`571.272.7822
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`Paper No. 11
`Filed: October 7, 2015
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`THE MANGROVE PARTNERS MASTER FUND, LTD.,
`Petitioner,
`
`v.
`
`VIRNETX INC.,
`Patent Owner.
`____________
`
`Case IPR2015-01046
`Patent 6,502,135 B1
`____________
`
`Before MICHAEL P. TIERNEY, KARL D. EASTHOM, and STEPHEN C. SIU,
`Administrative Patent Judges.
`
`SIU, Administrative Patent Judge.
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 42.108
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`IPR2015-01046
`Patent 6,502,135 B1
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`I.
`
`INTRODUCTION
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`
`
`Background
`A.
`The Mangrove Partners Master Fund, Ltd. (“Petitioner”) filed a Petition
`(“Pet.”) on April 27, 2015 (Paper 5) requesting inter partes review of claims 1, 3,
`4, 7, 8, 10, and 12 of U.S. Patent No. 6,502,135 B1 (“the ’135 Patent,” Ex. 1001)
`pursuant to 35 U.S.C. §§ 311-319. VirnetX Inc. (“Patent Owner”) filed a
`Preliminary Response (“Prelim. Resp.”) on July 24, 2015. Paper 9.
`We have jurisdiction under 35 U.S.C. § 314. We determine based on this
`record that Petitioner has demonstrated, under 35 U.S.C. § 314(a), that there is a
`reasonable likelihood of showing unpatentability with respect to at least one of the
`challenged claims, claims 1, 3, 4, 7, 8, 10, and 12.
`Petitioner relies on the following prior art:
`
`Takahiro Kiuchi and Shigekoto Kaihara, C-HTTP-- The Development of a
`Secure, Closed HTTP-Based Network on the Internet, PROCEEDINGS OF THE
`SYMPOSIUM ON NETWORK AND DISTRIBUTED SYSTEM SECURITY, IEEE 64–75
`(1996) (Ex. 1002, “Kiuchi”).
`
`P. Mockapetris, Domain Names – Concepts and Facilities, Network
`Working Group, Request for Comments: 1034 (1987) (Ex. 1005,
`“RFC 1034”).
`
`
`
`Petitioner contends that the challenged claims are unpatentable under
`35 U.S.C. § 102 and/or § 103 based on the following specific grounds (Pet. 3–4,
`15–37):
`
`Reference(s)
`
`Kiuchi
`Kiuchi and RFC 1034
`
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`Basis
`
`§ 102
`§ 103
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`2
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`Claims challenged
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`1, 3, 4, 7, 8, 10, and 12
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`IPR2015-01046
`Patent 6,502,135 B1
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`The Invention
`B.
`The ’135 Patent describes a system and method for securely communicating
`over the Internet. Ex. 1001, 2:66.
`Claim 1 of the ’135 Patent is reproduced below:
`
`
`1. A method of transparently creating a virtual private
`network (VPN) between a client computer and a target computer,
`comprising the steps of:
`(1) generating from the client computer a Domain Name
`Service (DNS) request that requests an IP address corresponding to a
`domain name associated with the target computer;
`(2) determining whether the DNS request transmitted in step (1)
`is requesting access to a secure web site; and
`(3) in response to determining that the DNS request in step (2)
`is requesting access to a secure target web site, automatically
`initiating the VPN between the client computer and the target
`computer.
`
`Ex. 1001, 47:20–32.
`
`
`We note that the ’135 Patent is presently the subject of co-pending actions,
`as follows:
`1) Civ. Act. No 6:13-cv-00211-LED (E.D. Tex.), filed February 26, 2013;
`2) Civ. Act. No. 6:12-cv-00855-LED (E.D. Tex.), filed November 6, 2012;
`3) Civ. Act. No. 6:10-cv-00417-LED (E.D. Tex.), filed August 11, 2010.
`See Pet. 1.
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`Patent 6,502,135 B1
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`II. ANALYSIS
`Cited References
`A.
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`1) Overview of Kiuchi
`Kiuchi discloses a closed HTTP-based network (“C-HTTP”) for a closed
`group of institutions, in which each member is protected by its own firewall. Ex.
`1002, 64. Communication is made possible with a client-side proxy (for one
`institution), a server-side proxy (for another institution), and a C-HTTP name
`server that provides both client-side and server-side proxies with each peer’s public
`key and Nonce values for both request and response. Id. at 64–65.
`The client-side proxy asks the C-HTTP name server whether it can
`communicate with the host specified in a given URL. If the connection is
`permitted, the C-HTTP name server sends the IP address and public key of the
`server-side proxy and both request and response Nonce values, which are
`encrypted and certified using asymmetric key encryption and digital signature. Id.
`at 65.
`The client-side proxy then sends an encrypted request (including the client-
`side proxy’s IP address, hostname, request Nonce value and symmetric data
`exchange key for request encryption) to the server-side proxy, which then asks the
`C-HTTP name server if the query from the client-side proxy is legitimate. Id. If
`the request is confirmed to be legitimate and access is permitted, the C-HTTP
`name server sends the IP address and public key of the client-side proxy and both
`request and response Nonce values to the server-side proxy. After receiving the
`client-side proxy’s IP address, hostname and public key, the server-side proxy
`generates and sends a connection ID to the client-side proxy. After the client-side
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`proxy accepts the connection ID from the server-side proxy, the connection is
`established. Id. at 66.
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`2) Overview of RFC 1034
`RFC 1034 discloses a name server that answers standard queries in recursive
`mode or non-recursive mode. Ex. 1005, 22. In non-recursive mode, the server is
`unable to provide an answer to the request and refers to “some other server ‘closer’
`to the answer.” In recursive mode, the server “returns either an error or the
`answer, but never referrals.” Id.
`
`Claim Construction
`B.
`We interpret claims of an unexpired patent using the broadest reasonable
`construction in light of the specification of the patent in which they appear. 37
`C.F.R. § 42.100(b); see In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1275–79
`(Fed. Cir. 2015). We presume a claim term carries its “ordinary and customary
`meaning,” which is “the meaning that the term would have to a person of ordinary
`skill in the art in question” at the time of the invention. In re Translogic Tech.,
`Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007) (citation and quotations omitted).
`Petitioner and Patent Owner each proffer proposed constructions of several
`claim terms. For purposes of this decision, we determine that no claim terms
`require express construction.
`
`Kiuchi - Anticipation
`C.
`Based on the present record at this preliminary stage of the proceedings, we
`agree that Petitioner has established that there is a reasonable likelihood of
`unpatentability of at least one claim as anticipated by Kiuchi. For example,
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`Petitioner provides evidence and arguments in support of the proposed ground of
`unpatentability of claims 1, 3, 4, 7, 8, 10, and 12 as anticipated by Kiuchi. Pet. 26–
`35; Ex. 1001, 38:30–33; Ex. 1002, 64–66, 69; Declaration of Dr. Roch Guerin, Ex.
`1003 ¶¶ 18–31, 34. We have reviewed the evidence Petitioner cites, and we find
`that evidence persuasive of a reasonable likelihood that Petitioner would prevail
`with respect to this asserted ground of unpatentability.
`For example, claim 1 recites generating from the client computer a Domain
`name Service (DNS) request that requests an IP address corresponding to a domain
`name associated with the target computer. As Petitioner explains, Kiuchi discloses
`a client-side proxy that receives a request and sends a request to a C-HTTP name
`server to resolve the hostname in the request into an IP address. Pet. 27 (citing
`Ex. 1002, 65; Ex. 1003, ¶¶ 20-22).
`Claim 1 also recites determining whether the DNS request transmitted in
`step (1) is requesting access to a secure web site. As Petitioner explains, Kiuchi
`discloses, for example, that the “C-HTTP name server evaluates the request to
`determine if the hostname specifies a destination that is part of the closed network
`and whether the connection between the user agent and the origin server is
`permitted.” Pet. 27-28 (citing Ex. 1002, 65-66; Ex. 1003, ¶¶ 22-26).
`Claim 1 also recites that in response to a determination that the DNS request
`is requesting access to a secure target web site, automatically initiating the VPN
`between the client computer and the target computer. As Petitioner explains,
`Kiuchi discloses that “if a connection is permitted, the C-HTTP name server
`initiates the connection by returning an IP address and public key associated[d]
`with the hostname” and that “[t]he client-side proxy sends an encrypted connection
`request to the server-side proxy.” Pet. 28-29 (citing Ex. 1002, 65-66; Ex. 1003,
`¶¶ 23, 24, 27).
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`D. Kiuchi and RFC 1034
`Based on the present record at this preliminary stage of the proceedings, we
`agree that Petitioner has established that there is a reasonable likelihood of
`unpatentability of at least one claim as obvious over the combination of Kiuchi and
`RFC 1034. For example, Petitioner provides evidence and arguments in support of
`the proposed grounds of unpatentability of claim 8 over Kiuchi and RFC 1034.
`Pet. 35–37; Ex. 1001 Fig. 26; Ex. 1002, 64–65, §§ 2.1–2.3; Ex. 1003 ¶¶ 18, 19,
`23–26, 34, 35, and 37–40; Ex. 1005. We have reviewed the evidence Petitioner
`cites, and we find that evidence persuasive of a reasonable likelihood that
`Petitioner would prevail with respect to this asserted ground of unpatentability.
`For example, claim 8 recites passing through the request to a DNS server if
`it determined that access is not being requested to a secure target web site. As
`Petitioner explains, Kiuchi discloses “[w]hen the client-side proxy receives a
`request from a user agent, it determines whether the requested hostname in the
`URL specifies a secure server by sending to a C-HTTP name server a request to
`resolve the hostname,” that “[i]f the C-HTTP name server returns an error code,
`the client-side proxy determines the URL specifies a non-secure destination” and
`“sends the hostname to a conventional DNS server for resolution.” Pet. 32-33
`(citing Ex. 1002, 65; Ex. 1003 ¶¶ 23-26; Ex. 1001, 38:43-47).
`
`Real-parties-in-interest
`E.
`Patent Owner argues that the Petitioner fails to name all of the real parties-
`in-interest. Prelim. Resp. 2. In particular, Patent Owner argues that “[t]he petition
`names The Mangrove Partners Master Fund, Ltd. . . . as the only RPI” but fails to
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`name other alleged real parties-in-interest, namely, “(1) the Mangrove Partners
`Hedge Fund; (2) Nathaniel August (President and majority owner of the Mangrove
`Partners Hedge Fund); (3) The Mangrove Partners Fund, L.P. (‘the US Feeder’);
`(4) The Mangrove Partners Fund (Cayman), Ltd. (‘the Cayman Feeder’); (5)
`Mangrove Capital (the General Partner of the US Feeder); and (6) the unnamed
`investors in the US Feeder and the Cayman Feeder.” Id. at 2–13.
`The present record does not reflect that Petitioner is precluded from
`modifying the named real-parties-in-interest to include any of the entities (or
`subset thereof) cited by Patent Owner. Nor does the record indicate that any such
`modification would result in rendering this proceeding improper. Given these
`observations, non-institution of these proceedings at this preliminary stage based
`solely on this potential issue is premature as Petitioner has not had the opportunity
`to either provide evidence whether the additional entities are real-parties-in-interest
`and/or modify the named real-parties-in-interest if it is determined that any of the
`additional entities are, in fact, real-parties-in-interest.
`
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`Alleged attempts to manipulate the financial markets
`F.
`Patent Owner argues that “[t]he Board should . . . refuse to institute this
`IPR” because “[t]his proceeding was filed in an apparent attempt to manipulate the
`financial markets.” Prelim. Resp. 13, 15 (citing Ex. 2004, 2; Ex. 2006, 2).
`Profit is at the heart of nearly every patent and nearly every inter partes
`review. As such, an economic motive for challenging a patent claim does not itself
`raise abuse of process issues. We take no position on the merits of Petitioner’s
`investment strategy.
`In any event, the AIA sought to establish a more efficient and streamlined
`patent system that improved patent quality, while at the same time limiting
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`unnecessary and counterproductive litigation costs. The AIA was designed to
`encourage the filing of meritorious patentability challenges, by any person who is
`not the patent owner, in an effort to further improve patent quality. H.R. Rep. No.
`112-98, pt. 1, at 85 (2011). Patent Owner does not allege that Petitioner filed a
`non-meritorious patentability challenge.
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`Alleged clashes with the Federal Circuit
`G.
`Patent Owner argues that “each of [Petitioner’s] proposed rejections rely on
`a view of Kiuchi that clashes with the Federal Circuit’s view of Kiuchi.” Prelim.
`Resp. 17.
`This proposed issue is best resolved during trial to ascertain, for example,
`what the specific determinations or holdings of the Federal Circuit are, the precise
`nature of these determinations or holdings, and how such determinations or
`holdings would affect the present proceeding, given the nature of the specific
`issues that may present themselves during the course of the (as yet to occur) trial.
`For example, Patent Owner argues that the Federal Circuit determined that
`“Kiuchi’s proxy servers at least do not teach ‘direct communication’ between a
`client and target computer.’” Prelim. Resp. 15-16. As an initial matter, we note
`that claim 1, for example, does not recite a “direct communication.” Also, at this
`preliminary stage of the proceeding, Patent Owner has not clearly shown that claim
`1, for example, requires a “direct communication,” as one of ordinary skill in the
`art would have understood, under a broadest reasonable construction in light of the
`Specification or that the Federal Circuit determined that claim 1 requires a “direct
`communication,” under a broadest reasonable construction in light of the
`Specification. Patent Owner does not appear to provide any statement at all
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`regarding what standard was used to determine the alleged lack of a “direct
`communication,” even assuming that such a requirement actually exists.
`Also, while Patent Owner argues that the Federal Circuit determined that
`“there was ‘substantial evidence that . . . Kiuchi’s proxy servers at least do not
`teach ‘direct communication’ between a client and target computer’” (Prelim.
`Resp. 15-16), Patent Owner does not indicate what the “substantial evidence” was
`and whether the “substantial evidence” pertained to the determination of a broadest
`reasonable construction of claim terms in light of the Specification, for example.
`Hence, at this early stage of the proceeding, particularly in view of the decision
`from the Federal Circuit, the record lacks necessary evidence to demonstrate
`definitively that Kiuchi, in fact, fails to disclose the features recited in claim 1.
`Patent Owner also argues that the Federal Circuit “explained that . . . there
`was evidence that the ‘client’ of Kiuchi is actually a web browser, a component
`that is distinguishable from the client-side proxy.” Prelim. Resp. 16. As discussed
`previously, Patent Owner does not specify what the alleged “evidence” was,
`whether the alleged “evidence” was considered under a broadest reasonable
`standard in light of the Specification, and under a broadest reasonable standard, the
`relevance of the Federal Circuit’s determination that “Kiuchi is actually a web
`browser” as it pertains to specifically (as yet to be argued) claim limitations.
`
`Alleged excessive burden and redundancy under 35 U.S.C. § 325(d)
`H.
`Patent Owner argues that “[n]either the Board nor Patent Owner should be
`forced to assume the burden of handling duplicative proceedings challenging the
`’135 patent involving a common set of prior art references” such that “the Board
`should exercise its discretion and deny the Petition under 35 U.S.C. § 325(d).”
`Prelim. Resp. 19–20.
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`Notwithstanding Patent Owner’s stated concerns, we determine that, given
`the specific facts of the present proceeding, that institution of this proceeding
`would not pose an excessive burden on the Board or the parties. We decline to
`exercise our discretion to deny the Petition solely under 35 U.S.C. § 325(d) in this
`matter.
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`Printed publications
`I.
`Patent Owner argues that “Petitioner has . . . failed to meet its burden to
`establish that RFC 1034 is a printed publication.” Prelim. Resp. 26.
`The determination of whether a given reference qualifies as a prior art
`“printed publication” involves a case-by-case inquiry into the facts and
`circumstances surrounding the reference’s disclosure to members of the public. In
`re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004). We acknowledge Patent
`Owner’s argument regarding RFC 1034. On its face, however, RFC 1034 is a
`dated “Request for Comments” from the “Network Working Group,” discussing a
`standard of the Domain Name System (DNS) including an “official protocol” that
`“includes standard queries and their responses and most of the Internet class data
`formats.” Ex. 1005, 1. These indicia suggest that there is a reasonable likelihood
`the document was made available to the public (over the Internet), in order to
`obtain feedback prior to implementation of the standard it describes.
`On this record,1 we are persuaded that Petitioner has made a threshold
`showing that RFC 1034 constitutes a prior art printed publication. Accordingly,
`we consider the disclosure of RFC 1034 for the purposes of this decision.
`
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`1 To the extent that Patent Owner continues to assert that Petitioner has not met its
`burden of showing that RFC 1034 is a “printed publication,” it will have the
`opportunity to make this argument in its Patent Owner Response.
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`III. CONCLUSION
`We institute an inter partes review of claims 1, 3, 4, 7, 8, 10, and 12 under
`35 U.S.C. § 102 as anticipated by Kiuchi and claim 8 under 35 U.S.C. § 103 as
`obvious over the combination of Kiuchi and RFC 1034.
`
`IV. ORDER
`For the reasons given, it is
`ORDERED that an inter partes review is instituted as to claims 1, 3, 4, 7, 8,
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`10, and 12 on the ground of anticipation by Kiuchi, and as to claim 8 on the ground
`of obviousness in view of Kiuchi and RFC 1034;
`FURTHER ORDERED that pursuant to 35 U.S.C. § 314(a), inter partes
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`review of the ’135 Patent is hereby instituted commencing on the entry date of this
`Order, and pursuant to 35 U.S.C. § 314(c) and 37 C.F.R. § 42.4, notice is hereby
`given of the institution of a trial.
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`FURTHER ORDERED that the trial is limited to the grounds stated above.
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`IPR2015-01046
`Patent 6,502,135 B1
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`For PETITIONER:
`Abraham Kasdan
`James T. Bailey
`WIGGIN AND DANA LLP
`akasdan@wiggin.com
`jtb@jtbaileylaw.com
`
`For PATENT OWNER:
`
`Joseph E. Palys
`Naveen Modi
`PAUL HASTINGS LLP
`josephpalys@paulhastings.com
`naveenmodi@paulhastings.com
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