`
`Case: Apple, Inc. v. VirnetX Inc.
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`Page i
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`VIRNETX EXHIBIT 20(cid:19)(cid:20)
`(cid:36)(cid:83)(cid:83)(cid:79)(cid:72) v. VirnetX
`Trial IPR201(cid:25)-0(cid:19)(cid:19)(cid:25)(cid:22)
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Page 1
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` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` _________________________
` APPLE, INC.
` Petitioner,
` Vs.
` VIRNETX INC.
` Patent Owner
`
` Case IPR2015-01046
` IPR2016-00062
` IPR2016-00063
` Patent No. 6,502,135
` And
` Case IPR2015-01047
` Patent No. 7,490,151
`
` Oral Argument on Proposed Motions of Apple, Inc.
` November 18, 2015 (10:01 a.m.)
`Before: HON. STEPHEN SIU
` HON. KARL D. EASTHOM
` HON. MICHAEL TIERNEY
`
`202-347-3700
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`APPEARANCES:
` JOSEPH E. PALYS, ESQ.
` NAVEEN MODI, ESQ.
` DANIEL ZEILBERGER, ESQ.
` Paul Hastings LLP
` 875 15th Street, Northwest
` Washington, DC 20005
` 202.551.1996 FAX: 202.551.0496
` Josephpalys@paulhastings.com
` On behalf of VirnetX Inc.
`
` ABRAHAM KASDAN, ESQ.
` Wiggin and Dana LLP
` 450 Lexington Avenue
` New York, NY 10017
` Akasdan@wiggin.com
` And
` JAMES T. BAILEY
` 504 W. 136th St. #1B
` New York, NY 10031
` Jtb@baileylaw.com
` On behalf of Petitioner in IPR2015-01047
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
`
`APPEARANCES: (Continued)
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`Page 3
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` JEFFREY P. KUSHAN, ESQ.
` THOMAS A. BROUGHAN, III
` Sidley Austin LLP
` 1501 K Street, Northwest
` Washington, DC 20005
` Jkushan@sidley.com
` On behalf of Petitioner Apple
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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` P R O C E E D I N G S
` HON. TIERNEY: This is Judge Tierney. I'm
`going to wait just a moment until we get Judges Siu
`and Easthom on the line, so please hold.
` HON. SIU: This is Judge Siu joining the
`call, S-I-U.
` HON. TIERNEY: Is Judge Easthom on the
`line?
` HON. EASTHOM: Yes, good morning,
`everyone.
` HON. TIERNEY: Thank you for joining us,
`Judge Easthom.
` All right, we have the judges, we are
`going to begin.
` Do we have the counsel for the Petitioner?
` MR. KUSHAN: Yes. Good morning, Your
`Honor. This is Jeff Kushan for Apple. And with me
`is Tom Broughan.
` HON. TIERNEY: Welcome to the call.
` Do we have counsel for the Patent Owner
`today?
` MR. PALYS: Yes, Your Honor. This is
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Joseph Palys. I'm joined with Naveen Modi and Dan
`Zeilberger.
` HON. TIERNEY: Was there any other party
`that was joining us today by invite of the parties?
` MR. BAILEY: Yes, Your Honor. This is Jim
`Bailey. I'm counsel for the original petitioner,
`Mangrove Partners Master Fund.
` MR. KASDAN: Your Honor, this is Abe
`Kasdan, also for Petitioner.
` HON. TIERNEY: Welcome to the call.
` Court Reporter, and you are here at the
`behest of whom.
` COURT REPORTER: Let me see who has
`requested me.
` MR. PALYS: Your Honor, this Joseph Palys.
`We had sent an e-mail recently, albeit a little
`probably short, but to notify the Board that we had
`a court reporter on the call. And it was my
`intention to let you know as soon as we started to
`let you know, but we managed to not do that.
` COURT REPORTER: Looks like it's Paul
`Hastings that called us, Judge.
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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` HON. TIERNEY: I would just like to state
`for the Patent Owner then, if possible then once you
`get a copy of the transcript if you could submit it
`as an exhibit.
` MR. PALYS: Yes, sir. That's our intent.
` HON. TIERNEY: Thank you.
` All right. My understanding is that the
`Petitioner in this case would be Apple has requested
`the conference call. The cases that we are talking
`about today, there's four IPRs is my understanding,
`IPR2015-01046 and -01047, as well as the recently
`filed IPR2016 IPRs which would be IPR2016-00062 and
`00063.
` So with that I'm going to turn it to
`Petitioner which would be in this case Apple for the
`IPR2016 cases and they requested the call, and
`please inform us as to the purpose of the call
`today.
` MR. KUSHAN: Yes, Your Honor, the purpose
`of the call because we had filed a Motion for
`Joinder seeking to join our petitions to the
`petitions that have been instituted, and we wanted
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`to bring the joinder motion to the attention of the
`Board for two reasons, one, in our joinder motion we
`have indicated that we are prepared to, as many
`parties have done in similar situations, adhere to
`the existing schedule of the petition that has been
`instituted, and, second, to confirm that we're not
`seeking any additional variations from the schedule
`that has been set.
` And given those types of parameters and
`the fact that the proceeding has already been
`instituted and is already moving on its schedule, we
`were hoping to bring the joinder motion to the
`attention of the panel so that it may be considered
`promptly so that we may be able to join the
`proceeding and not disrupt it in any fashion.
` The purpose of the call was to bring that
`to your attention and also to hopefully address any
`questions you've got regarding the joinder motion.
` HON. TIERNEY: I'm going to turn it over
`to Patent Owners to see if they have any comments or
`have any questions for the parties. Patent Owner,
`do you have any comments you would like to make
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`before we start asking questions today?
` MR. PALYS: This is Joseph Palys.
` Just to note, Your Honor, that it is our
`intention to file an opposition to the Motion to
`Joinder to the extent we needed authority to do that
`we are seeking that. And then another point on the
`due date for that opposition, our understanding is
`that the opposition would be due one month from the
`filing of that motion which was 10/26, October 26,
`unfortunately that happens to fall on Thanksgiving,
`and we know, I believe the field may be open on the
`following Friday and we were going to ask if it
`would be okay for the Board to extend that to the
`following Monday.
` HON. TIERNEY: That does lead us into a
`couple of questions here, and I appreciate your
`pointing that out. For scheduling purposes would
`the Patent Owner expect to file a Patent Owner
`Preliminary Response in these two cases, the 2016
`cases?
` MR. PALYS: Yes, we do, Your Honor.
` HON. TIERNEY: All right. And what
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`schedules do we set for the Preliminary Patent Owner
`Responses?
` MR. PALYS: We would like to maintain the
`normal schedule which is a three-month time period.
` HON. TIERNEY: How would that affect a
`potential joinder?
` MR. PALYS: I'm not sure I follow your
`question, I apologize.
` HON. TIERNEY: Okay, the point being right
`now I guess the day recorded or rather the notice of
`the date of recording was sent out I believe
`November 4th in these cases. My apologies, the case
`hasn't been docketed on my electronic system so I
`have to the public portal for this information. If
`it's November 4th that's going to put up to three
`months for you to file your preliminary response and
`then up to three months for us to decide whether to
`institute it or not. Potentially we're looking at
`five and a half more months for the added time; how
`is that going to impact if we go to that full
`schedule, how is that going to impact the joinder
`with the 2015 proceedings which have already been
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`instituted?
` MR. PALYS: Thank you for the
`clarification, Your Honor. I think from VirnetX's
`standpoint we don't think Apple should be joined,
`that's why we are going to be filing an opposition.
`So in terms of how it will affect the joinder,
`that's from our view where we stand, but in terms of
`the schedule why we believe that we should be
`getting at least the three months to file our
`preliminary responses because the normal schedule
`are for several reasons; one, we will need time as
`we do with all responses to a petition to consider
`the arguments and the positions that were raised in
`Apple's petition. In some instances there is
`actually some new evidence and new arguments that
`Apple has raised in these 62 and 63 matters.
` And a second and important reason is our
`schedule just really did not allow for any room on
`it for than a expedited schedule on these
`proceedings. I can list out and I will list out
`just VirnetX's deadlines alone that we are dealing
`with that are going to extend through the end of
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`January, somewhat into February that require
`significant work.
` Just to list a few of these, Your Honor,
`is there are some IPR proceedings, IPR2014-00237 and
`238 that his honor might be aware of, those are up
`at the Fifth Circuit, those briefs are due, right
`now it is our understanding is around the 19th or
`the 25th or within the next week or two.
` We have re-examination matters, 95001697
`and 001714, we have comments after an action closing
`prosecution, those are due on November 23rd. IPR
`matters 2015-810, 811 and 812, we have patent owner
`responses due on December 11th.
` HON. TIERNEY: Well, let's just talk of
`this. If we are to go ahead, we are going to have
`to have these papers filed at some point anyway,
`there's always going to be some VirnetX cases going
`on because those re-exams are going away but those
`Circuit briefs are going to be a additional work and
`IPRs are still going to have additional work, so
`from what I'm gathering there is never going to be a
`good time for patent owner to file a response due.
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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` MR. PALYS: We understand that, Your
`Honor, but the point of going through the list,
`which, you know, there is a list of over 20 some
`deadlines coming up in the next couple months, is
`that I was just showing that we think it's only fair
`that we get the whole three months to present these
`arguments to consider these arguments and present
`our full response within the three month time frame.
` HON. TIERNEY: But if we were go too much
`on that we'd have the same call, wouldn't there be
`another list of 20 different things that were due?
` MR. PALYS: Your Honor, obviously every
`other practitioner we have other matters as well,
`but, you know, really having -- putting VirnetX in a
`position to excise its schedule to accommodate
`Apple seems to be --
` HON. TIERNEY: No, it's not just to
`accommodate Apple, it's to resolve the issues that
`are opposed.
` MR. KUSHAN: Your Honor, if I may, may I
`make a couple comments?
` HON. TIERNEY: For the court reporter's
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`November 18, 2015
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`sake could you identify yourself?
` MR. KUSHAN: Yes, first, this is Jeff
`Kushan.
` HON. TIERNEY: Thank you.
` MR. KUSHAN: I, as opposing counsel has
`entered these proceedings I certainly understand and
`sympathize with the volume of activities in front of
`us, I'm actually in a trial right now in Texas, and
`it's even more important to do this call because I
`consider it to be very important, and one of the
`things I wanted to flag was that we're not raising
`any new grounds in the petitions we filed, we have
`provided additional, Apple additional lists of
`evidence, but those are in our view the same kind of
`things you would normally encounter in supplemental
`evidence coming in after the institution of a
`proceeding.
` I guess my bigger question is, since the
`positions are actually identical as to the grounds
`that have already been instituted I'm not clear what
`issue would be addressed by VirnetX in their
`preliminary response. If there is an issue that
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`November 18, 2015
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`they want to raise which is unique to Apple maybe
`that's something which is better done in opposition
`to the joinder motion, and we are open to discussing
`an opportunity to accommodate that briefing.
` We would certainly, if there is an
`opposition granted would prefer to have at least an
`opportunity for a short reply, if there are any new
`issue that came up in that. But we feel if it's
`possible to do and accommodate VirnetX's desire to
`address Apple-specific issues, we do that in this
`briefing relating to the joinder motion, and we do
`that in a fashion that will not disrupt the existing
`schedule of the instituted proceedings.
` HON. TIERNEY: I'm going to point out, I'm
`amenable to setting a date for preliminary patent
`owner response that is commensurate with the same
`date to accommodate motion for joinder of
`opposition. So I'm willing to give, but I'm
`contemplating at this point, and I'm going to turn
`to my panel members in the moment, would be to
`possibly extend the date for having an opposition to
`the joinder, but at the same time I shorten the time
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`November 18, 2015
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`for the Preliminary Patent Owner Response. So they
`would fall on the same date, so you get more time
`for one and less time for the other.
` Now, I do want to, a point I just want to
`raise, is I've pulled up in the petition for the
`IPR2016, I guess it's 62, let me just get my numbers
`straight here going back. I see 20 different things
`in my system, it was numbered, yes, 00062. I've
`also opened the IPR2015-01046. I'm just looking at
`the table of contents, and it looks like the
`arguments that are raised, at least in the table of
`contents, appear to be identical in the two cases.
` I would like VirnetX to address what
`different arguments that were raised that are going
`to be some new time to respond to.
` MR. PALYS: Sure, Your Honor, this is
`Joseph Palys, I will respond to your question and
`then I'd like to comment on what his honor mentioned
`in terms of opposition and the preliminary response.
` HON. TIERNEY: I think I would appreciate
`that.
` MR. PALYS: Yes, thank you.
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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` Regarding your last question, Apple
`introduced new evidence in its 62 and 63 matters,
`those involve exhibits 1026 through 1030, and they
`are geared for the public availability positions
`regarding certain references, and they actually
`introduce arguments pertaining to that additional
`evidence for its availability in its petition, on
`pages 39 through 42 of the 62 matter and page 54
`through 59 of the 63 matter.
` HON. TIERNEY: Okay. For the 62 I'm
`looking through the file right now; what pages did
`you identify?
` MR. PALYS: My notes here say pages 39
`through 42.
` HON. TIERNEY: Thank you. I have it open
`right now. Is there anything you would like me to
`look at in particular on those pages?
` MR. PALYS: Your Honor, I actually don't
`have a copy in front of me.
` HON. TIERNEY: Not a problem. Okay, I
`have it noted.
` So I'm hearing that there are several
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`cases of argument and a couple of additional
`exhibits. And you were going to explain your
`position as to the going on a proposal to extend the
`time for the joinder opposition, but decreasing the
`time for including patent owner's response.
` MR. PALYS: Yes, Your Honor. Just a final
`comment on the last discussion, what we point out
`are examples as far as we know, I mean we are still
`going through the petitions as well so the court or
`the board would appreciates that.
` Now -- I'm sorry?
` HON. TIERNEY: Is there some way we can
`make it easier for you at identifying differences?
` MR. PALYS: I'm not sure, Your Honor, what
`you are suggesting.
` HON. TIERNEY: Well, I'm just throwing
`out, if you are worried about catching the
`differences, do wish is to try and ask Apple? We
`have them on the line, if they would be able to
`point out the differences.
` MR. PALYS: Your Honor, I would prefer not
`to do that on the fly, I'd like to think through and
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`review the petitions at our own --
` HON. TIERNEY: All right, I was just
`seeing if there was something we could do to help
`you out.
` MR. PALYS: Okay, so regarding the other
`issue, regarding I believe what the Board was
`suggesting merging the opposition with the
`preliminary response, and somehow finding a date to
`do that, we would like to just point out, if the
`Board is inclined to expedite this schedule for the
`preliminary response and allow Apple to join, we
`believe it would be fair instead of expediting and
`prejudicing VirnetX in this case, we do think the
`fair thing to do here would be really to extend the
`schedule. There's tools available in the statute to
`do that, you know, the Board can extend schedules
`six months, and even in terms of for joinder,
`there's tools for the Board to allow for an
`extension here. And if the inclination here is to
`allow Apple to join the party, so to speak --
` HON. TIERNEY: Well, let's stop there. I
`think for the record we ought to point out we want
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`to find out, you know, we haven't addressed here
`whether or not they should be joined. So we are not
`inclined one way or the other, we just want to make
`sure we pick up the issue in a timely fashion.
` And I'd rather not delay the resolution of
`the issue whether they should or should not be
`joined, to the point where a joinder would be
`prejudiced if it went forward because it's such a
`delay in resolving the issue, that's all we are
`trying to say, we are not inclined one way or the
`other.
` MR. PALYS: I appreciate that, Your Honor,
`you know, there is just other issues beyond even
`the, what Apple is raising in its petitions, I mean
`VirnetX is considering discovery of Mangrove and we
`were going to address this at the proper time once
`we have a chance to meet and confer with Mangrove's
`counsel as well.
` So there are other things in play here
`that we were thinking in terms of how VirnetX is
`going to respond to the Mangrove proceedings, and
`the issues now that are being brought up from
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Apple's joinder in its petition.
` MR. KUSHAN: Your Honor, this is Jeff
`Kushan again, just very briefly, and I don't want to
`belabor the point, but the schedule that's already
`instituted is one where if we, and I think we are
`very supportive of your trying to accommodate the
`briefing as you proposed, because the schedule that
`from the current proceedings has a Patent Owner
`Response date I believe in January, and if we drift
`too far past the end of November it's kind of a moot
`issue, it's effectively denying our joinder motion
`by consequence of just the schedule will be pushed
`out past the time when this proceeding really would
`be relevant.
` And so I do appreciate the effort to try
`to find a compromise to get the other, you know, the
`patent owner a chance to file their opposition to
`the joinder motion.
` The other issue I just want to flag is we
`read, there was apparently a conference call with
`the Mangrove Petitioner and the Patent Owner a
`couple weeks ago. We looked at that transcript and
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Page 21
`there was a suggestion in there regarding some kind
`of a connection between Apple and Mangrove, and we
`were concerned about that because we are not aware
`of any such connection, and if that's the topic of,
`that would be addressed by VirnetX. You know, I
`think that speaks also to the need to get that
`joinder opposition put on the table quickly so we
`can deal with that.
` We are not raising it of course because
`there's nothing there in our view, but we were
`concerned that that had been alleged, and it is a
`bit of a concern for us hearing that, and having
`this uncertainty around the overall scheduling.
` So we would support your proposal for
`getting that joinder opposition set at a timely
`date.
` HON. TIERNEY: I want to turn back to
`VirnetX. I'm going to confer with my panel in a
`moment as to whether or not one we should go ahead
`and put the date for Opposition to the Joinder and
`the Preliminary Patent Owner Response on the same
`schedule. What I would like to do though is when I
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`confer with my panel, with VirnetX is there a date
`that would be less prejudicial than others?
`Obviously you have mentioned Thanksgiving is a bad
`date, if we want to extend it beyond Thanksgiving
`for the Opposition for Joinder; but is there a date
`which would be less burdensome to you for having the
`Patent Owner Preliminary Response scheduled,
`something that's shorter than the currently
`scheduled date?
` MR. PALYS: Yes, Your Honor this is Joseph
`Palys, if you don't mind I can confer with my
`co-counsel?
` HON. TIERNEY: Yes.
` MR. BAILEY: Your Honor, in the meantime,
`this is Jill Bailey for Mangrove Partners Master
`Fund. I just want to go on the record on Mr. Palys'
`suggested delaying the schedule on my IPRs. Of
`course we would oppose that, and quite frankly, you
`asked about the new evidence, and as I see it Apple
`put in a couple more exhibits regarding the public
`availability of RFCs, so I relied in obviousness
`arguments on certain RFCs in my petitions, VirnetX
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`opposed them as a not being true prior art. You've
`looked at the evidence I had presented and found
`that those RFCs were more likely than not prior art,
`and Apple has simply piled on with more evidence,
`and quite frankly, Mr. Palys listed a whole bunch of
`other proceedings that VirnetX is involved in, and
`quite frankly, in almost every one of them there is
`one or more RFCs, Request for Comments from the IETF
`that are being used as priorities, because pretty
`much everybody in the industry knows that these
`things are available on the Internet as are the
`date on their face.
` HON. TIERNEY: Your comment's noted.
` Is there anything that the Board needs to
`do at this point, though? All right.
` MR. PALYS: Was that question of me, Your
`Honor?
` HON. TIERNEY: It is of anybody at this
`issue, is there anything that the Board needs to do
`at this moment?
` MR. KUSHAN: Your Honor, this is Jeff
`Kushan, I don't think so. I think, I mean I assume
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`patent owner has an opportunity to address this
`evidence in their Patent Owner Response. If we were
`to be joined to the proceeding that would be the
`natural course. They could also introduce contrary
`evidence. I mean it's just, it's not changing any
`issue that has been the subject of the grounds that
`are instituted, and I don't think there is a big
`issue with the ability of the patent owner to
`respond to the evidence we put in.
` HON. TIERNEY: It's not an issue we have
`to resolve today.
` MR. KUSHAN: No, definitely not.
` HON. TIERNEY: Thank you.
` MR. PALYS: That I agree with, Your Honor.
`This is Joe Palys.
` HON. TIERNEY: All right. Then while we
`are waiting for the patent owner, is it possible
`or is it feasible to have an opportunity for a reply
`if an opposition is granted? I know that's
`something that I've seen the Board go different ways
`in allowing the reply or not allowing a reply; is
`that something you would be considering here as an
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Page 25
`option for us, or Apple in opposition to the joinder
`motion if authorized?
` HON. TIERNEY: I would say before I'm
`going to consult my colleagues, but I'm inclined to
`grant opposition, so I need file, you know, to have
`the opportunity to file one. As far as the reply,
`that's something I want to confer with my colleagues
`if you want to authorize it today, or if you want to
`wait and see, I take it your comment is indicating
`is you would rather have us to decide that issue
`today as to whether for a reply?
` MR. KUSHAN: If it's possible, Your Honor,
`if you could do that. I have a conference in
`December as well, I think we have an oral hearing
`on, believe it or not, on an interference that was
`agreed to in mid-December.
` So just having some certainty about the
`date of the reply would be helpful for our
`scheduling as well.
` HON. TIERNEY: Okay.
` MR. PALYS: Your Honor, Joseph Palys.
` I'm sorry we were trying to confer and
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`there was discussion so we had to listen to the
`arguments at the same time, so that's why it's
`taking so long.
` HON. TIERNEY: Do you needed additional
`time?
` MR. PALYS: No, I think from our
`perspective, and if we understand it, this is where
`the Board is inclined to accommodate Apple with the
`joinder, is that we think that an opposition to the
`joinder motion would be a separate paper, it
`wouldn't be merged in one document with the
`preliminary response, and both of those documents or
`papers would be filed on the same day.
` And then as far as a date, if we're really
`forced to pick a date we are thinking somewhere
`around mid-January would be less prejudicial, if you
`will, if that's even, if it's possible. I mean just
`to point out, too, and I hope the Board appreciates
`that this is a long history here, this isn't just a
`case where a company coming in out of the blue and
`trying to join, I think the board can appreciate
`that Apple has tried to address these patents
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`Apple, Inc. v. VirnetX Inc.
`November 18, 2015
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`Page 27
`before, has done many joinder motions in attempts to
`joined proceedings against VirnetX patents, and
`Apple's emergency, so to speak, shouldn't prejudice
`VirnetX.
` HON. TIERNEY: Okay, just a very brief
`comment, if you will, as to whether or not you have
`any thoughts of the January date, before I confer
`with my colleagues.
` MR. KUSHAN: I believe the January date
`that they may be proposing is after their reply
`date, and Patent Owner Response date, and I'll ask
`my colleague Tom Broughn, what is the date for the
`current Mangrove proceeding?
`