throbber
Filed on behalf of: VirnetX Inc.
`By:
`Joseph E. Palys
`
`Naveen Modi
`Finnegan, Henderson, Farabow,
` Garrett & Dunner, L.L.P.
`11955 Freedom Drive
`Reston, VA 20190-5675
`Telephone: 571-203-2700
`Facsimile: 202-408-4400
`E-mail: joseph.palys@finnegan.com
`
` naveen.modi@finnegan.com
`
`
`
`
`
`
`Paper No.
`Filed: May 28, 2014
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`
`
`
`
`
`
`
`
`APPLE INC.
`Petitioner
`
`v.
`
`VIRNETX INC.
`Patent Owner
`
`
`
`
`
`
`
`Case IPR2014-00237
`Patent 8,504,697
`
`
`
`
`
`
`
`
`
`
`Patent Owner’s Request for Rehearing Under 37 C.F.R. § 42.71(d)(1)
`
`
`
`

`
`Case IPR2014-00237
`Patent 8,504,697
`
`TABLE OF CONTENTS
`
`STATEMENT OF THE PRECISE RELIEF REQUESTED .......................... 1
`
`LEGAL STANDARD ..................................................................................... 1
`
`
`
`I.
`
`II.
`
`III.
`
`STATEMENT OF REASONS FOR RELIEF REQUESTED ........................ 1
`
`A. VirnetX’s Arguments Under 37 C.F.R. § 42.104(b) and 35
`U.S.C. § 312(a)(3) Were Misapprehended or Overlooked ................... 3
`
`1.
`
`2.
`
`3.
`
`Failing to Cite Asserted Prior Art Violates 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3) ....................................... 3
`
`Vague Grounds Without Explanation Violate 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3) ....................................... 5
`
`Apple’s Citations to the Prior Art Through a Declaration
`Render the Petition Overlength ................................................... 8
`
`B.
`
`VirnetX Requests an Expanded Panel on Rehearing .......................... 10
`
`IV. CONCLUSION .............................................................................................. 11
`
`i
`
`
`

`
`Case IPR2014-00237
`Patent 8,504,697
`
`
`
`TABLE OF AUTHORITIES
`
`Cases
`Apple Inc. v. Evolutionary Intelligence, LLC,
`IPR2014-00079, Paper No. 8 (Apr. 24, 2014) ............................................ 6, 7, 10
`
`CaptionCall, LLC v. Ultratec, Inc.,
`IPR2013-00549, Paper No. 20 (Apr. 28, 2014) .............................................. 4, 10
`
`CLIO USA, Inc. v. The Procter and Gamble Co.,
`IPR2013-00450, Paper No. 19 (Feb. 4, 2014) ..................................................... 1
`
`Gracenote, Inc. v. Iceberg Indus. LLC,
`IPR2013-00552, Paper No. 6 (May 7, 2014) .............................................. 6, 7, 10
`
`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.,
`CBM2012-00003, Paper No. 7 (Oct. 25, 2012) .................................................. 10
`
`Tasco, Inc. v. Pagnani,
`IPR2013-00103, Paper No. 6 (May 23, 2013) ................................................ 4, 10
`
`Wowza Media Sys., LLC et al. v. Adobe Sys., Inc.,
`IPR2013-00054, Paper No. 16 (July 13, 2013) .............................................. 4, 10
`
`Statutes
`35 U.S.C. § 312(a)(3) ........................................................................................passim
`
`Regulations
`
`37 C.F.R. § 42.24(a)(1) .............................................................................................. 8
`
`37 C.F.R. § 42.71(c) ................................................................................................... 1
`
`37 C.F.R. § 42.71(d) .................................................................................................. 1
`
`37 C.F.R. § 42.104(b)(4) ...................................................................................passim
`
`
`
`ii
`
`
`

`
`
`I.
`
`Case IPR2014-00237
`Patent 8,504,697
`
`STATEMENT OF THE PRECISE RELIEF REQUESTED
`
`Patent Owner VirnetX Inc. requests rehearing of the Patent Trial and Appeal
`
`Board’s Decision entered May 14, 2014 (“Decision”), instituting an inter partes
`
`review of U.S. Patent No. 8,504,697. As explained in VirnetX’s Preliminary
`
`Response (Paper No. 12), Apple Inc.’s Petition (Paper No. 1, the “Petition”)
`
`contravenes 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3) and should be
`
`denied.
`
`II. LEGAL STANDARD
`
`“A party dissatisfied with a decision may file a request for rehearing.” 37
`
`C.F.R. § 42.71(d). “The request must specifically identify all matters the party
`
`believes the Board misapprehended or overlooked, and the place where each
`
`matter was previously addressed in a motion, an opposition, or a reply.” Id.
`
`Institution decisions are reviewed on rehearing for an abuse of discretion.
`
`37 C.F.R. § 42.71(c). “An abuse of discretion occurs when a ‘decision was based
`
`on an erroneous conclusion of law or clearly erroneous factual findings, or . . . a
`
`clear error of judgment.’” CLIO USA, Inc. v. The Procter and Gamble Co.,
`
`IPR2013-00450, Paper No. 19 at 2 (Feb. 4, 2014) (quoted source omitted).
`
`III. STATEMENT OF REASONS FOR RELIEF REQUESTED
`Apple’s Petition represents an extreme violation of 37 C.F.R. § 42.104(b)(4)
`
`and 35 U.S.C. § 312(a)(3), for it never cites the Beser reference upon which the
`
`1
`
`
`

`
`
`Board instituted IPR. The Board has repeatedly enforced § 42.104(b)(4)’s mandate
`
`Case IPR2014-00237
`Patent 8,504,697
`
`that a “petition must specify where each element of the claim is found in the prior
`
`art patents or printed publications relied upon.” Recognizing a petitioner’s burden
`
`of proof, the Board has refused to piece together grounds of unpatentability that are
`
`not adequately set forth in a petition.
`
`VirnetX’s Preliminary Response explained why Apple’s Petition fails to
`
`comply with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3), and evades the
`
`page limit for petitions. These arguments appear to have been misapprehended or
`
`overlooked in the Decision, which makes reference to 37 C.F.R. § 42.104(b)(5)
`
`and other requirements, but never discusses the distinct requirements of 37 C.F.R.
`
`§ 42.104(b)(4) and 35 U.S.C. § 312(a)(3). Because the Petition fails to comply
`
`with these provisions and the Board’s precedent applying them, and effectively
`
`exceeds 60 pages, the Petition should be denied.
`
`VirnetX respectfully requests rehearing of the Decision. If the Board is
`
`inclined to deny such relief, VirnetX requests rehearing by an expanded panel so
`
`that the Board’s jurisprudence in this important areathe basic substantive
`
`requirements for petitionscan provide clear guidance to petitioners and patent
`
`owners.
`
`2
`
`
`

`
`
`
`Case IPR2014-00237
`Patent 8,504,697
`
`A. VirnetX’s Arguments Under 37 C.F.R. § 42.104(b) and 35 U.S.C.
`§ 312(a)(3) Were Misapprehended or Overlooked
`1.
`
`Failing to Cite Asserted Prior Art Violates 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3)
`VirnetX explained that the Petition fails to cite Beser at all in its purported
`
`application of the reference to the challenged claims. (Prelim. Resp. at 4.) Instead,
`
`the Petition requires the Board and VirnetX to search Apple’s voluminous record
`
`and construct grounds of unpatentability on their own. (Id. at 3-4.)
`
`This is no small task. For just independent claim 1, Apple cites 104
`
`paragraphs of an accompanying declaration as its support for alleging anticipation
`
`based on Beser. (See Pet. at 16-23 (citing Ex. 1003 at 95-118, 255-70, 272, 278-
`
`93, 295-314, 318-326, 330, 345-70, 372-76, and 378-81).) As VirnetX explained,
`
`this approach shifts Apple’s burden to the Board and VirnetX, asking them to parse
`
`the record “by (i) collecting the Petition’s declaration citations for each claim
`
`feature, (ii) ascertaining the various arguments the declarant makes for each
`
`feature, (iii) comparing those arguments to the disclosure of the cited references,
`
`and (iv) determining whether referenced portions of the prior art correspond to the
`
`features of the claims.” (Prelim. Resp. at 5 (emphases added).)
`
`Apple’s kitchen sink approach cannot be reconciled with the Board’s
`
`instruction that the “petitioner has the burden to identify and explain the specific
`
`evidence that supports its arguments in the petition” and “[t]hus, the petition itself
`
`3
`
`
`

`
`
`must identify ‘[h]ow the construed claim is unpatentable’ and must identify
`
`Case IPR2014-00237
`Patent 8,504,697
`
`‘specific portions of the evidence that support the challenge.’” CaptionCall, LLC
`
`v. Ultratec, Inc., IPR2013-00549, Paper No. 20 at 5 (Apr. 28, 2014) (emphasis in
`
`original). As the Board has explained, a “[p]etitioner should not expect the Board
`
`to search the record and piece together any evidence or arguments that may support
`
`[the p]etitioner’s ultimate conclusion.” Id. Because Apple’s Petition forces the
`
`Board and VirnetX to do exactly thatcompare the petition to the declaration, the
`
`declaration to the prior art, and the prior art to the claims, all while citing more
`
`than 100 paragraphs of declarant testimony for a single claimit fails to comply
`
`with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3), and should be denied
`
`based on that substantive defect. (See Prelim Resp. at 3 (citing Wowza Media Sys.,
`
`LLC et al. v. Adobe Sys., Inc., IPR2013-00054, Paper No. 16 at 3 (July 13, 2013);
`
`Tasco, Inc. v. Pagnani, IPR2013-00103, Paper No. 6 at 22 (May 23, 2013).)
`
`VirnetX respectfully submits that its arguments concerning 37 C.F.R.
`
`§ 42.104(b)(4) and 35 U.S.C. § 312(a)(3) were overlooked or misapprehended in
`
`the Decision. While the Decision acknowledges VirnetX’s argument that “the
`
`Petition cites almost exclusively to a declaration instead of the prior art
`
`references,” the Decision nowhere addresses 37 C.F.R. § 42.104(b)(4), 35 U.S.C.
`
`§ 312(a)(3), or its case law applying those provisions, including the cases cited by
`
`VirnetX. (Decision at 16.) Indeed, those cases present factual records less
`4
`
`
`

`
`
`egregious in many respects than the one present here, yet the Board denied
`
`Case IPR2014-00237
`Patent 8,504,697
`
`institution in those other cases. VirnetX thus requests rehearing on the ground that
`
`the Petition fails to comply with 37 C.F.R. § 42.104(b)(4) and 35 U.S.C.
`
`§ 312(a)(3).
`
`2.
`
`Vague Grounds Without Explanation Violate 37 C.F.R.
`§ 42.104(b) and 35 U.S.C. § 312(a)(3)
`
`VirnetX also explained that, by citing large swaths of declarant testimony
`
`without mapping specific elements of the prior art to the specific elements in the
`
`challenged claims, the Petition is critically deficient in explanation. For example,
`
`the Petition fails to explain how Beser discloses “determining, in response to the
`
`request, whether
`
`the second network device
`
`is available for a secure
`
`communications service,” as recited in claim 1 and similarly in claim 16. (Prelim.
`
`Resp. at 5-6.) The Petition does not even attempt to map Beser’s disclosure to
`
`these claim features. (Id. (citing Pet. at 19-21).) Instead, the Petition cites the
`
`declaration for general features of Beser, and then concludes without explanation
`
`that Beser “thus shows a method comprising” the entire feature. (Id.) The
`
`Decision appears to recognize the Petition’s absence of explanation, finding that
`
`“Petitioner implies that this step may include” the features of Beser that it cites.
`
`(Decision at 14 (emphasis added).)
`
`The Petition’s lack of analysis, leaving the Board and VirnetX to guess
`
`5
`
`
`

`
`
`at implicit grounds of unpatentability, is improper under Board precedent applying
`
`Case IPR2014-00237
`Patent 8,504,697
`
`37 C.F.R. § 42.104(b)(4) and 35 U.S.C. § 312(a)(3). For example, in Gracenote,
`
`Inc. v. Iceberg Indus. LLC, IPR2013-00552, Paper No. 6 at 20-21 (May 7, 2014),
`
`the Board considered a situation where the petitioner “present[ed] limited, if any,
`
`arguments in its petition apart from the various citations to the references and to
`
`[an expert] Declaration [] provided in the claim charts.” The Board denied
`
`institution, finding that “[t]o the extent that such unexplained citations qualify as
`
`argument, they are inadequate to demonstrate that elements of the challenged
`
`claims are inherent in the cited references.” Id. at 21. The Board further instructed
`
`that “parties requesting inter partes review should ‘avoid submitting a repository
`
`of all the information that a judge could possibly consider, and instead focus on
`
`concise, well organized, easy-to-follow arguments supported by
`
`readily
`
`identifiable evidence of record.’” Id. at 20 (quoted source omitted).
`
`Similarly, in Apple Inc. v. Evolutionary Intelligence, LLC, IPR2014-00079,
`
`Paper No. 8 at 17 (Apr. 24, 2014), the Board considered a petition that “refer[red]
`
`generally” to features of a prior art reference but did “not identify specifically what
`
`Petitioner regards as the [claim element] as recited in claim 1.” Citing
`
`§ 42.104(b)(4) and other rules, the Board found the petitioner’s discussion “vague”
`
`for “failing to identify” how the claim element was satisfied by the prior art. Id.
`
`The Board also found the “Petitioner’s numerous citations to the [expert]
`
`6
`
`
`

`
`
`declaration [] equally unpersuasive.” Id.
`
`Case IPR2014-00237
`Patent 8,504,697
`
`The Gracenote and Evolutionary Intelligence decisions, which issued after
`
`VirnetX filed its Preliminary Response, are consistent with the cases cited by
`
`VirnetX, in which deficient petitions were rejected. (See Prelim. Resp. at 3.)
`
`Here, as in Gracenote, the Petition offers no explanation of how a claim feature
`
`(e.g., the “determining” step) is met, apart from the various citations to an
`
`accompanying declaration. Indeed, the present Petition is more deeply flawed than
`
`that in Gracenote, for it fails to even cite the asserted reference (Beser) itself. And
`
`as in Evolutionary Intelligence, the Petition fails to explain how the asserted prior
`
`art corresponds to a specific claim element (the “determining” step). Just as the
`
`Board found the petition in Evolutionary Intelligence “vague” and therefore
`
`defective, here the Board has recognized that the Petition requires an assessment of
`
`what “Petitioner implies” in its discussion of the prior art. (Decision at 14
`
`(emphasis added).) The principle applied in both Gracenote and Evolutionary
`
`Intelligence, which derives from 37 C.F.R. § 42.104(b)(4) and 35 U.S.C.
`
`§ 312(a)(3), is that a petitioner has the burden of clearly articulating where in the
`
`prior art each claim element is found. Because Apple’s Petition fails to fulfill this
`
`substantive requirement for a petition, it should be denied.
`
`These arguments concerning 37 C.F.R. § 42.104(b)(4) and 35 U.S.C.
`
`§ 312(a)(3) were also overlooked or misapprehended in the Decision. The
`
`7
`
`
`

`
`
`Decision notes VirnetX’s argument that the Petition contains no explanation of
`
`Case IPR2014-00237
`Patent 8,504,697
`
`where Beser discloses the recited “determining” step of claim 1, but the Decision
`
`nowhere addresses 37 C.F.R. § 42.104(b)(4) or 35 U.S.C. § 312(a)(3), or the
`
`Board’s case law applying those provisions, including the cases cited by VirnetX.
`
`(Decision at 16, 23.)
`
`3.
`
`Apple’s Citations to the Prior Art Through a Declaration
`Render the Petition Overlength
`
`VirnetX explained that the Petition’s reliance on sprawling citations to
`
`declarant testimony, rather than specific portions of the prior art itself, circumvents
`
`the page limit for petitions. (Prelim. Resp. at 5.) Apple’s Petition stands at 60
`
`pages—the limit for a petition. 37 C.F.R. § 42.24(a)(1)(i). As noted above, for
`
`just the ground based on Beser and claim 1, the Petition relies on 104 paragraphs
`
`of declarant testimony. The Decision notes VirnetX’s concern that Apple’s
`
`citation scheme disregards the 60-page limit for petitions, but concludes that the
`
`Petition nonetheless complies with “prescribed page limits.” (Decision at 16.)
`
`As an illustration of VirnetX’s concern, after VirnetX filed its Preliminary
`
`Response in this matter, the Board issued an Order in other IPRs involving patents
`
`in the same family as the ’697 patent. (Order in RPX Corp. v. VirnetX Inc.,
`
`IPR2014-00171-IPR2014-00177, Paper No. 37 (Mar. 17, 2014).) The Order
`
`explained that the petitions “cite to [the] declarant instead of the prior art,” and
`
`8
`
`
`

`
`
`“[i]n turn, the declarant cites to the prior art.” (Id. at 3-4.)1 The Board required the
`
`Case IPR2014-00237
`Patent 8,504,697
`
`petitioner to file substitute petitions containing the missing citations. In response,
`
`by attempting to import the declarations’ citations to the prior art into the body of
`
`the petitions themselves, six of the seven petitions became overlength, with the
`
`largest totaling 78 pages. 2
`
` (IPR2014-00173, Ex. 1078.)
`
` By merely
`
`importing citationsnot to mention substantive discussion in the declarations that
`
`was missing in the petitionsthey almost all became overlength. For a 60-page
`
`petition such as the present Petition, exceeding the 60-page limit would be certain
`
`if the same exercise were required of Apple here.
`
`The Petition’s disregard for the 60-page limit also appears to have been
`
`misapprehended or overlooked in the Decision. In particular, the Decision does
`
`not appear to appreciate the practical problem of importing a massive number of
`
`declaration citations into the body of the Petition, not to mention the missing
`
`1 As explained in VirnetX’s Requests for Rehearing in each matter at issue,
`
`the petitions are substantively defective under 37 C.F.R. § 42.104(b) and should be
`
`denied, not subject to correction midstream. (See, e.g., IPR2014-00171, Paper No.
`
`44 (Mar. 26, 2014).)
`
`2 Apple requested Board authorization to follow the same procedure here,
`
`but the Board decided that a conference call to discuss the issue was unnecessary.
`
`9
`
`
`

`
`
`substantive discussion.
`
`Case IPR2014-00237
`Patent 8,504,697
`
`B. VirnetX Requests an Expanded Panel on Rehearing
`To the extent that the Board declines to grant this Request for Rehearing,
`
`VirnetX respectfully requests an expanded panel on rehearing to consider the
`
`applicability of 37 C.F.R. § 42.104(b) and 35 U.S.C. § 312(a)(3) in situations
`
`where petitions either (1) cite exclusively to declarant testimony or (2) provide
`
`inadequate explanation of proposed grounds such that the Board must discern
`
`implicit explanation in a petition. The Office has assembled expanded panels in
`
`the past when setting substantive rules on the content of petitions, and VirnetX
`
`believes an expanded panel would permit the Office to clarify its policy on this
`
`important issuethe basic substantive requirements for petitions. See, e.g.,
`
`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-00003, Paper
`
`No. 7 (Oct. 25, 2012) (expanded panel promulgating rules on redundant
`
`rejections). This is especially true here where different panels appear to be
`
`applying different standards to petitions. Compare Decision at 16, 23, with
`
`CaptionCall, IPR2013-00549, Paper No. 20 at 5; Wowza, IPR2013-00054, Paper
`
`No. 16 at 3; Tasco, IPR2013-00103, Paper No. 6 at 22; Gracenote, IPR2013-
`
`00552, Paper No. 6 at 20-21; and Evolutionary Intelligence, IPR2014-00079, Paper
`
`No. 8 at 17.
`
`
`
`10
`
`
`

`
`
`IV. CONCLUSION
`
`Case IPR2014-00237
`Patent 8,504,697
`
`For the foregoing reasons, VirnetX respectfully requests rehearing of the
`
`Board’s May 14, 2014 Decision instituting inter partes review. Apple’s Petition
`
`should be denied.
`
`Dated: May 28, 2014
`
`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Reg. No. 46,508
`
`Counsel for Patent Owner
`
`
`
`11
`
`
`

`
`
`
`Certificate of Service
`
`Case IPR2014-00237
`Patent 8,504,697
`
`Pursuant to 37 C.F.R. §§ 42.6(e), I certify that I caused to be served on the
`
`counsel for Petitioner a true and correct copy of the foregoing Patent Owner’s
`
`Request for Rehearing Under 37 C.F.R. § 42.71(d)(1) by electronic means on May
`
`28, 2014 at the following address of record:
`
`Jeffrey P. Kushan
`jkushan@sidley.com
`Sidley Austin LLP
`1501 K Street, N.W.
`Washington, D.C. 20005
`
`Joseph A. Micallef
`jmicallef@sidley.com
`Sidley Austin LLP
`1501 K Street, N.W.
`Washington, D.C. 20005
`
`Respectfully submitted,
`
`By: /Joseph E. Palys/
`Joseph E. Palys
`Reg. No. 46,508
`
`Counsel for Patent Owner
`
`
`
`Dated: May 28, 2014

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