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VirnetX Scores A Big Hit In The RPX IPR Petitions

|Includes:AAPL, RPXC, VirnetX Holding Corporation (VHC)

VirnetX Holding Corp. (NYSEMKT:VHC) yesterday filed a request for the PTAB to reconsider their decision of asking RPX (NASDAQ:RPXC) to modify their original petitions for IPR of VirnetX's patents. Case law and prior PTAB history shows that these flaws are grounds to deny the petitions, not ask the petitioner to modify their petition. There is a possibility that this request to rehear gets denied by the Board (although some would claim political motivation and not judicial efficiency as the reason), however VirnetX has given us a glimpse into their Initial Response and it is full of reasons for denial of RPX's petitions.

In its Initial Response, VirnetX pointed out many flaws in these petitions and cited case law demonstrating that these flaws were enough to have the petitions denied. RPX's petitions have fatal flaws throughout their pages, which in and of themselves number 74 (the page limit without filing a motion for waiver is 60 and RPX didn't even file such a motion, this is also enough for dismissal of the petitions). Time after time, RPX cites an expert witness's discussion of the prior art and not the prior art itself, grounds for dismissal of the petitions. Time after time, RPX "failed to state the relevance or identify specific portions of the evidence that support the challenge", again all grounds for dismissal. I could go on.

What this means in the long run is that given a dismissal tomorrow and a refiling by RPX of these petitions on Monday (although I would think it would take longer than one weekend to fix all of the fatal flaws), RPX must still worry about their privity and Real Party of Interest issues in regards to Apple (NASDAQ:AAPL) and they have lost a little over four months (petitions were originally filed on 11/20/13) in the race to final appeal with the Federal District court case. Discussing the Baxter case at this point is beyond the scope of this blog, but is the reason for the race to final appeal.

After the stock price has taken a serious decline on the release of overwhelmingly good news on 3/3/14, this is a bright spot for the future of the company and the price outlook.

Disclosure: I am long VHC.

Stocks: VHC, RPXC, AAPL