`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
`
`
`
`
`
`Paper No.
`Filed: July 15, 2016
`
`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
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`THE MANGROVE PARTNERS MASTER FUND, LTD. and APPLE INC.,
`Petitioner
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`v.
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`VIRNETX INC.,
`Patent Owner
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`
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`
`
`
`Case IPR2015-010461
`Patent 6,502,135
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`
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`Patent Owner’s Sur-Reply
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`1 Apple Inc., who filed a petition in IPR2016-00062, has been joined as a Petitioner
`in the instant proceeding.
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`I.
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`II.
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`Case No. IPR2015-01046
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`TABLE OF CONTENTS
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`Introduction ...................................................................................................... 1
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`Petitioners’ Improper New Arguments Fail to Remedy the Petitioners’
`Original Analysis ............................................................................................. 2
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`A.
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`B.
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`C.
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`D.
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`Petitioners’ New Position 1 ................................................................... 2
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`Petitioners’ New Positions 2–3 ............................................................. 4
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`Petitioners’ New Position 4 ................................................................... 9
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`Petitioners’ New Position 5 .................................................................10
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`III. Petitioner Apple Inc.’s Separate Reply Omits Telling Facts.........................11
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`IV. Conclusion .....................................................................................................12
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`i
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`Case No. IPR2015-01046
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`TABLE OF AUTHORITIES
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` Page(s)
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`Cases
`Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd.,
`821 F.3d 1359 (Fed. Cir. 2016) ............................................................................ 1
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`Statutes
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`35 U.S.C. § 312(a)(3) ................................................................................................. 1
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`Other Authorities
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`37 C.F.R. § 42.23(b) .................................................................................................. 1
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`Office Patent Trial Practice Guide,
`77 Fed. Reg. 48,756 (Aug. 14, 2012) ................................................................... 1
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`
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`ii
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`I.
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`Introduction
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`Case No. IPR2015-01046
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`In an Order dated July 7, 2016, the Board authorized Patent Owner to file a
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`sur-reply “limited to issues enumerated by Patent Owner in Patent Owner’s
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`Identification of Improper Arguments in Petitioners’ Consolidated Reply Brief and
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`Petitioner Apple Inc.’s Separate Reply Filing).” Paper No. 66 at 2. As discussed
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`below, Petitioners’ new positions (see Paper No. 55 at 1–3) are flawed and fail to
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`remedy the deficiencies of Petitioners’ original positions. As such, to the extent
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`the Board considers the substance of Petitioners’ improper new arguments,2 the
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`Board should enter judgment against Petitioners, confirm the patentability of the
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`claims, and terminate this proceeding.
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`2 Patent Owner continues to maintain that Petitioners’ new arguments should not
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`be considered at this late stage. See Intelligent Bio-Sys., Inc. v. Illumina
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`Cambridge Ltd., 821 F.3d 1359, 1369 (Fed. Cir. 2016) (“Unlike district court
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`litigation—where parties have greater freedom to revise and develop their
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`arguments over time and in response to newly discovered material—the expedited
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`nature of IPRs bring with it an obligation for petitioners to make their case in their
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`petition to institute.”) (emphasis added); see also 35 U.S.C. § 312(a)(3); 37 C.F.R.
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`§ 42.23(b); Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,767 (Aug.
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`14, 2012).
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` 1
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`II.
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`Case No. IPR2015-01046
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`Petitioners’ Improper New Arguments Fail to Remedy the Petitioners’
`Original Analysis
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`In its Patent Owner’s Response (Paper No. 44, “Patent Owner Resp.”),
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`VirnetX set forth a multitude of reasons why Petitioners’ asserted grounds of
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`unpatentability must fail. In response, Petitioners’ Consolidated Reply Brief
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`(Paper No. 50, “Consol. Rep.”) shifts Petitioners’ positions in at leave five ways.
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`Paper No. 55 at 1–3 (identifying Petitioners’ New Positions 1–5). But these new
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`positions are unsupported attorney arguments and do not actually remedy the
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`problems with Petitioners’ anticipation and obviousness allegations. Each of
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`Petitioners’ new arguments should be rejected.
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`Petitioners’ New Position 1
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`A.
`Petitioners’ Consolidated Reply Brief asserts that Kiuchi discloses the
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`claimed “Domain Name Service (DNS) request,” relying on three different alleged
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`requests sent by Kiuchi’s client-side proxy. Consol. Rep. at 10. In particular,
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`Petitioners point to (a) “a ‘C-HTTP name service request’ sent to the name server,”
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`which as discussed in Patent Owner’s Response (at 20–23) does not read on the
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`claimed DNS request, along with two new requests: (b) “‘a request for connection
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`to the server-side proxy’” and (c) “‘C-HTTP requests’ to the server-side proxy.”
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`Consol. Rep. at 10; see also Paper No. 55 at 1–2 (identifying Petitioners’ new
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`position). Like Petitioners’ original mapping, these latter two new mappings fail to
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`support Petitioners’ anticipation positions.
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`2
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`Case No. IPR2015-01046
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`For one, neither request comports with the claimed DNS features. To the
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`contrary, Kiuchi repeatedly differentiates its C-HTTP features from DNS. Ex.
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`2043 at ¶ 44; see also Patent Owner Resp. at 20–22 (explaining why Kiuchi’s C-
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`HTTP features do not comport with DNS). Moreover, neither request “requests an
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`IP address corresponding to a domain name associated with the target computer,”
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`as claimed.
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`As to the request for connection to the server-side proxy, Kiuchi explains
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`that “[w]hen a server-side proxy accepts a request for connection from a client-side
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`proxy, it asks the C-HTTP name server whether the client-side proxy is an
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`appropriate member of the closed network.” Ex. 1002 at 8-9, § 2.3(4); see also Ex.
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`2043 at ¶ 40. If it is, the name server returns the IP address of the client-side
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`proxy. Ex. 1002 at 9, § 2.3(4); Ex. 2043 at ¶ 40. But Petitioners do not (and
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`cannot) allege that the client-side proxy corresponds to the claimed “target,” and so
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`Kiuchi’s request for connection to the server-side proxy cannot read on the claimed
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`DNS request “that requests an IP address corresponding to a domain name
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`associated with the target computer.” And in any event, in this scenario, the
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`server-side proxy sends the request that causes the client-side proxy’s IP address to
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`be returned, which is a different request than that pointed to by Petitioners. Ex.
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`1002 at 9, § 2.3(4); Ex. 2043 at ¶ 40.
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`3
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`Case No. IPR2015-01046
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`The C-HTTP requests referred to by Petitioners also fail to “request[] an IP
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`address corresponding to a domain name associated with the target computer,” as
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`claimed. To the contrary, these requests are sent after the C-HTTP connection (the
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`alleged “VPN,” see Consol. Rep. at 11–16) is even established. Ex. 2043 at ¶¶ 41,
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`42; Ex. 1002 at 9, § 2.3(6). The C-HTTP requests in Kiuchi simply do not request
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`any IP address whatsoever. See Ex. 2043 at ¶ 40.3
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`Therefore, for the reasons discussed above, in addition to the reasons
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`discussed in Patent Owner’s Response, Kiuchi fails to disclose a “a Domain Name
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`Service (DNS) request,” as recited in claim 1. Petitioners rely on their analysis of
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`the claimed DNS request to address the DNS features of claim 10. See Consol.
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`Rep. at 17. As such, for the reasons discussed above and in Patent Owner’s
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`Response, Kiuchi likewise fails to disclose the DNS features of claim 10.
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`Petitioners’ New Positions 2–3
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`B.
`Petitioners and their expert originally admitted that the hostname in a URL
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`“corresponds to an origin server” that is only “associated with a server-side proxy.”
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`See Paper No. 5 at 22; see also Ex. 1003 at ¶ 23. Based on this then-undisputed
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`operation of Kiuchi, Patent Owner showed how Kiuchi’s requests do not “request[]
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`3 Petitioners in fact now appear to change tack yet again and suggest that they are
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`not relying on either of the two new requests for the claimed DNS request. See
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`Paper No. 51 at 1; but see Consol. Rep. at 10.
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`4
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`an IP address corresponding to a domain name associated with the target
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`Case No. IPR2015-01046
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`computer,” as recited in claim 1. See Patent Owner Resp. at 22–23. In response,
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`Petitioners now shift gears and contend that “the hostname in a URL [in Kiuchi]
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`corresponds to an institution’s server-side proxy,” relying on Kiuchi’s appendices.
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`Consol. Rep. at 7; see also Paper No. 55 at 2 (identifying Petitioners’ new
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`position).4 Petitioners’ new interpretation of Kiuchi is wrong—worse still,
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`Petitioners’ Consolidated Reply Brief fails to even mention evidence (that at least
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`Apple was aware of) showing Petitioners’ new interpretation of Kiuchi is wrong.
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`In characterizing the hostname as corresponding to a server-side proxy,
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`Petitioner’s point to a “Server-Side-Proxy-Name” field in Kiuchi’s appendices that
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`is allegedly “[u]sed for specifying the hostname of a server side proxy.” Consol.
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`Rep. at 7; Ex. 1002 at Appendix 1. But this field actually refers to the URL of the
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`4 Petitioners argue that this is not a new argument because Dr. Guerin relied on
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`Kiuchi’s appendices, and that they in turn generally cited to Dr. Guerin’s
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`declaration. Paper No. 56 at 1–2 (citing Ex. 1003 at ¶ 32). However, Petitioners
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`never originally cite to paragraph 32 of Dr. Guerin’s declaration, the only
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`paragraph of his declaration that even mentions the appendices. Moreover, Dr.
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`Guerin’s citation to Kiuchi’s appendices has nothing whatsoever to do with
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`whether the hostname in a URL corresponds to an origin server or server-side
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`proxy.
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`5
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`resource on the origin server being requested; it does not refer to the domain name
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`Case No. IPR2015-01046
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`of the server-side proxy.
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`Kiuchi
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`explains
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`that
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`the
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`URL
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`“http://server.in.current.connection/sample.html=@=6zdDfldfcZLj8V!i” represents
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`a “resource name,” and that when the URL is clicked, “the client-side proxy takes
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`off the connection ID (i.e., “6zdDfldfcZLj8V”) and forwards, the stripped, original
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`resource name to the server . . . .” Ex. 1002 at 8–9, Figs. (b), (c) (reproduced
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`below) (emphases added); Ex. 2043 at ¶ 47.
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`Thus, the Kiuchi’s URL belongs to the resource on the origin server. Interpreting
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`the “Server-Side-Proxy-Name” field as referring to the domain name of the server-
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`side proxy would be inconsistent with Kiuchi’s main text
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`In fact, in raising its new argument, Petitioners did not inform the Board
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`(even though at least Apple was aware) that a 1996 slide presentation
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`accompanying Kiuchi, presented to the Institute of Electrical and Electronics
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`6
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`Engineers (“IEEE”) by Dr. Kiuchi (the author of the Kiuchi reference), confirms
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`Case No. IPR2015-01046
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`this understanding on C-HTTP—a presentation that was discussed at length at trial
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`between VirnetX and Apple nearly four years ago.5 See Kiuchi Slide Presentation,
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`Ex. 2063; see also Transcript of Trial, Morning Session, VirnetX, Inc. v. Apple,
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`Inc., Case No. 6:10-CV-417 (E.D. Tex. Nov. 5, 2012), Ex. 2048 at 68:13–69:14;
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`Transcript of Trial, Afternoon Session, VirnetX, Inc. v. Apple, Inc., Case No. 6:10-
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`CV-417 (E.D. Tex. Nov. 5, 2012), Ex. 2064 at 39:20–41:20, 104:24–106:17.6 For
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`example, slide 9 of the presentation explains that the C-HTTP name server “keeps”
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`“resource names.” Ex. 2063 at 9. Additionally, slide 17 illustrates that a C-HTTP
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`name request includes a “RESOURCE-NAME,” (id. at 17), while slide 20 shows
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`that the C-HTTP name response that follows includes a “SERVER-SIDE-PROXY-
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`IP [address],” (id. at 20). Indeed, expert testimony at trial confirmed that the
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`Kiuchi system would not work if the URL did not refer to the resource on the
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`origin server. See, e.g., Ex. 2064 at 40:15–20 (“Q. Would the Kiuchi system work
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`if the client-side proxy requested a domain name for the server-side proxy from
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`5 This discussion and the presentation was part of the record before the Federal
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`Circuit, which found Kiuchi not to anticipate the claims of the ’135 patent.
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`VirnetX Inc. v. Cisco Sys., 767 F.3d 1308, 1324 (Fed. Cir. 2014).
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`6 Patent Owner submits Exhibits 2063 and 2064 with this paper, each of which is
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`being relied upon because of Petitioners’ new arguments.
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`7
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`C-HTTP? A. No. The way Kiuchi has to work is that what’s being requested is
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`Case No. IPR2015-01046
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`the resource that’s on the origin server. That’s where the data is.”).
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`Relatedly, Petitioners asserted for the first time in their Consolidated Reply
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`Brief that RFC 1945 “defin[es] HTTP/1.0 used in Kiuchi” and that RFC 1945
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`“explains the ‘host’ is the domain name component of an HTTP URL.” Consol.
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`Rep. at 6–7; see also Paper No. 55 at 2 (identifying Petitioners’ new position).7
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`Petitioners are incorrect. For one, there is no evidence—only attorney argument—
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`that RFC 1945 “defin[es] HTTP/1.0 used in Kiuchi.” In any event, RFC 1945 does
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`not support Petitioners’ suggestion that only a domain name from a URL (e.g.,
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`server.in.connection) will be sent to the C-HTTP name server. To the contrary, as
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`discussed above, Kiuchi’s URL that is provided to the C-HTTP name server
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`belongs to the resource on the origin server. See also Ex. 2043 at ¶¶ 47-48.
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`Therefore, because the hostname in a URL corresponds to an origin server,
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`Kiuchi’s requests do not “request[] an IP address corresponding to a domain name
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`7 Petitioners argue that this is not a new argument, referencing paragraph 19 of Dr.
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`Guerin’s declaration. Paper No. 56 at 2. But paragraph 19 of Dr. Guerin’s
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`declaration only refers to RFC 1945 as “describing proxy as an ‘intermediary
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`program which acts as both a server and a client for the purpose of making requests
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`on behalf of other clients,’” which has nothing to do with Petitioners’ new position.
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`See Ex. 1003 at ¶ 19.
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`8
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`associated with the target computer,” as previously discussed. See Patent Owner
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`Case No. IPR2015-01046
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`Resp. at 22–23.
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`Petitioners’ New Position 4
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`C.
`For the first time in their Consolidated Reply Brief, Petitioners rely on the
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`“collective[]” actions of the client-side proxy and C-HTTP name server for the
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`claimed “determining.” Compare Consol. Rep. at 4, with Paper No. 5 at 28; see
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`also Paper No. 55 at 2 (identifying Petitioners’ new position).8 According to
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`Petitioners, this somehow suggests that Kiuchi also teaches “DNS request[s],” as
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`claimed. Consol Br. at 4–5. But regardless of whether the client-side proxy and
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`C-HTTP name server “collectively” determine whether “access to a secure web
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`site” has been requested, Petitioners have provided no explanation as to how such a
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`determination is a determination whether a “DNS request” transmitting from the
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`claimed client computer is requesting access to a secure web site, as recited in the
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`claims, especially where Kiuchi states its C-HTTP processes do not use DNS. Ex.
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`1002 at 7.
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`8 Petitioners argue that this is not a new argument, but its own citations suggest the
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`opposite. See Paper No. 56 at 2 (“C-HTTP name server and client-side proxy each
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`determine whether the user agent is requesting to connect to a secure destination”)
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`(quoting Paper No. 5 at 28) (emphasis added)
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`9
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`Case No. IPR2015-01046
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`Petitioners’ New Position 5
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`D.
`In addressing claim 10, the Consolidated Reply Brief asserts that “Patent
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`Owner nowhere explains how returning the IP address to the client-side proxy
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`(another ‘client computer’) does not” disclose “the DNS proxy server returns the
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`IP address for the requested domain name if it is determined that access to a non-
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`secure web site has been requested,” as claimed. Consol. Rep. at 18 (emphasis
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`removed). But the Consolidated Reply Brief represents the first time that
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`Petitioners point to the client-side proxy as mapping to the “client computer” for
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`claim 10—the Petitioners originally relied only on Kiuchi’s user agent. See, e.g.,
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`Paper No. 5 at 34; see also Paper No. 55 at 3 (identifying Petitioners’ new
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`position).9
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`Petitioners’ new mapping is improper. To allegedly address the claimed
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`“DNS proxy,” Petitioners rely on “Kiuchi’s client-side proxy and C-HTTP name
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`server . . . work[ing] together as part of a system of computers with a conventional
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`9 Petitioners assert that this is not a new argument because they allegedly mapped
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`the client-side proxy to the “client computer” of claim 1. Paper No. 56 at 3.
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`Whether or not Petitioners relied on the client-side proxy for the “client computer”
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`of claim 1, claim 10 stands on its own. Petitioners originally only relied on
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`Kiuchi’s user agent as allegedly mapping to the “client computer” of claim 10.
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`See, e.g., Paper No. 5 at 34.
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`10
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`name server.” Consol. Rep. at 17. Thus, Petitioners now rely on the client-side
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`Case No. IPR2015-01046
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`proxy as being part of the claimed “DNS proxy server” that returns an IP address,
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`while also being the “client computer” to which an IP address is returned. That is,
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`under this new mapping, Petitioners do not explain how or why Kiuchi’s client-
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`side proxy (the alleged “client computer”) “returns the IP address for the requested
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`domain name if it is determined that access to a non-secure web site has been
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`requested,” as recited in claim 10. Nowhere does Kiuchi disclose that the client
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`side proxy acts a DNS proxy server and returns any non-secure web site address,
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`much less to itself. Moreover, even if such a mapping was proper, Kiuchi’s client-
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`side proxy is not a “client computer,” as claimed. See Patent Owner Resp. at 24–
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`28 (explaining why Kiuchi’s client-side proxy is not a “client computer”).
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` Petitioner Apple Inc.’s Separate Reply Omits Telling Facts III.
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`Apple tries to make much of certain administrative petitions filed by
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`VirnetX in pending inter partes reexamination Control Nos. 95/001,682 (“the
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`1,682 proceeding”) and 95/001,697 (“the 1,697 proceeding”), accusing VirnetX of
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`“paralyz[ing]” those proceedings. See Paper No. 53 at 3–5. VirnetX has not
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`delayed resolution of those reexaminations in any way.
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`In the 1,682 proceeding, Apple filed an approximately 400-page request for
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`reexamination (containing over 200 pages of analysis, accompanied by an
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`additional over 200 pages of claim charts). Similarly, in the 1,697 proceeding,
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`11
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`Apple filed an approximately 400-page request for reexamination (containing just
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`Case No. IPR2015-01046
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`under 200 pages of analysis, accompanied by an additional over 200 pages of
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`claim charts). Given the extreme size of Apple’s requests—which would have
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`been impermissible in today’s inter partes review practice—VirnetX has
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`occasionally requested modest extensions of time and increased page limits to try
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`to level the playing field. In fact, Apple fails to mention that the Office has largely
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`agreed with VirnetX’s positions in the petitions that Apple now complains of. On
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`the other hand, when Apple sought to preclude VirnetX from making use of these
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`procedural safeguards, the Office rejected Apple’s request as one that “could
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`prejudice [VirnetX] and place unwarranted administrative burden on the Office.”
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`See, e.g., Decision Dismissing Petition to Align Schedules, Ex. 2065 at 10.10
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`Apple’s discussion of the 1,682 and 1,697 proceedings is a red herring that
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`should have no impact on the proceeding at hand.
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` Conclusion IV.
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`In sum, the Petitioners’ new, improper arguments do nothing to correct the
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`defects in their original analysis. As such, for the reasons discussed above and in
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`Patent Owner’s Response, Petitioners have failed to establish that any of the
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`challenged claims are unpatentable. Therefore, for at least these reasons, the Board
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`10 Patent Owner submits Exhibit 2065 with this paper, which is being relied upon
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`because of Petitioner Apple Inc.’s new argument.
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`12
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`should confirm the claims and enter judgment against the Petitioners.
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`Case No. IPR2015-01046
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`Respectfully submitted,
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`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
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`Dated: July 15, 2016
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`13
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`Case No. IPR2015-01046
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), I certify that I caused to be served on the
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`counsel for Petitioners a true and correct copy of the foregoing Patent Owner’s
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`Sur-Reply by electronic means on the date below at the following address of
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`record:
`
`Abraham Kasdan (akasdan@wiggin.com)
`Wiggin and Dana LLP
`450 Lexington Avenue
`New York, NY 10017
`IP@wiggin.com
`
`James T. Bailey (jtb@jtbaileylaw.com)
`504 W. 136th St. #1B
`New York, NY 10031
`
`Jeffrey P. Kushan
`Scott Border
`Thomas A. Broughan III
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`iprnotices@sidley.com
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`Respectfully submitted,
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`
`
` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
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`Dated: July 15, 2016