Nation’s First Patent Jury Trial During Pandemic Ends in $506.2M Verdict for PanOptis, but VirnetX Trial Gets Pushed Back

  • August 14, 2020
  • Category: Patent Litigation Feature

The COVID-19 pandemic has forced courts and litigants alike to rethink some of the core mechanics of patent cases—perhaps most notably, triggering disputes over the timing and format of jury trials. As recently reported by RPX, this has led the nation’s top patent venues to diverge in their approach to such trials. In particular, District Judge Rodney Gilstrap of the Eastern District of Texas has bucked the trend and pushed forward with the nation’s first patent jury trial since the start of the pandemic, which ended on August 11 in a $506.2M infringement verdict against Apple in litigation brought by several subsidiaries of PanOptis Holdings, LLC. However, another judge in the same district has now signaled a more conservative approach: the day before that verdict, District Judge Robert W. Schroeder III continued a planned retrial in litigation between VirnetX Inc. and Apple at the defendant’s request. By so ruling, Judge Schroeder has aligned himself with courts in other popular venues that have also opted not to proceed with jury trials—including some that also leave such decisions up to the presiding judge and others that have halted trials district-wide.

 

Judge Gilstrap Presides Over PanOptis Trial After Citing Safety Precautions

PanOptis filed the case that just went to trial against Apple in late February 2019, just weeks after the NPE’s acquisition by private equity firm Brevet Capital was announced. PanOptis’s complaint against Apple—the first new complaint filed by the NPE in years—alleged infringement of a group of patents declared essential to the LTE standard and was filed in the Marshall Division before Judge Gilstrap (2:19-cv-00066). As the case began to approach the trial scheduled for August 3, Judge Gilstrap suggested in an interview (addressing the pandemic generally, rather that this specific litigation) that while the court was “attempting to follow . . . public health guidance”, the pandemic had not affected his district to the extent that the court would need to “substantially curtail addressing the Constitutional mandate we have of providing justice”.

Apple argued to the contrary in a July 14 motion to continue, arguing that the trial should be pushed back until October 5 due to the risk posed by the pandemic to the parties and surrounding community. The company argued that increasing COVID-19 cases reported in the six counties that make up the Marshall Division, in Texas’s metropolitan areas, and the country in general reflected a much higher risk than when the Eastern District imposed a since-expired general continuance on jury trials. Moreover, Apple cited data showing that there would be more than a 90% risk that at least one individual attending the first day of trial would be infected with the virus, and that the safety measures to be imposed by the court—including requirements related to mask-wearing, regular disinfection, and social distancing—could be inadequate to prevent infection.

However, Judge Gilstrap denied that motion, declining to accept Apple’s arguments that public health concerns outweighed the rights of the parties to resolve their dispute. Notably, Judge Gilstrap pushed back on a medical doctor’s declaration addressing trial safety submitted by Apple, arguing that the report appeared “to convey that no in-person jury trial should be undertaken—anywhere”, faulting the doctor for not making a prediction on when it might be safe to do so. Overall, while Judge Gilstrap acknowledged the “conundrum of first impression” he faced in making this determination, he argued that ultimately, “the best way out is always through”—quoting the poet Robert Frost.

The trial then began as scheduled on August 3. On August 11, the seventh day of trial, the jury returned a verdict that Apple had infringed the asserted claims from the five tried patents (8,019,332; 8,102,833; 8,385,284; 8,411,557; 9,001,774) and that it had not shown the claims to be invalid. The verdict also included a finding that Apple’s infringement had been willful and awarded $506.2M in damages as a royalty for past sales.

Bench Trial on Remaining FRAND Issues

On August 11, Judge Gilstrap also held a one-day bench trial on remaining FRAND issues while the jury deliberated. That part of the dispute stemmed from Count VIII in PanOptis’s complaint, which sought a declaratory judgment that the NPE had not breached its FRAND obligations as to a worldwide license offer made to Apple. The defendant subsequently moved to dismiss that claim, arguing that the court lacked the jurisdiction to address PanOptis’s FRAND compliance as to foreign patents. As to the remaining part of the claim related to US patents, Apple argued that there remained no justiciable controversy, and that the court should decline to issue what amounted to an advisory opinion on that issue—as it held in another PanOptis case against Huawei.

In March, Judge Gilstrap granted Apple’s motion as to foreign patents but declined to dismiss the US-centric portion of the claim. Rather, he distinguished his contrary ruling on the latter issue in the Huawei case as based on the plaintiff’s failure to produce sufficient evidence and held that PanOptis should here get the chance to make its case at summary judgment or trial. PanOptis filed a sealed motion for summary judgment on that issue in June, and the motion was decided at the pretrial conference held on July 27. While the record does not reflect how the court ruled, PanOptis indicated during a dispute over jury instructions that at least some of its FRAND claim remained undecided (“FRAND issues have been saved for the bench trial”). The docket also does not reveal how Judge Gilstrap decided those FRAND issues at the bench trial, for which a written ruling is presumably forthcoming.

 

Judge Schroeder Continues VirnetX Trial, Noting Rising Infection Rates

Apple raised similar public health concerns as in the PanOptis case in requesting a continuance of the VirnetX trial (6:12-cv-00855) before Judge Schroeder, citing COVID-19 statistics in the Tyler Division (where the case is proceeding) and the fact that other, similarly situated districts—like the Western District—have continued jury trials. The company’s July 29 motion went further than its PanOptis brief in arguing that infection rates in the surrounding area, as well as statewide, statistically demonstrate that there is currently “uncontrolled community spread of COVID-19”. Apple also argued that the court should delay the present case from its then-scheduled date of August 17 to give enough time to determine whether the safety measures taken in the PanOptis trial, which ultimately concluded on August 11 as noted above, were effective. (The most recently available guidance from the Centers for Disease Control and Prevention, last updated on June 30, 2020 as of the date of this report, state that “[t]he incubation period for COVID-19 is thought to extend to 14 days, with a median time of 4-5 days from exposure to symptoms onset”.)

Beyond its arguments related to public health, Apple further argued that no prejudice would result to VirnetX because “any harm can be compensated with monetary damages, including prejudgment interest”—adding that “[w]hile the pandemic itself is unprecedented, continuing a trial due to the risk of contracting a highly infectious, potentially life-threatening disease is not”.

Judge Schroeder appeared to agree with Apple, largely granting its request for a continuance (setting trial for October 26, rather than moving it to November) in a two-page order issued on August 10. In that decision, Judge Schroeder found that there was “good cause” for a continuance because “Smith County—and the Tyler Division more generally—is in the midst of a COVID-19 outbreak”, further noting that “three counties in the Tyler Division rank among the top-30 counties for active COVID-19 cases in Texas: Anderson County (14th of 250), Smith County (17th of 250) and Gregg County (26th of 250)” (citing data from the Texas Department of State Health Services updated on August 9). Judge Schroeder concluded by finding that “[t]he continuance provided herein is relatively short, and its importance is not outweighed by VirnetX’s alleged prejudice”.

 

Judge Albright Grants Another Continuance

As also noted in RPX’s recent analysis on jury trials, District Judge Alan D. Albright of the Western District of Texas has been empowered by his district’s chief judge to conduct trials at his sole discretion, as the sole judge in his division. However, like Judge Schroeder, he has continued exercising that discretion to push back scheduled trials in certain cases before him. This includes one such decision on August 10, when Judge Albright granted a fourth continuance in litigation between inventor-controlled MV3 Partners LLC against Roku (6:18-cv-00308). In granting the defendant’s request to continue the trial previously rescheduled to September 8, Judge Albright—according to the docket text summarizing the ruling—expressed that he was “surprised[,] as he thought everyone was on board with moving forward in September”, but continued the trial to a date not specified in the public docket, citing Roku’s concerns. (The company had asked to move the trial “further out - possibly October”, per the associated docket entry.)

For more information on COVID-19 infection rates and jury trials in the above districts, as well as for the District of Delaware and the Central and Northern Districts of California, see “As the COVID-19 Pandemic Rages On, Top Patent Venues Diverge on Jury Trials” (August 2020).

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