Wednesday, February 10, 2016 6:57:54 AM
By Jenna Ebersole
Law360, Washington (February 9, 2016, 7:53 PM ET) -- VirnetX asked the Patent Trial and Appeal Board to rethink letting Apple join a hedge fund's challenge of two patents the tech giant has repeatedly attacked, saying Monday that the serial challenges and a statutory time limit bar the move.
VirnetX Inc. said PTAB wrongly concluded that Apple Inc. can be part of The Mangrove Partners Master Fund Ltd.’s challenge of VirnetX's network security patents, U.S. Patent Nos. 7,490,151 and 6,502,135. The board had granted the joinder in January, according to Monday's filings for a rehearing.
Congress intended to bar petitions filed more than a year after the petitioner is sued for infringement and to block repeated challenges, and the fact that the petition was associated with a joinder request does not change that, VirnetX said.
“When Congress established the inter partes review process, it had a clear concern that patent owners would be subjected to serial attacks,” VirnetX said in both filings seeking rehearing. “It is no mistake that Sections 315(b) and 325(d) appear in the statute; both provide tools to alleviate the concern for harassment. The proper and consistent application of these provisions is necessary.”
The company requested a rehearing with an expanded panel that includes the chief judge, saying previous panels have closely split on how the time limit applies to a petition accompanied by a joinder request.
“Given that the board’s willingness to join a time-barred party has been viewed as ultra vires (i.e., beyond the board’s legal authority) by at least some judges, this is an issue of tremendous importance,” the company said.
Representatives from Apple and VirnetX did not immediately respond to a request for comment late Tuesday.
The dispute comes after the board agreed to allow an intellectual property company, Black Swamp IP LLC, to join the challenge of the ‘151 patent last week. VirnetX had argued the challenge was overly burdensome and would require extra response time, but the panel said the company did not prove that would be the case.
That decision came a day after a blockbuster win for VirnetX involving the ‘151 patent and three others. A Texas federal jury hit Apple with a $625.6 million verdict on Feb. 3, concluding features of the tech giant's iPhone operating system infringed four patents held by the network security firm and awarding royalties based on a previous patent infringement finding.
In a unanimous decision following a weeklong trial, the Eastern District of Texas jury found the FaceTime and iMessage features of Apple’s latest operating systems for its iPhones, iPads and desktop computers infringed VirnetX's U.S. Patent Nos. 7,418,504 and 7,921,211. Meanwhile, Apple’s virtual private network on demand function continued to infringe VirnetX’s '135 and '151 patents, despite changes Apple had made after losing a 2012 patent trial to VirnetX tied to an earlier VPN on demand feature, according to the verdict.
As for the inter partes reviews, PTAB had approved Mangrove's request in October, rejecting VirnetX's argument that the hedge fund's petitions should be denied as an improper attempt to manipulate the tech firm's stock price.
The PTAB found Mangrove, run by 37-year-old Nathaniel August, showed there was a "reasonable likelihood" that VirnetX's patents were invalid as obvious or anticipated. The board instituted inter partes reviews, despite previously rejecting multiple petitions by Apple and Microsoft Corp. challenging the same patents.
In January, VirnetX told PTAB that the ‘135 and ‘151 patents were under “serial attack,” as they have been the subject of more than 20 combined challenges, nearly a dozen of which came from Apple.
VirnetX is represented by Joseph E. Palys and Naveen Modi of Paul Hastings LLP.
Apple is represented by Jeffrey P. Kushan of Sidley Austin LLP.
The cases are The Mangrove Partners Master Fund Ltd. et al. v. VirnetX Inc., case numbers IPR2015-01046 and IPR2015-01047, both before the Patent Trial and Appeal Board.
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