`
`Paper No.
`Filed: December 3, 2014
`
`
`Filed on behalf of: VirnetX Inc.
`By:
`
`Joseph E. Palys
`Paul Hastings LLP
`875 15th Street NW
`Washington, DC 20005
`Telephone: (202) 551-1996
`Facsimile: (202) 551-0496
`E-mail: josephpalys@paulhastings.com
`
`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
`
`__________________
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`__________________
`
`Case No. IPR2015-00188
`U.S. Patent No. 7,418,504
`
`__________________
`
`
`
`PATENT OWNER’S OPPOSITION TO
`APPLE’S MOTION FOR JOINDER
`
`
`
`Case No. IPR2015-00188
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`TABLE OF CONTENTS
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`
`INTRODUCTION .......................................................................................... 1
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`PRECISE RELIEF REQUESTED ................................................................. 1
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`STATEMENT OF FACTS ............................................................................. 2
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`
`I.
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`II.
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`III.
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`IV. ARGUMENT .................................................................................................. 3
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`A. Granting Apple’s Motion for Joinder Is Statutorily Barred ................. 4
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`B.
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`Apple’s Petition Raises Additional Issues Not Present in the
`’614 Proceeding .................................................................................... 7
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`C.
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`Apple Will Not Be Prejudiced if the Board Denies Joinder ................ 8
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`V.
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`CONCLUSION ............................................................................................... 8
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`
`
`
`
`i
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`Case No. IPR2015-00188
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` Page(s)
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`TABLE OF AUTHORITIES
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`FEDERAL CASES
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`Apple Inc. v. VirnetX Inc.,
`IPR2013-00393, Paper No. 4 (July 1, 2013) ........................................................ 3
`
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00393, Paper No. 17 (Dec. 18, 2013) .................................................... 3
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`Apple Inc. v. VirnetX Inc.,
`IPR2013-00394, Paper No. 1 (July 1, 2013) ........................................................ 3
`
`Apple Inc. v. VirnetX Inc.,
`IPR2013-00394, Paper No. 15 (Dec. 18, 2013) ................................................ 3, 4
`
`Dell Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00385, Paper No. 17 (July 29, 2013) .................................................... 6
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`Microsoft Corp. v. Surfcast Inc.,
`IPR2014-00271, Paper No. 20 (June 13, 2014) .................................................... 4
`
`RPX Corp. v. VirnetX Inc.,
`IPR2014-00176, Paper No. 57 (July 14, 2014) .................................................... 3
`
`Target Corp. v. Destination Maternity Corp.,
`IPR2014-00508, Paper No. 18 (Sept. 25, 2014) ................................................... 8
`
`VirnetX, Inc. v. Cisco Sys., Inc.,
`767 F. 3d 1308 (Fed. Cir. 2014) ........................................................................... 2
`
`FEDERAL STATUTES
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`35 U.S.C. § 311 .......................................................................................................... 6
`
`35 U.S.C. § 315(b) ............................................................................................passim
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`35 U.S.C. § 315(c) ............................................................................................passim
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`
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`ii
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`Case No. IPR2015-00188
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`I.
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`INTRODUCTION
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`For the third time, Apple has been responsible for filing a series of petitions
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`for inter partes review of U.S. Patent No. 7,418,504 (“the ’504 patent”). Its first
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`two petitions, in IPR2013-00393 and IPR2013-00394, were denied as untimely
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`under 35 U.S.C. § 315(b). Apple had RPX Corporation file its next two petitions
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`in IPR2014-0176 and IPR2014-00177, but those were also dismissed as untimely.
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`Apple then filed two more petitions, those in this proceeding, IPR2015-00188 (“the
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`’188 proceeding”), and IPR2015-00189 (“the ’189 proceeding”). This time Apple
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`accompanied its petitions with motions for joinder with consolidated IPR2014-
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`00613 and IPR2014-00614 (collectively, “the ’614 proceeding”), filed by
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`Microsoft. Apple’s repeated filings and its requests for joinder are an attempt to
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`evade the time bar of § 315(b) and should be rejected. Not only does the plain
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`language of § 315(b) require this result, § 315(c) and Congress’s express intent to
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`avoid serial harassment of patent owners confirms it. In addition, Apple’s petition
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`includes new grounds that were not presented nor considered in the ’614
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`proceeding. Thus, Patent Owner VirnetX respectfully requests that the Board deny
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`Apple’s motion requesting joinder of the ’188 proceeding with the ’614
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`proceeding.
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`II.
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`PRECISE RELIEF REQUESTED
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`VirnetX requests that the Board deny Apple’s motion for joinder (“Mot.”).
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`1
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`Case No. IPR2015-00188
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`III. STATEMENT OF FACTS
`On February 4, 2011, VirnetX served Apple with a complaint alleging
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`infringement of the ’504 patent and other VirnetX patents. (Ex. 2001, VirnetX
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`Inc.’s First Amended Complaint in VirnetX Inc. v. Cisco Sys., Inc. et al., Case No.
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`6:10-cv-00417 (E.D. Tex. Feb. 4, 2011) (“the ’417 litigation”).) In response,
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`Apple alleged, among other
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`things, noninfringement,
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`invalidity, and
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`unenforceability of the ’504 patent. (Ex. 2002, Apple’s Answer in the ’417
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`Litigation at ¶¶ 37, 48-51, 122-123, counterclaim ¶¶ 6-10, 13, 15, 38-44 (E.D. Tex.
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`April 16, 2012).) Prior to trial, Apple also requested inter partes reexamination of
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`the ’504 patent. The proceeding was assigned Control No. 95/001,788 (“the ’1,788
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`reexamination”) and is ongoing.
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`Following a five day trial, the district court upheld the validity of the ’504
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`patent. (Ex. 2003, Jury Verdict Form in the ’417 litigation (E.D. Tex. Nov. 6,
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`2012); Ex. 2004, Final Judgment in the ’417 litigation (E.D. Tex. Feb. 28, 2013).)
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`Apple appealed to the U.S. Court of Appeals for the Federal Circuit, which
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`affirmed that “none of the asserted claims are invalid[.]” VirnetX, Inc. v. Cisco
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`Sys., Inc., 767 F. 3d 1308, 1313-14 (Fed. Cir. 2014).
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`After trial, in November 2012, VirnetX served Apple with a related
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`complaint involving the ’504 patent and three other VirnetX patents. (Ex. 2005,
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`VirnetX Inc.’s Original Complaint in VirnetX Inc. v. Apple Inc., Case No. 6:12-cv-
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`Case No. IPR2015-00188
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`00855 (E.D. Tex. Nov. 6, 2012) (“the ’855 litigation”).) In response, Apple again
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`alleged, among other things, noninfringement and invalidity of the ’504 patent.
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`(Ex. 2006, Apple’s Answer in the ’855 Litigation at ¶¶ 21-24, 37-38, counterclaim
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`¶¶ 7, 9 (E.D. Tex. Jan. 23, 2013).)
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`More than two years after the ’504 patent was first asserted against Apple,
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`Apple submitted two petitions for inter partes review of the ’504 patent. See Apple
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`Inc. v. VirnetX Inc., IPR2013-00393, Paper No. 4 (July 1, 2013); Apple Inc. v.
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`VirnetX Inc., IPR2013-00394, Paper No. 1 (July 1, 2013). The Board denied these
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`petitions because they were “not filed within the time limit imposed by 35 U.S.C.
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`§ 315(b).” See Apple v. VirnetX, IPR2013-00393, Paper No. 17 at 5 (Dec. 18,
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`2013); Apple v. VirnetX, IPR2013-00394, Paper No. 15 at 5 (Dec. 18, 2013).
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`RPX Corporation then filed two petitions for inter partes review of the ’504
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`patent, but the Board found that Apple was an unidentified real party-in-interest
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`and denied institution under § 315(b)’s time bar. See RPX Corp. v. VirnetX Inc.,
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`IPR2014-00176, Paper No. 57 (July 14, 2014) (redacted Decision Denying
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`Institution).
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`IV. ARGUMENT
`The Board should not grant Apple’s motion because § 315(b) statutorily
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`prohibits joinder, because Apple attempts to add new issues that may increase the
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`complexity of the proceeding, and because denial will not prejudice Apple.
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`3
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`Case No. IPR2015-00188
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`A. Granting Apple’s Motion for Joinder Is Statutorily Barred
`Institution of Apple’s petition is barred by 35 U.S.C. § 315(b) because Apple
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`was served with a complaint more than one year before it filed its petition. See,
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`e.g., Apple v. VirnetX, IPR2013-00394, Paper No. 15 at 5 (Dec. 18, 2013). Joinder
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`is only permitted if the Board first determines that Apple’s petition warrants
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`institution. 35 U.S.C. § 315(c) (“the Director . . . may join . . . any person who
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`properly files a petition under section 311 that the Director . . . determines warrants
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`the institution of an inter partes review under section 314”). Because Apple’s
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`untimeliness precludes institution under § 315(b), it also precludes joinder under
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`§ 315(c). The Board, however, has interpreted the last sentence of § 315(b) to
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`mean that “the one-year time bar does not apply” if a party filing a time-barred
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`petition requests joinder. See Microsoft Corp. v. Surfcast Inc., IPR2014-00271,
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`Paper No. 20 at 7 (June 13, 2014). VirnetX respectfully disagrees.
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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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`provides an exception to the one-year bar only for a request for joinder, not for a
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`petition for inter partes review. Thus, the one-year bar continues to apply to all
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`petitions, even in the joinder context. The request-for-joinder exception of
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`Case No. IPR2015-00188
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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 a
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`petition has been instituted. 35 U.S.C. § 315(c). Since an institution decision can
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`take up to six months, it is likely that many requests for joinder will occur more
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`than one year after being served with a complaint. The statutory language
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`addresses this concern. It does not, however, provide a backdoor for time-barred
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`petitions to be effectively instituted through joinder. Such a view would be
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`contrary to Congress’s intent to “prevent[] the serial harassment of patent
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`holders[,]” which particularly applies to parties like Apple who have already had
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`ample opportunity to present validity challenges in district court, appellate court,
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`and in reexamination. (Ex. 2007, House Judiciary Transcript for Mark-Up of H.R.
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`1249, The America Invents Act at 72 (Apr. 14, 2011).)
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`Apple’s petitions in the ’188 and ’189 proceedings represent its eighth and
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`ninth attacks on the ’504 patent in the last three years and are indicative of the type
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`of “serial harassment” Congress intended to avoid. Moreover, Apple’s petition in
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`the ’188 proceeding attempts to add entirely new grounds to the ’614 proceeding
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`that were not put forth by Microsoft nor considered by the Board. See infra,
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`Section IV.B. Granting the relief that Apple requests here not only gives Apple the
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`opportunity to participate in an inter partes review proceeding, but also to
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`Case No. IPR2015-00188
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`affirmatively introduce new issues in a proceeding. In addition, it allows Apple
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`this opportunity more than three years after first receiving a complaint and after
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`having had opportunities to challenge the patent before a jury, the Federal Circuit,
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`and the Office, contrary to what Congress intended.
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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), a party may be joined if it has
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`“properly file[d] a petition under section 311.” (Emphasis added.) Senator Kyl
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`addressed the meaning of the phrase “properly file[d],” stating that “time deadlines
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`for filing petitions must be complied with in all cases.” (Ex. 2008, 154 Cong. Rec.
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`S9982, S9988 (daily ed. Sep. 27, 2008) (statement of Sen. Kyl).) Section 315(c) is
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`consistent with this view, because it requires compliance with § 311, which in turn
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`requires compliance with the other provisions of Title 35, Chapter 31 of the
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`U.S. Code, including the timeliness provisions. 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.”).
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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, e.g., Dell Inc. v. Network-1 Security Solutions, Inc.,
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`IPR2013-00385, Paper No. 17 at 5-6 (July 29, 2013). This interpretation is
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`incorrect, as it disregards the plain statutory language. The Board’s interpretation
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`Case No. IPR2015-00188
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`would also mean that other provisions of Chapter 31 do not apply to petitions when
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`joinder is requested, such as the petition requirements of § 312(a). This is not what
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`the statutory language permits, and is certainly not what Congress intended, yet it
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`is what the Board’s statutory interpretation would permit.
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`Under the plain language of §§ 315(b) and (c), joinder of Apple’s untimely
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`petition is prohibited.
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`B. Apple’s Petition Raises Additional Issues Not Present in the ’614
`Proceeding
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`Apple states that there exists a “substantial similarity between the Apple
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`petitions and the [’614 proceeding].” (Mot. at 1-2.) But, its petition includes two
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`new grounds of unpatentability that introduce a new claim, claim 5, with the
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`potential to increase the complexity and duration of the proceeding. See IPR2014-
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`00614, Paper No. 9 (Oct. 15, 2014) (Decision Instituting Inter Partes Review).
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`According to Apple, claim 5 “present[s] substantially the same patentability
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`considerations as those raised by claims 23 and 47.” (Mot. at 2.) However, claim
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`5, unlike claims 23 and 47, specifies that “authenticat[ing] the query,” involves the
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`additional feature of “using a cryptographic technique.” This additional feature is
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`not present in claims 23 and 47 or any of the other claims in the ’614 proceeding
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`and has the potential to increase the complexity of the proceeding with respect to
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`claim construction and the application of any prior art.
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`Also, the Board has found that § 315(c) does not permit joinder of issues.
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`7
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`Case No. IPR2015-00188
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`Target Corp. v. Destination Maternity Corp., IPR2014-00508, Paper No. 18 at 7
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`(Sept. 25, 2014). Apple’s motion for joinder is defective for this reason as well.
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`C. Apple Will Not Be Prejudiced if the Board Denies Joinder
`Contrary to Apple’s arguments, its petition is not simply an “effective
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`resolution of the validity of all the ’504 claims that VirnetX has asserted.” (See
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`Mot. at 5.) Rather, it is in addition to (and adding additional expense to) an issue
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`already resolved in litigation (Exs. 2003, 2004) and already being considered
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`before the Office. To the extent Apple desires a less-expensive and different
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`mechanism from district court litigation to challenge the validity of the ’504 patent,
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`it is currently enjoying that opportunity with the ongoing ’1,788 reexamination
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`proceeding.
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`Apple has had and continues to have ample opportunity to present validity
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`challenges relating to the ’504 patent. It does not need and is not entitled to yet
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`another serial attempt to challenge the ’504 patent. Even if joinder is denied, the
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`’614 proceeding will continue against the ’504 patent. Therefore, denying Apple
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`another attempt at challenging the validity of the ’504 patent will not prejudice it.
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`V. CONCLUSION
`For these reasons, the Board should deny Apple’s motion for joinder.
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`8
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`Case No. IPR2015-00188
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`Dated: December 3, 2014
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`
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`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
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`9
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`Case No. IPR2015-00188
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`CERTIFICATE OF SERVICE
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`I certify that I caused to be served on the counsel identified below a true and
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`correct copy of the foregoing Patent Owner’s Opposition to Apple’s Motion for
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`Joinder and supporting materials by electronic means on December 3, 2014:
`
`Counsel for Apple Inc.:
`
`Jeffrey P. Kushan (jkushan@sidley.com)
`Joseph A. Micallef (jmicallef@sidley.com)
`Sidley Austin LLP
`1501 K Street, N.W.
`Washington, DC 20005
`
`
`Dated: December 3, 2014
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`Respectfully submitted,
`
` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
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`
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`