throbber
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
`
`
`
`
`
`
`Paper No.
`Filed: October 11, 2019
`
`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
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`THE MANGROVE PARTNERS MASTER FUND, LTD. and APPLE INC.,
`Petitioner
`v.
`VIRNETX INC.,
`Patent Owner
`
`
`
`Case IPR2015-010461
`Patent 6,502,135
`
`
`
`
`
`Patent Owner’s Reply in Support of Motion for Additional Discovery
`
`
`
`
`
`
`1 Apple Inc., who filed a petition in IPR2016-00062, has been joined as a Petitioner
`in the instant proceeding.
`
`

`

`IPR2015-01046
`
`Patent Owner VirnetX Inc. (“VirnetX”) filed its motion for additional
`
`discovery to determine whether RPX Corporation (“RPX”)—a third-party entity
`
`that previously sought to challenge VirnetX’s patents on behalf of the time-barred
`
`Petitioner Apple Inc. (“Apple”)—is an unnamed RPI and/or privy of Petitioner The
`
`Mangrove Partners Master Fund, Ltd. (“Mangrove”). Petitioners disparage
`
`VirnetX’s argument as a “conspiracy theory.” (Paper 82 at 1.) But the record
`
`shows both extensive ties between RPX and Mangrove, and RPX’s keen interest in
`
`reducing risk from VirnetX’s patent to Apple—who Mangrove singled out to its
`
`investors as one of RPX’s main customers. (See Ex. 1051 at 3.) Specifically, the
`
`record shows: (1) RPX’s role as a for-profit company that seeks to invalidate
`
`patents on behalf of its clients, (2) RPX’s past attempt to invalidate the patent-at-
`
`issue on Apple’s behalf after Apple was found to be time-barred, (3) Mangrove’s
`
`extensive ties to RPX, including communications with RPX and substantial
`
`investment in RPX, (4) Mangrove’s decision to hire RPX’s former counsel to help
`
`try to invalidate the patent at issue here, and (5) Mangrove, like RPX (but unlike
`
`Apple), was never charged with infringement. (See generally Paper 81.)
`
`Petitioners now admit that Mangrove’s investment in RPX occurred in the
`
`exact same month that Mangrove filed its IPR petitions against VirnetX’s patents,
`
`which further supports the need for additional inquiry. (Paper 82 at 4, 12
`
`(acknowledging that Mangrove began acquiring RPX stock in April 2015).)
`
`1
`
`

`

`
`Petitioners argue the two decisions are “unrelated,” and that Mangrove’s decision
`
`IPR2015-01046
`
`to challenge VirnetX’s patents was motivated solely by Mangrove’s desire to short
`
`VirnetX’s stock. (Id. at 7; see also id. at 1, 12.) But if so, Mangrove should not
`
`fear the limited and targeted discovery VirnetX proposed. More fundamentally,
`
`Mangrove’s assertion that it initiated this proceeding solely as part of its short-
`
`selling strategy cannot outweigh the evidence of ties between Mangrove and RPX.
`
`Petitioners’ arguments against additional discovery, the denial of which
`
`would be highly prejudicial to VirnetX, are unavailing:
`
`Post-Institution Information: Petitioners argue that “[t]he only information
`
`or acts relevant to compliance with § 315(b) would be dated before October 7,
`
`2015, the date these proceedings were instituted.” (Paper 82 at 5.) That is too
`
`simplistic an approach. First, documents dated after October 7, 2015 may
`
`nonetheless include information from before October 7, 2015 (e.g., emails and
`
`documents routinely contain earlier dated threads and attachments). Second, post-
`
`October 7, 2015 documents may be informative of Mangrove’s motivation prior to
`
`that date.
`
`Pre-Institution Information: Petitioners argue that discovery of pre-
`
`institution information should be denied because VirnetX has not demonstrated
`
`that RPX is a real party-in-interest (“RPI”) or in privity with Mangrove. (Paper 82
`
`at 6-8.) This argument puts the cart before the horse. The purpose of VirnetX’s
`
`2
`
`

`

`
`motion is obtain the requested discovery so that VirnetX can make that showing.
`
`IPR2015-01046
`
`Garmin does not require a moving party to demonstrate it will win an underlying
`
`issue to obtain additional discovery. Petitioners argue that Mangrove’s investment
`
`strategies concerning RPX and VirnetX were independent. (Paper 82 at 6-7.) But
`
`these allegedly independent strategies were implemented simultaneously in April
`
`2015. (See Paper 82 at 4, 12.) Evidence suggests this timing is more than a
`
`coincidence given the extensive connections between Mangrove and RPX, as well
`
`as the prior history between RPX and VirnetX. (See Paper 81 at 6-13.)
`
`Petitioners assert that VirnetX further needs to show a direct link between
`
`Mangrove and Apple. (Paper 82 at 8.) Petitioners’ position, if adopted, would
`
`lead to perverse results as an entity otherwise barred by 35 U.S.C. § 315(b) (e.g.,
`
`Apple) could use intermediaries (e.g., RPX) to facilitate IPR challenges by others
`
`free from any efforts to expose that connection back to the time-barred party.2
`
`Depositions: Petitioners argue that deposition discovery should be denied
`
`because “written discovery is far less burdensome.” (Paper 82 at 11.) Petitioners
`
`ignore that VirnetX has already agreed to a single four-hour deposition of
`
`Nathaniel August to address both of VirnetX’s deposition notices. (Paper 81 at 5
`
`n.2.) More importantly, deposition discovery is a “critical component of the tools
`
`2 Even on this, it is telling that Apple has taken the lead on behalf of Mangrove in
`
`fighting against discovery in meet-and-confer telephone calls and correspondence.
`
`3
`
`

`

`
`of justice” and “rank[s] high in the hierarchy of pre-trial, truth-finding
`
`IPR2015-01046
`
`mechanisms.” Founding Church of Scientology of Washington, D.C. v. Webster,
`
`802 F.2d 1448, 1451 (D.C. Cir. 1986); see also Alexander v. FBI, 186 F.R.D. 113
`
`(D.D.C. 1998) (at deposition, “‘there is no opportunity to reflect and carefully
`
`shape the information given’”) (citation omitted).
`
` Petitioners attempt to
`
`circumvent this important tool by “respond[ing] to VirnetX’s present deposition
`
`requests as if they were interrogatories.” (Id.) Allowing Petitioners to unilaterally
`
`replace deposition discovery with self-serving representations on deposition topics
`
`leaves VirnetX with no avenue to check the veracity of such statements and would
`
`be prejudicial. Moreover, as VirnetX anticipated (Paper 81 at 15), Mangrove’s
`
`supposed responses are woefully inadequate and raise only more questions. For
`
`instance, Mangrove’s assertions of “reasonable” efforts to locate communications
`
`are unclear and unverified. (Ex. 1049 at 2, 3, 5, 6.) It also appears that Mangrove
`
`did not investigate non-written communications, or written communications that
`
`no longer exist. Indeed, Mangrove repeatedly discussed and treated the deposition
`
`topics as “RFP[s],” and not interrogatories. (Ex. 1049 at 3, 6.)
`
`Petitioners try to justify their resistance to deposition discovery because
`
`Mangrove ostensibly fears VirnetX may initiate litigation against Mangrove for
`
`seeking to shorten its stock. (Paper 82 at 13-14.) This contention is baseless.
`
`While VirnetX previously argued that Mangrove’s conduct warrants denial of
`
`4
`
`

`

`
`institution, VirnetX has never suggested it would sue Mangrove.
`
`IPR2015-01046
`
`Document Requests: Petitioners are wrong that Mangrove’s voluntary
`
`production renders much of VirnetX’s motion moot. (Paper 82 at 8-9.) Mangrove
`
`has produced hardly anything at all. VirnetX should be allowed to explore,
`
`through a deposition, Mangrove’s self-serving representations.
`
` Moreover,
`
`Petitioners appear to acknowledge that Mangrove has “internal-to-Mangrove
`
`documents” relating to RPX that it nevertheless has refused to produce (id. at 9), as
`
`well as communications, documents, or things relating to its acquisition of RPX
`
`stock that it refuses to produce (id. at 10) because of the purported fear of litigation
`
`(id. at 10-11). Mangrove’s concerns are unsupported, and should not block
`
`discovery of relevant documents and related information that are now exposed to
`
`exist. Moreover, Mangrove’s production is unilaterally limited by its incorrect
`
`October 7, 2015 cutoff date, as discussed above.
`
`RPX: Petitioners resist discovery from RPX because it would purportedly
`
`be redundant to that sought from Mangrove and would supposedly “disrupt the
`
`remand schedule.” (Paper 82 at 14-15.) This argument ignores that such discovery
`
`would serve as a vital evidentiary crosscheck, especially given the passage of time.
`
`(Paper 81 at 14.) Further, unless Petitioners have some undisclosed insight as to
`
`third party RPX’s plans regarding the requested discovery, Petitioners’ stated
`
`concern about the schedule is purely speculative.
`
`5
`
`

`

`
`
`Dated: October 11, 2019
`
`IPR2015-01046
`
`
`
`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
`
`
`
`6
`
`

`

`IPR2015-01046
`
`CERTIFICATE OF SERVICE
`Pursuant to 37 C.F.R. § 42.6(e), I certify that I caused to be served on the
`
`counsel for Petitioner a true and correct copy of the foregoing Patent Owner’s
`
`Reply in Support of Motion for Additional Discovery by electronic means on the
`
`date below at the following address of record:
`
`Abraham Kasdan (akasdan@wiggin.com)
`James T. Bailey (jtb@jtbaileylaw.com)
`IP@wiggin.com
`
`Jeffrey P. Kushan
`Scott Border
`Thomas A. Broughan III
`iprnotices@sidley.com
`
`Dated: October 11, 2019
`
`Respectfully submitted,
`
` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
`
`

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