(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:239) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)ºØ
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`§§§§§§
`
`§§§§§
`
` CASE NO. 6:10-CV-417
`
`VIRNETX INC.,
`
`Plaintiff,
`
`vs.
`
`APPLE INC.,
`
`Defendant.
`
`MEMORANDUM OPINION AND ORDER
`
` The following motions are before the Court:
`
`Apple’s Motion for Judgment as a Matter of Law under Rule 50(b) or, in the alternative,
`for a New Trial or a Remittitur (Docket No. 623);
`
`VirnetX’s Motion for Post-Verdict Damages to the Time of Judgment, Pre-Judgment
`Interest, and Post-Judgment Interest (Docket No. 620);
`
`VirnetX’s Amended Motion for Post-Verdict Damages (Docket No. 657);
`
`VirnetX’s Motion for a Permanent Injunction (Docket No. 621); and
`
`VirnetX’s Motion for Entry of Judgment on the Jury Verdict, Request for Attorneys’
`Fees, and Judgment against Apple on Apple’s Late-Abandoned Counterclaims and
`Defenses, including all of Apple’s Alleged Prior Art References (Docket No. 625).
`
`For the reasons stated below, Apple’s Motion for Judgment as a Matter of Law under Rule 50(b)
`
`or, in the alternative, for a New Trial or a Remittitur is DENIED. VirnetX’s Motion for Post-
`
`Verdict Damages to the Time of Judgment, Pre-Judgment interest, and Post-Judgment Interest is
`
`GRANTED IN PART and DENIED IN PART. VirnetX’s Amended Motion for Post-Verdict
`
`Damages is GRANTED. VirnetX’s Motion for Permanent Injunction is
`
`DENIED, and
`
`New Bay Capital, LLC-EX.1015-Page 1 of 47
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`

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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:238) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)ºŁ
`
`SEVERS VirnetX’s request for an Ongoing Royalty into a separate action. Lastly, VirnetX’s
`
`Motion for Entry of Judgment on the Jury Verdict, Request for Attorneys’ Fees, and Judgment
`
`against Apple on Apple’s Late-Abandoned Counterclaims and Defenses, including all of Apple’s
`
`Alleged Prior Art References is GRANTED IN PART and DENIED IN PART.
`
`BACKGROUND
`
` On August 11, 2010, VirnetX, Inc. (“VirnetX”) filed this action against Apple, Inc.
`
`(“Apple”) alleging that Apple infringed U.S. Patent Nos. 6,502, 135 (“the ’135 Patent”), 7,418,
`
`504 (“the ’504 Patent), 7,490,151 (“the ’151 Patent), and 7,921,211 (“the ’211
`
`Patent)(collectively, “the patents-in-suit”). The ’135 and ’151 Patents generally describe a
`
`method of transparently creating a virtual private network (“VPN”) between a client computer
`
`and a target computer, while the ’504 and ’211 Patents disclose a secure domain name service.
`
` VirnetX accuses Apple’s VPN On Demand and FaceTime features of infringement. Both
`
`products feature establishing secure communications, with Apple’s FaceTime feature providing a
`
`secure communication link for users when video-chatting. Apple’s VPN On Demand feature on
`
`the other hand is a product that seamlessly creates a VPN when a user requests access to a secure
`
`website or server.
`
` A jury trial regarding the instant suit commenced on October 31, 2012. At trial, VirnetX
`
`contended that Apple infringed claims 1, 3, 7, 8 of the ’135 Patent; claims 1 and 13 of the ’151
`
`Patent; claims 1, 2, 5, 16, 21, and 27 of the ’504 Patent; and claims 36, 37, 47 and 51 of the ’211
`
`Patent. In response, Apple asserted its FaceTime and VPN On Demand features did not infringe
`
`the patents-in-suit and that the asserted claims were invalid. Following a five-day trial, the jury
`
`returned a verdict that the ’135, ’151, ’211, and ’504 Patents were not invalid and Apple
`
`infringed the asserted claims. To compensate VirnetX for Apple’s infringement, the jury
`
`awarded VirnetX $368,160,000 in damages.
`
`2
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:237) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)º(cid:231)
`
`APPLE’S MOTION FOR JUDGMENT AS A MATTER OF LAW, OR IN THE
`ALTERNATIVE, FOR A NEW TRIAL OR A REMITTITUR
`
`Judgment as a Matter of Law, New Trial, and Remittitur Standards
`
`Judgment as a matter of law is only appropriate when “a reasonable jury would not have
`
`a legally sufficient evidentiary basis to find for the party on that issue.” F ED.R. C IV.P.50(A ).
`
`“The grant or denial of a motion for judgment as a matter of law is a procedural issue not unique
`
`to patent law, reviewed under the law of the regional circuit in which the appeal from the district
`
`court would usually lie.” Finisar Corp. v. DirectTV Grp., Inc. , 523 F.3d 1323, 1332 (Fed. Cir.
`
`2008). The Fifth Circuit “uses the same standard to review the verdict that the district court used
`
`in first passing on the motion.” Hiltgen v. Sumrall, 47 F.3d 695, 699 (5th Cir. 1995). Thus, a
`
`jury verdict must be upheld, and judgment as a matter of law may not be granted, unless “there is
`
`no legally sufficient evidentiary basis for a reasonable jury to find as the jury did.”
`
`Id. at 700.
`
`The jury’s verdict must also be supported by “substantial evidence” in support of each element
`
`of the claims. Am. Home Assurance Co. v. United Space Alliance , 378 F.3d 482, 487 (5th Cir.
`
`2004).
`
`A court reviews all evidence in the record and must draw all reasonable inferences in
`
`favor of the nonmoving party; however, a court may not make credibility determinations or
`
`weigh the evidence, as those are solely functions of the jury. See Reeves v. Sanderson Plumbing
`
`Prods., Inc., 530 U.S. 133, 150–51 (2000). The moving party is entitled to judgment as a matter
`
`of law, “only if the evidence points so strongly and so overwhelmingly in favor of the
`
`nonmoving party that no reasonable juror could return a contrary verdict.” Int’l Ins. Co. v. RSR
`
`Corp., 426 F.3d 281, 296 (5th Cir. 2005).
`
` Under Federal Rule of Civil Procedure 59, a new trial may be granted to any party to a
`
`jury trial on any or all issues “for any reason for which a new trial has heretofore been granted in
`
`3
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:236) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œ(cid:240)
`
`an action at law in federal court.” “A new trial may be granted, for example, if the district court
`
`finds the verdict is against the weight of the evidence, the damages awarded are excessive, the
`
`trial was unfair, or prejudicial error was committed in its course.” Smith v. Transworld Drilling
`
`Co., 773 F.2d 610, 612–13 (5th Cir. 1985).
`
` Remittitur is within the sound discretion of the trial court and is only appropriate when
`
`the damages verdict is “clearly excessive.”
`
`See Alameda Films S.A. v. Authors Rights
`
`Restoration Corp., 331 F.3d 472, 482 (5th Cir. 2003).
`
`Judgment as a Matter of Law Regarding Direct Infringement
`
` Apple first contends that VirnetX failed to present substantial evidence that Apple’s VPN
`
`On Demand and FaceTime features infringe the patents-in-suit. See Docket No. 623 at 2–16.
`
`Applicable Law
`
`To prove infringement, the plaintiff must show the presence of every element or its
`
`equivalent in the accused device. Lemelson v. United States , 752 F.2d 1538, 1551 (Fed. Cir.
`
`1985). Determining infringement is a two-step process: “[f]irst, the claim must be properly
`
`construed, to determine the scope and meaning. Second, the claim, as properly construed must
`
`be compared to the accused device or process.” Absolute Software, Inc. v. Stealth Signal, Inc. ,
`
`659 F.3d 1121, 1129 (Fed. Cir. 2011) (citing Carroll Touch, Inc. v. Electro Mech. Sys., Inc. , 15
`
`F.3d 1573, 1576 (Fed. Cir. 1993)). “A determination of infringement is a question of fact that is
`
`reviewed for substantial evidence when tried to a jury.” ACCO Brands, Inc. v. ABA Locks Mfr.
`
`Co., 501 F.3d 1307, 1311 (Fed. Cir. 2007).
`
` VPN On Demand
`
`The parties’ primary dispute at trial was if in fact Apple’s VPN On Demand feature
`
`“determines whether” a DNS request is requesting access to a secure website or server (the
`
`“determining whether” limitation/step). At trial, VirnetX alleged the VPN On Demand feature
`
`4
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» º –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œ(cid:239)
`
`infringed claims 1, 3, 7, 8 of the ’135 Patent, and claims 1 and 13 of the ’151 Patent. The ’135
`
`Patent discloses a method of transparently creating a virtual private network (“VPN”) between
`
`client computer and a target computer, while the ’151 Patent describes creating a secure
`
`communication link based on a domain name service (“DNS”) request.
`
`Claim 1 of the ’135 Patent is a representative claim and claims the following:
`
`A method of transparently creating a virtual private network (VPN) between a
`client computer and a target computer, comprising the steps of:
`
`(1)generating from the client computer a Domain Name Service (DNS)
`request that requests an IP address corresponding to a domain name
`associated with the target computer;
`(2)determining whether the DNS request transmitted in step (1) is requesting
`access to a secure web site; and
`(3)in response to determining that the DNS request in step (2) is requesting
`access to a secure target web site, automatically initiating the VPN
`between the client computer and the target computer.
`
`While the Court has not construed the word “determining,” in its claim construction
`
`opinion, the Court noted this determining step could be performed by the client computer or by
`
`the target computer. See Docket No. 266 at 18–20. Additionally, the Court has construed the
`
`phrase “secure web site” to mean “a website that requires authorization for access and that can
`
`communicate in a VPN.” Docket No. 266 at 21.1
`
` Apple now contends that VirnetX failed to present substantial evidence that the VPN On
`
`Demand feature meets the “determining whether” limitation. Docket No. 623 at 3. Apple argues
`
`that the feature cannot meet this limitation, because the accused feature cannot determine
`
`whether the DNS request actually corresponds to a secure website or to a secure server, as
`
`Apple’s expert, Dr. Kelly, demonstrated. Id.; see 11/02/12 a.m. TT at 148:10–21; 154:5–156:18;
`
`167:8–176:25.
`
`1 The ’151 Patent is directed to creating connections with a secure server. Like “secure website,” the Court
`construed secure server to mean “a server that requires authorization for access and that can communicate in an
`encrypted channel.” Docket No. 266 at 24.
`
`5
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» Œ –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œ(cid:238)
`
` Apple explains that the VPN On Demand feature operates by referencing a
`
`“configuration file,” which is created by the user.
`
`Id. Prior to using the feature, a user will
`
`create a list of websites or servers in the “configuration file,” which the user wishes to establish a
`
`secure connection with in the future.
`
`Id. at 3. If a particular website is listed in the
`
`“configuration file,” when a user later requests that particular website, the VPN On Demand
`
`feature will first compare the requested website to those websites listed in “configuration file.”
`
`If the website is listed in the “configuration file,” the feature will then automatically create a
`
`VPN. Id. However, a user may erroneously enter public websites, i.e. non-secure websites, such
`
`as www.ebay.com, in the “configuration file.” If a user then requests this public website, the
`
`feature will automatically create a VPN, even though the website is not a secure website.
`
`Id.
`
`Therefore according to Apple, the VPN On Demand feature does not meet the claim limitation,
`
`because the feature does not actually determine whether a website or server is secure.
`
`Id.
`
`Instead, the feature merely compares the requested website to the “configuration file.” Apple
`
`further illustrates the feature’s inability to perform the claim step, explaining when a user
`
`requests a secure website that is not listed in the “configuration file,” a VPN will not be created
`
`even though the user has requested a secure website. Id. at 4.
`
` Apple concedes VirnetX did present testimony and evidence that Apple’s accused VPN
`
`On Demand feature can be configured to infringe the ’131 and ’151 Patents. See 11/01/12 a.m.
`
`TT at 48:18–52:15; 56:5–61:9. However, Apple contends VirnetX’s expert Dr. Jones’s
`
`interpretation of the “determining whether” step is unsupported by the claim language. Id. At
`
`trial, Dr. Jones stated the feature performs the “determining whether” step when the requested
`
`website or server is compared to the configuration file. 11/01/12 a.m. TT at 31:19–32:12; 48:18–
`
`52:15; 11/01/12 p.m. TT at 18:1–19:20. However, Apple argues that “the claims require that the
`
`6
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» Ø –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œ(cid:237)
`
`actual security of the requested web site or server be ‘determined,’” which does not occur when
`
`the requested website or server is compared to the configuration file.
`
`Id. at 4–5. Apple argues
`
`that to be found infringing, the accused VPN On Demand feature must be able to decide if a
`
`DNS request corresponds to a secure server or website, but the accused feature lacks this
`
`capability. Rather, the feature only initiates VPN connections with whatever server or website
`
`the user has provided. Id. at 5. Even Dr. Jones acknowledged that the VPN On Demand feature
`
`can initiate VPN connections with unsecure websites. See 11/01/12 p.m. TT at 21:8–25:7. Since
`
`the feature cannot actually determine a requested website or server’s security, then Apple argues
`
`no reasonable factfinder could have found Apple or its customers infringed the asserted claims of
`
`the ’151 or the ’135 Patent.
`
` However, Dr. Jones presented a thorough infringement analysis of how Apple’s VPN On
`
`Demand feature can be configured to infringe the ’131 and the ’151 Patents based on Apple’s
`
`internal documents and Apple’s source code. Dr. Jones explained that the “determining
`
`whether” step can be performed by comparing the requested domain name against a list of
`
`domain names, i.e. the “configuration file.” 11/01/12 a.m. TT at 48:18–52:15. While Dr. Jones
`
`acknowledges the feature may initiate VPN connections with unsecure websites, the feature is
`
`not intended to be used in this manner. 11/01/12 a.m TT at 26:8–18. In rejecting Apple’s
`
`alternative, Dr. Jones stated Apple’s interpretation would impermissibly add another limitation to
`
`the claims, because the claim language does not require verifying the identity of the secure
`
`website or server. 11/01/12 p.m. TT at 33:15–35:3.
`
`There is no requirement in the claims, as Apple suggests, that the security of the
`
`requested website or server be verified. Instead, the claims merely require that the feature
`
`ascertain whether a VPN is needed. See ’135 Patent col. 47:27–28. Even Apple agrees that if a
`
`7
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» Ł –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œ(cid:236)
`
`user correctly enters a secure website into the “configuration file,” the VPN On Demand feature
`
`will create a VPN when that website is accessed.
`
`See 11/02/12 a.m. TT at 153:22–154:4;
`
`11/02/12 p.m. TT at 105:9–12. Simply because a user may enter unsecure websites or servers
`
`into the “configuration file” does not defeat infringement. At best, it could have a de minimis
`
`effect on damages. Ultimately, Apple is rearguing the infringement theory it presented at trial,
`
`which the jury was free to reject. Here, VirnetX produced substantial evidence that the VPN On
`
`Demand feature meets the “determining whether” limitation.
`
`Additionally, Apple contends that VirnetX failed to demonstrate that Apple’s VPN On
`
`Demand feature meets other claim limitations found in either the ’135 or ’151 Patent. Docket
`
`No. 623 at 6–11. Specifically, Apple argues: (1) VirnetX failed to show that the feature returns
`
`an IP address for a requested domain name to the requester; (2) failed to show the feature creates
`
`a secure and anonymous communication between computers; (3) failed to demonstrate the
`
`feature transmits a DNS request from the client computer; and (4) failed to demonstrate that the
`
`feature creates an encrypted or secure channel between the client and the secure server. Id. at 6,
`
`8–11.
`
`Regarding the encrypted or secure channel limitation, Apple alleges VirnetX’s
`
`infringement theory is inherently flawed. Docket No. 623 at 10. VirnetX conceded the VPN On
`
`Demand feature did not literally meet the “encrypted channel” limitation, however VirnetX
`
`argued the feature infringed under the Doctrine of Equivalents (“DOE”). 11/01/12 a.m. TT at
`
`74:6–76:1. Apple argues VirnetX’s doctrine of equivalents argument — a system in which the
`
`encrypted channel only extends from the device to the VPN server and not to the target server —
`
`is flawed, because the proposed equivalent would effectively vitiate the limitation.
`
`Id. Apple
`
`also asserts that the proposed equivalent fails to meet the function-way-result test, because it fails
`
`8
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:231) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)Œº
`
`to provide the security one would receive with end to end encryption, as required by the claims.
`
`Id. at 11.
`
`In response, VirnetX contends Apple’s interpretation of the doctrine of equivalents would
`
`require VirnetX to prove actual infringement, even though the doctrine clearly does not require
`
`such a showing. Docket No. 632 at 10. Also, VirnetX argues Apple’s argument regarding a
`
`“secure channel” is misplaced, as VirnetX did produce evidence that the limitation was literally
`
`practiced by the feature. See 11/01/12 a.m TT at 82:2–23.
`
`To support a finding of infringement under the DOE, a patentee must either: (1)
`
`demonstrate an insubstantial difference between the claimed invention and the accused product
`
`or method; or (2) satisfy the function, way, result test.
`
`Aquatex Industries, Inc. v. Techniche
`
`Solutions, 479 F.3d 1320, 1326 (Fed. Cir. 2007) (citing Graver Tank & Mfg. v. Linde Air Prods.
`
`Co., 339 U.S. 605, 608, 70 S.Ct. 854, 94 L.Ed. 1097 (1950)). A patentee must provide
`
`particularized testimony and linking argument as to the insubstantiality of the differences
`
`between the claimed invention and the accused device or process on a limitation-by-limitation
`
`basis. Id. at 1328 (quoting Texas Instruments, Inc. v. Cypress Semiconductor Corp., 90 F.3d
`
`1558, 1567 (Fed. Cir. 1996)). A patentee should typically provide particularized testimony from
`
`a qualified expert describing the claim limitations and establishing that those skilled in the art
`
`would recognize the equivalents. Id. at 1329. However, the expert is not required to “re-start his
`
`testimony at square one when transitioning to a doctrine of equivalents analysis.” Paice LLC v.
`
`Toyota Motor Corp., 504 F.3d 1293, 1305 (Fed. Cir. 2007). Instead, an expert may explicitly or
`
`implicitly incorporate his earlier testimony into the DOE analysis. Id.
`
`Here, VirnetX provided evidence that the VPN On Demand feature does create an
`
`“encrypted channel” as required by claims 1 and 13 of the ’151 Patent. See 11/01/12 a.m. TT at
`
`9
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`
`74:23–79:10 (Dr. Jones explaining that the creation of an encrypted channel only between the
`
`client and VPN server, and not the client and the secure server, meets the claim limitation under
`
`DOE). Additionally, VirnetX produced evidence that the feature literally meets the “secure
`
`channel” limitation. 11/01/12 a.m. TT at 82:2–23. Accordingly, VirnetX did present substantial
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`evidence to support the jury verdict that the VPN On Demand feature meets the “encrypted
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`channel” and “secure channel” claim limitations.
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`As to Apple’s other arguments, VirnetX did produce substantial evidence showing the
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`Apple’s VPN On Demand feature meets the claim limitations disputed by Apple. For example,
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`Dr. Jones explained that the feature returns an IP address for a requested domain name to the
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`requester, when it returns an IP address to the Safari application after a domain was requested.
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`See 11/01/12 a.m. TT at 63:13–64:4. He also detailed how a secure and anonymous
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`communication between computers is established by the feature. 11/01/12 a.m. TT at 34:17–
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`37:12; 54:18–55:23. Additionally, Dr. Jones demonstrated how the feature meets the
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`transmitting requirement when the DNS request is sent from the Safari web browser and sent to
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`the iOS operating system. 11/01/12 a.m. TT at 47:22–48:12. Accordingly, VirnetX produced
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`substantial evidence to demonstrate Apple’s VPN On Demand meets all the claim limitations of
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`the asserted claims of the ’135 Patent and ’151 Patent.
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`Finally, Apple alleges VirnetX failed to demonstrate that Apple directly infringes any
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`asserted method claim of the ’135 Patent.
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`2 Docket No. 623 at 6–7. Apple argues VirnetX
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`2 Independent claim 1 and dependent claims 3, 7, and 8 of the ’135 Patent were asserted against Apple. Claim 1 is
`directed to “[a] method of transparently creating a virtual private network (VPN) between a client computer and a
`target computer, comprising the steps of: (1) generating from the client computer a Domain Name Service (DNS)
`request that requests an IP address corresponding to a domain name associated with the target computer; (2)
`determining whether the DNS request transmitted in step (1) is requesting access to a secure web site; and (3) in
`response to determining that the DNS request in step (2) is requesting access to a secure target web site,
`automatically initiating the VPN between the client computer and the target computer.”
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:239)(cid:239) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)ŒØ
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`presented no evidence that Apple itself preformed all the steps of any asserted claim, and it is
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`improper for VirnetX to assume Apple conducted internal testing of the method while the feature
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`was being developed to show direct infringement. Id. at 7; seeMirror World, LLC v. Apple, Inc. ,
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`784 F. Supp. 2d. 703, 713 (E.D. Tex. 2011).
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`“To infringe a method claim, a person must have practiced all steps of the claimed
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`method.” Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1206 (Fed. Cir. 2010). "[A]
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`method claim is not directly infringed by the sale of an apparatus even though it is capable of
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`performing only the patented method. The sale of the apparatus is not a sale of the method. A
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`method claim is directly infringed only by one practicing the patented method." Joy Techs., Inc.
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`v. Flakt, Inc., 6 F.3d 770, 774–75 (Fed. Cir. 1993); Ricoh Co. v. Quanta Computer Inc., 550 F.3d
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`1325, 1335 (Fed. Cir. 2008) ("[A] party that sells or offers to sell software containing
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`instructions to perform a patented method does not infringe the patent under § 271(a).").
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`Here, VirnetX did address direct infringement of the ’135 Patent, stating Apple
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`performed its own internal testing and use. 11/01/12 a.m. TT at 88:12–89:11 (Dr. Jones stated,
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`“they directly infringe by performing – Apple does that by performing the steps itself, say,
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`through its own internal use and testing.”). VirnetX also introduced evidence that once the
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`feature is set-up by the user, the actual steps of the asserted claims are performed by the feature
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`itself and not the user. See id.; 11/01/12 a.m. TT at 34:5–20. While Apple contends user input is
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`required to practice the claimed invention, the steps of the asserted claims do not explicitly
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`require an additional party’s involvement. SeeSiRF Tech., Inc. v. ITC , 601 F.3d 1319, 1331
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`(Fed. Cir. 2010)(finding direct infringement when the accused products automatically perform
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`all the steps in the asserted claims). For example, claim 1 of the ’135 Patent only has three steps:
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`generating a DNS request; determining whether that DNS request is requesting access to a secure
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`(cid:221)¿›» Œ(cid:230)(cid:239)(cid:240)(cid:243)‰“(cid:243)(cid:240)(cid:240)(cid:236)(cid:239)Ø(cid:243)(cid:212)(cid:219)(cid:220) (cid:220)–‰«‡»†‹ Ø(cid:237)(cid:238) (cid:218)•·»… (cid:240)(cid:238)æ(cid:238)Œæ(cid:239)(cid:237) —¿„» (cid:239)(cid:238) –” (cid:236)Ø —¿„»(cid:215)(cid:220) (cid:253)(cid:230) (cid:238)Œ(cid:239)ŒŁ
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`website; and automatically initiating a VPN if the DNS request corresponds to a secure website.
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`Col. 47:21–33. Nothing in the claim language requires a user to set up a configuration file or
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`take other steps for the VPN On Demand feature to infringe. Instead, once a website is entered
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`in a browser, the accused feature will perform the steps of the asserted claims. In light of Dr.
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`Jones’ testimony and the claim language, VirnetX provided substantial evidence to establish
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`Apple directly infringed the method claims of the ’135 Patent.
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`FaceTime
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` As to the FaceTime feature, the parties’ arguments at trial mostly concerned whether the
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`feature meets the “direct communication” limitation. At trial, VirnetX alleged Apple’s
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`FaceTime feature infringed claims 1, 2, 5, 16, 21, 27 of the ’504 Patent and claims 36, 37, 47,
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`and 51 of the ’211 Patent. Each claim requires some indication that “the domain name service
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`system supports establishing a secure communication link.”
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`See ’211 Patent, claim 36; ’504
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`Patent, claim 1. In its claim construction opinion, the Court construed “secure communication
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`link” to mean “a direct communication link that provides data security.” Docket No. 266 at 13.
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` Both parties agree that “secure communication” requires a direct communication,
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`however the parties dispute whether a network address translator (NAT) allows for direct
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`communication.
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`See 11/01/12 p.m. TT at 50:19–51:15. Both sides acknowledge that the
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`FaceTime feature can operate either via a relay server or via a NAT or other devices containing a
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`NAT functionality. See 11/01/12 p.m. TT at 51:24–52:24. VirnetX concedes that the feature
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`does not infringe if calls are routed through a relay server, because there is no direct
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`communication through a relay server
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`. 11/01/12 p.m. TT at 52:19–24. The only dispute is
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`whether a NAT impedes direct communication between the devices.
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`Apple devices, such as iPhones, can be located behind other devices that have a NAT
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`functionality. NATS alter or readdress the IP address of data packets sent between devices.
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`Apple argues this readdressing of data packets interrupts any direct communication between the
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`two Apple devices. Docket No. 623 at 11–13.
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` VirnetX’s expert, Dr. Jones, agreed that “secure communication link” requires a direct
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`communication. 11/01/12 p.m. TT at 50:19–22. However, Dr. Jones explained in his testimony
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`that NATs do not impede direct communication. 11/01/12 a.m. TT at 116:22–117:5; 119:8–23.
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`Dr. Jones distinguished a relay server, which VirnetX conceded did not infringe, from a NAT
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`router, which VirnetX argued does infringe. Dr. Jones explained that the relay server creates two
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`separate communications, while a NAT router still allows for “end-to-end communication
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`between the two devices” because it merely translates addresses. 11/01/12 a.m. TT at 116:1–
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`117:5. VirnetX also submitted evidence that describes how the FaceTime feature establishes
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`peer-to-peer connections. See PX 213; PX 215; PX 472; PX 485; and PX 478; 11/01/12 a.m. TT
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`at 119:24–123:1.
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`Additionally, the Court noted in its claim construction opinion that “routers, firewalls,
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`and similar servers that participate in typical network communication do not impede ‘direct’
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`communication between a client and a target computer.” Docket No. 266 at 8 (addressing the
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`term “directly” in the context of “virtual private network”). VirnetX produced evidence that a
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`NAT operated like a router, firewall or other similar servers and did not impede direct
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`communication. 11/01/12 p.m. TT at 60:12–61:17; 120:13–123:10. Here, the jury was free to
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`accept this testimony or reject some or all of Dr. Alexander’s testimony. In light of the
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`foregoing, there was substantial evidence to support a finding that NATs allow direct
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`communication.
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` Apple also alleges that VirnetX failed to produce sufficient evidence that the feature
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`satisfies the “look up service” limitation 3, that the feature indicates that it supports establishing a
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`secure communication link4, and that the feature meets the domain name limitation 5, as required
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`by the ’504 and ’211 Patents. Docket No. 623 at 13–16. However, VirnetX provided a detailed
`
`analysis how the FaceTime feature meets every single claim limitation. VirnetX presented
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`evidence that the feature meets the “lookup service” limitation when Apple’s FaceTime servers
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`return an IP address for the requested domain name, i.e. phone number or e-mail address.
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`See
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`11/01/12 a.m. TT at 110:20-113:12; PX 249; PX 548. Additionally, V