Transport Room

Case: 18-1751 Document: 71 Page: 1 Filed: 08/28/2019
2018-1751
United States Court of Appeals

for the Federal Circuit
VIRNETX INC.,
Appellant,
v.
CISCO SYSTEMS, INC.,
Appellee.
Appeal from the United States Patent and Trademark Office,

Patent Trial and Appeal Board in No. 95/001,851
APPELLANT VIRNETX INC.’S RESPONSE

TO APPELLEE CISCO SYSTEMS, INC.’S
PETITION FOR PANEL AND EN BANC REHEARING
NAVEEN MODI
JOSEPH E. PALYS
STEPHEN B. KINNAIRD
IGOR V. TIMOFEYEV
DANIEL ZEILBERGER
PAUL HASTINGS LLP
875 15th Street, N.W.
Washington, D.C. 20005
(202) 551-1700
naveenmodi@paulhastings.com
Counsel for Appellant
August 28, 2019
CERTIFICATE OF INTEREST
Counsel for Appellant VirnetX Inc. certifies the following:
1. Full name of party 2. Name of real party in 3. Parent corporations and

represented by me interest represented by me publicly held companies
that own 10% or more of
stock in the party
VirnetX Inc. VirnetX Inc. VirnetX Inc. is a wholly

owned subsidiary of
VirnetX Holding
Corporation.
4. The names of all law firms and the partners or associates that appeared for
the party now represented by me in the agency or are expected to appear in this
Court (and who have not or will not enter an appearance in this case) are:
None.
5. The title and number of any case known to counsel to be pending in this or
any other court or agency that will directly affect or be directly affected by this
court’s decision in the pending appeal. See Fed. Cir. R. 47.4(a)(5) and 47.5(b).
VirnetX Inc. v. Apple Inc., Cisco Systems, Inc.,
Nos. 2017-1591, -1592, -1593 (Fed. Cir.);
VirnetX Inc. v. Iancu, Nos. 2017-2593, -2594 (Fed. Cir.);

VirnetX Inc., Leidos, Inc. v. Cisco Systems, Inc., Apple Inc.,
No. 2018-1197 (Fed. Cir.);
VirnetX, Inc. v. Apple Inc., No. 2019-1050 (Fed. Cir.);
VirnetX Inc. v. Apple Inc., No. 13-cv-00211 (E.D. Tex.).
Dated: August 28, 2019 /s/Naveen Modi

Naveen Modi
Counsel for Appellant VirnetX Inc.
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ....................................................................................iv
INTRODUCTION .....................................................................................................1
BACKGROUND .......................................................................................................2
I. The Cisco 1751 Appeal .....................................................................................2
II. The Separate Apple/Cisco Appeals.................................................................... 4
REASONS THE PETITION SHOULD BE DENIED .............................................. 6
I. Cisco’s Petition Is Not a Proper Rehearing Petition ......................................... 6

II. Collateral Estoppel Is Improper ......................................................................... 9
A. Cisco’s Common-Law Collateral Estoppel Argument Conflicts

with the Statutory Scheme ......................................................................... 9
B. Collateral Estoppel Is Improper Where VirnetX Lacked the

Incentive To Litigate Fully Claims at Issue ............................................12
III. Cisco’s Arguments Are Properly Addressed to the Board on Remand .......... 14
CONCLUSION ........................................................................................................18
iii
TABLE OF AUTHORITIES
Page(s)
Cases
Astoria Fed. Sav. & Loan Ass’n v. Solimino,
501 U.S. 104 (1991) ......................................................................................11, 12
B & B Hardware, Inc. v. Hargis Indus., Inc.,
135 S. Ct. 1293 (2015) ........................................................................................14
Belkin Int’l, Inc. v. Kappos,

696 F.3d 1379 (Fed. Cir. 2012) ..........................................................................15
MaxLinear, Inc. v. CF Crespe LLC,
880 F.3d 1373 (Fed. Cir. 2018) ..........................................................................14
Consumer Watchdog v. Wisconsin Alumni Research Found.,
753 F.3d 1258 (Fed. Cir. 2014) ....................................................................16, 17
Dana v. E.S. Originals, Inc.,
342 F.3d 1320 (Fed. Cir. 2003) ..........................................................................16
Fairchild (Taiwan) Corp. v. Power Integrations, Inc.,
854 F.3d 1364 (Fed. Cir. 2017) ..........................................................................10
JTEKT Corp. v. GKN Automotive LTD.,

898 F.3d 1217 (Fed. Cir. 2018) ..........................................................................17
Lujan v. Defenders of Wildlife,
504 U.S. 555 (1992) ............................................................................................16
Nationwide Mut. Ins. Co. v. Liberatore,
408 F.3d 1158 (9th Cir. 2005) ........................................................................9, 11
Ohio Willow Wood Co. v. Alps South, LLC,

735 F.3d 1333 (Fed. Cir. 2013) ............................................................................ 7
Parklane Hosiery Co., Inc. v. Shore,
439 U.S. 322 (1979) ............................................................................................16
Pentax Corp. v. Robison,
135 F.3d 760 (Fed. Cir. 1998) ..........................................................................6, 7
iv
Power Integrations, Inc. v. Semiconductor Components Indus., LLC,

926 F.3d 1306 (Fed. Cir. 2019) ..............................................................12, 13, 14
SEC v. Chenery,
318 U.S. 80 (1943) ..............................................................................................15
United States v. Levy,

416 F.3d 1273 (11th Cir. 2005) ............................................................................ 7
Univ. of Tennessee v. Elliott,

476 U.S. 788 (1986) ............................................................................................11
XY, LLC v. Trans Ova Genetics,

890 F.3d 1282 (Fed. Cir. 2018) ............................................................................ 7
Statutes
35 U.S.C. § 312(a) (2006) ........................................................................................15
35 U.S.C. § 313 (2006) ............................................................................................15

35 U.S.C. § 317(b) (2006) ................................................................................passim
Other Authorities
Fed. R. App. P. 35(b)(1)(A) .......................................................................................7
Fed. R. App. 40(a)(1) .................................................................................................6
Restatement (Second) of Judgments § 83(4) ............................................................11
v
INTRODUCTION
Cisco’s belated rehearing petition seeks unprecedented relief. Cisco does
not ask this Court to rehear any issue actually raised or decided by the panel.
Instead, Cisco seeks modification of the judgment based on the alleged preclusive
effect of this Court’s subsequent decision in a different appeal involving a different
party and a different patent. There is no precedent—and Cisco cites none—for
granting such relief on rehearing, or for applying offensive non-mutual collateral
estoppel retroactively. Doing so would run afoul of federal appellate rules; upend
the collateral estoppel doctrine; and be unjust because VirnetX lacked incentive to
fully litigate claim 5 of the ’211 patent (the basis for Cisco’s collateral-estoppel
demand) in the other proceeding.
Cisco seeks to give preclusive effect to this Court’s decision in VirnetX Inc.
v. Apple Inc., No. 17-1591 (Fed. Cir. 2019), affirming the Patent Trial and Appeal
Board’s decision in an Apple-initiated reexamination that claims 1-35 of the ’211
patent are unpatentable. Cisco, however, is statutorily barred from challenging
those claims, as the PTO has ruled. Applying collateral estoppel in these
circumstances would sanction an end-run around a clear statutory command, and
conflict with the panel’s decision in No. 17-1591. In fact, that panel already
rejected similar efforts by Apple to give collateral estoppel effect to this panel’s
decision. Apple/Cisco Op. 24-25 n.15.
1
Cisco’s arguments should at most be addressed to the Board on remand.
First, non-mutual offensive collateral estoppel is discretionary, and that discretion
belongs with the Board in the first instance. Second, Cisco has not demonstrated
that it has Article III standing to seek the affirmative judicial relief it now
requests—a modification of this Court’s judgment in the form of offensive
collateral estoppel. Remand would avoid that substantial constitutional question.
Rehearing should be denied.
BACKGROUND
Cisco’s petition concerns two sets of reexamination appeals: “the Cisco
1751 appeal” decided by this panel (No. 18-1751) and the later-decided
consolidated appeal from two Apple-initiated reexaminations (Nos. 17-1591 and
17-1592) (“Apple 1591/92 appeals”), plus a Cisco-initiated reexamination (No. 17-
1593) (“Cisco 1593 appeal”).
I. The Cisco 1751 Appeal

The present appeal arises from a reexamination Cisco initiated after VirnetX
sued it for infringement of the ’504 patent (at issue in this appeal) and the ’211
patent (at issue in the Cisco 1593 appeal). Cisco requested reexamination of all
claims (claims 1-60) in the ’504 patent in light of the Lendenmann reference.
Op. 4.
2
In a district court action, a jury had rejected Cisco’s arguments that asserted
claims of the ’504 patent are invalid, but found that Cisco did not infringe them.
After the judgment became final, the PTO terminated reexamination of claims 36-
59 based on pre-America Invents Act section 317(b), id., which requires the PTO
to terminate an inter partes reexamination once there is a “final decision … in a
civil action” that the challenged claims are not invalid, 35 U.S.C. § 317(b) (2006).
The Board then found the remaining claims unpatentable. Op. 4-5.
VirnetX appealed. On June 28, 2019, while affirming as to other grounds,
this Court vacated the Board’s decision with respect to claims 5, 12, and 13 of the
’504 patent. The Court held that the Board “failed to meaningfully address”
VirnetX’s arguments,” and remanded to the Board to “consider whether the
Lendenmann reference discloses the use of its RPC mode of communication for
communications between a user and the CDS as found by the Examiner.” Id.
at 10.
VirnetX considered seeking rehearing, obtaining an extension to do so, but
subsequently notified this Court that it had decided not to seek rehearing. Cisco
requested leave to file an out-of-time petition for rehearing, which this Court
granted.
3
II. The Separate Apple/Cisco Appeals

Another panel of this Court heard separate appeals, one arising from a Cisco
reexamination, and the other two from Apple reexaminations.
The Cisco 1593 Appeal: That appeal arises from a reexamination where
Cisco challenged every claim (claims 1-60) of the ’211 patent. Apple/Cisco Op. 6.
The ’211 patent was also at issue in the district court litigation between VirnetX
and Cisco. The jury rejected Cisco’s arguments that claims 1, 8, 23, 27, and 31 of
the ’211 patent were invalid, Appx7351, and the district court entered a final
judgment of validity as to those claims. After Cisco did not appeal, the PTO
terminated reexamination of claims 1-35 of the ’211 patent under 35 U.S.C.
§ 317(b). Appx4171 in No. 17-1591.
The PTO continued the proceeding as to the remaining claims—claims 36-
60 of the ’211 patent—and found them unpatentable under the Lendenmann
reference. Apple/Cisco Op. 6. VirnetX appealed that decision to this Court. Cisco
did not appeal the PTO’s termination of the reexamination with respect to claims
1-35.
The Apple 1591/92 Appeals: Those appeals concern reexaminations brought
by Apple, challenging claims 1-60 of both the ’504 and ’211 patents on the basis of
the Provino reference. Id. at 4. Cisco did not participate in those reexaminations
and is not a party to the Apple 1591/92 appeals.
4
In an appeal from a different district court proceeding brought by Apple,
VirnetX secured a judgment upholding the validity of claims 1-2, 16, 21, and 27 of
the ’504 patent and claims 36-37, 47, and 51 of the ’211 patent. Id. Nonetheless,
the PTO denied VirnetX’s petition to terminate Apple’s reexaminations of those
and related claims under section 317(b) on the basis of that judgment. Id. at 5.
The Board subsequently found all claims of the two patents unpatentable, and
VirnetX appealed. Id. at 5-6.
The Apple/Cisco Appeals Decision: On August 1, 2019—over a month after
the Court’s decision in the present appeal—the Court issued its decision in the
Apple/Cisco appeals. It agreed with VirnetX that Apple was estopped under
section 317(b), and therefore vacated the Board’s decisions in the Apple 1591/92
appeals with respect to claims 1-35 of the ’504 patent and claims 36-59 of the ’211
patent, and remanded with instructions to terminate those reexaminations. Id. at
23-24, 28. The Court affirmed the Board’s decisions with respect to the remaining
claims in those appeals: claims 36-60 of the ’504 patent and claims 1-35 and 60 of
the ’211 patent. Id. at 28.
In the Cisco 1593 appeal, the Court also affirmed the Board’s decision that
claims 36-60 of the ’211 patent are unpatentable. Id. The statutory estoppel
provision of 35 U.S.C. § 317(b) was not at issue there because the PTO had
5
already terminated reexamination of claims 1-35 of the ’211 patent under that
provision, and Cisco did not appeal that decision. See supra at 4.
On August 26, 2019, Apple filed a petition for panel and en banc rehearing
in the Apple 1591/92 appeals. VirnetX is planning to seek rehearing in the Cisco
1593 appeal, including as to claim 5 of the ’211 patent.
REASONS THE PETITION SHOULD BE DENIED
I. Cisco’s Petition Is Not a Proper Rehearing Petition

Cisco nominally requests “rehearing,” but it is not actually asking this panel
or the en banc court to rehear any issue raised or decided in the June 28, 2019
judgment. Instead, invoking grounds that were not previously before either the
Board or this panel, Cisco seeks new, offensive relief to invalidate certain claims of
the ’504 patent based on a subsequent decision achieved by a different party in a
different appeal on different claims of a different patent. Cisco fails to identify a
single case where a court of appeals has granted rehearing to apply collateral
estoppel from a subsequent decision, see infra at 8-9, much less in the
extraordinary circumstances here.
The relief Cisco seeks defies the Federal Rules of Appellate Procedure.
Rule 40, authorizing panel rehearing, requires that “[t]he petition must state with
particularity each point of law or fact that the petitioner believes the court has
overlooked or misapprehended.” Fed. R. App. 40(a)(1). Cisco does not attempt to
6
comply with this rule, because it cannot; new issues are by definition not
“overlooked or misapprehended” by the panel. As this Court held in Pentax
Corporation v. Robison: “In this case, the government’s theory was not
overlooked or misapprehended. The theory was not presented on appeal. Just as
this court will not address issues raised for the first time on appeal or issues not
presented on appeal, we decline to address the government’s new theory raised for
the first time in its petition for rehearing.” 135 F.3d 760, 762 (Fed. Cir. 1998). It
does not matter if the new issue could not have been raised earlier; brand new
issues are simply not within the ambit of a rehearing petition, even if they arise
from an intervening decision. United States v. Levy, 416 F.3d 1273, 1275-76 (11th
Cir. 2005).
Cisco’s certifications in support of en banc review likewise illustrate the
petition’s departure from the Rules. The only issues this panel decided were
whether the Board erred in finding claims 1-35 and 60 of the ’504 patent
unpatentable over Lendenmann and Aziz. Attempting to meet Rule 35’s standard
that “consideration by the full court is … necessary to secure and maintain
uniformity of the court’s decisions,” Fed. R. App. P. 35(b)(1)(A), Cisco’s counsel
certifies that “the panel decision … is contrary to the following decisions of this
Court: XY, LLC v. Trans Ova Genetics, 890 F.3d 1282 (Fed. Cir. 2018) and Ohio
Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333 (Fed. Cir. 2013).” Pet. 1.
7
That certification is untenable. Those cases simply applied collateral estoppel in a
pending appeal before judgment. The panel decision here did not—could not—
contravene those decisions because it decided no collateral estoppel issue. Equally
unavailing is the certification that “this appeal requires an answer to the following
precedent-setting question of exceptional importance: Whether this Court should
affirm the Patent Trial and Appeal Board’s decision rejecting claims as
unpatentable where another panel of this Court has affirmed the unpatentability of
claims in a related patent that are substantively the same.” Id. That question was
not raised in this appeal or decided by the Court because affirmance here occurred
before the other panel’s decision. The panel’s decision was not “precedent-
setting” with respect to that “question.” Nor would the denial of rehearing set any
“precedent” with respect to that “question.”
It is simply not the office of a rehearing petition to raise the new and
contested collateral estoppel claims that Cisco wants this Court to decide. Cisco
does not dispute that it may raise its collateral estoppel arguments before the Board
on remand. This Court should not depart from Rules 35 and 40 just because Cisco
wants the convenience of an immediate decision.
Indeed, it would be especially perverse to deviate from these rules in the
circumstances here:
[There is] the fundamental difference between the

preclusive effect of a … judgment upon a future action
8
and its effect upon an action that predates the relevant

judgment. Although a … judgment carries preclusive
effect forward, it cannot operate to bar direct review of
an extant judgment. To conclude otherwise would
“turn[] res judicata on its head.”
Nationwide Mut. Ins. Co. v. Liberatore, 408 F.3d 1158, 1162 (9th Cir. 2005)
(citations omitted). This Court should similarly reject Cisco’s invitation to turn
collateral estoppel “on its head.”
II. Collateral Estoppel Is Improper

Even if this Court were to consider Cisco’s collateral estoppel arguments, it
should reject them. At a minimum, the Court should leave them to consideration
by the Board.
A. Cisco’s Common-Law Collateral Estoppel Argument Conflicts

with the Statutory Scheme
Cisco seeks to give preclusive effect to the panel’s decision in the Apple
1591/92 appeals (where Apple, and not Cisco, is the party) affirming the Board’s
findings of unpatentability of claims 1-35 and 60 of the ’211 patent. Pet. 6-13.
But common-law issue preclusion does not apply where it would be inconsistent
with the statutory design or legislative intent. Here, Congress created a special
estoppel regime tailored to the particular context of inter partes reexamination.
See 35 U.S.C. § 317(b) (2006). Engrafting extra-statutory preclusion rules onto
that carefully crafted scheme thwarts Congress’s design—especially in the
circumstances presented here. Section 317(b) forbids Cisco from challenging
9
claims 1-35 of VirnetX’s ’211 patent. Yet Cisco seeks to wield a decision
regarding those claims as a sword against VirnetX by invalidating claims that
Cisco contends are indistinguishable from the claims it is prohibited from
challenging.
Pre-AIA section 317 provides that, “[o]nce a final decision has been entered
against a party in a civil action … that the party has not sustained its burden of
proving the invalidity of any patent claim in suit,” a reexamination of such claims
based on issues that were or could have been raised in the judicial action “may not
thereafter be maintained by the [Patent] Office.” 35 U.S.C. § 317(b) (2006). “Put
simply, ‘[i]f a defendant brought an invalidity challenge in a district court litigation
and was unsuccessful, it is not permitted to bring the same challenge in an inter
partes reexamination.’” Fairchild (Taiwan) Corp. v. Power Integrations, Inc., 854
F.3d 1364, 1365 (Fed. Cir. 2017) (citation omitted).
In the reexamination at issue in the Cisco 1593 appeal, Cisco initially
challenged all claims of the ’211 patent. But the PTO terminated the
reexamination of claims 1-35 pursuant to the section 317(b) bar, and they are not
part of Cisco’s own appeal. By seeking to invalidate those claims based on a non-
mutual offensive collateral estoppel Cisco is seeking to do what Congress forbid.
An adjudication may not be given preclusive effect in a subsequent
proceeding if preclusion would violate legislative text, structure, or policy. Even if
10
the statutory text is silent, the question is whether “a common-law rule of
preclusion would be consistent with Congress’ intent in enacting” the statute.
Univ. of Tennessee v. Elliott, 476 U.S. 788, 796 (1986). Thus, the Supreme Court
explained that common-law estoppel only “appl[ies] where Congress has failed
expressly or impliedly to evince any intention on the issue.” Astoria Fed. Sav. &
Loan Ass’n v. Solimino, 501 U.S. 104, 110 (1991). The Supreme Court found no
issue preclusion because the statute at issue “carrie[d] an implication that the
federal courts should recognize no preclusion by state administrative findings with
respect to age-discrimination claims.” Id. (emphasis added); see also Restatement
(Second) of Judgments § 83(4) (no issue preclusion if it would contravene
legislative policy).
That principle applies here. Given that Congress created a special statutory
estoppel regime for inter partes reexaminations, applying non-mutual common-law
estoppel on top of Congress’s mutual estoppel regime does not comport with—
indeed, frustrates—legislative design. In section 317(b), Congress forbade Cisco
from challenging the patentability of claims 1-35 of the ’211 patent in
reexamination—whether or not they were deemed patently distinct from claims
that the Board could reexamine. It would be contrary to the statutory design to
allow Cisco nonetheless to capture the benefit of a reexamination decision
concerning those claims—a decision Cisco is forbidden from obtaining itself. It
11
would be odder still to allow Cisco to extend the reach of such a decision through
offensive collateral estoppel to attack additional patent claims, even as to claims
Cisco contends are patently indistinguishable from the ’211 patent claims it is
forbidden from challenging. Cf. Apple/Cisco Op. 24 n.14 (applying section 317(b)
estoppel to dependent claims of previously adjudicated independent claims). It is
thus clear that section 317(b) “carries an implication” that it would be improper to
extend issue preclusion to claims 1-35 of the ’211 patent. Astoria, 501 U.S. at 110.
In fact, doing so would conflict with the Court’s decision in the Apple/Cisco
appeals. There, the panel affirmed unpatentability of claims 5, 12, and 13 of the
’211 patent in the Apple 1591/92 appeals, but nevertheless ordered termination of
the reexamination of claims 5, 12, and 13 of the ’504 patent—the very claims
Cisco seeks to invalidate here—under section 317(b). Apple/Cisco Op. 28.
Similarly, the panel ordered termination of the Apple reexamination of claims 36-
59 of the ’211 patent (in the Apple 1591/92 appeals) even though it affirmed (in the
Cisco 1593 appeal) the Board’s decision in the Cisco reexamination that claims 36-
60 of the ’211 patent are unpatentable. Id. The panel did not apply collateral
estoppel to override section 317(b)’s plain statutory command.
B. Collateral Estoppel Is Improper Where VirnetX Lacked the

Incentive To Litigate Fully Claims at Issue
Even if common-law preclusion principles were relevant, collateral estoppel
does not apply when there “is a lack of opportunity or incentive to litigate the first
12
action.” Power Integrations, Inc. v. Semiconductor Components Indus., LLC, 926
F.3d 1306, 1312 (Fed. Cir. 2019). Thus, this Court refused to apply collateral
estoppel against a patent-owner even though an identical issue had been resolved
against the patent-owner in an earlier proceeding. Id. at 1312-13. The Court found
the incentives to litigate too disparate because the patent in the second IPR
supported a money judgment for infringement in separate district-court litigation,
whereas the patent in the first IPR did not. Id.
Here, too, VirnetX lacked sufficient interest to specifically defend claim 5 of
the ’211 patent. VirnetX had to focus its finite briefing on the most valuable
claims—namely, the claims undergirding the district court infringement judgment.
In the Apple 1591/92 appeals, VirnetX’s main argument was that reexamination of
the asserted claims was barred by section 317(b)—and VirnetX prevailed in that
argument. See Apple/Cisco Op. 7-24. Claim 5 of the ’211 patent was not asserted
in the infringement litigation, and so VirnetX understandably did not focus on
defending it (and only briefly argued it as part of a cluster of claims involving
asserted claims, see VirnetX Br. 45, Dkt. No. 62 in No. 17-1591). In this appeal,
by contrast, VirnetX had significant incentive to litigate the validity of claim 5 of
the ’504 patent because that claim does support the infringement judgment. See
VirnetX Br. 42-44, Dkt. No. 31. And those focused efforts paid off, with the panel
vacating the Board’s decision invalidating claim 5 of the ’504 patent. That
13
“significant” “disparity in incentives” renders it inappropriate to hold that a
decision on claim 5 of the ’211 patent in the Apple 1591/92 appeals has preclusive
effect here. Power Integrations, 926 F.3d at 1313; see also B & B Hardware, Inc.
v. Hargis Indus., Inc., 135 S. Ct. 1293, 1309 (2015) (“Issue preclusion may be
inapt if ‘the amount in controversy in the first action [was] so small in relation to
the amount in controversy in the second that preclusion would be plainly unfair.’”)
(citation omitted).
If this Court were to embrace Cisco’s argument, patentees with multiple
patents facing a slew of proceedings brought by different parties would have to
engage in endless litigation of virtually every claim that conceivably could support
a future collateral estoppel argument with respect to another patent. Such a rule
would be unfair to patentees and deleterious to this Court.
III. Cisco’s Arguments Are Properly Addressed to the Board on Remand

To the extent there is a question of collateral estoppel, the Court should let
the Board consider it on remand rather than grant rehearing. Cf. MaxLinear, Inc. v.
CF Crespe LLC, 880 F.3d 1373, 1377-78 (Fed. Cir. 2018).
The ’211 patent was never at issue in this appeal, and the parties never
briefed nor argued its relationship to the ’504 patent. In fact, although Cisco now
asserts that the claims are not patentably distinct, it acknowledges that claim 1 of
14
the ’504 patent and claim 1 of the ’211 patent (from which claims 5, 12, and 13 of
those patents depend) are in fact different. Pet. 8-10.
The prior art applied in the two appeals is also different: Provino in the
Apple 1591/92 appeals and Lendenmann here. Compare Apple/Cisco Op. 4, 28,
with Op. 6-10. By statute, however, the PTO’s authority to reconsider and cancel
patents in inter partes reexamination is defined by—and limited to—“resolution of
the question” of patentability raised by the prior art identified in the order
instituting reexamination. 35 U.S.C. §§ 312(a), 313 (2006). Reexamination “may
not include other prior art than what constituted the basis of the Director’s
determination” to institute reexamination, “unless it is raised by the Director on his
own initiative.” Belkin Int’l, Inc. v. Kappos, 696 F.3d 1379, 1382 (Fed. Cir. 2012).
A decision by this Court declaring patent claims unpatentable in light of prior art
the PTO has not raised in the underlying reexamination risks improperly expanding
the PTO’s reexamination authority beyond statutory bounds. At the least, this
Court would risk intruding on the Director’s discretion to decide what prior art
may be the basis for cancelling a patent in reexamination. Cf. SEC v. Chenery, 318
U.S. 80, 88 (1943) (“an appellate court cannot intrude upon the domain which
Congress has exclusively entrusted to an administrative agency”). The Director
(through the Board) thus should assess in the first instance whether it is appropriate
15
for new prior art (Provino) to effectively be brought within the scope of this
reexamination proceeding.
General preclusion principles reinforce that conclusion. The non-mutual
offensive collateral estoppel Cisco invokes here is discretionary. Dana v. E.S.
Originals, Inc., 342 F.3d 1320, 1325 (Fed. Cir. 2003). In federal court litigation,
“trial courts [have] broad discretion to determine when [offensive collateral
estoppel] should be applied.” Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322,
331 (1979) (emphasis added). In this context, the Board is equivalent to the trial
court. The Board should be permitted to exercise its discretion on that issue in the
first instance, and to consider how Congress’s policy choices in pre-AIA section
317(b) or differences in incentives to litigate weigh against preclusion. In all
events, discretionary relief does not warrant rehearing by this Court.
Remand is also preferable because it would avoid a substantial question of
Article III standing. Cisco seeks affirmative judicial relief: It asks this Court to
alter the status quo, vacate its existing judgment vacating the Board’s decision
below, and apply offensive collateral estoppel to invalidate VirnetX’s claims.
Cisco has the burden to prove that it has standing to request that relief. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992). Cisco has not tried to carry that
burden. VirnetX has not asserted claims 5, 12, and 13 of the ’504 patent against
Cisco, and Cisco does not claim that it is infringing (or plans to infringe) these
16
claims; and in all events, VirnetX represents that it will not sue Cisco on those
claims. See Consumer Watchdog v. Wisconsin Alumni Research Found., 753 F.3d
1258, 1261 (Fed. Cir. 2014). * As such, Cisco has not shown that it has a concrete,
personal stake in obtaining invalidation of the claims at issue here. See JTEKT
Corp. v. GKN Auto. LTD., 898 F.3d 1217, 1221 (Fed. Cir. 2018) (standing requires
party to be engaged in infringing activity or have “concrete plans for future activity
that creates a substantial risk of future infringement or likely cause the patentee to
assert a claim of infringement”).
The Court can avoid this substantial constitutional question of jurisdiction if
it simply denies rehearing and remands to the Board, per the existing panel
decision, where the Board can resolve the collateral-estoppel issues. See
Consumer Watchdog, 753 F.3d at 1261 (Article III standing does not apply before
PTO). The remand this panel has already ordered—not the “rehearing” Cisco
belatedly sought—is the proper forum for Cisco’s arguments.
*
While Cisco was previously sued for infringing certain claims of the ’211 patent,
it was found not to infringe.
17
CONCLUSION
The petition for rehearing should be denied.
August 28, 2019 Respectfully submitted,
/s/Naveen Modi
Naveen Modi
Stephen B. Kinnaird
Joseph E. Palys
Igor V. Timofeyev
Daniel Zeilberger
PAUL HASTINGS LLP
875 15th St., N.W.
(202) 551-1700
Counsel for Appellant VirnetX Inc.
18
CERTIFICATE OF SERVICE
I, Naveen Modi, hereby certify that on August 28, 2019, the foregoing
document was filed using the Court’s CM/ECF system and a copy served on the
parties’ counsel of record via ECF.
Date: August 28, 2019 BY: /s/Naveen Modi

Naveen Modi
PAUL HASTINGS LLP
Tel.: (202) 551-1700
Fax: (202) 551-1705
CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME

LIMITATION, TYPEFACE REQUIREMENTS AND TYPE STYLE
REQUIREMENTS
1. This response complies with the type-volume limitation of Federal Circuit
Rule 35(e)(4).
The response contains 3,900 words, excluding the parts of the brief
exempted by Federal Rule of Appellate Procedure 32(f) and Federal Circuit
Rule 32(b).
2. This response complies with the typeface requirements of Federal Rule of
Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of
Appellate Procedure 32(a)(6).
The response has been prepared in a proportionally spaced typeface using

MS Word 2013 in a 14 point Times New Roman font.
Date: August 28, 2019 BY: /s/Naveen Modi

Naveen Modi
PAUL HASTINGS LLP
Tel.: (202) 551-1700
Fax: (202) 551-1705

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Case: 18-1751 Document: 71 Page: 1 Filed: 08/28/2019

United States Court of Appeals

Appeal from the United States Patent and Trademark Office,

APPELLANT VIRNETX INC.’S RESPONSE

1. Full name of party 2. Name of real party in 3. Parent corporations and

VirnetX Inc. VirnetX Inc. VirnetX Inc. is a wholly

VirnetX Inc. v. Iancu, Nos. 2017-2593, -2594 (Fed. Cir.);

VirnetX, Inc. v. Apple Inc., No. 2019-1050 (Fed. Cir.);

VirnetX Inc. v. Apple Inc., No. 13-cv-00211 (E.D. Tex.).

Dated: August 28, 2019 /s/Naveen Modi

REASONS THE PETITION SHOULD BE DENIED .............................................. 6

I. Cisco’s Petition Is Not a Proper Rehearing Petition ......................................... 6

A. Cisco’s Common-Law Collateral Estoppel Argument Conflicts

B. Collateral Estoppel Is Improper Where VirnetX Lacked the

Belkin Int’l, Inc. v. Kappos,

JTEKT Corp. v. GKN Automotive LTD.,

Ohio Willow Wood Co. v. Alps South, LLC,

Power Integrations, Inc. v. Semiconductor Components Indus., LLC,

United States v. Levy,

Univ. of Tennessee v. Elliott,

XY, LLC v. Trans Ova Genetics,

35 U.S.C. § 313 (2006) ............................................................................................15

Fed. R. App. 40(a)(1) .................................................................................................6

Restatement (Second) of Judgments § 83(4) ............................................................11

effect of this Court’s subsequent decision in a different appeal involving a different

party and a different patent. There is no precedent—and Cisco cites none—for

granting such relief on rehearing, or for applying offensive non-mutual collateral

demand) in the other proceeding.

Board’s decision in an Apple-initiated reexamination that claims 1-35 of the ’211

patent are unpatentable. Cisco, however, is statutorily barred from challenging

circumstances would sanction an end-run around a clear statutory command, and

decision. Apple/Cisco Op. 24-25 n.15.

Cisco’s arguments should at most be addressed to the Board on remand.

First, non-mutual offensive collateral estoppel is discretionary, and that discretion

requests—a modification of this Court’s judgment in the form of offensive

collateral estoppel. Remand would avoid that substantial constitutional question.

Rehearing should be denied.

consolidated appeal from two Apple-initiated reexaminations (Nos. 17-1591 and

17-1592) (“Apple 1591/92 appeals”), plus a Cisco-initiated reexamination (No. 17-

1593) (“Cisco 1593 appeal”).

I. The Cisco 1751 Appeal

to terminate an inter partes reexamination once there is a “final decision … in a

VirnetX appealed. On June 28, 2019, while affirming as to other grounds,

VirnetX’s arguments,” and remanded to the Board to “consider whether the

VirnetX considered seeking rehearing, obtaining an extension to do so, but

II. The Separate Apple/Cisco Appeals

reexamination, and the other two from Apple reexaminations.

terminated reexamination of claims 1-35 of the ’211 patent under 35 U.S.C.

§ 317(b). Appx4171 in No. 17-1591.

The PTO continued the proceeding as to the remaining claims—claims 36-

60 of the ’211 patent—and found them unpatentable under the Lendenmann

The Apple 1591/92 Appeals: Those appeals concern reexaminations brought

and is not a party to the Apple 1591/92 appeals.

In an appeal from a different district court proceeding brought by Apple,

the PTO denied VirnetX’s petition to terminate Apple’s reexaminations of those

VirnetX appealed. Id. at 5-6.

The Apple/Cisco Appeals Decision: On August 1, 2019—over a month after

patent, and remanded with instructions to terminate those reexaminations. Id. at

the ’211 patent. Id. at 28.

1593 appeal, including as to claim 5 of the ’211 patent.

REASONS THE PETITION SHOULD BE DENIED

I. Cisco’s Petition Is Not a Proper Rehearing Petition

the ’504 patent based on a subsequent decision achieved by a different party in a