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`Paper No.
`Filed: September 20, 2021
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`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., APPLE INC., and
`BLACK SWAMP IP, LLC,
`Petitioner
`v.
`VIRNETX INC.,
`Patent Owner
`
`
`
`Case IPR2015-010471
`Patent 7,490,151
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`
`
`
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`Patent Owner’s Request for Director Rehearing
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`1 Apple Inc. and Black Swamp IP, LLC, who filed petitions in IPR2016-00063 and
`IPR2016-00167, respectively, have been joined as a Petitioner in the instant
`proceeding.
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`Case No. IPR2015-01047
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`B.
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`TABLE OF CONTENTS
`Background ...................................................................................................... 1
`The Board Erred in Declaring the ’151 Patent Claims Unpatentable ............. 3
`A.
`The Board’s Reliance on a Combination of Different Elements
`in Kiuchi Is Improper ............................................................................ 4
`The Board’s Purported Combination Does Not Perform All the
`Recited Steps of the DNS Module ........................................................ 7
`C. Kiuchi Does Not Disclose the Forwarding of a DNS Request to
`a DNS Function ..................................................................................... 8
`The Board’s Obviousness Rulings Are Likewise Defective ...............11
`D.
` The Final Written Decision Should Be Vacated Under Facebook ...............12
` A Principal Officer Must Consider This Rehearing Request ........................13
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`Case No. IPR2015-01047
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`On August 19, 2021, the Federal Circuit issued an order “allowing VirnetX
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`the opportunity to request Director rehearing.” VirnetX Inc. v. Mangrove Partners
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`Master Fund, Ltd., Nos. 2020-2271, 2020-2272, Dkt. No. 51 at 3 (Fed. Cir. Aug. 19,
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`2021). Pursuant to that order, VirnetX hereby requests Director rehearing of the
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`Final Written Decision on Remand issued July 14, 2020 (“Remand FWD”).
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`Claim 13 of U.S. Patent No. 7,490,151, which is representative, recites “a
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`computer readable medium storing a domain name server (DNS) module comprised
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`of computer readable instructions that, when executed, cause a data processing
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`device to perform” three steps relating to the establishment of secure computer
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`communications. Ex. 1001 (48:18-29) (emphasis added). Originally, the Board
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`found the claims anticipated by mapping the claim’s DNS module to a name server
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`in the prior-art reference. But the Federal Circuit rejected that finding. On remand,
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`the Board mapped the DNS module to a combination of separate elements in the
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`prior-art reference. But that violates the cardinal anticipation rule that the reference
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`must disclose the same elements arranged in the same way. Moreover, those
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`elements in combination do not even perform the three functions of the claimed DNS
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`module. This and other errors warrant rehearing by a properly appointed Director.
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`Background
`The primary reference in this proceeding is Kiuchi (Ex. 1002). In Kiuchi, a
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`user agent requests information residing in an “origin server.” Kiuchi at 64-67. Two
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`entities are interposed between the user agent and origin server and relay information
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`between them. A “client-side proxy” relays information between a user agent and
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`the Internet, and a “server-side proxy” relays information between the Internet and
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`the origin server. Id. at 64. A “C-HTTP name server” facilitates exchange of
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`encryption keys between the client-side and server-side proxy. Id. at 64-65.
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`The Federal Circuit first considered whether Kiuchi could render the ’151
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`patent claims unpatentable in VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308 (Fed.
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`Cir. 2014). In affirming a finding that it could not, Cisco found evidence that
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`“Kiuchi fails to disclose the requirement that the DNS request be ‘sent by a client.’”
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`Id. at 1324. The Board nonetheless found that Kiuchi rendered the challenged ’151
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`patent claims unpatentable in the original Final Written Decision dated September
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`9, 2016 (“Original FWD”). But the Federal Circuit vacated the Original FWD. It
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`held “[t]he Board could not have found that the client-side proxy corresponds to the
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`claimed ‘client’ and is also a part of the DNS proxy module, as the claim makes clear
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`that these are separate components.” VirnetX Inc. v. Mangrove Partners Master
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`Fund, Ltd., 778 F. App’x 897, 906 (Fed. Cir. 2019). The court also held “the C-
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`HTTP name server [does not] perform the functions of the claimed DNS proxy
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`module” because “[t]he C-HTTP name server does not forward a DNS request to a
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`DNS function.’” Id. at 906-07. And the court found that, “[t]o the extent the Board
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`intended to rely on different components in Kiuchi for the disclosure of all the
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`claimed limitations attributed to the ‘client’ or the ‘secure server,’ its finding of
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`anticipation is not supported by substantial evidence.” Id. at 907-08.
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`On remand, the Board found Kiuchi anticipated the claim. It reasoned that a
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`“combination” of “the client-side proxy and C-HTTP name server, acting together,”
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`in Kiuchi performed the function of the VirnetX’s DNS module. Remand FWD at
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`11-12, 14. While the Federal Circuit held that Kiuchi’s C-HTTP name server does
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`not forward a received DNS request to a DNS function like VirnetX’s DNS module
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`the Board stated that holding did not preclude it from relying on the “asserted
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`combination.” Id. at 12. The Board also concluded that the forwarding claim
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`limitation was met when “the client-side proxy alone forwards the DNS request to a
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`DNS function when it determines (in conjunction with the C-HTTP name server)
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`that the request does not correspond to a secure server.” Id. (emphasis added).
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` The Board Erred in Declaring the ’151 Patent Claims Unpatentable
`Claim 13 recites “a computer readable medium storing a domain name server
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`(DNS) module comprised of computer readable instructions that, when executed,
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`cause a data processing device to perform” three steps. Appx210 (48:18-29)
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`(emphasis added). The first step is “determining whether a DNS request sent by a
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`client corresponds to a secure server.” Appx210 (48:22-23). “[W]hen the DNS
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`request does not correspond to a secure server,” the next step is “forwarding the DNS
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`request to a DNS function that returns an IP address of a nonsecure computer.”
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`Appx210 (48:24-26). On the other hand, “when the intercepted DNS request
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`corresponds to a secure server,” a “secure channel between the client and the secure
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`server” is “automatically creat[ed].” Appx210 (48:27-29). Nothing in Kiuchi
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`corresponds to the DNS module that performs the three enumerated limitations. The
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`Board’s reliance upon a “combination” of Kiuchi’s client-side proxy and C-HTTP
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`name server does not replicate what is claimed arranged in the same way, and indeed
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`even that combination does not perform all three limitations.
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`A. The Board’s Reliance on a Combination of Different Elements in
`Kiuchi Is Improper
`In Mangrove, the Federal Circuit considered whether VirnetX’s DNS module
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`corresponded to Kiuchi’s C-HTTP name server. Mangrove, 778 F.3d at 906. It held
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`there was no substantial evidence of anticipation because Kiuchi’s C-HTTP name
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`server does not perform the second function of VirnetX’s DNS module. The Court
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`reasoned that, if a DNS request does not correspond to a secure server, Kiuchi’s C-
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`HTTP name server does not forward it to a DNS function, but instead returns an
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`error message, and thus cannot be the claimed DNS module. Id. at 906-07.
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`On remand, the Board pivoted to “rely” on the “combination” of two Kiuchi
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`components, Remand FWD at 12, arguing that the “client-side proxy …, together
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`with the C-HTTP name server, maps to the claimed ‘DNS proxy module.’” Id. at
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`11; see also id. at 12 (relying on “functionality of the combined client-side proxy
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`and C-HTTP name server”). But the fact that Kiuchi splits the various functions of
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`the DNS proxy module among different components (and even then, Kiuchi is
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`missing key features) demonstrates that Kiuchi does not anticipate the claims.
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`The Board found that the combination of the “the client-side proxy and the C-
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`HTTP server, acting together, determine whether the intercepted DNS request
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`corresponds to a secure server.” Id. at 14 (emphasis added). The Board declared
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`that reliance on this “combination” did not run afoul of Mangrove because the Board
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`did not use the C-HTTP server to satisfy two different claims limitations (unlike the
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`client-side proxy in the Board’s Original FWD). Id. at 15. Accordingly, the Board
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`“f[ou]nd that Kiuchi discloses its client-side proxy acting with the C-HTTP name
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`server as the claimed DNS proxy module ‘determining whether the intercepted DNS
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`request corresponds to a secure server.’” Id. at 15-16 (emphasis added).
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`The Board’s reliance on this combination violates the cardinal anticipation
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`rule that the prior-art reference must disclose “all of the limitations arranged or
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`combined in the same way as recited in the claim.” Net MoneyIN, Inc. v. VeriSign,
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`Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008) (emphasis added). Claim 13 recites a
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`single computer-readable “domain name server (DNS) module” that comprises
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`instructions to perform the recited tasks. Kiuchi’s client-side proxy and C-HTTP
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`name server, however, are not part of the same software or memory “module,” as
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`the claims require. Instead, Kiuchi’s client-side proxy and C-HTTP name server are
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`arranged as separate modules where the client-side proxy makes a request to (and
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`receives a response from) the C-HTTP name server. Ex. 1002 at 8. The Federal
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`Circuit previously described the user agent, client-side proxy, server-side proxy, and
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`the origin server as “different components in Kiuchi.” Mangrove, 778 F. App’x at
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`907. The same is true of the client-side proxy and C-HTTP name server. The
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`Board’s finding that Kiuchi—where the secure-communications and DNS functions
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`are separated and the client-side proxy forwards a domain name request to a C-HTTP
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`name server for determination of whether the client’s domain name request is
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`associated with a secure server—anticipates the asserted claims ignores the different
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`arrangement in those claims. The Board cannot rely on two separate components of
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`Kiuchi to perform the tasks that the claims ascribe to the DNS module. See Enfish,
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`LLC v. Microsoft Corp., 822 F.3d 1327, 1342-43 (Fed. Cir. 2016) (claim requiring a
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`single logical table not anticipated by prior art using two tables).
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`The Board’s assertion that “[t]he Specification discloses that functionality
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`may be located in a single computer or may instead by distributed among multiple
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`computers,” Remand FWD at 14, is irrelevant. Those passages state only that the
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`DNS proxy 2610 can be implemented on the same or different computer as other
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`functionality (such as Gatekeeper 2603 or DNS Server 2609)—i.e., the DNS module
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`can be co-located on the same physical computer with other functionality. See Ex.
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`1001 at 38:30–50. While the Board is correct “that the claims are not limited to a
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`particular arrangement of hardware,” Remand FWD at 15 (emphasis added), that
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`does not mean that two distinct modules/sets of instructions in Kiuchi (client-side
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`proxy and C-HTTP name server) disclose the single DNS module of the claims.
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`The Board also relied on the specification’s disclosure that, if it is determined
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`that access to a secure host was requested, “a further check [whether the user is
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`authorized to connect to the secure host] can be made by communicating with
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`gatekeeper 2603,” Ex. 1001 at 38:44-50, as evidence that the DNS proxy module
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`can be composed of multiple separate functions. Remand FWD at 15. But this
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`section refers to an authorization check after the association of the DNS request with
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`a secure server has already occurred. The only disclosure with regard to the
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`determination of whether a secure server is associated with a DNS request is that the
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`DNS proxy server 2610 itself “determines whether access to a secure site has been
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`requested”—“for example, by a domain name extension, or by reference to an
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`internal table of such sites,” and “DNS proxy 2610 determines whether the user has
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`sufficient security privileges to access the site.” Ex. 1001 at 37:60-66. No other
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`functionality is involved in this determination. Because Kiuchi does not disclose a
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`single “domain name service (DNS) module,” but instead a proxy and name server
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`in a client-server relationship, it does not disclose this limitation.
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`B.
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`The Board’s Purported Combination Does Not Perform All the
`Recited Steps of the DNS Module
`The combination of elements on which the Board relied do not even perform
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`all the steps performed of VirnetX’s DNS module. VirnetX’s DNS module performs
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`three distinct functions. But the Board nowhere found that Kiuchi’s client-side
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`proxy and the C-HTTP name server together perform the second step. Ex. 1001 at
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`48:24-26. In fact, the Board acknowledged that “the client-side proxy alone
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`forwards the DNS request to a DNS function” if the request is not for a secure server.
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`Remand FWD at 12 (emphasis added). Nor did the Board find Kiuchi’s client-side
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`proxy and the C-HTTP name server together performed the third step. It instead
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`found that the combination of the client-side proxy and the server-side proxy
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`“automatically creat[es] a secure channel between the client and the secure server.”
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`Ex. 1001 at 46:55-67; see Remand FWD at 16-18 (relying on “Kiuchi’s disclosure
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`of encrypting connections between client-side and server-side proxies,” and the end
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`legs protected by firewalls). Thus, the Board relied on the combination of the client-
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`side proxy and the C-HTTP name server for the first step, the client-side proxy alone
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`for the second step, and the two proxies for the third step. This amalgamation of
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`Kiuchi components treats the claims “as mere catalogs of separate parts, in disregard
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`of the part-to-part relationships set forth in the claims.” Therasense, Inc. v. Becton,
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`Dickinson & Co., 593 F.3d 1325, 1332 (Fed. Cir. 2010). Kiuchi fails to “disclose[]
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`exactly what is claimed” in the ’151 patent, Titanium Metals Corp. v. Banner, 778
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`F.2d 775, 780 (Fed. Cir. 1985)—a single DNS module performing all three steps.
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`C. Kiuchi Does Not Disclose the Forwarding of a DNS Request to a
`DNS Function
`The Board’s analysis of Claim 13 is deficient for another reason. The Board
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`found that Kiuchi’s client-side proxy performs the second step of VirnetX’s DNS
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`module—“forwarding the DNS request to a DNS function that returns an IP address
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`of a nonsecure computer”—based on Kiuchi’s passing statement that, “[i]f the client-
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`side proxy receives an error status, then it performs DNS lookup, behaving like an
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`ordinary HTTP/1.0 proxy.” Ex. 1002 at 8. However, Kiuchi never says what it
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`sends for DNS lookup. No substantial evidence supports the Board’s assumption
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`that Kiuchi’s client-side proxy forwards the very same request that it receives.
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`In fact, Kiuchi is inconsistent with that assumption. Kiuchi repeatedly
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`differentiates its C-HTTP features from DNS. Ex. 2038 ¶¶ 41-42. For example,
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`Kiuchi explains that the C-HTTP name service is used “instead of DNS,” the “DNS
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`name service is not used for hostname resolution,” and a “DNS lookup” is only
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`performed after a permission request to the C-HTTP name server fails. Ex. 1002 at
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`7-8; see also Ex. 1002 at 11 (explaining that C-HTTP involves a different naming
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`scheme). Thus, in order to perform DNS lookup, the client-side proxy necessarily
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`generates a new DNS request—it does not “forward[] the DNS request” it previously
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`received like the DNS module in VirnetX’s claims.2
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`2 The client-side proxy follows a different protocol (C-HTTP) than what would be
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`used to perform the “DNS lookup” in Kiuchi; “C-HTTP protocol … is different than
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`the protocol you would use to access the public DNS, so packet wise, there would
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`The Board cast aside the C-HTTP/DNS dichotomy, asserting that “Kiuchi’s
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`statement that it uses C-HTTP name service instead of DNS does not mean all
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`aspects of Kiuchi’s system use a different format from DNS.” Remand FWD at 12-
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`13. This is precisely VirnetX’s point. Up until when DNS lookup is performed
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`because of an error status message, Ex. 1002 at 8, C-HTTP format is used, not DNS
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`format. Thus, far from teaching “forwarding the DNS request to a DNS function
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`that returns an IP address of a nonsecure computer,” Kiuchi indicates that a new
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`DNS request is generated and sent to a DNS function.
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`The Board further asserted that “the format of Kiuchi’s C-HTTP requests is
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`not at issue because the claim limitation relates to requests for resources outside the
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`secure system—those for which the C-HTTP name server returns an error,” Remand
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`FWD at 13 (citing Ex. 1002 at 9), and therefore deduced that in Kiuchi “nonsecure
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`requests use standard DNS,” id. (citing Ex. 1002 at 7). The Board appears to suggest
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`that Kiuchi’s C-HTTP system is bypassed when a DNS request is received that does
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`not correspond to a secure server. That, however, is not how Kiuchi works.
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`Kiuchi explains that when a new connection request is received, the “client-
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`side proxy asks the C-HTTP name server whether it can communicate with the host
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`specified in a given URL.” Ex. 1002 at 8. “If the [C-HTTP] name server confirms
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`be some format differences.” Ex. 2039 at 110:12-17.
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`that the query is legitimate, it examines whether the requested server-side proxy is
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`registered in the closed network and is permitted to accept the connection from the
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`client-side proxy.” Ex. 1002 at 8. In other words, the C-HTTP server must receive
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`a legitimate C-HTTP query before it can determine that the connection “is not
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`permitted,” and therefore “send a status code which indicates an error” to the client-
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`side proxy. Ex. 1002 at 8. Indeed, the Board’s rationale is contradicted by
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`Petitioners’ own expert, who explained that the error message in Kiuchi is what
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`“triggers then the client-side proxy to initiate, you know, a DNS request to the DNS
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`system,” Ex. 2039 at 80:21-81:5, and that you would have to “construct [the] DNS
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`request … that you would send,” id. at 106:18-107:1. Because Kiuchi’s client-side
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`proxy generates a new DNS request for a nonsecure server—as opposed to
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`forwarding an existing request—there is no anticipation.
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`D. The Board’s Obviousness Rulings Are Likewise Defective
`The Board found that Kiuchi anticipated claims 13 and 14 but not 1, 2, 6-8,
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`and 12 because the latter set of claims required an encrypted channel between the
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`client and the secure server that Kiuchi does not disclose. Remand FWD at 30. But
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`the Board also found that Kiuchi, combined with Rescorla, rendered all the
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`challenged claims unpatentable. Id. at 16-19, 22-27. Because the Kiuchi/Rescorla
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`combination depends on Kiuchi for all of the limitations discussed above, the
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`Board’s ruling on obviousness should be withdrawn for the reasons given above.
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`The Board declined to address Petitioners’ alternative ground of obviousness over
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`Kiuchi and RFC 1034. Remand FWD at 28. But that ground likewise depends on
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`Kiuchi’s disclosures of the DNS module/DNS proxy module.
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` The Final Written Decision Should Be Vacated Under Facebook
`As the Federal Circuit explained in Facebook, Inc. v. Windy City Innovations,
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`LLC, Section 315(c) “does no more than authorize the Director to join 1) a person
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`2) as a party, 3) to an already instituted IPR.” Id. at 1335. It “does not authorize the
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`joined party to bring new issues from its new proceeding into the existing
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`proceeding.” 973 F.3d 1321, 1336 (Fed. Cir. 2020) (emphasis added). Here, the
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`Board improperly allowed Black Swamp, a joined party, to introduce new issues.
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`While Black Swamp relied on Kiuchi, Black Swamp’s petition offered
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`different unpatentability rationales from Mangrove’s, as Petitioners previously
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`acknowledged. See Appellees Br., VirnetX Inc. v. Mangrove Partners Master Fund,
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`Ltd., No. 17-1368, Docket No. 58, at 22 n.6, 25 n.7 (Fed. Cir. May 14, 2018).
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`Moreover, Black Swamp’s petition provided additional arguments in favor of
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`Mangrove’s proposed mappings, on which Petitioners relied. Paper 57 at 3-4, 9, 12-
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`13. And Petitioners cited Black Swamp’s petition in mapping the encrypted channel
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`limitation to a path between the user agent and origin server. Id. at 12.
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`In permitting joinder, the Board did not deny that Black Swamp’s petition
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`added new issues and arguments, but declared them not “sufficiently different and
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`complex to preclude joinder.” IPR2016-00167, Paper 12 at 5 (emphasis added); see
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`Paper 57 at 3-4. After Facebook issued and made clear no new issues or arguments
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`are permitted, the Board did not permit VirnetX even to brief the issue, denying
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`VirnetX’s request in an email within two hours.
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`Although the Board summarily stated it did not consider “the similar petitions
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`filed by the joined parties,” Remand FWD at 2 n.2, Black Swamp’s arguments were
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`intertwined with other petitioners’ arguments throughout the proceedings. The
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`Board, moreover, refused even to consider whether the Facebook decision warranted
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`a different result. To the extent the anticipation and obviousness findings are not
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`reversed outright, reopened proceedings and further briefing is warranted.
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` A Principal Officer Must Consider This Rehearing Request
`VirnetX’s rehearing request cannot be decided until a new Director is
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`appointed and confirmed, as there currently is no officer who can issue a final
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`decision. In United States v. Arthrex, Inc., 141 S. Ct. 1970, 1980, 1987 (2021), the
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`Supreme Court held that inferior officers “lack[] the power under the Constitution
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`to finally resolve” patentability questions, and “must be ‘directed and supervised . . .
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`by others who were appointed by Presidential nomination with the advice and
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`consent of the Senate.’” “Only an officer properly appointed to a principal office
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`may issue a final decision binding the Executive Branch.” Id. at 1985. The Court
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`thus held that a properly appointed principal officer—namely, “the Director”—must
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`have an opportunity “to review decisions rendered by APJs.” Id. at 1988.
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`Currently, there is “no principal officer” who can direct and supervise other
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`Board members and “issue a final decision binding the Executive.” Id. at 1980,
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`1985. The Senate-confirmed post of Director is vacant. While Commissioner of
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`Patents Hirshfeld is temporarily performing certain functions and duties of the
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`Director, he was not “appointed to a principal office” by the President and Senate.
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`Id. at 1985 (emphasis added). As Commissioner, he was appointed to an inferior
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`office by the Secretary of Commerce—just like the other Board members who,
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`Arthrex held, “lacked the power under the Constitution to finally resolve the matter
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`within the Executive Branch.” Id. at 1987; see 35 U.S.C. §§3(b)(2)(A), (6)(a). Nor
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`is Mr. Hirschfeld exercising authority delegated by a principal officer under that
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`officer’s supervision: The Directorship is vacant, so there is no one who could
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`revoke the delegation or supervise the exercise of delegated authority.
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`Arthrex’s passing reference to a “remand to the Acting Director,” 141 S. Ct.
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`at 1987, is not to the contrary. In Arthrex, neither the parties nor the Court addressed
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`Mr. Hirshfeld’s status or appointment; whether he qualifies as “Acting Director”; or
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`whether a non-Senate-confirmed officer could fill that role. The Office does not
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`even assert Mr. Hirshfeld is “Acting Director.” Construing a stray line to permit
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`someone appointed as an inferior officer to have the final say would be defy the
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`Court’s express holding that “[o]nly an officer properly appointed to a principal
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`office may issue a final decision.” Id. at 1985 (emphasis added).
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`The Federal Vacancies Reform Act (“FVRA”) also precludes Mr. Hirshfeld
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`from exercising the Director’s review authority. When a principal office is vacant,
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`any functions or duties “required by statute to be performed by the [principal] officer
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`(and only that officer)” may be performed only by “the first assistant to the office”
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`or someone directed by “the President (and only the President)” to perform them.
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`5 U.S.C. §§3345(a), 3348(a)-(b); see id. §3347. Final review of Board decisions is
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`a function or duty only the Director may perform. After Arthrex, the Patent Act
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`permits “the Director” to singlehandedly “review final PTAB decisions.” 141 S. Ct.
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`at 1987. But the Act’s prohibition on anyone else doing so “remains operative as to
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`the other [PTAB] members”—including the Commissioner. Id. The FVRA thus
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`would allow only “the first assistant” (Deputy Director), or someone so-directed by
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`“the President,” to exercise the Director’s review authority. 5 U.S.C. §3345(a).
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`Because Mr. Hirschfeld is neither—he is performing the Director’s functions and
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`duties in accordance with the succession plan promulgated by the Secretary of
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`Commerce—any attempted exercise of that authority would be “of no force or
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`effect.” Id. §3348(d)(1).
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`Dated: September 20, 2021
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`
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`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
`15
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`
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`Case No. IPR2015-01047
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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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`Request for Director Rehearing by electronic means on the date below at the
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`following address of record:
`
`Abraham Kasdan
`Wiggin and Dana LLP
`akasdan@wiggin.com
`IP@wiggin.com
`
`James T. Bailey
`jtb@jtbaileylaw.com
`
`Jeffrey P. Kushan
`Scott Border
`Thomas A. Broughan III
`Sidley Austin LLP
`iprnotices@sidley.com
`
`Thomas H. Martin
`Wesley C. Meinerding
`Martin & Ferraro, LLP
`tmartin@martinferraro.com
`docketing@martinferraro.com
`
`Dated: September 20, 2021
`
`
`
`
`
`Respectfully submitted,
`
` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
`
`
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