Trials@uspto.gov
`Tel: 571-272-7822
`
`
`Paper 83
`Entered: October 20, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`THE MANGROVE PARTNERS MASTER FUND, LTD., APPLE INC.,
`and BLACK SWAMP IP, LLC,
`Petitioner,
`
`v.
`
`VIRNETX INC.,
`Patent Owner.
`____________
`
`Case IPR2015-010471
`Patent 7,490,151 B2
`____________
`
`Before MICHAEL P. TIERNEY, KARL D. EASTHOM, and
`STEPHEN C. SIU, Administrative Patent Judges.
`
`SIU, Administrative Patent Judge.
`
`
`
`DECISION
`Request for Rehearing
`37 C.F.R. § 42.71(d)
`
`
`VirnetX Inc. (“Patent Owner”), in its Request for Rehearing (“Req.
`Reh’g.” or “Request”), seeks reversal of the Board’s Decision (“Decision”)
`
`
`1 Apple Inc. and Black Swamp IP, LLC, which filed petitioners in IPR2016-
`00063 and IPR2016-00167, respectively, have been joined as Petitioners in
`the instant proceeding.
`
`
`
`Tel: 571-272-7822
`
`
`Paper 83
`Entered: October 20, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`THE MANGROVE PARTNERS MASTER FUND, LTD., APPLE INC.,
`and BLACK SWAMP IP, LLC,
`Petitioner,
`
`v.
`
`VIRNETX INC.,
`Patent Owner.
`____________
`
`Case IPR2015-010471
`Patent 7,490,151 B2
`____________
`
`Before MICHAEL P. TIERNEY, KARL D. EASTHOM, and
`STEPHEN C. SIU, Administrative Patent Judges.
`
`SIU, Administrative Patent Judge.
`
`
`
`DECISION
`Request for Rehearing
`37 C.F.R. § 42.71(d)
`
`
`VirnetX Inc. (“Patent Owner”), in its Request for Rehearing (“Req.
`Reh’g.” or “Request”), seeks reversal of the Board’s Decision (“Decision”)
`
`
`1 Apple Inc. and Black Swamp IP, LLC, which filed petitioners in IPR2016-
`00063 and IPR2016-00167, respectively, have been joined as Petitioners in
`the instant proceeding.
`
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`pertaining to Patent Owner’s arguments regarding Petitioner’s alleged
`failure to name all real parties in interest and disputes all references to
`Exhibit 1003 in the Decision. See Req. Reh’g. 1. For the reasons that
`follow, the Board denies the requested relief.
`The applicable standard for a request for rehearing is set forth in 37
`C.F.R. § 42.71(d), which provides in relevant part:
`A party dissatisfied with a decision may file a request for
`rehearing, without prior authorization from the Board. The
`burden of showing a decision should be modified lies with the
`party challenging the decision. The request must specifically
`identify all matters the party believes the Board
`misapprehended or overlooked, and the place where each
`matter was previously addressed in a motion, opposition, or a
`reply.
`
`Patent Owner argues that The Mangrove Partners Master Fund, Ltd.
`failed to name all real parties in interest and that “[t]he Decision
`misapprehended or overlooked that a number of new arguments were
`presented in Patent Owner’s Response.” Paper 82, 7. In particular, Patent
`Owner argues that “the Decision misapprehended or overlooked [that]:
`In a form filed with the SEC on March 17, 2016, Petitioner
`Mangrove admitted that the US Feeder and the Cayman Feeder
`are “controlling shareholders” of the Mangrove Petitioner and,
`because of this relationship, shares of RPX Corporation owned
`by the Mangrove Petitioner “may be deemed to be beneficially
`owned by the US Feeder and the Cayman Feeder.” Ex. 2057 at
`14; Response at 51–52.
`
`Paper 82, 8.
`We are not persuaded by Patent Owner’s argument. Even assuming
`that Petitioner, in fact, “admitted that the US Feeder and the Cayman Feeder
`are ‘controlling shareholders’ of the Mangrove Petitioner,” as Patent Owner
`
`2
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`asserts, Patent Owner does not demonstrate persuasively that Petitioner also
`“admitted” that the “US Feeder and the Cayman Feeder” exerted control
`over the filing or preparation of the Petition. Nor does Patent Owner
`provide sufficient evidence demonstrating such control.
`Patent Owner also argues that we “misapprehended or overlooked”
`the following argument that was allegedly previously presented:
`The SEC filing explained that by virtue of the relationship between
`Nathaniel August, the Mangrove Partners Hedge Fund, Mangrove
`Capital, and the Mangrove Petitioner, “each of [the] Mangrove
`Partners [Hedge Fund], Mangrove Capital, and Mr. August may be
`deemed to beneficially own the Shares owned by the [Mangrove
`Petitioner].” Ex. 2057 at 14; Response at 52.
`
`Paper 82, 8
`We are not persuaded by Patent Owner’s argument. Even assuming
`that an SEC filing, in fact, states that “each of [the] Mangrove Partners
`[Hedge Fund], Mangrove Capital, and Mr. August may be deemed to
`beneficially own the Shares owned by the [Mangrove Petitioner],” as Patent
`Owner asserts, Patent Owner does not demonstrate persuasively that the
`alleged SEC filing also states that “each of [the] Mangrove Partners [Hedge
`Fund], Mangrove Capital, and Mr. August” exerted control over the filing or
`preparation of the Petition. Nor does Patent Owner provide sufficient
`evidence demonstrating such control.
`Patent Owner also argues that we “misapprehended or overlooked”
`that Ward Dietrich (Chief Operating Officer of the Mangrove Partners
`Hedge Fund) allegedly reimbursed the filing fees for filing the Petition in
`accordance with a prior “agreement to reimburse such fees.” Paper 82, 8–9
`(citing Ex. 2058, 24, 25, 29; Response 55; Paper No 56, 22). Patent Owner
`does not demonstrate sufficiently that a party honoring a prior agreement to
`
`3
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`reimburse fees to Petitioner constitutes sufficient control of the preparation
`or filing of the Petition. Therefore, we are not persuaded by Patent Owner’s
`argument.
`Patent Owner also argues that we “misapprehended or overlooked”
`the following argument that was allegedly previously presented:
`Nathaniel August, Ward Dietrich, and Jeff Kalicka (who, as discussed
`above, work for the Mangrove Partners Hedge Fund), also commented
`extensively on the petitions and expert declarations in IPR2015-01046
`and IPR2015-01047, even asking for changes to be made after
`Petitioner Mangrove’s attorneys thought the papers “were ready to
`file.” Ex. 2058 at 12–18, 20–23, 28, 29; see also Ex. 2059 at 3 (“It is
`likely that Mr. Dietrich had one or more oral conversations that were
`not immediately reduced to writing with Nathanial August and/or Jeff
`Kalicka pertaining to Mr. Dietrich’s involvement in the preparation
`and filing of the Petitions.”); Response at 55.
`
`Paper 82, 9.
`
`Upon review of the cited portions of Exhibit 2058, we note that the
`only suggestions provided are a “few small nits” and questioning the use of
`the term “see” with no subsequent use of the term “see also.” Exhibit 2058,
`22, 28. While it is stated that suggestions are embedded in the draft, no
`other specific suggested modifications are noted, much less any indication
`that any alleged suggested modifications were actually adopted. In any
`event, we conclude that these suggestions (e.g., a “few small nits” and the
`use of the term “see”) are minor and do not rise to the level of exerting
`control over the filing or preparation of the Petition. Therefore, we are not
`persuaded by Patent Owner’s argument.
`Patent Owner also argues that we “misapprehended or overlooked”
`the following argument that was allegedly previously presented:
`
`4
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`
`Petitioner Mangrove and the Mangrove Partners Hedge Fund in fact
`had a pre-established plan as to the hiring of “intellectual property
`advisors and attorneys,” and fees that the Mangrove Partners Hedge
`Fund would receive based on the success of Petitioner Mangrove.
`Ex. 2042 at 9, 10; Response at 55–56.
`
`Paper 82, 9.
`
`We note that the cited portion of Exhibit 2042 states that “[t]he Master
`Fund” pays a “monthly management fee” to “the Investment Manager” and
`that “[t]he Funds . . . will reimburse the Investment Manager for . . .
`operating expenses of the Master Fund” that includes “legal and other
`costs.” Ex. 2042, 9, 10. In other words, Petitioner agrees to pay a
`management fee and reimburse legal costs to the Investment Manager. We
`do not identify, and Patent Owner does not indicate, where this agreement
`also mandates that the Investment Manager (or any specific entity other than
`Petitioner) controls the filing or preparation of the Petition. Therefore, we
`are not persuaded by Patent Owner’s argument.
`Patent Owner also argues that we “misapprehended or overlooked”
`the following argument that was allegedly previously presented:
`An agreement between Mangrove Partners Hedge Fund and Petitioner
`Mangrove shows that the former, as investment manager in its “sole
`and absolute discretion,” has the authority to “effect all necessary
`registrations, notices or other filings with governmental or similar
`agencies” (Ex. 2042 at 2–3), which would include the Patent Office.
`See also Ex. 2058 at 7 (providing Ward Dietrich with authorization to
`execute the power of attorney in this proceeding); Response at 56.
`
`Paper 82, 9-10.
`
`While Patent Owner asserts that a general agreement exists between
`Mangrove Partners Hedge Fund and Petitioner that Mangrove Partners
`
`5
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`Hedge Fund has “sole and absolute discretion” to “effect all necessary
`registrations,” Patent Owner provides insufficient evidence to demonstrate
`that an agreement exists between Mangrove Partners Hedge Fund and
`Petitioner that Mangrove Partners Hedge Fund controls the filing or
`preparation of the Petition or that Mangrove Partners Hedge Fund, in fact,
`exerted control over the filing or preparation of the Petition. Therefore, we
`are unpersuaded by Patent Owner’s argument.
`Patent Owner also argues that “the Board should find that Exhibit
`1003 is entitled to no weight and reverse its findings of unpatentability that
`improperly rely on Exhibit 1003.” Paper 82, 14. Reference to Exhibit 1003
`in the Decision was made in conjunction with the Petition in describing the
`Kiuchi disclosure with respect to claim features. Decision 5. We note that
`Exhibit 1003 merely confirms what is already apparent in the Petition and/or
`the Kiuchi reference itself (both of which are also relied upon in
`consideration of the Kiuchi reference with respect to claim features). Hence,
`to the extent that any modifications might have been made to the relevant
`portions of Exhibit 1003, we conclude that such alleged potential
`modifications (if any) are of insubstantial relevance in view of the fact that
`analysis of the Petition and the Kiuchi reference itself (without reliance on
`Exhibit 1003 in this regard) indicate that Petitioner has met its burden by a
`preponderance of the evidence that claims 1, 2, 6–8, and 12–14 of the ’151
`patent are unpatentable, as indicated in the Decision. See, e.g., Decision 1-4,
`6-24, and 26-38.
`Reference to Exhibit 1003 in the Decision was also made in the
`Petition as corroboration that RFC documents are “publications [that] are
`prepared and distributed,” “published and widely distributed” for “a period
`for others to provide comments on the document,” “can be obtained from a
`
`6
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`number of Internet hosts using . . . document-retrieval systems,” and contain
`a date “in the top right corner of the first page of the document.” Decision
`25. Such testimony merely corroborates what is already clear on its face.
`For example, the fact that RFC documents are prepared and distributed, are
`for others to provide comments, are published on a specific date, and that the
`top right corner of such documents specify a date is clear on simple
`inspection of the RFC document itself. Therefore, we determine that the
`importance of any alleged modifications to Dr. Guerin’s testimony
`confirming what is already apparent on its face is of insubstantial
`importance. Also, Patent Owner does not demonstrate sufficiently that any
`modifications were, in fact, made to Dr. Guerin’s testimony that RFC
`documents are published on a specific date and that the top right corner of
`such documents specify a date.
`Patent Owner “suggests that an expanded panel that includes the Chief
`Judge consider this request for rehearing.” Paper 82, 14. Discretion to
`expand a panel rests with the Chief Judge, who, on behalf of the Director,
`may act to expand a panel on a suggestion from a judge or panel. AOL Inc.
`v. Coho Licensing LLC, Case IPR2014-00771, slip op. at 2 (PTAB
`Mar. 24, 2015)(Paper 12)(informative). Patent Owner’s suggestion was
`considered by the Chief Administrative Patent Judge, who declined to
`expand the panel.
`
`
`ORDERS
`After due consideration of the record before us, it is:
`ORDERED that Patent Owner’s Request for Rehearing is denied.
`
`7
`
`
`
`IPR2015-01047
`Patent 7,490,151 B2
`
`PETITIONER:
`Abraham Kasdan
`WIGGIN AND DANA LLP
`akasdan@wiggin.com
`
`Jeffrey P. Kushan
`Scott M. Border
`SIDLEY AUSTIN LLP
`IPRNotices@sidley.com
`sborder@sidley.com
`
`James T. Bailey
`jtb@jtbaileylaw.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
`
`8
`
`
`
`
`
`Thomas H. Martin
`Wesley C. Meinerding
`MARTIN & FERRARO, LLP
`tmartin@martinferraro.com
`wmeinerding@martinferraro.com
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