`Filed: January 8, 2016
`
`Naveen Modi
`Paul Hastings LLP
`875 15th Street NW
`Washington, DC 20005
`Telephone: (202) 551-1990
`Facsimile: (202) 551-0490
`E-mail:
`PH-VirnetX-IPR@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:
`PH-VirnetX-IPR@paulhastings.com
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`__________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`__________________
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`__________________
`
`Case No. IPR2016-00063
`U.S. Patent No. 7,490,151
`
`__________________
`
`
`PATENT OWNER’S OPPOSITION TO
`APPLE’S MOTION FOR JOINDER
`
`
`
`Case No. IPR2015-00063
`
`TABLE OF CONTENTS
`
`
`INTRODUCTION .......................................................................................... 1
`
`PRECISE RELIEF REQUESTED ................................................................. 2
`
`STATEMENT OF FACTS ............................................................................. 2
`
`
`I.
`
`II.
`
`III.
`
`IV. ARGUMENT .................................................................................................. 3
`
`A. Granting Apple’s Motion for Joinder Is Statutorily Barred ................. 4
`
`B.
`
`C.
`
`Joining Apple Will Impact the ’047 Proceeding and Apple Will
`Not Be Prejudiced if the Board Denies Joinder ................................... 8
`
`If Apple’s Joinder Motion Is Granted, its Participation in the
`Mangrove Proceeding Should Be Limited ......................................... 10
`
`V.
`
`CONCLUSION ............................................................................................. 11
`
`
`
`
`
`i
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`Case No. IPR2015-00063
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`TABLE OF AUTHORITIES
`
` Page(s)
`
`Federal Cases
`Achates Reference Publ’g, Inc. v. Apple Inc.,
`803 F.3d 652 (Fed. Cir. 2015) .............................................................................. 5
`
`Avaya Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-0071, Paper No. 40 (July 29, 2013) .................................................... 10
`
`Butamax Adv. Biofuels LLC v. Gevo, Inc.,
`IPR2014- 00581, Paper No. 8 (Oct. 14, 2014) ..................................................... 5
`
`Dell Inc. v. Network-1 Security Solutions, Inc.,
`IPR2013-00385, Paper No. 17 (July 29, 2013) .................................................... 8
`
`Microsoft Corp. v. Surfcast Inc.,
`IPR2014-00271, Paper No. 20 (June 13, 2014) .................................................... 4
`
`Samsung Electronics Co. Ltd. v. E-Watch, Inc.,
`IPR2015-00611, Paper No. 9 (July 10, 2015) .................................................... 10
`
`Target Corp. v. Destination Maternity Corp.,
`IPR2014-00508, Paper No. 28, Dissent slip op. (Feb. 12, 2015) ......................... 5
`
`VirnetX, Inc. v. Cisco Sys., Inc.,
`767 F. 3d 1308 (Fed. Cir. 2014) ........................................................................... 2
`
`Zhongshan Ocean Motor Co. v. Nidec Motor Corp.,
`IPR2015-00762, Paper No. 16 (Oct. 5, 2015) .................................................. 4, 5
`
`Federal Statutes
`
`35 U.S.C. § 311 .................................................................................................. 4, 7, 8
`
`35 U.S.C. § 315(b) ............................................................................................passim
`
`35 U.S.C. § 315(c) ............................................................................................passim
`
`
`
`
`
`ii
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`Case No. IPR2015-00063
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`I.
`
`INTRODUCTION
`For the fourth time, Apple has been responsible for filing a petition for inter
`
`partes review of U.S. Patent No. 7,490,151 (“the ’151 patent”). Its first petition, in
`
`IPR2013-00354, was denied as untimely under 35 U.S.C. § 315(b). Apple had
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`RPX Corporation file its next petition in IPR2014-00173, but it was also dismissed
`
`as untimely. Apple then filed another petition, IPR2015-00187 (“the ’187
`
`proceeding”). Apple accompanied its petition in the ’187 proceeding with a
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`motion for joinder with IPR2014-00610 (“the ’610 proceeding”), filed by
`
`Microsoft. But in part because of the termination of the ’610 proceeding, and
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`given Apple’s time-barred status, the Board again denied institution. Now, Apple
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`has filed yet another petition, IPR2016-00063 (“the ’063 proceeding”). This time,
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`Apple accompanies its petition with a motion for joinder with IPR2015-01047
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`(“the ’047 proceeding”), filed by The Mangrove Partners Master Fund, Ltd.
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`(“Mangrove”). Apple’s repeated filings and its request for joinder are an attempt
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`to evade the time bar of § 315(b) and should be rejected. Not only does the plain
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`language of § 315(b) require this result, § 315(c) and Congress’s express intent to
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`avoid serial harassment of patent owners confirms it. Thus, Patent Owner VirnetX
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`respectfully requests that the Board deny Apple’s motion requesting joinder of the
`
`’063 proceeding with the ’047 proceeding.
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`1
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`Case No. IPR2015-00063
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`II.
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`PRECISE RELIEF REQUESTED
`
`VirnetX requests that the Board deny Apple’s motion for joinder (“Mot.”).
`
`III. STATEMENT OF FACTS
`On August 11, 2010, VirnetX served Apple with a complaint alleging
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`infringement of the ’151 patent and other VirnetX patents. (Ex. 2002, VirnetX
`
`Inc.’s Original Complaint in VirnetX Inc. v. Cisco Sys., Inc. et al., Case No. 6:10-
`
`cv-00417 (E.D. Tex. Aug. 11, 2010) (“the ’417 litigation”).) In response, Apple
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`alleged, among other things, noninfringement, invalidity, and unenforceability of
`
`the ’151 patent. (Ex. 2003, Apple’s Answer in the ’417 Litigation at ¶¶ 37, 43-45,
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`122-123, counterclaim ¶¶ 6-10, 12, 15, 31-37 (E.D. Tex. April 16, 2012).) Prior to
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`trial, Apple also requested inter partes reexamination of the ’151 patent. The
`
`proceeding was assigned Control No. 95/001,697 (“the ’1,697 reexamination”) and
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`is ongoing.
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`Following a five day trial, the district court upheld the validity of the ’151
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`patent. (Ex. 2004, Jury Verdict Form in the ’417 litigation (E.D. Tex. Nov. 6,
`
`2012); Ex. 2005, Final Judgment in the ’417 litigation (E.D. Tex. Feb. 28, 2013).)
`
`Apple appealed to the U.S. Court of Appeals for the Federal Circuit, which
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`affirmed that “none of the asserted claims are invalid[.]” VirnetX, Inc. v. Cisco
`
`Sys., Inc., 767 F. 3d 1308, 1313-14 (Fed. Cir. 2014).
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`After trial, in November 2012, VirnetX served Apple with a related
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`2
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`Case No. IPR2015-00063
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`complaint involving the ’151 patent and three other VirnetX patents. (Ex. 2006,
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`VirnetX Inc.’s Original Complaint in VirnetX Inc. v. Apple Inc., Case No. 6:12-cv-
`
`00855 (E.D. Tex. Nov. 6, 2012) (“the ’855 litigation”).) In response, Apple again
`
`alleged, among other things, noninfringement and invalidity of the ’151 patent.
`
`(Ex. 2007, Apple’s Answer in the ’855 Litigation at ¶¶ 16-18, 37-38, counterclaim
`
`¶¶ 7, 9 (E.D. Tex. Jan. 23, 2013).)
`
`Almost three years after the ’151 patent was first asserted against Apple,
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`Apple submitted a petition for inter partes review of the ’151 patent. See Apple
`
`Inc. v. VirnetX Inc., IPR2013-00354, Paper No. 5 (June 17, 2013). The Board
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`denied this petition because it was “not filed within the time limit imposed by 35
`
`U.S.C. § 315(b).” See id., Paper No. 20 at 5 (Dec. 13, 2013).
`
`RPX Corporation then filed a petition for inter partes review of the ’151
`
`patent, but the Board found that Apple was an unidentified real party-in-interest
`
`and denied institution under § 315(b)’s time bar. See RPX Corp. v. VirnetX Inc.,
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`IPR2014-00173, Paper No. 56 (July 14, 2014) (redacted Decision Denying
`
`Institution). Apple’s IPR petition was similarly found to be time-barred in the ’187
`
`proceeding. IPR2015-00187, Paper No. 11 at 2-3 (February 17, 2015).
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`IV. ARGUMENT
`The Board should not grant Apple’s motion because § 315(b) statutorily
`
`prohibits joinder and because denial will not prejudice Apple. To the extent Apple
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`3
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`Case No. IPR2015-00063
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`is joined, however, its participation should be limited in the ’047 proceeding.
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`A. Granting Apple’s Motion for Joinder Is Statutorily Barred
`It is undisputed that VirnetX served Apple with “a complaint” alleging
`
`infringement of the ’151 patent more than one year before the Petition was filed.
`
`Accordingly, institution of Apple’s petition is barred by 35 U.S.C. § 315(b). See,
`
`e.g., Apple v. VirnetX, IPR2013-00354, Paper No. 20 at 5 (Dec. 13, 2013). Joinder
`
`is only permitted if the Board first determines that Apple’s petition warrants
`
`institution. 35 U.S.C. § 315(c) (“the Director . . . may join . . . any person who
`
`properly files a petition under section 311 that the Director . . . determines warrants
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`the institution of an inter partes review under section 314”). Because Apple’s
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`untimeliness precludes institution under § 315(b), it also precludes joinder under
`
`§ 315(c).
`
`The Board has interpreted the last sentence of § 315(b) to mean that “the
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`one-year time bar does not apply” if a party filing a time-barred petition requests
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`joinder. See Zhongshan Ocean Motor Co. v. Nidec Motor Corp., IPR2015-00762,
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`Paper No. 16 at 5 (Oct. 5, 2015) (split expanded panel) (finding a § 315(b) time-
`
`bar not to apply because Ҥ 315(c) permits the joinder of any person who properly
`
`files a petition under § 311”); see also Microsoft Corp. v. Surfcast Inc., IPR2014-
`
`00271, Paper No. 20 at 7 (June 13, 2014). VirnetX respectfully disagrees with
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`such an interpretation of § 315(b). See Zhongshan Ocean Motor Co. v. Nidec
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`4
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`Case No. IPR2015-00063
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`Motor Corp., IPR2015-00762, Paper No. 16, Dissent slip op. at 2 (Oct. 5, 2015)
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`(“the majority’s position is misplaced because it reads too much into § 315(c)’s use
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`of the word ‘any’”); but see Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d
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`652 (Fed. Cir. 2015) (stating in dicta that “an otherwise time-barred party may
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`nonetheless participate in an inter partes review proceeding if another party files a
`
`proper petition”). In particular, as explained in Target Corp. v. Destination
`
`Maternity Corp., IPR2014-00508, Paper No. 28, Dissent slip op. at 18 (Feb. 12,
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`2015):
`
`[S]uch an interpretation “effectively rewrites the second
`sentence of § 315(b) as follows, with added material
`underlined: The time limitation set forth in the preceding
`sentence shall not apply to a petition accompanied by a
`request for joinder under subsection (c) if that request is
`granted.
`
`Such an “interpretation of § 315(b) converts the statutory bar set forth therein into
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`a discretionary bar in certain circumstances, including those present in this
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`proceeding.” Id. Once a petitioner like Apple “is time-barred under § 315(b) with
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`respect to a particular patent, it is always time-barred.” Id. at 19 (emphasis added).
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`In fact, the Board has acknowledged that “[t]he statute does . . . set forth at least
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`one circumstance in which we do not have the discretion to join a party: if the
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`Board determines that the second petition does not warrant institution.” Butamax
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`5
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`Case No. IPR2015-00063
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`Adv. Biofuels LLC v. Gevo, Inc., IPR2014- 00581, Paper No. 8 at 7 (Oct. 14, 2014)
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`(emphasis in original). Because Apple remains time-barred to challenge the ’151
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`patent via inter partes review, its Petition does not warrant institution generally
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`and so institution is impossible under 35 U.S.C. § 315(c).
`
`The last sentence of 35 U.S.C. § 315(b) states that “[t]he time limitation set
`
`forth in the preceding sentence shall not apply to a request for joinder under
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`subsection (c).” The AIA, and indeed § 315 itself, distinguishes between petitions
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`for inter partes review and requests for joinder. The last sentence of § 315(b)
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`provides an exception to the one-year bar only for a request for joinder, not for a
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`petition for inter partes review. Thus, the one-year bar continues to apply to all
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`petitions, even in the joinder context. The request-for-joinder exception of
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`§ 315(b) applies only when two timely petitions are filed, but the request for
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`joinder is made more than a year after being served with a complaint.
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`This reading makes sense because joinder is not available until after a
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`petition has been instituted. 35 U.S.C. § 315(c). Since an institution decision can
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`take up to six months, it is likely that many requests for joinder will occur more
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`than one year after being served with a complaint. The statutory language
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`addresses this concern. It does not, however, provide a backdoor for time-barred
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`petitions to be effectively instituted through joinder. Such a view would be
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`contrary to Congress’s intent to “prevent[] the serial harassment of patent
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`Case No. IPR2015-00063
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`holders[,]” which particularly applies to parties like Apple who have already had
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`ample opportunity to present validity challenges in district court, appellate court,
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`and in reexamination. (Ex. 2008, House Judiciary Transcript for Mark-Up of H.R.
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`1249, The America Invents Act at 72 (Apr. 14, 2011).)
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`Apple’s petition in the ’063 proceeding represents its seventh attack on the
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`’151 patent at the Office and in litigation in the last four years and is indicative of
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`the type of “serial harassment” Congress intended to avoid. Granting the relief that
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`Apple requests here gives Apple the opportunity to participate in an inter partes
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`review more than five years after first receiving a complaint and after having had
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`opportunities to challenge the patent before a jury, the Federal Circuit, and the
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`Office, contrary to what Congress intended.
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`Permitting untimely petitions to be instituted through joinder is also contrary
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`to the joinder statute. Under 35 U.S.C. § 315(c), a party may be joined if it has
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`“properly file[d] a petition under section 311.” (Emphasis added.) Senator Kyl
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`addressed the meaning of the phrase “properly file[d],” stating that “time deadlines
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`for filing petitions must be complied with in all cases.” (Ex. 2009, 154 Cong. Rec.
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`S9982, S9988 (daily ed. Sep. 27, 2008) (statement of Sen. Kyl).) Section 315(c) is
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`consistent with this view, because it requires compliance with § 311, which in turn
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`requires compliance with the other provisions of Title 35, Chapter 31 of the
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`U.S. Code, including the timeliness provisions. 35 U.S.C. § 311 (“Subject to the
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`7
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`Case No. IPR2015-00063
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`provisions of this chapter, a person who is not the owner of a patent may file with
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`the Office a petition to institute an inter partes review of the patent.”).
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`The Board has recognized that § 311 limits joinder under § 315(c), but
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`disregards the portion of § 311 that also requires compliance with other provisions
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`of Chapter 31. See, e.g., Dell Inc. v. Network-1 Security Solutions, Inc.,
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`IPR2013-00385, Paper No. 17 at 5-6 (July 29, 2013). This interpretation is
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`incorrect, as it disregards the plain statutory language. The Board’s interpretation
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`would also mean that other provisions of Chapter 31 do not apply to petitions when
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`joinder is requested, such as the petition requirements of § 312(a). This is not what
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`the statutory language permits, and is certainly not what Congress intended, yet it
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`is what the Board’s statutory interpretation would permit.
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`Under the plain language of §§ 315(b) and (c), joinder of Apple’s untimely
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`petition is prohibited.
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`B.
`
`Joining Apple Will Impact the ’047 Proceeding and Apple Will
`Not Be Prejudiced if the Board Denies Joinder
`
`Contrary to Apple’s arguments, joining Apple will have an impact on the
`
`’047 proceeding. As Apple admits, its petition raises additional issues and
`
`evidence. (Pet. at 54-59; Mot. at 6.) Thus, joining Apple will increase the burden
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`8
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`Case No. IPR2015-00063
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`on the parties and the Board.1
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`In addition, Apple’s petition is not simply a way to “allow Apple to ensure
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`the Board does not resolve an issue in this proceeding that would impact those
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`other proceedings.” (See Mot. at 5.) Rather, it is in addition to (and adding
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`additional expense to) an issue already resolved in litigation (Exs. 2004, 2005) and
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`already being considered before the Office. To the extent Apple desires a less-
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`expensive and different mechanism from district court litigation to challenge the
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`validity of the ’151 patent, it is currently enjoying that opportunity with the
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`ongoing ’1,697 reexamination proceeding.2
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`Apple has had and continues to have ample opportunity to present validity
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`challenges relating to the ’151 patent. It does not need and is not entitled to yet
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`another serial attempt to challenge the ’151 patent. Therefore, denying Apple
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`another attempt at challenging the validity of the ’151 patent will not prejudice it.
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`1 To the extent Apple is joined to the ’047 proceeding, these issues and
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`exhibits should not be introduced into the ’047 proceeding.
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`2 Apple alleges that the ’1,697 reexamination proceeding has been subject to
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`delays caused by petitions filed by VirnetX. (Mot. at 5.) This is not the case.
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`Many of the petitions filed by VirnetX have been granted by the Office, reflecting
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`the fact that VirnetX’s petitions have been meritorious.
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`9
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`Case No. IPR2015-00063
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`C.
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`If Apple’s Joinder Motion Is Granted, its Participation in the
`Mangrove Proceeding Should Be Limited
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`VirnetX conditionally requests that, should the Board grant Apple’s Motion,
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`a number of procedural conditions be adopted to reduce the prejudice to VirnetX
`
`and reduce the disruption to the present proceeding, as the Board has done in other
`
`similar situations (see, e.g., Samsung Electronics Co. Ltd. v. E-Watch, Inc.,
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`IPR2015-00611, Paper No. 9 at 6-7 (July 10, 2015); see also Avaya Inc. v.
`
`Network-1 Security Solutions, Inc., IPR2013-0071, Paper No. 40 at 7-9, 11-12
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`(July 29, 2013).). Those conditions include at least the following: (1) the
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`Scheduling Order in place for the ’047 proceeding (Paper Nos. 12, 20) shall govern
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`the joined proceedings; (2) that, throughout the joined proceeding, Mangrove will
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`be responsible for the preparation and filing of any papers; (3) Mangrove will
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`conduct the deposition of any VirnetX witness; (4) Mangrove will be responsible
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`for any redirect of its expert, Dr. Roch Guerin; and (5) Mangrove will conduct all
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`oral arguments. Also, to the extent the Board allows Apple to file any paper for
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`any filing by Mangrove, Apple’s paper should not exceed three pages and may
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`address only points of disagreement with Mangrove; any VirnetX response
`
`permitted by the Rules, the Board, or otherwise, may be three additional pages,
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`should Apple file such a paper. Finally, the additional issues and evidence
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`submitted by Apple should not be introduced into the ’047 proceeding. (Pet. at 54-
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`59; Mot. at 6.)
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`10
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`Case No. IPR2015-00063
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`Apple agreed to be limited (Mot. At 6) and given that Apple has had and
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`continues to have ample opportunity to challenge the ’151 patent, and that its
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`petition in the ’063 proceeding is time-barred, Apple will not be prejudiced by
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`these conditions.
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`V. CONCLUSION
`For the reasons set forth above, the Board should deny Apple’s motion for
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`joinder. Alternatively, if Apple’s motion is granted, the Board should limit
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`Apple’s participation in the proceeding as set forth above.
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`Dated: January 8, 2015
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`
`
`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
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`11
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`Case No. IPR2015-00063
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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 Petitioner a true and correct copy of the foregoing Patent Owner’s
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`Opposition to Apple’s Motion for Joinder and supporting materials by electronic
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`means on the date below at the following address of record:
`
`Counsel for Apple Inc.:
`
`Jeffrey P. Kushan
`Scott Border
`Thomas A. Broughan III
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`iprnotices@sidley.com
`
`
`
`
`
`
`
`
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`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
`
`Dated: January 8, 2015