IP Law Daily PTAB’s invalidation of four VirnetX network security patents affirmed
Friday, December 9, 2016

PTAB’s invalidation of four VirnetX network security patents affirmed

By Cheryl Beise, J.D.

The U.S. Court of Appeals for the Federal Circuit has issued three separate nonprecedential decisions affirming Patent Trial and Appeal Board final decisions invalidating certain claims of four VirnetX, Inc., network security patents following inter partes reexaminations instituted at the request of Apple Inc. In the one appeal, a divided panel of the court affirmed two PTAB’s decisions rejecting the challenged claims of U.S. Patent No. 8,504,697 (the ’697 patent) as anticipated or obvious over various prior art references (VirnetX, Inc. v. Apple Inc., December 9, 2016, Wallach, E.). In a second ruling, the court summarily affirmed the Board’s determination that the challenged claims of U.S. Patent Nos. 7,188,180 (the ’180 patent) and 7,987,274 (the ’274 patent) were unpatentable over three prior art references. The court’s third ruling summarily affirmed the Board’s rejection of all claims of U.S. Patent No. 8,051,181 (the ’181 patent) as anticipated by three prior art patents.

With regard to the’697 patent, two judges of the three-judge panel agreed with the Board’s determination that claims 1–11, 14–25, and 28–30 were invalid. The ’697 patent, entitled "System and Method Employing an Agile Network Protocol for Secure Communications Using Secure Domain Names," provides key technologies for implementing a secure virtual Internet by using a new agile network protocol that is built on top of an existing IP address through the use of a proxy domain name server (DNS) to establish a secure network.

Claim construction. On appeal, VirnetX challenged the PTAB’s construction of claims. The court, however, declined to construe the claims because the challenged limitations had no bearing on the PTAB’s anticipation and obviousness findings in IPR2014-00237 ("VirnetX II"), which the court relied upon in affirming the Board’s rejections. Because VirnetX did not present its claim construction arguments to the PTAB in VirnetX II, they were waived. The court did not address the Board’s alternative basis for invalidating the claims as set forth a separate final decision issued in in IPR2014-00238 ("VirnetX I").

Expert testimony. VirnetX also argued that the PTAB’s anticipation and obviousness findings were flawed because the patent at issue involved complex technology and the Board made factual findings regarding what a person having ordinary skill in the art (PHOSITA) would have understood with respect to the prior art references without relying on supporting expert testimony.

VirnetX’s understanding was incorrect. No authority supports the proposition that the PTAB is required to consider expert testimony, the court said. In Belden Inc. v. Berk-Tek LLC, the Federal Circuit held that "[n]o rule requires …. an expert [to] guid[e] the [PTAB] as to how it should read prior art." 805 F.3d 1064, 1079 (Fed. Cir. 2015). If the PTAB finds "that the technology in a particular case is sufficiently complex that expert testimony is essential," it may rely upon that evidence. Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 1320 (Fed. Cir. 2016)(emphasis added). The PTAB may not base its factual findings on its expertise, rather than on evidence in the record. However, in this case, the court concluded that substantial record evidence supported the PTAB’s findings.

Anticipation. Substantial evidence supported the Board’s determination that U.S. Patent No. 5,898,830 (Wesinger) anticipates claims 1–3, 8–11, 14–17, 22–25, and 28–30 of the ’697 patent. Wesinger generally "provides a firewall that achieves maximum network security and maximum user convenience." As for claim 1, substantial evidence supported the PTAB’s finding that "available" means "allowed" and, thus, that Wesigner discloses the limitation "determining, in response to the request, whether the second network device is available for a secure communications service." In finding anticipation of claims 8-9 and 22-23, the PTAB permissibly relied upon its expertise and the experience of its members to resolve the relatively simple question of whether a PHOSITA in 1996 would have understood Wesinger’s disclosure of "computer" to encompass a "notebook computer," as disclosed in the ’697 patent.

Obviousness. The PTAB found that claims 4–7 and 18–21 would have been obvious over a combination of two prior art references—Wesinger and M. Handley et al., SIP: Session Initiation Protocol (Network Working Grp. Request for Comments: 2543, March 1999) ("RFC 2543"). Instead of addressing the PTAB’s particular findings as to the combination of Wesinger and RFC 2543, VirnetX argued that it presented uncontroverted expert testimony on the prior art references, which the PTAB impermissibly ignored and instead reached the opposite conclusion. However, the PTAB was entitled to make factual findings absent expert testimony, the court said.

The Board’s decision in VirnetX I was affirmed in its entirety.

Dissent. Circuit Judge Kathleen O’Malley filed a dissenting opinion to express her view that the Board’s factual findings in VirnetX I were not adequately supported by the record. "Where, as here, the technology at issue is complex, there are multiple prior art references that must be combined to support the Board’s invalidity conclusions, and there is substantial dispute regarding what one of skill in the art—at the relevant time frame— would have gleaned from those prior art references, the Board must point to actual evidence in the record to support its conclusions," Judge O’Malley said.

The cases are Nos. 2015-1934 and 2015-1935No. 2016-1480; and Nos. 2016-1211, 2016-1213, 2016-1279, and 2016-1281.

Attorneys: Igor Victor Timofeyev (Paul Hastings LLP) and Joseph Palys (Paul Hastings LLP) for VirnetX, Inc. John C. O'Quinn (Kirkland & Ellis LLP) for Apple Inc.

Companies: VirnetX, Inc; Apple Inc.

MainStory: TopStory Patent TechnologyInternet FedCirNews

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