throbber
Paper No.
`Filed: October 21, 2015
`
`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
`
`
`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
`
`
`
`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 IPR2015-01047
`Patent No. 7,490,151
`
`
`
`
`
`
`
`
`
`
`
`
`Patent Owner’s Request for Rehearing Under 37 C.F.R. § 42.71(d)(1)
`
`
`
`
`
`

`
`
`
`I.
`
`II.
`
`
`
`Case No. IPR2015-01047
`
`Table of Contents
`
`INTRODUCTION AND PRECISE RELIEF REQUESTED ......................... 1
`
`LEGAL STANDARD ..................................................................................... 2
`
`III. STATEMENT OF REASONS FOR RELIEF REQUESTED ........................ 2
`
`A.
`
`B.
`
`35 U.S.C. § 312(a)(2) Requires Consideration of Real Party-in-
`Interest Issues Prior to Consideration of the Merits of a Petition,
`as Numerous Other Panels Have Found ................................................ 3
`
`The Office Has Repeatedly Noted the Importance of
`Determining Real Party-in-Interest Issues During the
`Preliminary Stage of a Proceeding ........................................................ 6
`
`IV. PATENT OWNER SUGGESTS REHEARING BY AN EXPANDED
`PANEL THAT INCLUDES THE CHIEF JUDGE ......................................... 7
`
`V.
`
`CONCLUSION ................................................................................................ 9
`
`
`
`
`
`i
`
`

`
`
`
`Case No. IPR2015-01047
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Federal Cases
`Apple Inc. v. DSS Technology Management, Inc.,
`IPR2015-00369, Paper No. 14 (August 12, 2015) ............................................... 2
`
`Google Inc. v. SimpleAir, Inc.,
`CBM2015-00019, Paper No. 15 (Aug. 19, 2015) ................................................ 8
`
`In re Guan, Control No. 95/001,045, Decision Vacating Filing Date
`(Aug. 25, 2008) ..................................................................................................... 7
`
`Intellectual Ventures Mgmt., LLC v. Xilinx, Inc.,
`IPR2012-00018, Paper No. 12 (Jan. 24, 2013) (designated
`representative) ....................................................................................................... 3
`
`Metrics, Inc. v. Senju Pharm. Co., Ltd.,
`IPR2014-01041, Paper No. 19 (Feb. 19, 2015) .................................................... 3
`
`Reflectix, Inc. v. Promethean Insulation Tech. LLC,
`IPR2015-00039, Paper No. 18 (Apr. 24, 2015) .................................... 3, 4, 5, 6, 7
`
`TRW Auto. US LLC v. Magna Elecs., Inc.,
`IPR2014-00293, Paper No. 18 (June 27, 2014) (designated
`representative) (expanded panel) .......................................................................... 3
`
`Federal Statutes
`35 U.S.C. § 312(a)(2) ........................................................................................passim
`
`Rules and Regulations
`
`37 C.F.R. § 42.71(c) ................................................................................................... 2
`
`37 C.F.R. § 42.71(d) .................................................................................................. 2
`
`Amendments to the Rules of Practice for Trials Before the Patent
`Trial and Appeal Board, 80 Fed. Reg. 161 at 50730 (Aug. 20,
`2015) ............................................................................................................. 4, 5, 6
`
`ii
`
`

`
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. 157 at 48759 (Aug.
`14, 2012) ........................................................................................................... 6, 7
`
`Case No. IPR2015-01047
`
`Standard Operating Procedure 1, Rev. 14 (May 8, 2015) ..................................... 7, 8
`
`iii
`
`

`
`
`
`I.
`
`
`
`Case No. IPR2015-01047
`
`INTRODUCTION AND PRECISE RELIEF REQUESTED
`
`Patent Owner VirnetX Inc. requests rehearing of the Patent Trial and Appeal
`
`Board’s Decision entered October 7, 2015 (“Decision”), instituting an inter partes
`
`review of U.S. Patent No. 7,490,151 (“the ’151 patent”). As explained in Patent
`
`Owner’s Preliminary Response (Paper No. 9), the Petition (Paper No. 2) should be
`
`denied because it fails to properly name all of the real parties-in-interest (“RPIs”),
`
`as required by 35 U.S.C. § 312(a)(2).
`
`The Decision declined to address the RPI issue at the “preliminary stage”
`
`because 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 [and] the record [does not] indicate that any
`
`such modification would result in rendering this proceeding improper.” (Decision
`
`at 8.) But the Board’s findings are contrary to section 312(a)(2), which states that
`
`“[a] petition filed under section 311 may be considered only if . . . the petition
`
`identifies all real parties in interest.” As such, the Board should grant this request
`
`and deny the Petition.
`
`Moreover, numerous other decisions by the Board have held that section
`
`312(a)(2) permits consideration of a petition only if it includes a proper RPI
`
`designation. Given the inconsistency between the Decision and the Board’s other
`
`decisions on this issue, Patent Owner suggests rehearing by an expanded panel that
`
` 1
`
`
`
`

`
`
`includes the Chief Judge to secure and maintain uniformity. Rehearing by an
`
`Case No. IPR2015-01047
`
`expanded panel is also warranted given this is an issue of exceptional
`
`importance—the Board’s fundamental statutory authority to consider an IPR
`
`petition on the merits without first conducting an RPI analysis.
`
`II. LEGAL STANDARD
`“A party dissatisfied with a decision may file a request for rehearing.”
`
`37 C.F.R. § 42.71(d). “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, an opposition, or a reply.” Id.
`
`Institution decisions are reviewed on rehearing for an abuse of discretion.
`
`See 37 C.F.R. § 42.71(c). An abuse of discretion occurs when a “decision [i]s
`
`based on an erroneous conclusion of law or clearly erroneous factual findings,
`
`or . . . a clear error of judgment.” Apple Inc. v. DSS Technology Management, Inc.,
`
`IPR2015-00369, Paper No. 14 at 3 (August 12, 2015) (citing PPG Indus. Inc. v.
`
`Celanese Polymer Specialties Co., 840 F.2d 1565, 1567 (Fed. Cir. 1988)).
`
`III. STATEMENT OF REASONS FOR RELIEF REQUESTED
`The Decision declined to consider whether the Petition properly identified
`
`all of the RPIs because 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 [and] the record [does not]
`
`2
`
`

`
`
`indicate that any such modification would result in rendering this proceeding
`
`Case No. IPR2015-01047
`
`improper.” (Decision at 8.) Patent Owner respectfully requests rehearing of the
`
`Decision because under 35 U.S.C. § 312(a)(2), the Petition can only be considered
`
`if, and only if, “the petition identifies all real parties in interest.” (See Preliminary
`
`Response at 11-13.) Here, the Petition failed to do so and should have been
`
`denied. (Id.) It was legal error for the Board to hold otherwise.
`
`A.
`
`35 U.S.C. § 312(a)(2) Requires Consideration of Real Party-in-
`Interest Issues Prior to Consideration of the Merits of a Petition,
`as Numerous Other Panels Have Found
`
`The Board, citing section 312(a)(2), has repeatedly held that a “petition for
`
`inter partes review may be considered only if, inter alia, ‘the petition identifies all
`
`real parties in interest.’” TRW Auto. US LLC v. Magna Elecs., Inc., IPR2014-
`
`00293, Paper No. 18 at 12-13 (June 27, 2014) (designated representative)
`
`(expanded panel) (emphasis added); see also Intellectual Ventures Mgmt., LLC v.
`
`Xilinx, Inc., IPR2012-00018, Paper No. 12 at 2-3 (Jan. 24, 2013) (designated
`
`representative); Metrics, Inc. v. Senju Pharm. Co., Ltd., IPR2014-01041, Paper No.
`
`19 at 5 (Feb. 19, 2015) (“We may consider a petition for inter partes review only if
`
`it identifies all real parties-in-interest”). The “America Invents Act (‘AIA’) is
`
`unequivocal: a petition for inter partes review ‘may be considered only if’ it
`
`identifies all RPIs.” Reflectix, Inc. v. Promethean Insulation Tech. LLC, IPR2015-
`
`00039, Paper No. 18 at 7 (Apr. 24, 2015) (emphasis in original); see also
`
`3
`
`

`
`
`Amendments to the Rules of Practice for Trials Before the Patent Trial and Appeal
`
`Case No. IPR2015-01047
`
`Board, 80 Fed. Reg. 161 at 50730 (Aug. 20, 2015) (“The statute requires a petition
`
`to identify all real parties-in-interest without qualification.”). The “determination
`
`of whether a petition identifies all real parties-in-interest is a ‘threshold issue,’ on
`
`which the Petitioner bears the burden of persuasion.” Reflectix, IPR2015-00039,
`
`Paper No. 18 at 8 (citing Atlanta Gas Light Co. v. Bennett Regulator Guards, Inc.,
`
`IPR2013-00453, Paper No. 88 at 7-8 (Jan. 6, 2015)).
`
`In the case at hand, Patent Owner demonstrated in its Preliminary Response
`
`that the “Petition fails to name a number of RPIs, including at least (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.” See
`
`Preliminary Response at 2; see also id. at 3-13. For example, extensive evidence
`
`was presented establishing that the Mangrove Partners Hedge Fund and Nathaniel
`
`August have complete control over Petitioner’s conduct and funding. (See id. at 4-
`
`8.) Similarly, extensive evidence was presented that the US Feeder, the Cayman
`
`Feeder, and Mangrove Capital have repeatedly acted as a single entity with the
`
`Mangrove Partners Hedge Fund and Petitioner, establishing that they too have an
`
`4
`
`

`
`
`actual measure of control over this proceeding. (See id. at 8-10.) And with respect
`
`Case No. IPR2015-01047
`
`to the unnamed investors, evidence was presented with respect to a special
`
`fiduciary duty that compels a finding that the investors are RPIs. (See id. at 10-
`
`11.)
`
`In view of the above, Patent Owner respectfully submits that the Board
`
`legally erred in finding that it was not required to determine, in the Decision,
`
`whether the Petition failed to properly identify the RPIs. As the Board itself has
`
`previously recognized, section 312(a)(2) is unequivocal: a petition for inter partes
`
`review may be considered only if it identifies all RPIs. Reflectix, IPR2015-00039,
`
`Paper No. 18 at 7; see also 80 Fed. Reg. 161 at 50730.
`
`In addition, the Decision’s observation that “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”
`
`does not negate the legal error in the Decision. (Decision at 8-9.) To the contrary,
`
`the Decision overlooks that Petitioner had the initial burden to investigate this
`
`factual issue and would have been privy to facts regarding whether any other entity
`
`was a RPI at the time Petitioner filed the Petition. See, e.g., Reflectix, IPR2015-
`
`00039, Paper No. 18 at 8 (citing Atlanta Gas Light Co. v. Bennett Regulator
`
`Guards, Inc., IPR2013-00453, Paper No. 88 at 7-8 (Jan. 6, 2015)); see also 80 Fed.
`
`5
`
`

`
`
`Reg. 161 at 50730. Indeed, not only did Petitioner have the “opportunity” to
`
`Case No. IPR2015-01047
`
`identify such an entity in its Petition, it had nearly three months to raise the issue to
`
`the Board after reviewing Patent Owner’s Preliminary Response. Neither occurred
`
`here and Petitioner should not be permitted to “correct” its RPI designation at this
`
`time. The Petition should be denied.
`
`B.
`
`The Office Has Repeatedly Noted the Importance of Determining
`Real Party-in-Interest Issues During the Preliminary Stage of a
`Proceeding
`
`The Office recently recognized that “it is important to resolve real party-in-
`
`interest and privity issues as early as possible, preferably in the preliminary stage
`
`of the proceeding prior to institution, to avoid unnecessary delays and to minimize
`
`cost and burden on the parties and the resources of the Office.” 80 Fed. Reg. 161
`
`at 50729 (emphasis added). The statute and the Office require proper identification
`
`of the RPIs before the merits of a petition are considered for good reason. For
`
`instance, “[t]he Board relies on petitioner’s identification of the RPI to determine
`
`conflicts of interest for the Office [and] the credibility of evidence presented in a
`
`proceeding.” Reflectix, IPR2015-00039, Paper No. 18 at 8 (citing GEA Process
`
`Eng’g Inc. v. Steuben Foods, Inc., IPR2014-00041, Paper No. 140 at 24 (Feb. 11,
`
`2015)); see also Office Patent Trial Practice Guide, 77 Fed. Reg. 157 at 48759
`
`(Aug. 14, 2012) (same). In addition, the other “core function” of the “‘real party-
`
`in-interest’ and ‘privies’ requirement . . . [is] to assure proper application of the
`
`6
`
`

`
`
`statutory estoppel provisions,” which “seek[] to protect patent owners from
`
`Case No. IPR2015-01047
`
`harassment via successive petitions by the same or related parties, to prevent
`
`parties from having a ‘second bite at the apple,’ and to protect the integrity of both
`
`the USPTO and Federal Courts by assuring that all issues are promptly raised and
`
`vetted.” 77 Fed. Reg. 157 at 48759; see also In re Guan, Control No. 95/001,045,
`
`Decision Vacating Filing Date (Aug. 25, 2008) (finding that the goal of requiring
`
`the identification of RPIs is to ensure that the estoppel requirements are not “easily
`
`circumvented by naming a straw man if every first request for inter partes
`
`reexamination filed against a patent could avoid identifying the actual real party in
`
`interest.”).
`
`Petitioner’s incorrect RPI identification here goes directly to the concerns
`
`raised by the Board and the Office. For instance, Petitioner’s incorrect
`
`identification of RPI does not allow the Board to determine conflict issues. It also
`
`should cause the evidence presented in the Petition to be viewed with less
`
`credibility. See Reflectix, IPR2015-00039, Paper No. 18 at 8; Office Patent Trial
`
`Practice Guide, 77 Fed. Reg. 157 at 48759; see also Preliminary Response at 11-
`
`13. Finally, it also prevents proper application of the statutory estoppel provisions.
`
`IV. PATENT OWNER SUGGESTS REHEARING BY AN EXPANDED
`PANEL THAT INCLUDES THE CHIEF JUDGE
`
`Patent Owner suggests that an expanded panel that includes the Chief Judge
`
`consider this request for rehearing. See Standard Operating Procedure 1, Rev. 14
`
`7
`
`

`
`
`(May 8, 2015), Section III.C; see also Google Inc. v. SimpleAir, Inc., CBM2015-
`
`Case No. IPR2015-01047
`
`00019, Paper No. 15 at 8 (Aug. 19, 2015) (considering a suggestion for expanded
`
`panel review under Standard Operating Procedure 1, Rev. 14). Patent Owner is
`
`making this suggestion because (1) the Decision “involves an issue of exceptional
`
`importance,” see Standard Operating Procedure 1, Rev. 14, Section III.A, and (2)
`
`“[c]onsideration by an expanded panel is necessary to secure and maintain
`
`uniformity of the Board’s decisions, such as where different panels of the Board
`
`render conflicting decisions on issues of statutory interpretation . . ., or a
`
`substantial difference of opinion among judges exists on issues of statutory
`
`interpretation,” see id.
`
`This request involves an issue of exceptional importance because it involves
`
`the Board’s fundamental statutory authority to consider an IPR petition on the
`
`merits without first conducting an analysis of RPI, as required by section
`
`312(a)(2). See supra Section III. Consideration by an expanded panel is also
`
`required to secure and maintain uniformity of the Board’s decisions because
`
`numerous panels have interpreted section 312(a)(2), contrary to the Decision’s
`
`findings, to require an analysis of RPI prior to consideration of a petition on the
`
`merits. See id.
`
`8
`
`

`
`
`V. CONCLUSION
`As discussed above, proper identification of the RPIs associated with a
`
`Case No. IPR2015-01047
`
`petition plays a fundamental role in inter partes review practice for numerous
`
`reasons. Even putting aside those reasons, the statute states that a petition shall
`
`only be considered if it identifies all RPIs. Accordingly, the Board should have
`
`determined, in the Decision, whether the parties identified in the Preliminary
`
`Response were improperly omitted RPIs. For these reasons, VirnetX respectfully
`
`requests rehearing of the Decision and denial of the Petition because it fails to
`
`
`
`Respectfully submitted,
`
`
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
`
`
`identify all the RPIs.
`
`Dated: October 21, 2015
`
`9
`
`

`
`
`
`
`
`Case No. IPR2015-01047
`
`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
`
`Request for Rehearing Under 37 C.F.R. § 42.71(d)(1) by electronic means on the
`
`date below at the following address of record:
`
`Abraham Kasdan (akasdan@wiggin.com)
`Wiggin and Dana LLP
`450 Lexington Avenue
`New York, NY 10017
`
`James T. Bailey (jtb@jtbaileylaw.com)
`504 W. 136th St. #1B
`New York, NY 10031
`
`IP@wiggin.com
`
`
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
`
`
`
`
`
`
`Dated: October 21, 2015

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket