Paper No. 53
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`––––––––––––––––––
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`––––––––––––––––––
`
`THE MANGROVE PARTNERS MASTER FUND, LTD., and APPLE INC.,
`Petitioner,
`
`v.
`VIRNETX INC.,
`Patent Owner.
`
`––––––––––––––––––
`
`Case No. IPR2015-010461
`Patent No. 6,502,135
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`––––––––––––––––––
`
`PETITIONER APPLE INC.’S SEPARATE REPLY FILING
`
`
`
`1 Apple Inc., who filed a petition in IPR2016-00062, has been joined as a Petitioner
`in the instant proceeding.
`
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`––––––––––––––––––
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`––––––––––––––––––
`
`THE MANGROVE PARTNERS MASTER FUND, LTD., and APPLE INC.,
`Petitioner,
`
`v.
`VIRNETX INC.,
`Patent Owner.
`
`––––––––––––––––––
`
`Case No. IPR2015-010461
`Patent No. 6,502,135
`
`––––––––––––––––––
`
`PETITIONER APPLE INC.’S SEPARATE REPLY FILING
`
`
`
`1 Apple Inc., who filed a petition in IPR2016-00062, has been joined as a Petitioner
`in the instant proceeding.
`
`
`
`
`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
`
`Table of Contents
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`Apple’s Joinder Is Not Barred under Section 315(b) ...................................... 1
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`The Board Should Maintain the Current Schedule.......................................... 3
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`
`
`i
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`I.
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`II.
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`TABLE OF AUTHORITIES
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` Page(s)
`
`Cases
`Achates Reference Publ’g, Inc. v. Apple Inc.,
`803 F.3d 652 (Fed. Cir. 2015) .............................................................................. 1
`
`Elekta, Inc. v. Varian Medical Systems, Inc.,
`IPR2015-01401, Paper 19 (Dec. 31, 2015)........................................................... 4
`
`FDA v. Brown & Williamson Tobacco Corp.,
`529 U.S. 120 (2000) .............................................................................................. 2
`
`Mexichem Amanco Holdings S.A. de C.V. v. Honewell International,
`Inc.,
`IPR2015-01309, Paper 25 (Apr. 17, 2016) ........................................................... 4
`
`Microsoft Corporation v. Proxyconn, Inc.,
`IPR2013-00109, Paper 15 (Feb. 25, 2013) ........................................................... 1
`
`Motorola Mobility LLC v. Softview LLC,
`IPR2013-00256, Paper 10 (Jun. 20, 2013) ........................................................... 1
`
`In re Procter & Gamble Co.,
`749 F.3d 1376 (Fed. Cir. 2014) ............................................................................ 5
`
`Statutes
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`35 U.S.C. § 311 .......................................................................................................... 3
`
`35 U.S.C. § 315(b) ............................................................................................. 1, 2, 3
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`35 U.S.C. § 315(c) ............................................................................................. 1, 2, 3
`
`35 U.S.C. § 316(a)(12) ........................................................................................... 1, 3
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`Other Authorities
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`37 C.F.R. § 42.5 ..................................................................................................... 4, 5
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`37 C.F.R. § 42.101(b) ................................................................................................ 1
`
`ii
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`37 C.F.R. § 42.122(b) ............................................................................................ 1, 3
`
`157 Cong. Rec. S1376 (Mar. 8, 2011) ....................................................................... 2
`
`
`
`iii
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`The Board’s order instituting inter partes review on Apple's petition
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`(IPR2016-00062) authorized Apple to make a separate filing of no more than five
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`pages addressing “an issue unique to” Apple or “a point of disagreement related to
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`[a] consolidated filing.” See Paper 28 at 5-6. This paper replies to issues raised by
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`Patent Owner’s Response that are unique to Apple. See Resp., 57-60.
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`I.
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`Apple’s Joinder Is Not Barred under Section 315(b)
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`Apple timely filed its petition and motion for joinder within one month of
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`the Board’s institution decision in this proceeding. 37 C.F.R. §§ 42.122(b),
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`42.101(b); 35 U.S.C. §§ 315(c), 316(a)(12). As this panel and others have
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`repeatedly found, § 315(b) does not apply to a petition filed with a request for
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`joinder. E.g., IPR2013-00109, Paper 15; IPR2013-00256, Paper 10.
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`In response, Patent Owner argues Apple is time-barred based on its theory
`
`that § 315(b) provides an exception only for “a request for joinder,” and not a
`
`petition. Resp., 57-60. That theory conflicts with the statute, the Board’s rules and
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`how the Federal Circuit has construed both. In Achates Reference Publ’g, Inc. v.
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`Apple Inc., 803 F.3d 652, 657 (Fed. Cir. 2015), a case which Patent Owner fails to
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`even cite, the Federal Circuit held that § 315(c) permits “an otherwise time-barred
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`party [to] nonetheless participate in an inter partes review proceeding if another
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`party files a proper petition.” The Court explained that “the [§]315(b) time bar
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`does not impact the Board’s authority to invalidate a patent claim,” and by its
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`1
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`terms does not apply to requests for joinder made under Section 315(c). Id.
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`That explanation accords with the plain language of the statute. The first
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`sentence of § 315(b) bars institution of an IPR filed more than a year after a party
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`was served with a complaint alleging infringement of the patent, while the second
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`sentence of § 315(b) creates an exception to that rule. 35 U.S.C. § 315(b). Patent
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`Owner’s construction of the statute would render § 315(b)’s second sentence
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`superfluous – it would create an exception for something not even addressed in the
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`first sentence (i.e., joinder to other proceedings). To make any sense, the second
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`sentence of § 315(b) must create an exception to what is prohibited in the first
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`sentence: the “institut[ion]” of an IPR by a time-barred party. Id., § 315(b); see
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`FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000).
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`Patent Owner next argues that “the Board treated the terms ‘petition’ and
`
`‘request for joinder’ as interchangeable.” Resp., 59. That theory conflicts with the
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`plain language of the statute: § 315(c) states that a request to join an instituted
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`IPR is based on “a petition” that is filed by a party. See 35 U.S.C. § 315(b)
`
`(referring to “a request for joinder under subsection (c)”); id. § 315(c) (referring
`
`only to “a petition”); 157 Cong. Rec. S1376 (Mar. 8, 2011) (“if an [IPR] is
`
`instituted on the basis of a petition…, a party that files an identical petition will be
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`joined to that proceeding”). Patent Owner’s contention that the second sentence of
`
`§ 315(b) merely “exempts” a request for joinder from the one-year time limitation
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`2
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`is thus facially inconsistent with the statutory text: the time-bar of the first sentence
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`refers only to a “petition,” not a request for joinder, § 315(b), and the time limit on
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`joinder is defined separately in § 316(a)(12) and 37 C.F.R. § 42.122(b).
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`Patent Owner also points to the language stating that “the Director … may
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`join … any person who properly files a petition under section 311,” § 315(c)
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`(emphasis added), to contend that Congress meant to incorporate the timing
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`requirements for filing a petition, Resp., 58-59. But § 315(c) specifically refers to
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`“section 311,” which sets out general rules for who may file an IPR petition and
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`when. Apple’s IPR petition met every requirement stated in § 311. See Paper 28,
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`1-3; Paper 11, 2. Indeed, the time-bar that Patent Owner claims Apple ran afoul of
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`is not in § 311, but in § 315(b). Thus, even if § 315(c) incorporates the timing
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`requirements in § 311, it does not incorporate the one-year time limit from being
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`served with an action for infringement, which is found only in § 315(b). Patent
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`Owner’s repeated “objections” to Apple’s joinder must be dismissed.
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`II. The Board Should Maintain the Current Schedule
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`Patent Owner asserts that Petitioner Mangrove did not identify each and
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`every RPI. Resp., 46-57. Even if true, Mangrove is not subject to a § 315(b) issue,
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`and as the Board has found, Mangrove could update its disclosure of RPIs without
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`any consequence. Paper 11, 8. If the Board determines that Mangrove should do
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`so, the Board should exercise its discretion and maintain the current schedule of
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`3
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`this proceeding. 37 C.F.R. § 42.5; see, e.g., IPR2015-01401, Paper 19, 6-10 (Dec.
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`31, 2015) (waiving resetting the filing date); IPR2015-01309, Paper 25, 4-5 (Apr.
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`7, 2016) (resetting the filing date while maintaining the same FWD schedule);
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`compare id., Paper 9 with Paper 26.
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`Indeed, compelling public policy reasons justify doing so – it would avoid
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`further unwarranted delays to the Office reaching a conclusion on the patentability
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`of the ’135 and ’151 patents. Apple raised inter partes reexamination challenges
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`to these patents in July of 2011, before enactment of the America Invents Act,
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`more than a year before the underlying litigation’s first jury verdict, and more than
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`four years before the second jury verdict. Control Nos. 95/001,682, 95/001,697.
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`Since then, Patent Owner has engaged in an unprecedented campaign to delay
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`entry of a final PTO decision on the ’135 and ’151 patent claims—claims which
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`underlie a $625 million verdict against Apple in the Eastern District of Texas.
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`Despite the PTO’s continued rejection of each and every claim, Apple’s
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`reexaminations proceedings against the ’135 and ’151 patents remain pending.
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`The reason is simple – Patent Owner has exploited procedural defects in the inter
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`partes reexamination scheme to paralyze those proceedings, filing more than 35
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`administrative petitions in those two proceedings alone to exploit the PTO’s
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`practice of suspending action in the proceedings while a decision on a petition is
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`pending. Patent Owner has also openly sought to delay those proceedings – it has
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`4
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`asked not only to suspend them at various times, but to extend every deadline set
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`by the PTO for Patent Owner to take action, regardless of the circumstances. The
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`clear intent of Patent Owner’s campaign of delay is to increase the chances of the
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`jury verdict reaching the Federal Circuit before a final decision from the Board.
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`This pattern of delay has continued unabated into the present proceedings.
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`Patent Owner requested and obtained multiple extensions to the due dates of its
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`filings, and has asked for even more extensions. See e.g., Ex. 2038, 29:7-12; Paper
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`40, 455. Then, two business days before its Response was due, Patent Owner filed
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`a petition for a writ of mandamus of the Board’s decision to grant Apple’s motion
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`for joinder, Paper 40, despite settled case law foreclosing such an action. In re
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`Procter & Gamble Co., 749 F.3d 1376, 1376 (Fed. Cir. 2014). Patent Owner’s
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`petition and motion for an emergency stay lacked any merit, and the Federal
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`Circuit promptly denied Patent Owner’s petition after briefing was completed.
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`Patent Owner’s campaign of delay should not be tolerated further. Even if the
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`Board determines that another Mangrove entity is an RPI, it should exercise its
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`sound discretion under 37 C.F.R. § 42.5 to maintain the current schedule.
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`
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`Dated: May 9, 2016
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`Respectfully Submitted,
`
`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Reg. No. 43,401
`SIDLEY AUSTIN LLP
`5
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`1501 K Street NW
`Washington, DC 20005
`Attorney for Petitioner Apple
`
`6
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`
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`IPR2015-01046
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` Petitioner Apple’s Separate Reply Filing
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), I hereby certify that on this 2nd day of May,
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`2016, I caused to be served a true and correct copy of the foregoing and any
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`accompanying exhibits by e-mail on the following counsel:
`
`Joseph E. Palys
`josephpalys@paulhastings.com
`
`Naveen Modi
`naveenmodi@paulhastings.com
`
`
`Dated: May 9, 2016
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`Respectfully Submitted,
`
`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Reg. No. 43,401
`SIDLEY AUSTIN LLP
`1501 K Street NW
`Washington, DC 20005
`Attorney for Petitioner Apple
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