VirnetX Inc. et al v. Apple Inc. DC CAFC

The Federal Circuit has declined to overturn a pair of final decisions by the Patent Trial and Appeal Board (PTAB) that cancelled claims from a VirnetX Inc. patent in an Apple inter partes review (IPR), holding that the NPE’s appeal was barred by issue preclusion. VirnetX had challenged the Board’s June 2017 decisions that certain claims from the challenged patent were invalid as obvious in light of a single prior art reference. However, in a December 10 opinion, the Federal Circuit held that VirnetX was collaterally estopped from disputing whether that reference was prior art, since in March 2017 the court had summarily affirmed multiple PTAB decisions that the same reference qualified as a printed publication in several other Apple IPRs against related patents (2017-2490, 2017-2494). Issue preclusion was applicable here in the Rule 36 context, the court ruled, because those decisions necessarily turned on a single issue: whether the aforementioned reference counted as prior art for the challenged patent family. The Federal Circuit also declined to allow VirnetX to proceed based on an alternative, constitutional argument, holding that it had failed to properly preserve the issue.

A Texas judge has upheld a pair of infringement verdicts issued in April for VirnetX Inc. against Apple, in which a jury found that the company had infringed claims from four patents through certain versions of the FaceTime and VPN on Demand features offered on iOS and macOS devices (6:12-cv-00855). In an order issued on August 30, District Judge Robert Schroeder III denied Apple’s motion judgment as a matter of law or for a new trial as to both verdicts, the first of which included a damages award of $502.6M and the second of which included a finding of willfulness. However, Judge Schroeder also declined to award VirnetX enhanced damages and denied the NPE’s request for an injunction. Meanwhile, each of the claims Apple was found to infringe was cancelled by the Patent Trial and Appeal Board (PTAB) before the trial in the -855 case, in inter partes reviews (IPRs) filed by Apple and other parties, and appeals of those decisions remain active before the Federal Circuit.

A Texas jury has issued a verdict for VirnetX Inc., finding that Apple infringed claims from four patents through certain versions of the FaceTime and VPN on Demand features offered on iOS and macOS devices (6:12-cv-00855). The April 10 verdict also included a damages award of $502.6M, while a second verdict issued on April 12 included a finding of willfulness. However, all of the claims that Apple was found to infringe have been invalidated by the Patent Trial and Appeal Board (PTAB) in inter partes reviews (IPRs) filed by Apple and other parties, with two of the patents also invalided through reexamination. Appeals of those decisions are currently pending before the Federal Circuit.

The Patent Trial and Appeal Board (PTAB) saw activity in a variety of notable campaigns throughout February 2018, with petitions for inter partes review (IPR) filed against publicly traded Quarterhill Inc. as well as Fundamental Innovation Systems International LLC, Intellectual Ventures LLC, Realtime Data LLC, and Uniloc Corporation Pty. Limited. The Board also instituted trial in February for IPRs against General Patent Corporation, Oyster Optics, LLC, and Uniloc. In addition, the PTAB issued final decisions throughout February in IPRs against a range of different patent owners, including publicly traded NPEs (Acacia Research Corporation; InterDigital, Inc.; and VirnetX Inc.), an individual inventor (Daniel L. Flamm), and privately held plaintiffs (ChanBond, LLC; Makor Issues & Rights Ltd.; Papst Licensing GmbH & Company Kg; and Personalized Media Communications, LLC).

A Texas judge has issued a final judgment in one of VirnetX Inc.’s two cases against Apple. In an order issued on September 29 and unsealed on October 13, District Judge Robert W. Schroeder III awarded enhanced damages, attorney fees, and interest to VirnetX, bringing the total judgment to $439M, up from the $302M in damages established by a September 2016 jury verdict (6:10-cv-00417). The judgment follows a significant loss for VirnetX before the Patent Trial and Appeal Board (PTAB), which in June cancelled all of the claims Apple had been found to infringe from both of the patents that went to trial in two inter partes reviews (IPRs) filed by Black Swamp IP, LLC (IPR2016-00693, IPR2016-00957). The Board has also collectively cancelled all claims from both patents in four inter partes reexaminations filed by Apple and Cisco. Federal Circuit appeals of both IPR decisions and three of the reexaminations are currently pending.

Acacia Research Corporation has announced a 22 percent revenue increase for fiscal year 2016 and a dip in revenue for Q4, disclosing losses for both the quarter and the year that were significantly smaller than those in 2015. Meanwhile, VirnetX Holding Corporation reported stagnant revenue for 2016 along with a loss of its own, as it continues to experience setbacks in its sole litigation campaign due to post-trial rulings and the invalidation of multiple asserted patents.

A Texas jury has issued a verdict against Apple in a lawsuit brought by VirnetX Inc., finding that the company infringed a pair of patents (7,418,504; 7,921,211) through its FaceTime feature (6:10-cv-00417). The September 30 verdict included a $302M damages award that covered FaceTime, as well as Apple’s VPN on Demand feature, which had been the subject of another infringement verdict handed down earlier in this same case. The current verdict comes after a late July win for Apple in another suit (6:12-cv-00855) brought against it by VirnetX; there, a Texas judge reversed a $625M jury verdict and granted Apple a new trial.

The Patent Trial and Appeal Board (PTAB) has cancelled claims from two VirnetX Inc. patents (8,850,009; 8,868,705) in multiple inter partes reviews (IPRs) filed by Apple. In two final decisions issued on August 30, and one issued on September 8, the PTAB ruled that asserted claims 1-8, 10-20, and 22-25 of the ‘009 patent (IPR2015-00812) and all 34 claims of the ‘705 patent (IPR2015-00810, IPR2015-00811) are invalid as obvious over various combinations of prior art. While these patents have not yet been involved in litigation, they belong to the same family as four other patents that the NPE has asserted against Apple, which led to a $625 infringement verdict issued in February 2016 that was overturned in July.

A Texas judge has overturned VirnetX Inc.’s $625M infringement verdict against Apple. In an order issued on July 29, District Judge Robert Schroeder III granted a motion for new trial filed by Apple, accepting the company’s arguments that the consolidation of two cases involving different versions of the same accused features had resulted in undue prejudice and confusion to the jury (6:10-cv-00417, 6:12-cv-00855). Judge Schroeder ruled that prejudice had indeed resulted from repeated mentions of the first infringement verdict at trial due to the “incredibly similar issues” shared by the cases. The complexity of the issues involved, Judge Schroeder continued, “magnified the risk of deference” to the first case, especially since the jury had been tasked with relying on the first verdict for the issue of willfulness but ignoring it for others. Confusion had also likely resulted from the fact that the earlier verdict had been partially reversed on appeal. Judge Schroeder concluded by reversing the court’s consolidation order, bifurcating the issue of willfulness in both cases, and scheduling jury selection in September for the retrial of the first-filed case.

Last week, a Texas jury handed down a $625.6M verdict in VirnetX’s 2012 lawsuit against Apple (6:12-cv-00855). The jury found that the company’s FaceTime and iMessage features infringe two secure networking patents (7,418,504; 7,921,211) and that the latest version of its VPN On Demand feature infringes two other patents from the same family (6,502,135; 7,490,151). The February 3 verdict also included a determination of $334.9M in royalties based on a partially vacated jury decision from VirnetX’s first case against Apple, which found that a previous version of the VPN On Demand feature also infringed the same two patents.

VirnetX filed a new suit against Apple accusing Apple’s mobile and computing products that incorporate VPN, mobile video conferencing and instant messaging functionality of  infringing four patents on the same day a jury returned a verdict finding that Apple infringed claims of those same four patents and awarding $368 million to VirnetX  for damages up to the time of trial. VirnetX first filed suit against Apple in August 2010 along with defendants Aastra, Cisco and NEC, 6:2010cv00417. The patents-in-suit originated with SAIC and were assigned to VirnetX in December 2006.  11/6, Eastern District of Texas, assigned to Judge Leonard Davis, 6:2012cv00855.