UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________________________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________________________
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`MICROSOFT CORPORATION,
`Petitioner
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`v.
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`VIRNETX, INC.,
`Patent Owner
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`____________________________________
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`U.S. Patent No. 6,502,135
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`IPR2014-00558
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`____________________________________
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`REQUEST FOR REHEARING UNDER 37 C.F.R. § 42.71(d)
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`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-
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`____________________________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________________________
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`MICROSOFT CORPORATION,
`Petitioner
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`v.
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`VIRNETX, INC.,
`Patent Owner
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`____________________________________
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`U.S. Patent No. 6,502,135
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`IPR2014-00558
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`____________________________________
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`
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`REQUEST FOR REHEARING UNDER 37 C.F.R. § 42.71(d)
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`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`TABLE OF CONTENTS
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`I. Statement of Relief Requested ............................................................................ 2
`II. Proper Application of Chevron Principles to 35 U.S.C. § 315(b) ....................... 2
`III. Conclusion ........................................................................................................ 8
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`1
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`I.
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`Statement of Relief Requested
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`Attorney Docket No. 38868-0004IP1
`IPR of U.S. Patent No. 6,502,135
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`Pursuant to 37 C.F.R. § 42.71, Microsoft Corporation (“Petitioner” or
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`“Microsoft”) requests rehearing on the decision by the Board to deny institution of
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`an inter partes review of the ’135 patent. Petitioner respectfully submits that the
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`Board did not properly apply the Chevron principles of statutory interpretation
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`when applying 35 U.S.C. § 315(b).
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`II.
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`Proper Application of Chevron Principles to 35 U.S.C. § 315(b)
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`If a “statute’s text does not explicitly address the precise question” at issue,
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`interpretation must go beyond the statute’s text to consider “the statute’s structure,
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`canons of statutory construction, and legislative history” to determine Congress’s
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`“intention on the precise question at issue.” See Timex VI, Inc. v. US, 157 F. 3d
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`879, 882 (Fed. Cir. 1998) (citing Chevron, U.S.A., Inc. v. Natural Resources
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`Defense Council, Inc., 467 U.S. 837, 842-43 & n. 9 (1984)). Microsoft submits
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`that the statutory text of § 315(b) itself does not explicitly address the precise
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`question of how to interpret the phrase “a complaint alleging infringement of the
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`patent” in the case where there are multiple complaints. Therefore, under the
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`principles set forth in Chevron, the Board must go beyond the text of the statute to
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`consider evidence such as legislative history to determine Congress’s intent for the
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`application of § 315(b) to the facts of this case.
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`2
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`As previously set forth beginning on page 8 of the Petition, Microsoft
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`presented reasons why the inclusion of the indefinite article “a” before the subject
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`“complaint” creates an ambiguity in the application of § 315(b) to the current
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`situation – where an IPR is filed within one year of service of a subsequent
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`complaint alleging infringement of the patent, but after one year from service of an
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`initial complaint(s) alleging infringement of the same patent. Though in its
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`Institution Decision the Board adopted one interpretation of § 315(b), Microsoft set
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`forth an equally plausible interpretation that emerges from the “plain language” of
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`the statute when considered in light of the current situation. To resolve which of
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`these interpretations is proper, the Board should have turned to the legislative
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`history of § 315(b).
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`In particular, Microsoft proposed that § 315(b), through its use of the
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`indefinite article “a”, should be interpreted as designating a one-year timeframe in
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`which a petitioner may file a petition for inter partes review after “a complaint for
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`infringement” has been served, regardless of whether the complaint with regard to
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`which this timeframe is calculated is the first, second, or third complaint. The
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`following diagram illustrates this point.
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`3
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`Attorney Docket No. 38868-0004IP1
`IPR of U.S. Patent No. 6,502,135
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`Because both the Board’s and Microsoft’s interpretations of § 315(b) emerge
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`from a plain-language reading of the statutory text, the statutory text itself cannot
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`explicitly address the precise question of which of multiple complaints should be
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`considered “a complaint” for purposes of assessing the one-year time limitation set
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`forth in § 315(b). Accordingly, Chevron dictates that the Board employ other
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`“tools of statutory construction”, including assessing legislative history, in
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`construing Congress’s intent on this matter. See Timex VI, Inc., 157 F. 3d at 882.
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`Yet, in the Institution Decision, no justification was provided other than plain text.
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`See Paper 13, p. 4 (“we interpret ‘a complaint,’ in accordance with the plain
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`language of 35 U.S.C. § 315(b), to include ‘a complaint’ as explicitly stated.”)
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`When one considers the legislative history of § 315(b), as Microsoft did in
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`pages 10 to 13 of its Petition, it is clear that Microsoft’s interpretation of § 315(b)
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`should prevail.
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`As indicted in the Petition soliciting inter partes review, the legislative
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`history of § 315(b) reveals Congresses mutual goals of preventing “abusive serial
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`challenges to patents” while “coordinat[ing] inter partes and post-grant review
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`with litigation.” Petition (Paper 2), p. 10 (citing 157 Con. Rec. S1041 (daily ed.
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`Mar. 1, 2011) (statement of Sen. Kyl)). Indeed, under Microsoft’s proposed
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`interpretation, a patentee would only be subject to challenge when bringing a
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`complaint against a party, leaving them in full control over the situation, and
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`preventing the kind of abusive challenges that Congress intended to shut down.
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`See id. To this point, when considering the various post-grant challenges included
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`in the proposed legislation, the House of Representatives’ Committee on the
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`Judiciary more specifically reported:
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`The Committee recognizes the importance of quiet title to patent
`owners to ensure continued investment resources. While this
`amendment is intended to remove current disincentives to current
`administrative processes, the changes made by it are not to be used as
`tools for harassment or a means to prevent market entry through
`repeated litigation and administrative attacks on the validity of a
`patent. Doing so would frustrate the purpose of the section as
`providing quick and cost effective alternatives to litigation. Further,
`such activity would divert resources from the research and
`development of inventions. As such, the Committee intends for the
`USPTO to address potential abuses and current inefficiencies under its
`expanded procedural authority.
`Petition (Paper 2), pp. 10-11 (citing H.R. Rep. No. 112-98, 112th Cong., at 76
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`(2011)).
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`5
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`And yet, the patentee’s interests were not the only interests of Congressional
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`concern. See Petition (Paper 2), p. 11. Congress also clearly intended to provide a
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`quick and cost effective tool for defendants to use as an alternative to litigation.
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`See id. Congress didn’t express any intent to limit the use of this tool by
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`defendants, other than to prevent the aforementioned harassment of patentee. See
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`id. Thus, given the aforementioned control that would remain with Patentee under
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`Microsoft’s interpretation of this statute, where challenges would be available only
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`upon further assertion of a patent by Patentee, the Board should interpret the
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`statutory limits on IPRs (e.g., the limits imposed by § 315(b)) consistent with
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`Microsoft’s proposed interpretation. See id. Indeed, Microsoft’s interpretation
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`yields safe guards against abusive challenges aimed at harassing a patent owner
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`while also providing defendants otherwise available tools when confronted with
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`new assertions of infringement. See id. Patentees can hardly proclaim harassment
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`when their new complaint of infringement triggers the availability of the tool. See
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`id.
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`To be clear, adopting Microsoft’s proposed interpretation of § 315(b)
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`satisfies these legislative goals. See id. In particular, Microsoft’s proposed
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`interpretation would prevent an IPR from being instituted more than one year after
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`service of a first complaint, unless patentee brings new allegations of infringement
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`against a defendant. See id. at pp. 11-12. By barring an IPR more than a year after
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`6
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`service of a first complaint, without regard to service of subsequent complaints, a
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`third party is disincentivised from settling in a manner that promotes dismissal
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`with prejudice; indeed, since such a bar may prevent a party seeking to settle with
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`prejudice from being able to settle without jeopardizing their ability to later use
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`USPTO tools to defend themselves if patentee dishonors the settlement terms. See
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`id. at p. 12. On the other hand, allowing an IPR to be filed within a year of service
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`of any subsequent complaints would coordinate IPR with subsequent litigation and
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`provide the third party with the cost-effective alternative intended by Congress.
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`See id.
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`Applying Microsoft’s proposed interpretation of § 315(b) to the facts of this
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`case provides a model of how the proposed interpretation aligns with
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`Congressional intent. See id. As described in the Petition, the settlement
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`agreement that was mutually reached by the parties in the 2007 and 2010 VirnetX
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`litigations specifically preserved Microsoft’s right to challenge the validity of the
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`‘135 patent in future proceedings. See id. Specifically, the settlement agreement
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`states, “Microsoft’s affirmative defenses and counterclaims of (i) non-infringement
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`and invalidity shall be dismissed without prejudice”. Ex. 1075, at § 5.1. In
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`exchange for retaining its right to later challenge the validity of the ‘135 patent,
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`Microsoft agreed to discontinue all of its then-pending inter partes challenges to
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`the patents-in-suit in the Patent Office. See Ex. 1075, § 7.16. In other words, the
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`7
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`Attorney Docket No. 38868-0004IP1
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`IPR of U.S. Patent No. 6,502,135
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`Patent Owner in this case specifically consented to future challenges to the validity
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`of the ‘135 patent. Therefore, the institution of an IPR as a result of this Petition
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`cannot be considered abusive or harassing, because the patent owner has implicitly
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`consented to such a challenge.
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`III. Conclusion
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`For at least these reasons, Microsoft respectfully requests that the Board
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`reconsider and reverse its previous decision to deny institution of an inter partes
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`review of the ’135 patent by Microsoft.
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`Respectfully submitted,
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`/W. Karl Renner/
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`W. Karl Renner, Reg. No. 41,265
`Fish & Richardson P.C.
`P.O. Box 1022
`Minneapolis, MN 55440-1022
`T: 202-626-6447
`F: 202-783-2331
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`/Kevin E. Greene/
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`Kevin E. Greene, Reg. No. 46,031
`Fish & Richardson P.C.
`P.O. Box 1022
`Minneapolis, MN 55440-1022
`T: 202-626-6376
`F: 202-783-2331
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`Dated: 08/22/2014
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`Dated: 08/22/2014
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`8
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 CFR §§ 42.6(e)(1) and 42.6(e)(4)(iii), the undersigned
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`certifies that on August 22, 2014, a complete and entire copy of this Request for
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`Rehearing under 37 C.F.R. § 42.71(d) was provided via email to the Patent Owner
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`by serving the email correspondence addresses of record as follows:
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`Joseph E. Palys
`Finnegan, Henderson, Farabow, Garrett
`& Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
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`Naveen Modi
`Finnegan, Henderson, Farabow, Garrett
`& Dunner, L.L.P.
`901 New York Avenue, NW
`Washington, DC 20001-4413
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`Email: joseph.palys@finnegan.com
`Email: naveen.modi@finnegan.com
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`/Edward G. Faeth/
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`Edward G. Faeth
`Fish & Richardson P.C.
`60 South Sixth Street, Suite 3200
`Minneapolis, MN 55402
`(202) 626-6420
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