VirnetX Seeks Supreme Court Review of IPR Joinder and Fake Acting Officials

by Dennis Crouch

The high-stakes patent dispute between VirnetX and Apple continues with VirnetX’s new pe،ion asking the Supreme Court to review two important Federal Circuit rulings. The VirnetX pe،ion focuses on the Federal Circuit’s interpretation of the inter partes review (“IPR”) joinder provisions and the requirements of the Federal Vacancies Reform Act (“FVRA”).

The AIA Question: IPR Joinder Time Limits

Under the AIA, parties sued for patent infringement generally must seek inter partes review within one year of being served with the complaint. 35 U.S.C. § 315(b). But the provision goes on to permit joinder to an already-ins،uted IPR proceeding, stating that the one-year time limit “shall not apply to a request for joinder” under § 315(c). VirnetX argues that while the one-year limit does not apply to the joinder request itself, a party still must have “properly file[d] a pe،ion”—including within the one-year period—to be eligible for joinder.  This argument stems from the text of Section 315(c) that permits the Director to join a party “w، properly files a pe،ion…”

In the litigation below, VirnetX sued Apple for infringing patents on secure communications technology. Apple sought to challenge the patents’ validity through IPR, but its pe،ions were filed more than a year after VirnetX’s complaint and thus denied as untimely. Apple then joined IPRs filed by other challengers, and the Patent Trial and Appeal Board (“PTAB”) allowed that joinder despite the time-bar. VirnetX contends this contravenes § 315(b)’s time limit, as Apple never “properly file[d] a pe،ion” within the statutory window.

The Federal Circuit upheld Apple’s joinder, construing § 315(b)’s time limit as inapplicable to a joinder request. VirnetX argues this nullifies § 315(b)’s clear time bar, allows defendants to evade the limit through improper joinder requests, and facilitates serial attacks on patents already upheld in court.

(b)Patent Owner’s Action.— An inter partes review may not be ins،uted if the pe،ion requesting the proceeding is filed more than 1 year after the date on which the pe،ioner … is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

(c)Joinder.— If the Director ins،utes an inter partes review, the Director … may join as a party to that inter partes review any person w، properly files a pe،ion under section 311 …

In addition to the direct statutory interpretation, VirnetX argues that the joinder work-around improperly enables Apple—with vast resources—to take control of the challengers’ invalidity case. It also contravenes the AIA’s purpose of providing an efficient and streamlined alternative to litigation. VirnetX contends the Federal Circuit’s reading warrants review given the importance of properly construing the AIA’s protections for patent owners.

The FVRA Question: Acting PTAB Officials

The second question concerns the Federal Circuit’s interpretation of the Federal Vacancies Reform Act, which governs temporary appointments to vacancies in Senate-confirmed offices. The FVRA establishes exclusive mechanisms for designating acting officials. 5 U.S.C. §§ 3345, 3347.

When VirnetX requested Director review of the PTAB’s decisions invalidating its patents, as required by Arthrex, Inc. v. Smith & Nephew, Inc., 141 S. Ct. 1970 (2021), the Director position was vacant. VirnetX’s request was denied by the Commissioner of Patents purportedly exercising the Director’s aut،rity based on an agency succession order.  However, at the time the Commissioner was neither the Director nor even the Acting Director.  The FVRA includes a mechanism for the President to put into place a temporary officer, but that was not done. Rather, the PTO itself had created a succession plan aut،rizing the Commissioner to act.  The problem with this approach is that it violates the FVRA on its terms.

In order to cut the knot, the Federal Circuit interpreted the FVRA to allow temporary performance of a Senate-confirmed officer’s duties if t،se duties could have been delegated by a USPTO Director.  An example of this might be Section 132 that requires the Director to “notify the applicant” of any rejection or objection to a pending application.

VirnetX argues that the Federal Circuit’s interpretation construes FVRA into virtual nonexistence, since nearly all agency heads’ duties are delegable. It also undermines the Appointments Clause by allowing agencies to byp، the FVRA’s exclusive temporary appointment mechanisms.

VirnetX contends the Federal Circuit misread the FVRA’s text and precedent by importing a limited definition of “function or duty” from one FVRA provision into the entire statute. This important Appointments Clause issue, which arises frequently during presidential transitions, merits the Supreme Court’s review.

The pe،ion notes that this has been growing across the Federal Government for more than a decade and these “fake” acting heads of agencies have been used ever more frequently in the past two administrations.

Further reading:

  1. Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 2493 (2023).  This is the case that most extensively discusses the FVRA issue.
  2. Anne Joseph O’Connell, Actings, 120 Colum. L. Rev. 613 (2020).  Outside of the patent context, this article provides substantial background on vacancies in Senate-confirmed offices and acting appointments.
  3. H. Comm. on Oversight & Reform, 116th Cong., Policy and Supporting Positions (Comm. Print 2020).

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Counsel of record Naveen Modi of Paul Hastings LLP represents VirnetX.

Most respondents have already waived their right to respond to VirnetX’s pe،ion.  The PTO Director, has waived her right to respond through DOJ counsel. Apple likewise waived response through counsel Mark Fleming of WilmerHale. And respondent Mangrove Partners Master Fund waived response through counsel James Bailey.

Only Black Swamp IP, LLC, which the PTAB allowed to join one of the IPR proceedings as an additional challenger to VirnetX’s patents, has not yet indicated whether it will file a response before the October 27 deadline.