Case No. IPR2014-00558
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`
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`Paper No.
`Filed: July 9, 2014
`
`Naveen Modi
`Paul Hastings LLP
`875 15th Street NW
`Washington, DC 20005
`Telephone: (202) 551-1990
`Facsimile: (202) 551-0490
`E-mail: naveenmodi@paulhastings.com
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
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`
`
`
`
`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 Preliminary Response
`to Petition for Inter Partes Review
`of U.S. Patent No. 6,502,135
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`
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`Filed on behalf of: VirnetX Inc.
`By:
`
`Joseph E. Palys
`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
`
`

`
`Table of Contents
`Introduction ...................................................................................................... 1
`The Petition Fails to Meet the Requirements for Instituting an
`Inter Partes Review ......................................................................................... 3
`A.
`The Petition Is Barred Under 35 U.S.C. § 315(b) ................................. 3
`1.
`Procedural History Relevant to § 315(b) .................................... 3
`2.
`Service of the 2007 and 2010 Complaints Bar
`Microsoft’s Petition under § 315(b) ............................................ 7
`Dismissal of the 2007 and 2010 Litigations Does Not
`Nullify Service for Purposes of § 315(b) .................................... 8
`a)
`The Relevant Aspects of the 2007 and 2010
`Litigations Were Dismissed With Prejudice and
`Left the Parties in Different Relative Legal
`Positions ............................................................................ 9
`Nullifying Service of the 2007 and 2010
`Complaints Under the Circumstances Would
`Render § 315(b) Irrelevant in Many Cases.....................11
`The Two Documents Dubbed “Aventail” Cannot Anticipate
`Any Claim ...........................................................................................14
`The Petition Fails to Present Any Cognizable Obviousness
`Position Based on the Aventail Documents ........................................15
`The Petition Fails to Comply with 35 U.S.C. §§ 312(a)(3)-(4)
`and 37 C.F.R. § 42.104(b) ...................................................................17
`The Petition’s Anticipation and Obviousness Arguments for
`Claim 10 Are Facially Inconsistent .....................................................21
`F. Microsoft’s Petition Should Be Denied Under 35 U.S.C.
`§ 325(d) ...............................................................................................24
`The Board Should Not Institute Based on the Petition’s
`Redundant Grounds .............................................................................26
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`3.
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`b)
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`B.
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`C.
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`D.
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`E.
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`Case No. IPR2014-00558
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`I.
`II.
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`G.
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`Case No. IPR2014-00558
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`III. The Petition’s Claim Constructions Are Flawed and Should Be
`Rejected .........................................................................................................29
`A. Overview of the ’135 Patent ................................................................29
`B.
`Level of Ordinary Skill in the Art .......................................................30
`C.
`“Virtual Private Network (VPN)” (Claims 1, 4-6, 10-12, and
`18) ........................................................................................................32
`“DNS Proxy Server” (Claims 8 and 10) .............................................37
`D.
`“Client Computer” (Claims 1-7, 9-13, and 17-18) ..............................37
`E.
`If Trial Is Instituted, VirnetX Requests an 18-Month Schedule ...................40
`Conclusion .....................................................................................................41
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`
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`IV.
`V.
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`Case No. IPR2014-00558
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`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Amkor Tech., Inc. v. Tessera, Inc.,
`IPR2013-00242, Paper No. 98 (Aug. 26, 2013) ................................................... 9
`Apple Inc. v. Evolutionary Intelligence, LLC,
`IPR2014-00079, Paper No. 8 (Apr. 25, 2014) .................................................... 18
`Apple Inc. v. Int’l Trade Comm’n,
`725 F.3d 1356 (Fed. Cir. 2013) .................................................................... 14, 15
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00348, Paper No. 14 (Dec. 13, 2013), Paper No. 18 (Feb.
`12, 2014) ........................................................................................................... 7, 8
`Atrium Med. Corp. v. Davol Inc.,
`IPR2013-00186, Paper No. 34 (Oct. 23, 2013) .................................................. 19
`In re Bigio,
`381 F.3d 1320 (Fed. Cir. 2004) .......................................................................... 35
`CallCopy, Inc. v. Verint Ams., Inc.,
`IPR2013-00486, Paper No. 11 (Feb. 5, 2014) .................................................... 16
`CaptionCall, LLC v. Ultratec, Inc.,
`IPR2013-00549, Paper No. 20 (Apr. 28, 2014) .................................................. 19
`Dominion Dealer Solutions, LLC v. Autoalert, Inc.,
`IPR2013-00220, Paper No. 13 (Oct. 10, 2013) .................................................. 16
`EMC Corp. v. Personal Web Techs., LLC,
`IPR2013-00087, Paper No. 25 (June 5, 2013) .............................................. 27, 29
`Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC,
`IPR2012-00001, Paper No. 15 (Jan. 9, 2013) ..................................................... 36
`Google Inc. et al. v. Everymd.com LLC,
`IPR2014-00347, Paper No. 9 (May 22, 2014) .............................................. 18, 21
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`iii
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`Case No. IPR2014-00558
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`Graham v. John Deere Co. of Kansas City,
`383 U.S. 1 (1966) .................................................................................... 15, 16, 17
`Idle Free Sys., Inc. v. Bergstrom, Inc.,
`IPR2012-00027, Paper No. 26 (June 11, 2013) .................................................. 27
`Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd.,
`IPR2013-00324, Paper No. 19 (Nov. 21, 2013) ................................................. 25
`Kyocera Wireless Corp. v. Int’l Trade Comm’n,
`545 F.3d 1340 (Fed. Cir. 2008) .......................................................................... 15
`Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co.,
`CBM2012-00003, Paper No. 7 (Oct. 25, 2012) ............................................ 27, 28
`Macauto U.S.A. v. BOS GmbH & KG,
`IPR2012-00004, Paper No. 18 (Jan. 24, 2013) ................................................... 11
`Motorola Solutions, Inc. v. Mobile Scanning Techs., LLC,
`IPR2013-00093, Paper No. 28 (Apr. 29, 2013) .................................................. 36
`Oracle Corp. v. Click-to-Call Techs. LP,
`IPR2013-00312, Paper No. 40 (Dec. 18, 2013) .................................................. 11
`Samsung Elecs., Co. v. Fractus, S.A.,
`IPR2014-00008, Paper No. 22 (Feb. 26, 2014) ................................................ 7, 8
`ScentAir Techs., Inc. v. Prolitec, Inc.,
`IPR2013-00180, Paper No. 18 (Aug. 26, 2013) ........................................... 28, 29
`Synopsys, Inc. v. Mentor Graphics Corp.,
`IPR2012-00041, Paper No. 16 (Feb. 22, 2013) .................................................. 19
`Tasco, Inc. v. Pagnani,
`IPR2013-00103, Paper No. 6 (May 23, 2013) .................................................... 18
`Universal Remote Control, Inc. v. Universal Elecs., Inc.,
`IPR2013-00152, Paper No. 8 (Aug. 19, 2013) ............................................. 23, 24
`Universal Remote Control, Inc. v. Universal Elecs., Inc.,
`IPR2013-00168, Paper No. 9 (Aug. 26, 2013) ............................................passim
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`Case No. IPR2014-00558
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`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054, Paper No. 16 (July 13, 2013) .................................................. 18
`Statutes
`35 U.S.C. § 103(a) ............................................................................................. 15, 17
`35 U.S.C. § 311(b) ................................................................................................... 14
`35 U.S.C. § 312(a)(3) ............................................................................... 2, 17, 18, 21
`35 U.S.C. § 312(a)(4) ............................................................................... 2, 17, 18, 21
`35 U.S.C. § 313 .......................................................................................................... 1
`35 U.S.C. § 315(b) ............................................................................................passim
`35 U.S.C. § 316(a)(1) ............................................................................................... 40
`35 U.S.C. § 325(d) ................................................................................... 2, 24, 25, 26
`Regulations
`37 C.F.R. § 42.8 ....................................................................................................... 40
`37 C.F.R. § 42.100(c) ............................................................................................... 40
`37 C.F.R. § 42.104(b) .............................................................................. 2, 17, 20, 24
`37 C.F.R. § 42.104(b)(4) .................................................................................... 18, 21
`37 C.F.R. § 42.104(b)(5) .................................................................................... 18, 21
`37 C.F.R. § 42.107 ..................................................................................................... 1
`37 C.F.R. § 42.108(c) ............................................................................................... 24
`Other Authorities
`157 Cong. Rec. S1041-42 (daily ed. Mar. 1, 2011) ................................................. 25
`77 Fed. Reg. 48680 (Aug. 14, 2012)........................................................................ 24
`77 Fed. Reg. 48756 (Aug. 14, 2012)........................................................................ 24
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`I.
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`Case No. IPR2014-00558
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`Introduction
`Patent Owner VirnetX Inc. respectfully submits this Preliminary Response
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`in accordance with 35 U.S.C. § 313 and 37 C.F.R. § 42.107, responding to the
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`Petition for Inter Partes Review (the “Petition”) filed by Microsoft Corporation
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`against VirnetX’s U.S. Patent No. 6,502,135 (“the ’135 patent”). VirnetX requests
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`that the Board not institute inter partes review for several reasons.
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`First, VirnetX served Microsoft with complaints alleging infringement of the
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`’135 patent in 2007 and 2010, both of which occurred more than one year before
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`Microsoft filed
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`its Petition. Thus, Microsoft’s Petition
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`is barred under
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`35 U.S.C. § 315(b). The 2010 Complaint was dismissed with prejudice in its
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`entirety, and the 2007 Complaint was dismissed with prejudice regarding several
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`issues, including infringement, which is the focal point of the § 315(b)
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`analysis. Thus, the dismissals did not nullify service of either complaint, as
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`Microsoft contends. The parties were left in distinctly different legal positions
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`than they were in before service, so the § 315(b) bar applies to this entire
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`proceeding and precludes institution.
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`Second, Microsoft attempts to combine two references in an anticipation
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`analysis, in violation of Federal Circuit case law.
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`Third, Microsoft presents backup obviousness arguments that lack any
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`analysis, in violation of Supreme Court precedent.
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`Fourth, Microsoft fails to identify where the prior art discloses each claimed
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`feature, violating the particularity requirements of 35 U.S.C. § 312(a)(3)-(4) and
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`37 C.F.R. § 42.104(b).
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`Fifth, Microsoft’s theories of anticipation and obviousness for claim 10 are
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`facially inconsistent and must be rejected.
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`Sixth, this proceeding is duplicative of other actions before the Office and
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`should be dismissed under 35 U.S.C. § 325(d). The Office currently has two inter
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`partes reexamination proceedings against the ’135 patent, and Microsoft had
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`previously unsuccessfully challenged the ’135 patent in reexamination. A third set
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`of Office proceedings against the ’135 patent, as Microsoft requests here, is
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`unnecessary and burdens both the Office and VirnetX. In addition, the primary
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`prior art references Microsoft relies on here are already being considered by the
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`Office in ongoing reexaminations of the ’135 patent. Section 325(d) was designed
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`to avoid the type of serial challenge Microsoft requests.
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`Seventh, Microsoft proposes redundant grounds without identifying how any
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`one ground improves on any other, violating Board precedent requiring petitioners
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`to identify differences in the proposed rejections.
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`Finally, Microsoft proposes incorrect claim constructions. Because its
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`unpatentability challenges are premised on incorrect claim constructions, Microsoft
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`has not met its burden of demonstrating a reasonable likelihood of proving
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`unpatentability of any ’135 patent claim.
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`II. The Petition Fails to Meet the Requirements for Instituting an
`Inter Partes Review
`A. The Petition Is Barred Under 35 U.S.C. § 315(b)
`Microsoft’s Petition is untimely under 35 U.S.C. § 315(b). The statute
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`prohibits instituting an IPR based on a petition filed more than one year after the
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`petitioner has been served with a complaint alleging infringement of the patent.
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`VirnetX served Microsoft with two complaints alleging infringement of the ’135
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`patent more than one year before Microsoft filed its Petition. After a jury verdict
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`in VirnetX’s favor, the parties settled the underlying litigations. The court
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`dismissed the cases, and the dismissals left the parties in different legal positions
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`than they were in before the dismissal, with some issues being dismissed with
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`prejudice and others being dismissed without prejudice. Microsoft contends the
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`§ 315(b) bar should not apply, but each of Microsoft’s reasons is contrary to statute
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`or prior Board decisions, as discussed below.
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`Procedural History Relevant to § 315(b)
`1.
`VirnetX served Microsoft with a complaint alleging infringement of the ’135
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`patent and two other VirnetX patents on April 5, 2007 (“the 2007 Complaint”).
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`(Ex. 2010, VirnetX Inc.’s First Amended Complaint in VirnetX Inc. v. Microsoft
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`Corp., Case No. 6:07-cv-00080 (E.D. Tex. Apr. 5, 2007 ) (“the 2007 Litigation”).)
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`VirnetX accused aspects of Microsoft’s products of infringing VirnetX’s patented
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`secure communications technology. (Id. at 3-4.)
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`The 2007 Litigation proceeded for over three years, with Microsoft raising
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`numerous defenses, including noninfringement, invalidity, laches, estoppel,
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`marking and notice, lack of standing, government sales, and unclean hands and
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`inequitable conduct regarding the ’135 patent. (Ex. 2011, Microsoft’s Answer to
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`VirnetX’s First Amended Complaint in the 2007 Litigation (E.D. Tex. May 4,
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`2007).)
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` Microsoft also
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`lodged several counterclaims,
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`including seeking
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`declarations of noninfringement, invalidity, and unenforceability of the ’135
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`patent. (Id. at 13-14.)
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`A few months before trial, on December 8, 2009, Microsoft sought inter
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`partes reexamination of the ’135 patent. The Office assigned the proceeding
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`control no. 95/001,269, and ultimately concluded that all challenged claims were
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`patentable. (Ex. 1001 at 62-71.) The Office issued a Reexamination Certificate
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`confirming all challenged claims. (Id.)
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`The 2007 Litigation went to trial in March 2010, and the jury supported
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`VirnetX across the board: Microsoft willfully infringed the asserted claims and
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`those claims were not invalid. (Ex. 2012, Jury Verdict Form in the 2007 Litigation
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`(E.D. Tex. March 16, 2010).)
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`After securing the jury verdict, VirnetX served Microsoft with a companion
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`complaint (“the 2010 Complaint”) on March 17, 2010, accusing of infringement
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`later versions of the products released since the 2007 Complaint had been served.
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`(Ex. 2013, VirnetX Inc.’s Original Complaint in VirnetX Inc. v. Microsoft Corp.,
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`Case No. 6:10-cv-00094 (E.D. Tex. Mar. 17, 2010) (“the 2010 Litigation”).)
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`Microsoft’s counsel agreed to accept service of the 2010 Complaint, and it did so
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`on March 19, 2010. (Ex. 2014, Microsoft’s counsel stating “[w]e agree to accept
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`service of the complaint on behalf of Microsoft” and that “we received the
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`complaint” on “Thursday, March 19”; see also Ex. 2015.)
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`Before the court entered final judgment on the jury verdict in the 2007
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`Litigation, VirnetX and Microsoft signed a settlement and license agreement. (Ex.
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`1075, Settlement and License Agreement.) The agreement resolved both the 2007
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`and 2010 Litigations, and granted Microsoft a non-exclusive, field-of-use-limited
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`license to VirnetX’s patents for the products at issue in those actions. (Id. at 2,
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`§ 3.1.)
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`Following settlement, the parties stipulated to dismissal (see Exs. 2016 and
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`2017), and the court dismissed the 2007 and 2010 Litigations. (Ex. 1072, Order of
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`Dismissal in 2007 Litigation (E.D. Tex. June 1, 2010); Ex. 1073, Order of
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`Dismissal in 2010 Litigation (E.D. Tex. May 25, 2010); Ex. 2018, Order Granting
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`Joint Stipulations (E.D. Tex. Jan. 15, 2010).) The dismissals left the parties in
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`different relative legal positions than before service of the 2007 and 2010
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`Case No. IPR2014-00558
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`Complaints. The court first dismissed the 2010 Litigation with prejudice in its
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`entirety, simply stating that “all of the claims asserted against Microsoft in this
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`action are dismissed with prejudice.” (Ex. 1073.) It also dismissed the 2007
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`Litigation by stating:
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`IT IS THEREFORE ORDERED that all claims
`asserted against Microsoft in this action are dismissed with
`prejudice.
`The affirmative defenses and counterclaims asserted
`by Microsoft in this action are dismissed. For the avoidance
`of doubt, this dismissal is without prejudice to Microsoft’s
`ability to assert, in future actions, (i) affirmative defenses
`and/or counterclaims of invalidity or noninfringement, (ii)
`affirmative
`defenses
`and/or
`counterclaims
`of
`unenforceability, subject to the terms of the Order dated
`January 15, 2010 in this action (Docket No. 274), and/or
`(iii) any other affirmative defenses. This dismissal is with
`prejudice
`to Microsoft’s ability
`to assert any other
`counterclaims asserted by Microsoft in this action.
`(Ex. 1072, Order of Dismissal in 2007 Litigation (E.D. Tex. Jun. 1, 2010).)
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`More recently, VirnetX served Microsoft with an additional complaint (“the
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`2013 Complaint”) alleging infringement of the ’135 patent (among others) by
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`Microsoft’s use of VirnetX’s patented technology in Skype®, which falls outside
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`the limited field of use permitted by the settlement and license agreement. (Ex.
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`6
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`2019, VirnetX Inc.’s Original Complaint in VirnetX Inc. v. Microsoft Corp., Case
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`Case No. IPR2014-00558
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`No. 6:13-cv-00351 (E.D. Tex. April 22, 2013) (“the 2013 Litigation”).) Nearly a
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`year after the filing of the 2013 Litigation, which is ongoing, Microsoft submitted
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`its Petition for inter partes review of the ’135 patent.
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`2.
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`Service of the 2007 and 2010 Complaints Bar Microsoft’s
`Petition under § 315(b)
`Under 35 U.S.C. § 315(b), if a petition for inter partes review is filed more
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`than one year after the petitioner is served with a complaint alleging infringement,
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`the petition is untimely and inter partes review may not be instituted, even if the
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`complaint predates enactment of the AIA. See, e.g., Samsung Elecs., Co. v.
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`Fractus, S.A., IPR2014-00008, Paper No. 22 (Feb. 26, 2014); Apple Inc. v. VirnetX
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`Inc., 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). Here, Microsoft filed its Petition in March 2014—nearly
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`seven years after VirnetX served the 2007 Complaint and over four years after
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`VirnetX served the 2010 Complaint—so inter partes review may not be instituted.
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`Microsoft contends that VirnetX’s service of the later 2013 Complaint
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`restarts the one-year clock for purposes of § 315(b), rendering its Petition timely.
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`(See Pet. at 7-13; id. at 11-12, “the proposed interpretation would prevent an IPR
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`from being instituted more than one year after service of a first complaint, unless
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`patentee brings new allegations of infringement against a defendant.”) The Board
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`has rejected Microsoft’s “latest complaint” theory as improperly rewriting § 315(b)
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`as though it authorizes, rather than bars, IPR. See, e.g., Samsung, IPR2014-00008,
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`Paper No. 19 at 4-5; Apple Inc., IPR2013-00348, Paper No. 14 at 4 (“The plain
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`language of the statute does not specify that a later complaint will nullify the effect
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`of an earlier complaint for timeliness purposes of a petition.”). As the Board
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`recognizes, because “the terms of [the] statute [are] unambiguous, judicial inquiry
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`is complete.” Universal Remote Control, IPR2013-00168, Paper No. 9 at 5 (citing
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`United States v. James, 478 U.S. 597, 606 (1986) (internal quotations omitted)).
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`The Board should reject Microsoft’s attempt to rewrite § 315(b) here the same way
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`it has rejected other petitioners’ identical attempts.
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`3.
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`Dismissal of the 2007 and 2010 Litigations Does Not Nullify
`Service for Purposes of § 315(b)
`The dismissals of the 2007 and 2010 Litigations do not nullify service of the
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`2007 and 2010 Complaints, as Microsoft contends, because the cases were
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`dismissed with prejudice regarding several issues, including infringement, which is
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`the focal point of the § 315(b) analysis. Microsoft also contends that the
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`circumstances of this case warrant nullification, but subjective justifications are
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`irrelevant to the § 315(b) analysis. Even if one were permitted to consider case-by-
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`case justifications, the facts here would support applying the § 315(b) bar, as
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`discussed below.
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`Case No. IPR2014-00558
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`a)
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`The Relevant Aspects of the 2007 and 2010 Litigations
`Were Dismissed With Prejudice and Left the Parties
`in Different Relative Legal Positions
`Section 315(b) focuses on when a party “is served with a complaint alleging
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`infringement of the patent.” According to the Board, “[w]hat matters is that the
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`complaint pleads a cause of action for patent infringement and is served lawfully
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`on the accused infringer in a civil action. Once that happens, the accused infringer
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`is subject to the time limit set forth in section 315(b) to petition for inter partes
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`review.” Amkor Tech., Inc. v. Tessera, Inc., IPR2013-00242, Paper No. 98 at 6-7
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`(Aug. 26, 2013). As far as the statute is concerned, it is irrelevant whether a served
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`party answers the complaint, lodges affirmative defenses or counterclaims of
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`invalidity, or even participates in the action at all. Because it is irrelevant to the
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`analysis whether any invalidity defenses or counterclaims ever existed, it is also
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`irrelevant how those defenses or counterclaims were dismissed.
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`Consistent with this interpretation, the Board has enforced the § 315(b) bar
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`without inquiring into the nature of the response to the complaint or the dismissal
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`of any defenses or counterclaims. See Universal Remote Control Inc. v. Universal
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`Elecs., Inc., IPR2013-00168, Paper No. 9 (Aug. 26, 2013). Instead, the Board has
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`focused on the service of the infringement complaint and the with-prejudice nature
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`of the dismissal of the infringement claims. See id. Indeed, the dismissal language
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`in Universal Remote Control, which did not nullify service, referred only to
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`“plaintiff’s causes of action for patent infringement.” (Ex. 2020 at 2.) That
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`Case No. IPR2014-00558
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`language is virtually identical in relevant part to the dismissal language for the
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`2010 Litigation:
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`Universal Remote Dismissal Language
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`2010 Litigation Dismissal Language
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`“Plaintiff’s causes of action for patent
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`“IT IS THEREFORE ORDERED that
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`infringement, based on U.S. Patent No.
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`all of
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`the claims asserted against
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`5,414,426 against Defendant Universal
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`Microsoft in this action are dismissed
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`Remote Control,
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`Inc., are hereby
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`with prejudice.” (Ex. 1073 at 1.)
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`dismissed with prejudice.” (Ex. 2020 at
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`2.)
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`Focusing on the one cause of action that matters for purposes of § 315(b)—
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`infringement—Microsoft does not dispute that VirnetX’s infringement claims were
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`dismissed with prejudice in both the 2007 and 2010 Litigations. (See Pet. at 3-7;
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`see also Ex. 1072 at 1, “all claims asserted against Microsoft in this action are
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`dismissed with prejudice”; Ex. 1073 at 1, “all of the claims asserted against
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`Microsoft in this action are dismissed with prejudice.”). This ends the § 315(b)
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`inquiry; Microsoft is barred.
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`But even if one were to continue the nullification inquiry, the result is no
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`different. The Board has found that nullification applies where a dismissal leaves
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`the parties in the same legal position “as though the action had never been
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`brought.” Macauto U.S.A. v. BOS GmbH & KG, IPR2012-00004, Paper No. 18 at
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`Case No. IPR2014-00558
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`15 (Jan. 24, 2013) (citing cases); Oracle Corp. v. Click-to-Call Techs. LP,
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`IPR2013-00312, Paper No. 40 at 4 (Dec. 18, 2013). VirnetX and Microsoft both
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`stand in different legal positions than before those actions were filed,1
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` so
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`nullification does not apply.2
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`b) Nullifying Service of the 2007 and 2010 Complaints
`Under the Circumstances Would Render § 315(b)
`Irrelevant in Many Cases
`Microsoft contends that it “does not seek a broad ruling that automatically
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`treats every voluntary dismissal as nullifying the effect of service for inter partes
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`1 Only some of Microsoft’s counterclaims were dismissed without prejudice.
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`(Ex. 1072 at 1.) The remainder were dismissed with prejudice, leaving Microsoft
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`in a different legal position after the dismissal than before litigation.
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`2 The voluntary nature of the VirnetX/Microsoft dismissals does not alter
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`their effect for purposes of § 315(b). The dismissal in Universal Remote Control
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`was voluntarily sought by motion, but the Board did not find nullification. See
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`Universal Remote Control,
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`IPR2013-00168, Paper No. 9. Microsoft
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`mischaracterizes Universal Remote Control, stating “[e]ven voluntary dismissal of
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`an infringement action with prejudice . . . has been found to nullify the legal effect
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`of service of a corresponding complaint . . . .” (Pet. at 5.) The Board made no
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`such finding—it recognized the effect of service for purposes of § 315(b).
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`review purposes,” but “the particular circumstances of this case simply warrant
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`Case No. IPR2014-00558
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`such treatment.” (Pet. at 7.) The circumstances of this case, however, show that
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`all the requirements are met for the § 315(b) bar to apply. Case-by-case subjective
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`justifications like the ones Microsoft proposes are simply not authorized by statute
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`and form no part of the analysis.
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`Nonetheless, if one were permitted to consider the circumstances of the case
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`in assessing whether to apply § 315(b), the facts present an even more compelling
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`justification in favor of barring Microsoft. Here, the 2007 Litigation proceeded to
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`trial, the jury rendered a verdict on the merits of the case (infringement and
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`validity), the parties settled after trial, the court dismissed the infringement
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`complaint with prejudice, and the parties are now in different relative legal
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`positions than before service of the complaint. The 2007 Litigation was far more
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`advanced than the dismissed litigation in Universal Remote Control (see Ex. 2021),
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`and it was nearly complete at the time of its dismissal.
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`If service of the 2007 Complaint is deemed a nullity despite the advanced
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`nature of the proceeding, then service of virtually any infringement complaint
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`dismissed with prejudice before receiving a final judgment could be considered a
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`nullity. It would essentially be a finding that § 315(b) itself is a nullity in many
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`cases. This is a long way from the plain language of § 315(b), which provides no
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`basis for nullification at all,3
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`jury verdict.
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`Case No. IPR2014-00558
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` let alone nullifying a complaint after a full trial and
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`Similarly, the 2010 Litigation was dismissed with prejudice: “all of the
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`claims asserted against Microsoft in this action are dismissed with prejudice.” (Ex.
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`1073.) As a result, it cannot be nullified as Microsoft contends.
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`For these reasons, service of the 2007 and 2010 Complaints bar Microsoft’s
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`petition under § 315(b), so IPR cannot be instituted.4
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`3 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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`any case. Section 315(b) refers only to when the “petitioner, real party in interest,
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`or 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 nullifying service, so
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`the plain language of the statute should control.
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`4 Microsoft requested that its time-barred Petition be joined with IPR2014-
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`00171, filed by RPX Corporation. The Board denied institution of that proceeding
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`on June 5, 2014, and RPX did not seek rehearing within the allotted time.
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`Microsoft’s joinder request should therefore be denied.
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`Case No. IPR2014-00558
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`B.
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`The Two Documents Dubbed “Aventail” Cannot Anticipate Any
`Claim
`Aventail is not a single document. It consists of two documents:
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`(1) “Aventail Connect v3.01/v2.51 Administrator’s Guide” (Ex. 1007 at 1-120),
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`and (2) “Aventail ExtraNet Center v3.0 Administrator’s Guide” (id. at 121-94).
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`Microsoft merged these two separate documents into a single PDF file, labeled it
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`“Aventail,” and argues that the merged PDF anticipates claims 1, 3, 4, 7, 8, 10, 12,
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`and 13. Microsoft disregards the fundamental principle that, “[f]or a prior art
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`reference to anticipate a claim, the reference must disclose each claim limitation in
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`a single document.” Apple Inc. v. Int’l Trade Comm’n, 725 F.3d 1356, 1362 (Fed.
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`Cir. 2013).
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`Microsoft contends that the two documents reference each other and
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`“describe the configuration and operation of client and server parts of a single
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`Aventail VPN system.” (Pet. at 20.) If Microsoft seeks to rely on a “system” to
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`challenge claims of the ’135 patent, its challenge is prohibited by statute.
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`35 U.S.C. § 311(b). And to the extent Microsoft contends that “the Aventail
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`Connect document . . . incorporates by reference specific portions of the Aventail
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`Extranet Center document,” it fails to set forth any plausible basis for
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`incorporation-by-reference. Neither document Microsoft seeks to combine
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`contains any incorporation-by-reference language regarding the other document.
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`Microsoft’s only support for its incorporation-by-reference argument is a
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`paragraph in a declaration, which merely states that the documents relate to and
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`Case No. IPR2014-00558
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`reference each other, but does not identify any specific basis for incorporation-by-
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`reference or identify where in the documents such incorporation is invoked. (See
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`Pet. at 20 (citing Ex. 1005 ¶ 29).)
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`Microsoft has not met the standard for incorporation by reference. See
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`Apple Inc., 725 F.3d at 1362 (“To incorporate material by reference, the host
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`document must identify with detailed particularity what specific material it
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`incorporates and clearly indicate where that material is found in the various
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`documents.”); see also Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d
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`1340, 1351 (Fed. Cir. 2008) (treating specifications related the same standard as
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`different documents for purposes of anticipation). Accordingly, Microsoft’s
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`anticipation grounds based on the Aventail documents must be rejected.
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`C. The Petition Fails to Present Any Cognizable Obviousness
`Position Based on the Aventail Documents
`Perhaps recognizing the weakness in its anticipation ground ba