`Tel: 571-272-7822
`
`
`Paper 111
`Entered: July 14, 2020
`
`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 IPR2015-01046
`Patent 6,502,135 B1
`________________________________________
`
`THE MANGROVE PARTNERS MASTER FUND, LTD., APPLE INC.,
`and BLACK SWAMP IP, LLC,
`Petitioner,
`v.
`VIRNETX INC.,
`Patent Owner.
`Case IPR2015-01047
`Patent 7,490,151 B2
`________________________________________
`
`
`Before MICHAEL P. TIERNEY, KARL D. EASTHOM, and
`JASON W. MELVIN, Administrative Patent Judges.
`
`MELVIN, Administrative Patent Judge.
`
`
`
`DECISION
`Denying Patent Owner’s Request on Rehearing of
`Order Regarding Additional Discovery
`37 C.F.R. §§ 42.71(d)
`
`
`
`
`
`
`
`
`
`IPR2015-01046 - Patent 6,502,135 B1
`IPR2015-01047 - Patent 7,490,151 B1
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`
`Patent Owner, VirnetX Inc., filed a Request for Rehearing (Paper 92,
`“Req. Reh’g”) asking the Board to reconsider the Decision Granting In Part
`Patent Owner’s Motion for Additional Discovery (Paper 88, “Disc. Dec.”).1
`In the Request, Patent Owner argues that the Discovery Decision should
`have granted depositions of Petitioner The Mangrove Partners Master Fund,
`Ltd. (“Mangrove”), and Nathaniel August (Mangrove’s Founder and
`President), or a combined, single deposition. Req. Reh’g 1, 2–5. Patent
`Owner also argues that the entire Discovery Decision must be reconsidered
`by a new panel because the original panel was constitutionally defective
`according to Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir.
`Oct. 31, 2019), petition for cert. filed, No. 19-1204 (U.S. April. 6, 2020).
`Req. Reh’g 1, 5–9. We decline to address Patent Owner’s Arthrex argument
`where Patent Owner did not raise the issue in the initial appeals and the
`Federal Circuit did not direct repaneling for the remands here.
`Regarding the deposition Patent Owner seeks, the Discovery Decision
`noted that Mangrove had already responded to Patent Owner’s deposition
`requests with written interrogatories related to pre-institution discovery.
`Disc. Dec. 7, 12–14. The Discovery Decision nonetheless permitted an
`additional ten interrogatories covering the material identified by Patent
`Owner’s deposition topics. Id. at 8, 14, 16. It did not grant Patent Owner a
`deposition because “Mangrove’s written answers suffice as to the
`depositions.” Id. at 7. The Discovery Decision further noted both that Patent
`Owner previously agreed that written responses could substitute for a
`
`
`1 Unless otherwise noted, citations refer to IPR2015-01046. The parties
`raised identical issues and filed materially similar papers in both cases. This
`Decision applies to both cases.
`
`2
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`IPR2015-01046 - Patent 6,502,135 B1
`IPR2015-01047 - Patent 7,490,151 B1
`
`deposition in another proceeding (id. at 9) and also that the schedule on
`remand weighed against a deposition (id. at 24–25). The Discovery Decision
`determined that, beyond interrogatory responses, “other information from a
`deposition would be based on speculation.” Id. at 16. In that determination,
`the Discovery Decision found persuasive Petitioner’s argument that the
`additional cost imposed by depositions outweighed any speculative benefit
`associated with them. Id. (quoting Paper 82, 13); accord id. at 20 (“[A]ny
`deposition . . . would involve mere speculation.”).
`Patent Owner argues that “deposition-based discovery and written
`discovery serve fundamentally different roles” and therefore interrogatories
`cannot take the place of a deposition. Req. Reh’g 2–3. Patent Owner argues
`that Mangrove’s asserted valid business reason for filing the Petition—a
`short-selling strategy—counsels for deposition-based discovery because it
`was initiated at the same time as Mangrove’s alleged connection with
`nonparty RPX Corp. Id. at 3–4. According to Patent Owner, the Discovery
`Decision overlooked Patent Owner’s argument regarding the timing of
`Mangrove’s two possible justifications for filing its Petitions. Id. at 4. Patent
`Owner argues that “a deposition is a critical element” of the discovery it
`seeks. Id. at 4–5.
`In this Request for Rehearing, Patent Owner bears the burden to show
`that the Discovery Decision should be modified. 37 C.F.R. § 42.71(d)
`(2015). To that end, Patent Owner must identify those matters it “believes
`the Board misapprehended or overlooked.” Id. As noted above, Patent
`Owner points to its arguments that written discovery could not substitute for
`deposition-based discovery, and that the timing of Mangrove’s possible
`
`3
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`IPR2015-01046 - Patent 6,502,135 B1
`IPR2015-01047 - Patent 7,490,151 B1
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`explanations for filing the petitions suggests both were actual motivations,
`implicating an additional real party in interest.
`The Discovery Decision made the determination that written
`interrogatories would satisfy Patent Owner’s need for additional discovery.
`Disc. Dec. 8, 14, 16. Thus, the Discovery Decision allows Patent Owner to
`explore the timing of Mangrove’s two possible justifications. Because the
`Discovery Decision permitted interrogatories as broad as the requested
`deposition topics (see id. at 14), it did not overlook Patent Owner’s
`argument regarding Mangrove’s justification for filing the petitions in these
`proceedings. Rather, it addressed that argument by permitting a different
`discovery mechanism.
`The Discovery Decision permitted written interrogatories rather than
`deposition-based discovery after determining that approach better fit with
`this proceeding’s schedule (id. at 24–25) and better balanced the cost of
`discovery against Patent Owner’s demonstrated need (id. at 16). Other than
`general statements regarding the value of depositions (see Req. Reh’g 3),
`Patent Owner does not demonstrate that the Discovery Decision
`misapprehended or overlooked anything material in making that
`determination. Indeed, determinations regarding additional discovery are
`discretionary decisions that weigh a number of factors, as identified in the
`Discovery Decision. See Wi-Fi One, LLC v. Broadcom Corp.,
`887 F.3d 1329, 1339 (Fed. Cir. 2018) (noting PTAB discovery decisions are
`reviewed for an abuse of discretion); Disc. Dec. 9–26 (citing Garmin Int’l,
`Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Paper 26 at 6 (PTAB
`Mar. 5, 2013) (precedential)).
`
`4
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`IPR2015-01046 - Patent 6,502,135 B1
`IPR2015-01047 - Patent 7,490,151 B1
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`
`Here, one discretionary factor involved Patent Owner’s overly broad
`discovery request, in terms of the unlimited time frame for the discovery
`sought, and in terms of seeking duplicative discovery with respect to
`nonparty RPX Corp. See Disc. Dec. 8. Despite finding that Patent Owner’s
`overly broad request failed to meet the interests of justice standard, the panel
`exercised its discretion and modified the request in order to accommodate
`Patent Owner, even though the panel previously had cautioned Patent Owner
`that an overly broad request carried a risk of outright denial (i.e., without a
`discretionary modification by the panel accruing to Patent Owner’s benefit).
`Id. at 5–8.
`Based on the foregoing, the Discovery Decision reached a correct
`determination under the interests of justice standard regarding the suitability
`of interrogatories in this proceeding when considering the cost of
`depositions, the impact depositions would have on the schedule, Patent
`Owner’s demonstrated need for depositions, and the panel’s discretionary
`modification of Patent Owner’s overly broad discovery request that failed to
`meet the interests of justice standard.
`Accordingly, it is hereby ORDERED that Patent Owner’s Request for
`Rehearing is denied.
`
`
`
`
`
`
`5
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`IPR2015-01046 - Patent 6,502,135 B1
`IPR2015-01047 - Patent 7,490,151 B1
`
`
`PETITIONER:
`Abraham Kasdan
`WIGGIN AND DANA LLP
`akasdan@wiggin.com
`
`James T. Bailey
`jtb@jtbaileylaw.com
`
`Jeffrey P. Kushan
`Thomas A. Broughan, III
`Scott M. Border
`SIDLEY AUSTIN LLP
`IPRNotices@sidley.com
`tbroughan@sidley.com
`sborder@sidley.com
`
`Thomas H. Martin
`Wesley C. Meinerding
`MARTIN & FERRARO, LLP
`tmartin@martinferraro.com
`docketing@martinferraro.com
`
`
`PATENT OWNER:
`Joseph E. Palys
`Naveen Modi
`Daniel Zeilberger
`Chetan Bansal
`PAUL HASTINGS LLP
`josephpalys@paulhastings.com
`naveenmodi@paulhastings.com
`danielzeilberger@paulhastings.com
`chetanbansal@paulhastings.com
`
`
`6
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