Source: https://es.scribd.com/document/387875391/Unsealed-VirnetX-Order-pdf
Timestamp: 2019-04-24 02:28:14+00:00

Document:
context for the Court’s opinion below.
the instant case, Case No. 6:12-cv-855, accusing of infringement several redesigned products.
action, Docket No. 853; see VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1313–14 (Fed. Cir.
affirmed the Court’s denial of Apple’s motion for judgment as a matter of law on invalidity. Id.
jury relied on a flawed damages model. Id. at 1314.
a verdict finding infringement of the ’135, ’151, ’504 and ’211 patents.
consolidation and repeated discussion of the previous jury verdict resulted in an unfair trial.
alternative date, and immediately followed by a second trial on the issue of willfulness. Cause No.
6:12-cv-855 will be retried after Cause No. 6:10-cv-417.” Id. at 15.
judgment is pending before the Federal Circuit. See 417 case, Docket Nos. 1079, 1089, 1091.
a schedule (Docket No. 539).
that Apple’s infringement was willful. Docket No. 729.
motions on July 18, 2018. The Court now resolves the parties’ motions below.
court would usually lie.” Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1332 (Fed. Cir.
not reverse the jury’s findings unless they are not supported by substantial evidence. Baisden v.
Cir. 2007) (citing Laxton v. Gap, Inc., 333 F.3d 572, 577 (5th Cir. 2003)).
evidence comes from disinterested witnesses.” Arismendez, 493 F.3d at 606.
the law of the regional circuit. Z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1347 (Fed. Cir.
reliability of the jury’s verdict.” Smith v. Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir.
Conway v. Chem. Leaman Tank Lines, Inc., 610 F.2d 360, 363 (5th Cir. 1980).
version” was implemented in April of 2013 and relayed 100 percent of calls. See, e.g., 4/3 PM Tr.
at 165:15–19. The parties agree that the “second version” does not infringe VirnetX’s patents. Id.
each of the asserted claims. Docket No. 723.
communication link.” Docket No. 180 at 10.
this was the result of a client-side software change, not a server change, so Apple does not infringe.
name for the callee, and other information.
to facilitate direct peer-to-peer calls. Id. (citing 4/5 PM Tr. at 247:22–248:1).
something more than ‘merely’ return an IP address—not that it cannot return an IP address.” Id.
at 2 (emphasis in original).
To put the parties’ arguments in context, a review of the claim construction is instructive.
supports establishing a secure communication link.” Docket No. 180 at 8–9.
domain name service system supports establishing a secure communication link.” Id.
don’t need IP addresses from both parties to establish that direct communication to begin with.”).
That Apple’s expert, Dr. Matthew Blaze, disagreed with Dr. Jones does not entitle Apple to JMOL.
258 F.3d 326, 337 (5th Cir. 2001).
direct, secure FaceTime call. See id. at 121:5–124:4.
other information I referenced as well.
Id. at 123:8–17. Even Mr. Thirumalai—Apple’s fact witness for FaceTime—did not contest Dr.
was provided by Dr. Jones? A. No, I don’t think so.”).
refuses to re-weigh evidence and invade the province of the jury. 4/9 AM Tr. at 21:5.
Court declines to rule on issues already resolved by the 417 judgment. See Aspex Eyewear, Inc.
v. Zenni Optical Inc., 713 F.3d 1377, 1382 (Fed. Cir. 2013).
patent and claim 13 of the ’151 patent.
forwards the request to a conventional DNS for resolution. Id. at 38:43–47.
as the name suggests, would always create a VPN without sending a DNS request to a DNS server.
the Court denied Apple’s JMOL motion of noninfringement. VirnetX Inc. v. Apple Inc., 925 F.
Supp. 2d 816, 830 (E.D. Tex. 2013). The Federal Circuit affirmed as to literal infringement.
VirnetX, 767 F.3d at 1322.
JMOL and substitute its judgment for that of the jury.
based on the probe, not the request.” Docket No. 783 at 5. But Apple’s disagreement with Dr.
Jones is not a basis for JMOL, and the jury was entitled to credit Dr. Jones’s testimony on this fact.
by that point, “[t]he probe has already failed or succeeded.” See 4/10 Sealed Tr. at 92:3–25.
whether the probe is able to reach the probe server. See 4/3 AM Tr. at 80:4–11.
relative to the private network, not a determination as to any requested server’s security. Id. at 9.
determine whether a server is “secure” or “not secure” is “absurd.” Id.
list, the IT administrators indicated that this is a computer that can communicate in a VPN.” Id.
access and that can communicate in an encrypted channel.”).
server”). See 4/4 AM Tr. at 32:4–14.
target server. See 4/6 PM Tr. at 165:18–166:2; 164:23–165:7; 170:10–16. According to Mr.
because that’s what VPN is. VPN is the authorization.”).
to VirnetX’s claims, and Apple is not entitled to JMOL on this basis.
Docket No. 783 at 5 (internal citations omitted).
constructions and retroactively apply them to the evidence introduced at trial.
only creates a VPN if needed.” Docket No. 783 at 4.
than the claims, is “undisputedly incorrect.” Docket No. 775 at 37 (citing Zenith Labs., Inc. v.
Bristol-Meyers Squibb Co., 19 F.3d 1418, 1423 (Fed. Cir. 1994)).
domain name could not be resolved by conventional DNS. Id. at 76:17–77:14; PX308.
Accordingly, Apple is not entitled to JMOL on this basis.
Apple “moved” the infringing Always mode functionality into the redesigned VOD. Docket No.
create a VPN also because the name is on the list.”).
withstand Apple’s JMOL motion, without including any reference to the previous Always mode.
entitled to a new trial on this basis.
identify use of the infringing configuration by Apple or its customers.
infringed by a device having the claimed structure capable of functioning as described by the claim.
capability. Id. at 16. With respect to the method claims of the ’135 patent, VirnetX points to Dr.
F.3d 1351, 1359 (Fed. Cir. 2012) (citing Lucent, 580 F.3d at 1317).
claim limitations, even if it is also capable of noninfringing modes of operation. Hilgraeve Corp.
Sys., Inc., 773 F.3d 1201, 1217 (Fed. Cir. 2014).
claimed method to be performed.”).
VPN on Demand. See Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir.
1986). Accordingly, Apple is not entitled to JMOL of noninfringement on the method claims.
Demand is capable of operating in an infringing mode. See 35 U.S.C. § 271(a); Intel Corp. v. U.S.
the recited structure and capable of performing the recited functions . . .”); UltimatePointer, L.L.C.
declaratory judgment of noninfringement have not been dismissed. Docket No. 775 at 14.
references were asserted up to the time of trial but were never presented to the jury. Id. at 45.
unasserted claims” for the Court to enter judgment, the Court declined to do so. Id. at 46.
exist at all stages of review, not merely at the time the complaint was filed.” Streck, Inc. v.
(vacating the district court’s order invalidating a claim not litigated at trial).
and the Court declines to penalize or discourage the parties’ efforts in narrowing the case for trial.
Accordingly, Apple is not entitled to JMOL of noninfringement for iMessage.
finding equally supports its finding of specific intent. Docket No. 779 at 19.
conclude that Apple intended its customers to infringe.
it has not already considered at length in the context of Daubert motions and the 417 post-trial.
testimony that was nearly identical to that presented in the 417 action.
expert’s prescribed royalty rate per unit. The Court considers each argument below.
VoIP licenses were paired with IP PBX servers, which Apple does not sell; and (5) that Mr.
Weinstein devalued the Microsoft license. Docket No. 775 at 18–22.
opinions, they go to the weight of the evidence rather than admissibility.”). Nevertheless, Mr.
these licenses in determining the appropriate royalty rate in this case.
exceeds the market price of FaceTime. Id. at 24.
them. See also Ericsson Inc. v. D-Link Corp., No. 6:10-cv-473, 2013 WL 2242444, *2–3 (E.D.
not implicate the entire market value rule.”); 4/4 PM Tr. at 11:13–12:14 (Larsen).
contribution that VirnetX’s technology makes to the final products of licensees.”). That Mr.
in detail for the jury to evaluate.
constant regardless of the number of accused features present in the given device is improper.
the jury was entitled to credit his opinion.
PM Tr. at 260:23–261:7, with 4/5 PM Tr. at 169:17–172:3.
to JMOL on this basis.
Apple argues that use of VirnetX’s licenses to calculate per-unit rates violates the EMVR.
the jury by placing undue emphasis on the value of the entire product. Id.
as a matter of law or a new trial.
prior ruling, the Court denies Apple’s motion for judgment as a matter of law on this basis.
evidence for its verdict. i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 848 (Fed. Cir. 2010).
Accordingly, Apple’s motion for JMOL on this basis is denied.
jury ultimately returned a verdict that Apple’s infringement was willful.
Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016).
Apple’s willfulness JMOL and new trial motions are moot. See Presidio Components, Inc. v.
renders a motion for judgment as a matter of law on willful infringement moot.”); Greatbatch Ltd.
exercised my discretion not to award enhanced damages under 35 USC, Section 284.”).
which the Court addresses below.
secure communication. All these terms are here.”). This testimony justifies the Court’s instruction.
jury. Accordingly, this is not a basis for a new trial.
abundance of caution, not to rely on the full price of any Apple product.” 417 action, Docket No.
products at issue in this case.”).
that the record did not support the rule’s applicability.” 417 action, Docket No. 1079 at 28.
not entitled to a new trial on this basis.
and declines to reconsider it here.
this comment suggests that Apple should be punished for its previous infringement. Id.
Apple’s motion for a new trial on this basis as well. See 417 action, Docket No. 1079 at 28.
a new trial on this basis.
The Court is not persuaded that exclusion of the PTO proceedings warrants a new trial.
fact that invalidity is not an issue in this case.
proceedings were issued after the parties’ alleged hypothetical negotiation date of September 2013.
released.”), with Docket No. 692 (Apple’s offer of proof).
chose. Apple is not entitled to a new trial on this basis.
claims have been held unpatentable, subject only to Federal Circuit appeal.” Docket No. 692 at 21–22.
argues that a 100 percent enhancement of the jury’s verdict is warranted under the Read factors.
under the totality of the circumstances.
A court may enhance the jury’s damages award by up to three times. 35 U.S.C. § 284.
egregiousness of the defendant’s conduct based on all the facts and circumstances.” Read Corp.
award of enhanced damages rather than a more rigid, mechanical assessment. See Finjan, Inc. v.
Blue Coat Sys., Inc., No. 13-cv-3999, 2016 WL 3880774, at *16 (N.D. Cal. July 18, 2016).
infringing components in its products.” Docket No. 782 at 4.
products that were already adjudicated to infringe, Apple “copied” the ideas or designs of VirnetX.
features in the redesigns. Barry v. Medtronic, Inc., 250 F. Supp. 3d 107, 114 (E.D. Tex. 2017).
Accordingly, the “copying” factor favors enhancement.
No. 1079 at 47 (citing Mondis Tech. Ltd. v. Chimei InnoLux Corp., 822 F. Supp. 2d 639, 652 (E.D.
are of limited value when attempting to establish a good faith belief of invalidity)).
conclude on this record that Apple’s noninfringement positions were not in good faith.
Apple maintained reasonable noninfringement positions for both products at issue in the case.
Considering the totality of the circumstances, this factor is neutral.
Read factor 4, the infringer’s size and financial condition, weighs in favor of enhancement.
condition that an award of enhanced damages might put it out of business. Idenix Pharm. LLC v.
infringement by VPN on Demand was not submitted to the jury.
F. Supp. 2d 858, 866 (E.D. Tex. 2010); Ericsson Inc. v. TCL Commc’n Tech. Holdings, Ltd., No.
2:15-CV-00011-RSP, 2018 WL 2149736, at *11 (E.D. Tex. May 10, 2018).
Arctic Cat Inc. v. Bombardier Recreational Prod., Inc., 198 F. Supp. 3d 1343, 1352 (S.D. Fla.
*19 (E.D. Tex. June 16, 2016), aff’d, 867 F.3d 1229 (Fed. Cir. 2017).
post-trial motions, the Court determined that the verdict was supported by substantial evidence.
But the Court is also persuaded that Apple presented reasoned and justified defenses. Apple Inc.
the case is the fact that the jury deliberated for over five hours between the two phases of the case.
make changes in light of the 417 verdict.
Similarly, there is no evidence of a “motivation for harm” that would support enhancement.
capture a piece of the market”); Internet Machines, 2013 WL 4056282, at *20; Spectralytics, Inc.
v. Cordis Corp., 834 F. Supp. 2d 920, 924 (D. Minn. 2011), aff’d, 485 F. App’x 437 (Fed. Cir.
at issue in this case, infringed each of the asserted claims.
alternative in April 2013. He was also a member of the team studying ways to reduce relay usage.
you tell us that 100 percent of FaceTime calls were being relayed? A: Yes.”); id. at 29:4–14; cf.
relayed 100 percent of FaceTime calls since April 2013).
and this factor weighs in favor of enhancement.
and the remediation effort significant.
a factor to be considered.”). The jury’s damages number is supported by the evidence in this case.
of this is to say that enhanced damages must follow a finding of egregious misconduct.”).
Accordingly, the Court exercises its discretion to deny VirnetX’s request for enhanced damages.
request for attorneys’ fees is DENIED.
damages awards in this action. Id.
of post-verdict, pre-judgment infringing units within thirty (30) days.
enter an injunction, VirnetX alternatively seeks a sunset royalty. Id.
injunction must satisfy a four-factor test before a court may grant such relief.” eBay Inc. v.
to demonstrate irreparable injury, the Court will deny VirnetX’s request for an injunction.
public health or welfare.” Id. at 39.
product. 4 The Court now considers whether the release of Gabriel justifies entry of an injunction.
Apple’s distribution of the infringing features.” Docket No. 774 at 34.
The Court is not persuaded that Gabriel competes with the infringing Apple products.
irreparable harm. Nichia Corp. v. Everlight Ams., Inc., 855 F.3d 1328, 1343 (Fed. Cir. 2017).
manufacturers. VirnetX’s damages are limited to the loss of Apple as a customer.” VirnetX, 925 F.Supp.2d at 846.
products do not compete. The only other irreparable harm VirnetX identifies is reputational harm.
unclear that Apple’s actions have led to these statements.
injunction, and VirnetX’s request for an injunction is DENIED.
already rejected. Docket No. 778 at 28.
principles of equity. Amado v. Microsoft Corp., 517 F.3d 1353, 1364 n.2 (Fed. Cir. 2008).
VirnetX for future infringement, the Court will award an ongoing royalty. Telcordia Techs., Inc.
v. Cisco Sys., Inc., 612 F.3d 1365, 1379 (Fed. Cir. 2010).
v. Eli Lilly & Co., No. 2:15-cv-1202-WCB, 2017 WL 3034655, at *7 (E.D. Tex. July 18, 2017).
per unit. Apple is ORDERED to provide an accounting of infringing units on a quarterly basis.
to the jury award beginning at the date of the hypothetical negotiation. Docket No. 774 at 43.
consolidation and “forc[ing] deconsolidation and two retrials.” Id. at 45.
Apple’s argument against prejudgment interest was not raised in response to the 417 retrial.
prime rate, compounded annually, beginning at the date of the hypothetical negotiation.
No. 774) is DENIED-IN-PART and GRANTED-IN-PART.
• VirnetX’s request for costs is GRANTED.
in accordance with this order.
So ORDERED and SIGNED this 30th day of August, 2018.

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