`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
`
`
`
`
`
`
`Paper No.
`Filed: July 12, 2017
`
`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
`
`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
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`v.
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`VIRNETX INC.
`Patent Owner
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`
`Case IPR2016-00957
`Patent No. 7,921,211
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`Patent Owner’s Request for Rehearing and Suggestion for Expanded Panel
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`I.
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`II.
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`Case No. IPR2016-00957
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`Table of Contents
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`INTRODUCTION AND PRECISE RELIEF REQUESTED ......................... 1
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`LEGAL STANDARD ..................................................................................... 3
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`III. STATEMENT OF REASONS FOR RELIEF REQUESTED ........................ 3
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`A.
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`The Final Decision Relies on a New Theory of Unpatentability
`in Addressing the “First Location” of Claims 27 and 51 ...................... 4
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`1.
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`2.
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`3.
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`The Petition Relied on Either Kiuchi’s Client-Side Proxy
`or User Agent .............................................................................. 4
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`The Institution Decision Was Silent as to What
`Component of Kiuchi It Relied On ............................................. 5
`
`The Final Decision Relied on a Purported Institution in
`Kiuchi in Which Both the Client-Side Proxy and User
`Agent Are Located ...................................................................... 6
`
`B.
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`The New Theory of Unpatentability is Impermissible Under
`Federal Circuit Precedent ...................................................................... 6
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`IV. PATENT OWNER SUGGESTS REHEARING BY AN EXPANDED
`PANEL THAT INCLUDES THE CHIEF JUDGE ......................................... 9
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`V.
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`CONCLUSION ..............................................................................................10
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`i
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`Case No. IPR2016-00957
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`TABLE OF AUTHORITIES
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` Page(s)
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`Cases
`Dell Inc. v. Acceleron, LLC,
`818 F.3d 1293 (Fed. Cir. 2016) .................................................................... 1, 8, 9
`
`EmeraChem Holdings, LLC v. Volkswagen Grp. of Am., Inc.,
`No. 2016-1984, 2017 WL 2587462 (Fed. Cir. June 15, 2017) ..................... 1, 8, 9
`
`In re Magnum Oil Tools Int’l, Ltd.,
`829 F.3d 1364 (Fed. Cir. 2016) ...................................................................passim
`
`In re NuVasive, Inc.,
`841 F.3d 966 (Fed. Cir. 2016) .................................................................... 1, 8, 10
`
`SAS Inst., Inc. v. ComplementSoft, LLC,
`825 F.3d 1341 (Fed. Cir. 2016) .................................................................. 1, 8, 10
`
`Other Authorities
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`37 C.F.R. § 42.71(d) .................................................................................................. 3
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`Standard Operating Procedure 1, Rev. 14 (May 8, 2015) ..................................... 2, 9
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`
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`
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`ii
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`I.
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`Case No. IPR2016-00957
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`INTRODUCTION AND PRECISE RELIEF REQUESTED
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`Patent Owner VirnetX Inc. (“Patent Owner”) requests rehearing of the
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`Patent Trial and Appeal Board’s Final Written Decision entered June 12, 2017
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`(Paper No. 14, “Final Decision”). This request is directed to one issue: the Final
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`Decision’s reliance on an unpatentability theory for dependent claims 27 and 51
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`that could have been included in Petitioner Black Swamp IP, LLC’s
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`(“Petitioner’s”) petition (Paper No. 1, “the Petition”), but was not.1 While it was
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`once the Office’s position that new theories of unpatentability like this are
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`permissible, the Federal Circuit has since disagreed. See In re Magnum Oil Tools
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`Int’l, Ltd., 829 F.3d 1364, 1377, 1380–81 (Fed. Cir. 2016); see also EmeraChem
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`Holdings, LLC v. Volkswagen Grp. of Am., Inc., No. 2016-1984, 2017 WL
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`2587462, at *6–8 (Fed. Cir. June 15, 2017); Dell Inc. v. Acceleron, LLC, 818 F.3d
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`1293, 1301 (Fed. Cir. 2016); In re NuVasive, Inc., 841 F.3d 966, 972–73 (Fed. Cir.
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`2016); SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351–52 (Fed. Cir.
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`2016).
`
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`1 Patent Owner does not concede that the new unpatentability theory advanced in
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`the Final Decision is itself correct. However, this request is directed to the
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`procedural impropriety of that new theory. Patent Owner reserves all rights to
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`appeal all aspects of the Final Decision.
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`1
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`Case No. IPR2016-00957
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`There is no reasonable question that the Final Decision, in addressing claims
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`27 and 51, relied on an unpatentability theory that was not presented by the
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`Petitioner. Claims 27 and 51 recite, inter alia, a “first location.” The Petitioner
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`alleged that “[t]he client-side proxy or the user agent associated with the client-
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`side proxy [in Kiuchi] can be considered a first location.” Petition at 33 (emphasis
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`added). As Patent Owner previously explained, however, neither Kiuchi’s client-
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`side proxy nor Kiuchi’s user agent can properly be mapped to the claimed “first
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`location.” See Patent Owner’s Response at 40–42. The Final Decision did not
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`disagree, but instead introduced a new mapping, alleging that an “institution” in
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`which both the client-side proxy and the user agent are purportedly located can be
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`mapped to the claimed “first location.” Final Decision at 13 (emphasis added). In
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`doing so, the Board either misapprehended the Petitioner’s position or overlooked
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`Federal Circuit precedent forbidding the new unpatentability theory advanced in
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`the Final Decision. As a consequence, the Final Decision’s finding that claims 27
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`and 51 are unpatentable should be withdrawn.
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`VirnetX suggests rehearing by an expanded panel that includes the Chief
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`Judge in deciding this request. Standard Operating Procedure 1, Rev. 14, Section
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`III.D (May 8, 2015) (“When a judge, a merits panel, or an interlocutory panel . . .
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`receives a suggestion for an expanded panel, the judge, merits panel, or
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`interlocutory panel shall notify the Chief Judge, Deputy Chief Judge, and the Vice
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`2
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`
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`Chief Judges of the suggestion, in writing.”). VirnetX submits this suggestion
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`Case No. IPR2016-00957
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`
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`because the Final Decision “conflicts with . . . an authoritative decision of the
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`Board’s reviewing courts.” Id. at Section III.A. The Final Decision’s treatment of
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`claims 27 and 51 conflicts, for example, with Magnum Oil Tools and related cases.
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`Therefore, this request “involves an issue of exceptional importance.” Id.
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`II. LEGAL STANDARD
`“A party dissatisfied with a decision may file a request for rehearing.”
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`37 C.F.R. § 42.71(d). “The request must specifically identify all matters the party
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`believes the Board misapprehended or overlooked, and the place where each
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`matter was previously addressed in a motion, an opposition, or a reply.” Id.
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`III. STATEMENT OF REASONS FOR RELIEF REQUESTED
`The Board’s finding that claims 27 and 51 are unpatentable should be
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`withdrawn because it was based on an unpatentability theory for dependent claims
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`27 and 51 that could have been—but was not—advanced by the Petitioner.2
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`Specifically, the Final Decision introduced a new mapping in addressing the “first
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`location” of claims 27 and 51, which is impermissible under Federal Circuit
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`precedent. Therefore, the unpatentability determination as to these claims should
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`be withdrawn.
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`2 As noted above, Patent Owner does not concede that the new unpatentability
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`theory advanced in the Final Decision is itself correct.
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`3
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`Case No. IPR2016-00957
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`A. The Final Decision Relies on a New Theory of Unpatentability in
`Addressing the “First Location” of Claims 27 and 51
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`Claims 27 and 51 require a “domain name service system [that] is
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`configured to enable establishment of a secure communication link between a first
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`location and a second location transparently to a user at the first location.” The
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`Petition presented a deficient analysis in trying to address this limitation,
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`particularly with respect to what it tried to map in Kiuchi to the claimed “first
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`location.” See Patent Owner’s Response at 40–42. In trying to navigate around
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`the problems in the Petition’s analysis, the Board first (in the Institution Decision)
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`relied on an unreasonably broad interpretation of the claims, and then (in the Final
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`Decision) relied on an improper new mapping for the claimed “first location.”
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`1. The Petition Relied on Either Kiuchi’s Client-Side Proxy or
`User Agent
`According to the Petition, “[t]he client-side proxy or the user agent
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`associated with the client-side proxy [in Kiuchi] can be considered a first location.”
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`Petition at 33 (emphasis added). However, as VirnetX explained in its Patent
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`Owner’s Response, both of Petitioner’s attempts to address the claimed “first
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`location” were deficient. As to the first mapping (i.e., the client-side proxy),
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`Kiuchi does not disclose, nor did Petitioner even allege that Kiuchi discloses, a
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`user at the client-side proxy. See Patent Owner’s Response at 40–41. On the other
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`hand, the claims at issue explicitly require “a user at the first location.” Thus the
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`4
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`Petition’s attempt to rely on the client-side proxy was without merit. Id.
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`Case No. IPR2016-00957
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`As to the second mapping (i.e., the user agent), the Petitioner did not present
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`any analysis establishing (or even attempting to establish) that Kiuchi discloses a
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`secure communication link between the user agent and any other device, despite
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`the fact that the claims require “a secure communication link between [the] first
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`location and a second location.” See Patent Owner’s Response at 41. The
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`Petitioner’s analysis instead was limited to an alleged “establishment and operation
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`of a secure communication link … between the client-side proxy and the server-
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`side proxy.” Petition at 25; see also Patent Owner’s Response at 41. Thus, as
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`VirnetX explained, the Petitioner’s reliance on Kiuchi’s user agent for the claimed
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`“first location” also could not support any conclusion that claims 27 and 51 are
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`unpatentable. Patent Owner’s Response at 41–42.
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`2. The Institution Decision Was Silent as to What Component of
`Kiuchi It Relied On
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`When VirnetX, prior to institution, highlighted the problems in the Petition’s
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`analysis of claims 27 and 51, the Board concluded that “Patent Owner [did] not
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`demonstrate persuasively that claim 27 . . . recites that a user must be located at
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`any specific location, much less located ‘at the client-side proxy.’” Institution
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`Decision at 10. In doing so, the Board appeared to overlook that the claims
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`explicitly require “a user at the first location.” Patent Owner’s Response at 42.
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`The Institution Decision did not elaborate as to what component of Kiuchi it relied
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`5
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`on for the claimed “first location,” but in any event did not present any new
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`Case No. IPR2016-00957
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`
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`mapping as compared to the Petition. Institution Decision at 10.
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`3. The Final Decision Relied on a Purported Institution in Kiuchi
`in Which Both the Client-Side Proxy and User Agent Are
`Located
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`The Final Decision took an entirely new path to address the claimed “first
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`location.” The Final Decision did not disagree that “the ‘user’ is located at the
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`‘user agent’ of Kiuchi” or that the Petitioner mapped “the client-side proxy [to the]
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`first location.” Final Decision at 13 (citing Patent Owner’s Response at 41).
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`Instead, the Final Decision pointed to Kiuchi’s disclosure of “closed networks
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`among hospitals and related institutions,” explaining that “a client-side proxy [is]
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`on the firewall of one institution” and “[a] user at a ‘user agent’ is [also] situated at
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`the ‘institution.’” Final Decision at 13 (citing Ex. 1005 at 64). Thus, the Final
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`Decision found that “both the user agent (and the user) and the client-side proxy
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`are located at the same location (i.e., the ‘institution’).” Id. This mapping
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`regarding claims 27 and 51 was never raised by Petitioner, and was never raised by
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`the Board in its Institution Decision or at any other time until the Final Decision.
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`B.
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`The New Theory of Unpatentability is Impermissible Under
`Federal Circuit Precedent
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`The Board’s new mapping is impermissible under governing Federal Circuit
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`precedent. For instance, in Magnum Oil Tools, the Federal Circuit considered a
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`scenario in which the Board made “an obviousness argument on behalf of [the
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`6
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`petitioner] . . . [that] ‘could have been included in a properly-drafted petition.’”
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`Case No. IPR2016-00957
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`
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`829 F.3d at 1380. Specifically, in Magnum Oil Tools, the Petitioner had “failed to
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`articulate a motivation to combine the specific teachings of [the prior art] to
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`achieve the claimed invention,” and the final written decision tried to correct the
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`Petitioner’s analysis. Id. at 1377, 1379–80.
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`The Office, which intervened in Magnum Oil Tools, argued that the Board
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`was allowed to present such new unpatentability theories in final written decisions.
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`Id. at 1377, 1380. The Federal Circuit disagreed, emphasizing that the “IPR
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`process is . . . a system that is predicated on a petition followed by a trial in which
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`the petitioner bears the burden of proof.” Id. at 1380–81. Finding “no support for
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`the PTO’s position that the Board is free to adopt arguments on behalf of
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`petitioners that could have been, but were not, raised by the petitioner during an
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`IPR,” the Federal Circuit held that “the Board must base its decision on arguments
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`that were advanced by a party, and to which the opposing party was given a
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`chance to respond,” and ultimately reversed the Board’s decision. Id. at 1381
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`(emphasis added).
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`Similarly to Magnum Oil Tools, there was nothing stopping the Petitioner
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`here from presenting the unpatentability theory advanced in the Final Decision
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`(i.e., relying on an institution in Kiuchi, which purportedly encompasses both the
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`client-side proxy and the user agent, to address the claimed “first location”).
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`7
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`Supra, Section III.A.3. As in Magnum Oil Tools, the Board’s adoption in the Final
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`Case No. IPR2016-00957
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`Decision of “arguments on behalf of [the Petitioner] that could have been, but were
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`not, raised by the [P]etitioner during [the] IPR” was improper. Id. at 1381.
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`To be sure, the final decision in Magnum Oil Tools introduced a new
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`motivation to combine, whereas the Final Decision here introduced a new prior art
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`mapping. But this is a distinction without a difference. The Federal Circuit has
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`repeatedly stressed that the Board’s reliance on new prior art mappings is
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`improper. See Dell, 818 F.3d at 1301 (vacating a final decision that relied on a
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`new prior art mapping introduced for the first time at oral argument); In re
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`NuVasive, 841 F.3d at 972–73 (vacating a final decision that relied on a new prior
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`art mapping introduced for the first time in a petitioner’s reply); see also SAS Inst.,
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`825 F.3d at 1351–52 (vacating a final decision that relied on a new claim
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`construction).
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`Nor is this a case where the Institution Decision can alleviate “[t]he fact that
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`the petition was defective.” See EmeraChem, 2017 WL 2587462, at *7 (citing In
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`re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1274 (Fed. Cir. 2015), aff’d, –––
`
`U.S. –––, 136 S. Ct. 2131, 195 L. Ed. 2d 423 (2016)). The Institution Decision
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`here did not give “the patentee notice of the prior art [mapping] that the final
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`decision relied upon.” Id.
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`Therefore, the Final Decision here failed to properly “base its decision on
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`8
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`arguments that were advanced by a party, and to which [Patent Owner] was given a
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`Case No. IPR2016-00957
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`
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`chance to respond.” Magnum Oil Tools, 829 F.3d at 1381. The Final Decision
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`argued, for the first time in this proceeding, that an institution in Kiuchi, which
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`purportedly encompasses both the client-side proxy and the user agent, may be
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`mapped to the claimed “first location.” Supra, Section III.A. The Final Decision’s
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`finding that claims 27 and 51 are unpatentable relied on this new theory and should
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`be withdrawn.
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`IV. PATENT OWNER SUGGESTS REHEARING BY AN EXPANDED
`PANEL THAT INCLUDES THE CHIEF JUDGE
`
`Patent Owner suggests that an expanded panel that includes the Chief Judge
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`consider this request for rehearing. See Standard Operating Procedure 1, Rev. 14,
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`Sections III.C–D. An expanded panel is necessary because the Final Decision
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`“conflicts with . . . an authoritative decision of the Board’s reviewing courts.” Id.
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`at Section III.A. Specifically, the Final Decision at least conflicts with the Federal
`
`Circuit’s Magnum Oil Tools decision, and thus “involves an issue of exceptional
`
`importance.”
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`Magnum Oil Tools is not an anomaly. To the contrary, the Federal Circuit
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`has repeatedly harped on the importance of avoiding, and the problems caused by,
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`new arguments in an IPR proceeding. See, e.g., EmeraChem, 2017 WL 2587462,
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`at *6–8 (vacating final decision that relied on a new theory of unpatentability);
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`Dell, 818 F.3d at 1301 (vacating a final decision that relied on a new prior art
`
`9
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`mapping introduced for the first time at oral argument); In re NuVasive, 841 F.3d
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`Case No. IPR2016-00957
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`
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`at 972–73 (vacating a final decision that relied on a new prior art mapping
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`introduced for the first time in a petitioner’s reply); SAS Inst., 825 F.3d at 1351–52
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`(vacating a final decision that relied on a new claim construction). As such,
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`ensuring that the Board properly applies the Federal Circuit’s jurisprudence on
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`improper new arguments is of the utmost importance.
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`V. CONCLUSION
`The Petition presented a deficient analysis of claims 27 and 51, particularly
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`with respect to the recited “first location.” The Final Decision did not disagree that
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`the Petition’s analysis was deficient, but rather relied on a new mapping to address
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`the “first location” recited in claims 27 and 51. This was improper under
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`governing Federal Circuit precedent. As such, Patent Owner respectfully requests
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`reconsideration of the Final Decision and withdrawal of the Board’s
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`unpatentability finding as to claims 27 and 51.
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`
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`Dated: July 12, 2017
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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.
`
`10
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`Case No. IPR2016-00957
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 12th day of July, 2017, a copy of Patent Owner’s
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`Request for Rehearing and Suggestion for Expanded Panel was served by
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`electronic mail, as agreed by the parties, upon the following Counsel for Black
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`Swamp IP, LLC:
`
`Thomas H. Martin
`Wesley C. Meinerding
`MARTIN & FERRARO
`1557 Lake O’Pines Street, NE
`Hartville, Ohio 44632
`tmartin@martinferraro.com
`docketing@martinferraro.com
`
`
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Registration No. 46,508
`
`Counsel for VirnetX Inc.
`
`
`
`Dated: July 12, 2017
`
`
`
`
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