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`Paper No.
`Filed: October 18, 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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`BLACK SWAMP IP, LLC,
`Petitioner
`v.
`VIRNETX INC.,
`Patent Owner
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`Case IPR2016-00957
`Patent 7,921,211
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`Patent Owner’s Request for Director Rehearing
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`Case No. IPR2016-00957
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`TABLE OF CONTENTS
`The Board’s FWD Should Be Vacated as Moot ............................................. 1
` A Principal Officer Must Consider This Rehearing Request .......................... 2
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`Case No. IPR2016-00957
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`On September 16, 2021, the Federal Circuit issued an order remanding this
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`case to the Patent Office to “allow[ VirnetX] the opportunity to request Director
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`rehearing.” VirnetX Inc. v. Hirschfeld, Nos. 2017-2593, 2017-2594, Dkt. No. 53 at
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`2 (Fed. Cir. Sept. 16, 2021). Pursuant to the Federal Circuit’s order, VirnetX hereby
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`requests Director rehearing of the Final Written Decision issued June 12, 2017
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`(“FWD”). The Director should rehear the FWD and, in conformity with traditional
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`principles of vacatur, vacate the Board’s unpatentability findings as moot because
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`the claims at issue have been cancelled in other Board proceedings and consideration
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`of the unpatentability of these claims is now moot. Moreover, in conformity with
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`the Supreme Court’s guidance, the Patent Office should defer rehearing until a
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`permanent Director is appointed by the President and confirmed by the Senate.
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`The Board’s FWD Should Be Vacated as Moot
`The Board’s FWD found that claims 1, 2, 5, 6, 15, 16, 23, 27, 36, 37, 39, 40,
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`47, 51, and 60 of U.S. Patent No. 7,921,211 are unpatentable. All of these claims,
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`however, were cancelled in reexamination control nos. 95/001,789 and 95/001,856.
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`As a result, consideration of the unpatentability of the claims is moot. Under
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`traditional principals of vacatur, a decision that becomes moot while on rehearing
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`must be vacated because review of a decision is no longer possible. See, e.g., Eisai
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`Co. v. Teva Pharms. USA, Inc., 564 U.S. 1001 (2011) (vacating the Federal Circuit’s
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`judgment where the case because moot while a petition for en banc rehearing was
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`1
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`pending) (citing United States v. Munsingwear, Inc., 340 U.S. 36 (1950)); Stewart
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`Case No. IPR2016-00957
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`v. S. Ry. Co., 315 U.S. 784 (1942) (vacating the judgment that became moot on
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`petition for rehearing after case was decided on the merits, 315 U.S. 283 (1942));
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`Munsingwear, 340 U.S. at 40 (vacatur is proper where “review of [a judgment] was
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`prevented through happenstance”).
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`Because the claims at issue have already been cancelled as a result of other
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`proceedings, there is effectively nothing for the Director to consider on rehearing
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`here with respect to those claims. The most that the Director could do upon finding
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`a claim unpatentable is to cancel that claim, yet that action is not possible for already-
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`cancelled claims. Cf. Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1340
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`(Fed. Cir. 2013) (“[W]hen a claim is cancelled, the patentee loses any cause of action
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`based on that claim, and any pending litigation in which the claims are asserted
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`becomes moot.”). Therefore, because Director rehearing of the FWD with respect
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`to the cancelled claims is no longer possible, the Board’s findings with respect to
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`those claims must be vacated. See Eisai, 564 U.S. at 1001; Munsingwear, 340 U.S.
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`at 40.
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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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`Case No. IPR2016-00957
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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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`3
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`at 1987, is not to the contrary. In Arthrex, neither the parties nor the Court addressed
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`Case No. IPR2016-00957
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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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`Case No. IPR2016-00957
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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: October 18, 2021
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`Respectfully submitted,
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`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`Counsel for VirnetX Inc.
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`5
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`Case No. IPR2016-00957
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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:
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`Thomas H. Martin
`Wesley C. Meinerding
`Martin & Ferraro, LLP
`tmartin@martinferraro.com
`docketing@martinferraro.com
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`Dated: October 18, 2021
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`Respectfully submitted,
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` /Joseph E. Palys/
`Joseph E. Palys
`Counsel for VirnetX Inc.
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