granted
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`Microsoft a limited license with a field of use restriction. Under the field of use
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`provision, Microsoft is not licensed to practice VirnetX’s patent technology in
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`certain ways, such as by using it across non-Windows platforms (Ex. 2006 at 4,
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`¶ 19.)
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`Microsoft now offers products using VirnetX’s technology that operate
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`across non-Windows platforms, outside the scope of the license, so VirnetX filed a
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`third suit against Microsoft. In that case, VirnetX, Inc. v. Microsoft Corp., No.
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`6:13-cv-00351 (E.D. Tex.) (“the 2013 Litigation”), VirnetX served Microsoft with
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`a complaint alleging infringement of the ’135 patent on April 23, 2013. (Ex.
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`2007.) The 2013 Litigation remains pending.
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`The ’135 patent has been challenged in three inter partes reexaminations.
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`Microsoft filed the first (Control No. 95/001,269), where the Office confirmed all
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`challenged claims and new claim 18. (Ex. 1001.) Later, Apple Inc. and Cisco
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`Systems, Inc. initiated Control Nos. 95/001,679 and 95/001,682, respectively,
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`which the Office merged and which remain pending.
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`In addition to these three inter partes reexaminations, six petitions for inter
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`partes review have been filed against the ’135 patent. Apple filed two (IPR2013-
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`00348 and IPR2013-00349); New Bay Capital, LLC filed one (IPR2013-00375);
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`RPX filed two (IPR2014-00171 and IPR2014-00172); and Microsoft filed the
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`present Petition. The Board declined to institute the two Apple petitions and
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`terminated the New Bay petition. (IPR2013-00348, Paper No. 14; IPR2013-
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`00349, Paper No. 14; IPR2013-00375, Paper No. 16.)
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`Microsoft’s Petition relies on a declaration from Dr. Roch Guerin. (Ex.
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`1003.) RPX’s ’171 Petition, however, relies on a declaration from Mr. Michael
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`Fratto. (’171 Petition, Ex. 1003.)
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`IV. ARGUMENT
`Joinder Is Unavailable for Petitions That Do Not Warrant
`A.
`Institution
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`Joinder is only permitted if a petition warrants institution. Specifically, the
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`Board has discretion to grant joinder to “any person who properly files a petition
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`under section 311 that the Director . . . determines warrants the institution of an
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`inter partes review under section 314.”). See 35 U.S.C. § 315(c) (emphasis added).
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`Here, Microsoft seeks joinder only in the event that Board determines that its
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`Petition is barred under § 315(b). (Paper No. 3 at 3, 11.) In that situation, by
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`definition the Petition would not “warrant[] the institution of an inter partes
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`review,” so joinder is unavailable based on the plain language of the statute.
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`Microsoft’s Petition should be denied for several reasons that will be
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`addressed in Patent Owner’s Preliminary Response, including that institution is
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`precluded by the one-year time bar of 35 U.S.C. § 315(b) because Microsoft was
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`served with two complaints alleging infringement of the ’135 patent more than one
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`year before it filed the Petition. See supra Section III.
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`Microsoft asks the Board to ignore the service of the complaints in the 2007
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`and 2010 Litigations, and instead allow the complaint in the 2013 Litigation to
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`reset the one-year bar. The Board has rejected this argument in other proceedings
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`and should do so here. See, e.g., Samsung Elecs., Co. Ltd. v. Fractus, S.A.,
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`IPR2014-00008, Paper No. 22 (Feb. 26, 2014); Apple Inc. v. VirnetX Inc.,
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`IPR2013-00348, Paper No. 14 (Dec. 13, 2013), Paper No. 18 (Feb. 12, 2014);
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`Universal Remote Control, Inc. v. Universal Elecs., Inc., IPR2013-00168, Paper
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`No. 9 (Aug. 26, 2013).
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`The Board should likewise reject Microsoft’s argument that the manner in
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`which the parties resolved the 2007 and 2010 cases “nullifies” the service of the
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`complaints in those cases. Section 315(b) hinges only on service of a complaint
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`for infringement and does not provide for any nullification exception, so
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`Microsoft’s argument should be rejected based on the language of the statute. To
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`the extent the Board has applied a narrow nullification exception,1 that exception
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`1 VirnetX respectfully disagrees that a “nullification” exception to the plain
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`language of 35 U.S.C. § 315(b) should be recognized or applied by the Board. In
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`does not apply here because the court dismissed several issues with prejudice.
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`These include VirnetX’s infringement claims directed to the products within the
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`scope of the parties’ license that were at issue in the 2007 and 2010 Litigations, as
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`well as Microsoft’s dismissed defenses, counterclaims, and allegations regarding
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`unenforceability. Thus, the dismissal did not leave the parties in the same legal
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`position “as though the action had never been brought,” so the Board’s narrow
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`nullification exception does not apply. See Macauto USA v. BOS GMBH & KG,
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`IPR2012-00004, Paper No. 18 at 15 (Jan. 24, 2013).
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`Joinder Does Not Avoid Microsoft’s Section 315(b) Bar
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`B.
`Prior Board panels have interpreted the last sentence of § 315(b) to mean
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`that “the one-year time bar does not apply” if a party filing a time-barred petition
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`requests joinder. See, e.g., Microsoft Corp. v. Proxyconn, Inc., IPR2013-00109,
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`Paper No. 15 at 3-4 (Feb. 25, 2013). VirnetX respectfully disagrees with this
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`interpretation.
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`particular, § 315(b) refers only to when the “petitioner, real party in interest, or
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`privy of the petitioner is served with a complaint alleging infringement of the
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`patent.” No limitations or conditions are expressed regarding how the complaint is
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`“served,” and thus the plain language of the statute should control.
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`The last sentence of 35 U.S.C. § 315(b) states that “[t]he time limitation set
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`forth in the preceding sentence shall not apply to a request for joinder under
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`subsection (c).” The AIA, and indeed § 315 itself, distinguishes between petitions
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`for inter partes review and requests for joinder. The last sentence of § 315(b),
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`however, provides an exception to the one-year bar only for a request for joinder,
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`not for a petition for inter partes review. Thus, the one-year bar continues to apply
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`to all petitions, even in the joinder context. The request-for-joinder exception of
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`§ 315(b) applies only when two timely petitions are filed, but the request for
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`joinder is made more than a year after being served with a complaint.
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`This reading makes sense because joinder is not available until after an IPR
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`has been instituted. 35 U.S.C. § 315(c). Since it can take up to six months for an
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`institution decision, it is likely that many requests for joinder will occur more than
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`one year after being served with a complaint. The statutory language addresses
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`this concern. It does not, however, provide a backdoor for time-barred petitions to
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`be instituted through joinder. Such a view is contrary to Congress’s intent to avoid
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`serial harassment of patent owners, which particularly applies to parties like
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`Microsoft who have already had ample opportunity to present validity challenges
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`in both district court and reexamination. (Ex. 2008 at 72 (a goal of the inter partes
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`review laws is to “prevent[ ] the serial harassment of patent holders.”).)
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`Permitting untimely petitions to be instituted through joinder is also contrary
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`to the joinder statute. Under 35 U.S.C. § 315(c), “the Director, in his or her
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`discretion, may join as a party to that inter partes review any person who properly
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`files a petition under section 311.” (Emphasis added.) Senator Kyl addressed the
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`meaning of the term “properly files,” stating that “time deadlines for filing
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`petitions must be complied with in all cases.” (Ex. 2009, 154 Cong. Rec. S9982,
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`S9988 (daily ed. Sep. 27, 2008) (emphasis added).) Section 315(c) is consistent
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`with this view because it requires compliance with § 311, which in turn requires
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`compliance with the other provisions of Title 35, Chapter 31 of the U.S. Code,
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`including the timeliness provisions. See 35 U.S.C. § 311 (“Subject to the
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`provisions of this chapter, a person who is not the owner of a patent may file with
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`the Office a petition to institute an inter partes review of the patent.”) (emphasis
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`added).
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`The Board has recognized that § 311 limits joinder under § 315(c), but
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`disregards the portion of § 311 that also requires compliance with other provisions
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`of Chapter 31. See Dell, Inc. v. Network-1 Sec. Solutions, Inc., IPR2013-00071,
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`Paper No. 17 at 5 (July 29, 2013) (“Section 315(c) refers only to ‘section 311,’ not
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`to any other portions of the statute or portions of the statute referenced in Section
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`311.”). This interpretation is incorrect, as it disregards the plain statutory language
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`and would also mean that other provisions of Chapter 31 do not apply to petitions
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`when joinder is requested, such as the petition requirements of § 312(a). There is
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`no indication that Congress intended to apply only portions of its statutory
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`framework in the context of joinder, so the Board’s interpretation is incorrect. The
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`plain language of §§ 315(b) and (c) prohibit joinder of Microsoft’s Petition.
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`C.
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`Joinder Will Increase the Complexity and Duration of the
`Proceedings and Prejudice VirnetX
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`Even if the Board were statutorily permitted to join an instituted trial with a
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`time-barred proceeding, the Board should decline to do so here given the
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`complexity joinder would introduce. “In exercising its discretion to grant joinder,
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`the Board considers the impact of both substantive issues and procedural matters
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`on the proceedings, as well as other considerations.” Motorola Mobility LLC v.
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`Softview LLC, IPR2013-00256, Paper No. 10 at 4 (June 20, 2013). Microsoft
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`emphasizes the similarities between this Petition and the ’171 Petition (Paper No. 3
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`at 7-9), but the significant differences between the petitions cannot so easily be
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`overlooked. Indeed, the differences would impact both substantive and procedural
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`issues.
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`Substantively, joining the two proceedings would mean considering different
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`declarant testimony, as the ’171 Petition is accompanied by a declaration from Mr.
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`Fratto while Microsoft’s Petition is accompanied by a declaration from Dr. Guerin.
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`Any time different declarants opine on similar subject matter, there is a likelihood
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`of divergent views resulting. Microsoft apparently believes that either its expert or
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`Microsoft itself will offer divergent views than those provided by RPX and its
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`expert, as it contends that “Microsoft’s interests will not be fully and fairly
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`represented in the RPX IPR” absent joinder. (Paper No. 3 at 8.) Addressing these
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`different views and interests in a single trial will substantively complicate the
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`proceeding beyond any efficiency that might be gained through joinder.
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`Procedurally, joinder here would require the deposition of a new declarant
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`with a separate declaration. It would also add Microsoft as an additional party,
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`further complicating the proceedings at least by requiring coordination between
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`Microsoft and RPX to address the large number of issues without duplication. Part
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`of Microsoft’s proposal to ameliorate these procedural difficulties is that “the
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`Patent Owner’s Preliminary Response period can be reasonably shortened,”2 but
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`this will only exacerbate the prejudice to VirnetX in having to deal with different
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`petitioners pursuing unpatentability based on the testimony of different experts.
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`(Paper No. 3 at 9.)
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`2 To the extent the proceedings are joined, the Board should set an extended
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`schedule, not a shortened schedule, due to the addition of Microsoft’s declarant
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`and the likelihood of divergent views that Microsoft plans to assert.
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`Because of the substantive and procedural complexities and burdens
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`involved in joinder here, Microsoft’s request should be denied.
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`D. Microsoft Will Not Be Prejudiced if the Board Denies Joinder
`Microsoft faces no prejudice if the Board declines to join its Petition with
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`the ’171 Petition. Microsoft already had an opportunity to challenge the validity of
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`the patent in inter partes reexamination, in a proceeding that reached a final
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`decision confirming the patentability of every challenged claim. In addition,
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`Microsoft had two previous opportunities to challenge the validity of the ’135
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`patent in district court, one of which proceeded all the way to a jury verdict against
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`Microsoft. Further, Microsoft is currently challenging the validity of the ’135
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`patent in district court. Denying Microsoft’s requested joinder, therefore, will not
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`prejudice Microsoft.
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`E. RPX’s ’171 Petition Should Be Denied, Rendering Moot
`Microsoft’s Petition
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`As explained in detail in VirnetX’s Preliminary Response to RPX’s ’171
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`Petition, that petition should be denied. In particular, the ’171 Petition should not
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`be considered under 35 U.S.C. §§ 312(a)(2) and 315(b) because it fails to name a
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`real party-in-interest and is time-barred. (IPR2014-00171, Paper No. 35 at 2-17.)
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`Further, the ’171 Petition fails to comply with 35 U.S.C. § 312(a)(3) and 37 C.F.R.
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`§ 42.104(b) (id. at 18-21), contravenes 35 U.S.C. § 325(d) (id. at 22-24),
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`mischaracterizes “Aventail” as a single reference amenable to an anticipation
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`analysis (id. at 24-26), offers redundant grounds of alleged unpatentability (id. at
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`26-31), and is premised on flawed claim constructions (id. at 32-59). Because the
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`’171 Petition should be denied for these reasons, Microsoft’s request for joinder
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`should be denied as moot.
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`V. CONCLUSION
`For these reasons, the Board should deny Microsoft’s motion for joinder.
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`Respectfully submitted,
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` /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), I hereby certify that I caused to be served on
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`the counsel for Petitioner a true and correct copy of the foregoing Patent Owner’s
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`Opposition to Microsoft’s Motion for Joinder and supporting materials by
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`electronic means on April 30, 2014 at the following address of record:
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`Counsel for Microsoft Corporation:
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`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
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`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
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`IPR38868-0004IP1@fr.com
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`Dated: April 30, 2014
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`Respectfully submitted,
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` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
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