Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 1 of 25 PageID #: 7476
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`§
`§
`§
`§
`§
`§
`§
`§ JURY TRIAL DEMANDED
`§
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`Case No. 6:10-cv-417
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`
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`DEFENDANT APPLE INC.’S ORIGINAL ANSWER, AFFIRMATIVE DEFENSES, AND
`COUNTERCLAIMS TO PLAINTIFF’S THIRD AMENDED COMPLAINT
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`Defendant Apple Inc. (“Apple”) files this Original Answer, Affirmative Defenses and
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`Counterclaims
`
`to Plaintiff’s Third Amended Complaint for Patent Infringement (the
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`“Complaint”) filed by VirnetX Inc. (“VirnetX”) and Science Applications International
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`Corporation (“SAIC”).
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`I.
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`ANSWER
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`THE PARTIES
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`
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`1. - 3. Apple is without sufficient information or knowledge to either admit or deny the
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`allegations in paragraphs 1 - 3 and therefore denies the same.
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`
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`4.
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`Apple admits that it is a California corporation organized and existing under the
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`laws of California, with its principal place of business at One Infinite Loop, Cupertino,
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`California 95014. Apple admits that it has conducted business in this district. Apple denies all
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`other allegations contained in paragraph 4 of the Complaint.
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`VirnetX Inc.
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`Plaintiff,
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`vs.
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`Cisco Systems, Inc., et al.,
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`Defendants.
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`Page 1 of 25
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`VIRNETX EXHIBIT 2003
`Apple v. VirnetX
`Trial IPR2016-00063
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`

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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 2 of 25 PageID #: 7477
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`5. - 6. Apple is without sufficient information or knowledge to either admit or deny the
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`allegations in paragraphs 5 and 6 and therefore denies the same.
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`JURISDICTION AND VENUE
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`7.
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`Apple admits that VirnetX alleges a civil action for patent infringement under the
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`laws of the United States, Title 35 United States Code §§ 101, et seq. Apple admits that this
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`Court has subject matter jurisdiction over VirnetX’s claims for patent infringement. Apple
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`denies all other allegations contained in paragraph 7 of the Complaint.
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`
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`8.
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`To the extent the allegations in paragraph 8 relate to Apple, Apple admits that
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`venue is proper in this Court, but Apple denies that this judicial district is the most convenient
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`forum for this case. Apple denies all other allegations in this paragraph to the extent such
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`allegations relate to Apple. To the extent the allegations in paragraph 8 relate to the other
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`Defendants in this case, Apple is without sufficient information or knowledge to either admit or
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`deny the allegations and therefore denies the same.
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`
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`9.
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` To the extent the allegations in paragraph 9 relate to Apple, Apple admits that
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`this Court has personal jurisdiction over Apple. Apple admits that it has conducted business in
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`the State of Texas. Apple admits that it has and does sell products and provide services to
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`persons within the State of Texas and this District, but it denies that it has committed any acts of
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`infringement within this District or the State of Texas, and specifically denies any wrongdoing,
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`infringement, inducement of infringement, or contribution to infringement. Apple denies all
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`other allegations in this paragraph to the extent such allegations relate to Apple. To the extent
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`the allegations in paragraph 9 relate to the other Defendants in this case, Apple is without
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`sufficient information or knowledge to either admit or deny the allegations and therefore denies
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`the same.
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`2
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 3 of 25 PageID #: 7478
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`ASSERTED PATENTS
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`10.
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`Apple admits that, according to the face of the patent, United States Patent No.
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`6,502,135 (“the ‘135 patent”) is entitled “Agile Network Protocol for Secure Communications
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`with Assured System Availability” and reflects an issue date of December 31, 2002. Apple
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`admits that Edmund Colby Munger, Douglas Charles Schmidt, Robert Dunham Short, III, Victor
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`Larson, and Michael Williamson are listed as inventors on the face of the patent. Apple admits
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`that what appears to be a copy of the ‘135 patent is attached as Exhibit A to the Complaint.
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`Apple denies all other allegations contained in paragraph 10 of the Complaint.
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`11.
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`Apple admits that, according to the face of the patent, United States Patent No.
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`6,839,759 (“the ‘759 patent”) is entitled “Method for Establishing Secure Communication Link
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`Between Computers of Virtual Private Network Without User Entering Any Cryptographic
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`Information” and reflects an issue date of January 4, 2005. Apple admits that Victor Larson,
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`Robert Dunham Short, III, Edmund Colby Munger, and Michael Williamson are listed as
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`inventors on the face of the patent. Apple admits that what appears to be a copy of the ‘759
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`patent is attached as Exhibit B to the Complaint. Apple denies all other allegations contained in
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`paragraph 11 of the Complaint.
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`
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`12. Apple admits that, according to the face of the patent, United States Patent No.
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`7,188,180 (“the ‘180 patent”) is entitled “Method for Establishing Secure Communication Link
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`Between Computers of Virtual Private Network” and reflects an issue date of March 6, 2007.
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`Apple admits that Victor Larson, Robert Dunham Short, III, Edmund Colby Munger, and
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`Michael Williamson are listed as inventors on the face of the patent. Apple admits that what
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`appears to be a copy of the ‘180 patent is attached as Exhibit C to the Complaint. Apple denies
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`all other allegations contained in paragraph 12 of the Complaint.
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`3
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 4 of 25 PageID #: 7479
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`13.
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`Apple admits that, according to the face of the patent, United States Patent No.
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`7,418,504 (“the ‘504 patent”) is entitled “Agile Network Protocol for Secure Communications
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`Using Secure Domain Names” and reflects an issue date of August 26, 2008. Apple admits that
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`Victor Larson, Robert Dunham Short, III, Edmund Colby Munger, and Michael Williamson are
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`listed as inventors on the face of the patent. Apple admits that what appears to be a copy of the
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`‘504 patent is attached as Exhibit D to the Complaint. Apple denies all other allegations
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`contained in paragraph 13 of the Complaint.
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`
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`14.
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`Apple admits that, according to the face of the patent, United States Patent No.
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`7,490,151 (“the ‘151 patent”) is entitled “Establishment of a Secure Communication Link Based
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`on a Domain Name Service (DNS) Request” and reflects an issue date of February 10, 2009.
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`Apple admits that Edmund Colby Munger, Robert Dunham Short, III, Victor Larson, and
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`Michael Williamson are listed as inventors on the face of the patent. Apple admits that what
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`appears to be a copy of the ‘151 patent is attached as Exhibit E to the Complaint. Apple denies
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`all other allegations contained in paragraph 14 of the Complaint.
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`
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`15.
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`Apple admits that, according to the face of the patent, United States Patent No.
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`7,921,211 (“the ‘211 patent”) is entitled “Agile Network Protocol for Secure Communications
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`Using Secure Domain Names” and reflects an issue date of April 5, 2011. Apple admits that
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`Edmund Colby Munger, Robert Dunham Short, III, Victor Larson, and Michael Williamson are
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`listed as inventors on the face of the patent. Apple admits that what appears to be a copy of the
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`‘211 patent is attached as Exhibit F to the Complaint. Apple denies all other allegations
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`contained in paragraph 15 of the Complaint.
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`COUNT ONE
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`ALLEGED PATENT INFRINGEMENT BY AASTRA
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 5 of 25 PageID #: 7480
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`16.
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`Apple incorporates by reference paragraphs 1-15 above as if fully set forth herein.
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`Apple is without sufficient information or knowledge to either admit or deny the allegations in
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`paragraph 16 regarding Aastra and the ‘135, ‘504, and ‘211 patents and therefore denies the
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`same.
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`16. – 36. Apple is without sufficient information or knowledge to either admit or deny
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`the allegations in paragraphs 16-36 and therefore denies the same.
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`COUNT TWO
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`ALLEGED PATENT INFRINGEMENT BY APPLE
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`37.
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`Apple incorporates by reference paragraphs 1-36 above as if fully set forth herein.
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`Apple denies that it has infringed or continues to infringe the ‘135, ‘151, ‘504, or ‘211 patents.
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`38.
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`39.
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`40.
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`Denied.
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`Denied.
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`Apple admits that it provides or has provided the iPhone, iPhone 3G, iPhone 3GS,
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`iPhone 4, iPod touch, iPad, and iPad 2 to others in the United States. Apple denies that these or
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`any other Apple products infringe any asserted claims of the ‘135 patent. Apple further denies
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`all other allegations contained in paragraph 40 of the Complaint.
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`41.
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`42.
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`43.
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`Denied.
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`Denied.
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`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
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`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
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`distributes or distributed within and from the United States the iPhone, iPhone 3G, iPhone 3GS,
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`iPhone 4, iPod touch, iPad and iPad 2, but it denies that these or any other Apple products
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 6 of 25 PageID #: 7481
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`infringe any asserted claims of the ‘151 patent. Apple further denies all other allegations
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`contained in paragraph 43 of the Complaint.
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`44.
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`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
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`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
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`distributes or distributed within and from the United States the iPhone, iPhone 3G, iPhone 3GS,
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`iPhone 4, iPod touch, iPad, and iPad 2, but it denies that these or any other Apple products
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`infringe any asserted claims of the ‘151 patent. It is not clear what is referenced by “Apple’s
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`servers, master discs, and other media that store, cache, or distribute iPhone OS.” As such,
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`Apple denies allegations in paragraph 44 regarding the foregoing statement. Apple further
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`denies all other allegations contained in paragraph 44 of the Complaint.
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`45.
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`Apple admits that it provides or has provided the iPhone, iPhone 3G, iPhone 3GS,
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`iPhone 4, iPod touch, iPad, and iPad 2 to others in the United States. Apple denies that these or
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`any other Apple products infringe any asserted claims of the ‘151 patent. It is not clear what is
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`referenced by “media that store, cache, or distribute iPhone OS.” As such, Apple denies
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`allegations in paragraph 45 regarding the foregoing statement. Apple further denies all other
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`allegations contained in paragraph 45 of the Complaint.
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`46.
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`47.
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`48.
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`49.
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`Denied.
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`Denied.
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`Denied.
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`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
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`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
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`distributes or distributed within and from the United States the iPhone 4, iPod touch, iPad 2, and
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`Apple computers, but it denies that these or any other Apple products infringe any asserted
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 7 of 25 PageID #: 7482
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`claims of the ‘504 patent. It is not clear what is referenced by “Apple’s servers, master discs,
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`and other media that store, cache, or distribute iPhone OS.” As such, Apple denies the same.
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`Apple further denies all other allegations contained in paragraph 49 of the Complaint.
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`50.
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`51.
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`Denied.
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`Apple admits that it provides or has provided the iPhone 4, iPod touch, iPad 2,
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`and Apple computers to others in the United States. Apple denies that these or any other Apple
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`products infringe any asserted claims of the ‘504 patent. Apple further denies all other
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`allegations contained in paragraph 51 of the Complaint.
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`52.
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`53.
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`54.
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`55.
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`Denied.
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`Denied.
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`Denied.
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`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
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`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
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`distributes or distributed within and from the United States the iPhone 4, iPod touch, iPad 2, and
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`Apple computers, but it denies that these or any other Apple products infringe any asserted
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`claims of the ‘151 patent. It is not clear what is referenced by “Apple’s servers, master discs,
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`and other media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
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`paragraph 55 regarding the foregoing statement. Apple further denies all other allegations
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`contained in paragraph 55 of the Complaint.
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`56.
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`57.
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`Denied.
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`Apple admits that it provides or has provided the iPhone 4, iPod touch, iPad 2,
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`and Apple computers to others in the United States. Apple denies that these or any other Apple
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`products infringe any asserted claims of the ‘211 patent. It is not clear what is referenced by
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 8 of 25 PageID #: 7483
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`“media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
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`paragraph 57 regarding the foregoing statement. Apple further denies all other allegations
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`contained in paragraph 57 of the Complaint.
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`58.
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`Denied.
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`59. Denied.
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`60.
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`61.
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`62.
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`Denied.
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`Denied.
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`Apple admits that it received notice of infringement after the filing of this lawsuit
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`but denies that any Apple products infringe the ‘135 ,‘151, ‘504, or ‘211 patents. Apple further
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`denies all other allegations contained in paragraph 62 of the Complaint.
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`COUNT THREE
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`ALLEGED PATENT INFRINGEMENT BY CISCO
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`63.
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`Apple incorporates by reference paragraphs 1-62 above as if fully set forth herein.
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`Apple is without sufficient information or knowledge to either admit or deny the allegations in
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`paragraph 63 regarding Cisco and the ‘135, ‘759, ‘180, ‘504, ‘211, and ‘151 patents and
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`therefore denies the same.
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`64. – 100. Apple is without sufficient information or knowledge to either admit or deny
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`the allegations in paragraphs 64 - 100 and therefore denies the same.
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`COUNT THREE
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`ALLEGED PATENT INFRINGEMENT BY NEC
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`101. Apple incorporates by reference paragraphs 1 - 100 above as if fully set forth
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`herein. Apple is without sufficient information or knowledge to either admit or deny the
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 9 of 25 PageID #: 7484
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`allegations in paragraph 101 regarding NEC and the ‘135, ‘504, and ‘211 patents and therefore
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`denies the same.
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`102. - 121. Apple is without sufficient information or knowledge to either admit or deny
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`the allegations in paragraphs 102 - 121 and therefore denies the same.
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`DEMAND FOR JURY TRIAL
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`Apple also demands a trial by jury.
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`PRAYER FOR RELIEF
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`Apple opposes VirnetX’s requested relief against Apple or any other relief VirnetX
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`requests against Apple, including those specified in paragraphs 1-19 of this Section of the
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`Complaint.
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`DENIAL OF ANY REMAINING ALLEGATIONS
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`Except as specifically admitted herein, Apple denies any remaining allegations in the
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`Complaint that are directed at Apple.
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`II.
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`AFFIRMATIVE DEFENSES
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`Apple asserts the following Affirmative Defenses.
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`FIRST AFFIRMATIVE DEFENSE
`(No Infringement)
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`122. Apple does not infringe and has not infringed any valid and enforceable claim of
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`the ‘135, ‘151, ‘504, and ‘211 patents.
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`SECOND AFFIRMATIVE DEFENSE
`(Invalidity)
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`123. Claims of the ‘135, ‘151, ‘504, and ‘211 patents are invalid for failure to satisfy
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`the conditions for patentability set forth in Title 35 of the United States Code, including without
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`limitation §§ 101, 102, 103 and 112.
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 10 of 25 PageID #: 7485
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`THIRD AFFIRMATIVE DEFENSE
`(Laches)
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`124. VirnetX’s claims are barred in whole or in part by laches.
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`FOURTH AFFIRMATIVE DEFENSE
`(Waiver)
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`125. VirnetX’s claims are barred in whole or in part by waiver.
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`FIFTH AFFIRMATIVE DEFENSE
`(Estoppel)
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`126. VirnetX’s claims are barred in whole or in part by estoppel.
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`SIXTH AFFIRMATIVE DEFENSE
`(Notice, Damages, and Costs)
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`127. VirnetX’s claims for damages, if any, against Apple are statutorily limited by 35
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`U.S.C. § 286 and/or § 287.
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`128. VirnetX is barred from recovering costs in connection with this action under 35
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`U.S.C. § 288.
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`SEVENTH AFFIRMATIVE DEFENSE
`(Sales to Government)
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`129. VirnetX’s claims are limited by 28 U.S.C. § 1498.
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`EIGHTH AFFIRMATIVE DEFENSE
`(Unclean Hands and Inequitable Conduct)
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`130. As more fully outlined in Apple’s Count III, specifically paragraphs 10-46 in
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`Apple’s Counterclaims, which are hereby incorporated by reference, the claims of the ‘135, ‘151,
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`‘504, and ‘211 patents are unenforceable due to inequitable conduct, infectious unenforceability,
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`and/or unclean hands committed by the inventors, their counsel, SAIC, VirnetX, and/or others
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`substantively involved in the prosecution of the ‘135, ‘151, ‘504, or ‘211 patents.
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 11 of 25 PageID #: 7486
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`RESERVATION OF AFFIRMATIVE DEFENSES
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`131. Apple hereby reserves the right to supplement additional affirmative defenses as
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`discovery proceeds in this case.
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`III. COUNTERCLAIMS
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`Apple asserts the following counterclaims against VirnetX and SAIC.
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`PARTIES
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`1.
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`Counterclaim plaintiff is a California Corporation with its principal place of
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`business at One Infinite Loop, Cupertino, California 95014.
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`2.
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`On information and belief based on the Complaint, Counterclaim Defendant
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`VirnetX Inc. (“VirnetX”) is a Delaware corporation, having a place of business located at 5615
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`Scotts Valley Drive, Suite 110, Scotts Valley, California.
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`3.
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`On information and belief based on the Complaint, Counterclaim Defendant
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`Science Applications International Corporation (“SAIC”) is a Delaware corporation, having a
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`place of business located at 1710 SAIC Drive, McLean, Virginia 22102.
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`JURISDICTION AND VENUE
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`4.
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`These counterclaims arise under the patent laws of the United States as enacted
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`under Title 35 of the United States Code and the provisions of the Federal Declaratory Judgment
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`Act. The jurisdiction of this Court is proper under 28 U.S.C. §§ 1331, 1338, 2201 and 2202.
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`5.
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`Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and 1400.
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`COUNT I – DECLARATION OF NON-INFRINGEMENT
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`6.
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`Based on VirnetX’s filing of this action, Apple’s Affirmative Defenses, SAIC’s
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`ownership interest in the patents asserted against Apple (see Dkt. No. 236), and the addition of
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`SAIC as a party to this action, an actual controversy has arisen and now exists between (a)
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 12 of 25 PageID #: 7487
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`VirnetX and SAIC and (b) Apple as to whether Apple has infringed or is infringing one or more
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`claims of U.S. Patent Numbers 6,502,135 (“the ‘135 patent”), 7,490,151 (“the ‘151 patent”),
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`7,418,504 (“the ‘504 patent”) and 7,921,211 (“the ‘211 patent”).
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`7.
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`Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.,
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`Apple requests the declaration of the Court that Apple does not infringe and has not infringed
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`any valid and enforceable claim of the ‘135, ‘151, ‘504, and ‘211 patents.
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`COUNT II – DECLARATION OF PATENT INVALIDITY
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`8.
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`Based on VirnetX’s filing of this action, Apple’s Affirmative Defenses, SAIC’s
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`ownership interest in the patents asserted against Apple (see Dkt. No. 236), and the addition of
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`SAIC as a party to this action, an actual controversy has arisen and now exists between (a)
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`VirnetX and SAIC and (b) Apple as to the validity of the claims of the ‘135, ‘151, ‘504, and ‘211
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`patents.
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`9.
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`Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 et seq.,
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`Apple requests the declaration of the Court that the ‘135, ‘151, ‘504, and ‘211 patents are
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`invalid.
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`COUNT III – DECLARATION OF UNENFORCEABILITY
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`10.
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`Based on VirnetX’s filing of this action, Apple’s Affirmative Defenses, SAIC’s
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`ownership interest in the patents asserted against Apple (see Dkt. No. 236), and the addition of
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`SAIC as a party to this action, an actual controversy has arisen and now exists between (a)
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`VirnetX and SAIC and (b) Apple as to the enforceability of the ‘135, ‘151, ‘504, and ‘211
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`patents.
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 13 of 25 PageID #: 7488
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`11.
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`The ‘135 patent, which issued on December 31, 2002, was filed with the United
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`States Patent and Trademark Office (“Patent Office”) on February 15, 2000 as U.S. Patent
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`Application No. 09/504,783 (“the ‘783 application”).
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`12.
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`The ‘151 patent, which issued on February 10, 2009, was filed with the Patent
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`Office on September 30, 2002 as U.S. Patent Application No. 10/259,494 (“the ‘494
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`application”).
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`13.
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`The ‘504 patent, which issued on August 26, 2008, was filed with the Patent
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`Office on November 18, 2003 as U.S. Patent Application No. 10/714,849 (“the ‘849
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`application”).
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`14.
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`The ‘211 patent, which issued on April 5, 2011, was filed with the Patent Office
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`on August 17, 2007 as U.S. Patent Application No. 11/840,560 (“the ‘560 application”).
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`15.
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`On information and belief, the applications that matured into the ‘135 and ‘151
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`patents were assigned to Science Application International Corporation (“SAIC”). On
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`information and belief, SAIC assigned to VirnetX certain rights in the ‘135 patent after issuance
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`and certain rights in the application that matured into the ‘151 patent. On information and belief,
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`the applications that matured into the ‘504 and ‘211 patents were assigned to VirnetX.
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`A. The ‘135 Patent
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`16.
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`The ‘135 patent is unenforceable due to inequitable conduct. Based on a review
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`of the file history and based on Apple’s understanding of the allegations by VirnetX and SAIC,
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`one or more of the people substantively involved in the prosecution of the application leading to
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`the ‘135 patent, including a reexamination, were aware of information material to the
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`patentability of the claims of the ‘135 patent, but withheld that information from the Patent
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`Office with the intent to deceive.
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`Case 6:10-cv-00417-LED Document 257 Filed 04/16/12 Page 14 of 25 PageID #: 7489
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`17.
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`The withheld information includes U.S. Patent Application No. 09/399,753 (“the
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`Miller Application”), which was pending during the prosecution of the ‘135 patent. The
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`pendency of the Miller Application was information material to patentability of the ‘135 patent
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`based on Apple’s understanding of the allegations by VirnetX. The withheld information also
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`includes RFC 2401-Security Architecture for the Internet Protocol (“RFC 2401”) and
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`information concerning the publication date of the Aventail Administrator’s Guide (“Aventail”),
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`which are material to patentability based upon Apple’s understanding of the allegations by
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`VirnetX. This withholding of information material to patentability with the intent to deceive the
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`Patent Office constitutes inequitable conduct.
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`18.
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`The Miller Application, RFC 2401, and the Aventail reference are not cumulative
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`to the prior art made of record during prosecution of the ‘135 patent. On information and belief,
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`there is a substantial likelihood that a reasonable examiner would have considered this art in
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`determining whether to allow the ‘135 patent to issue.
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`19.
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`During the prosecution of the application leading to the ‘135 patent, one or more
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`of the people substantively involved in its prosecution (including Ross Dannenburg) were aware
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`of the Miller Application. Mr. Dannenburg was involved in the prosecution of the Miller
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`Application at least as early as June 14, 2002, when he signed an Amendment / Response in the
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`prosecution history of the Miller Application. Mr. Dannenburg was involved in the prosecution
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`of the ‘135 patent at least as early as January 28, 2002, when he signed a Transmittal Form for an
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`Amendment / Response in the prosecution file history of the ‘135 patent. Therefore, Mr.
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`Dannenburg was involved in the prosecution of the Miller Application while he was prosecuting
`
`the ‘135 patent. Based on Apple’s understanding of the allegations by VirnetX, the pendency of
`
`the Miller Application is information material to patentability. Nonetheless, those substantively
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`involved in the prosecution of the application intentionally failed to disclose this material
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`information to the Patent Office at any time during the prosecution of the ‘135 patent with intent
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`to deceive. Moreover, the materiality of the Miller Application leads to an inference of intent to
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`deceive. This withholding of information material to patentability with the intent to deceive the
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`Patent Office constitutes inequitable conduct.
`
`20.
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`During the prosecution of the application leading to the ‘135 patent, one or more
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`of the people substantively involved in its prosecution were aware of RFC 2401, including Mr.
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`Dannenburg, because it is mentioned in the specification of the ‘135 patent. Based on Apple’s
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`understanding of the allegations by VirnetX, RFC 2401 is material prior art. Nonetheless, those
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`substantively involved in the prosecution of the application intentionally failed to submit this
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`material prior art reference to the Patent Office as required by 37 C.F.R. 1.56 and 37 C.F.R. 1.97,
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`with intent to deceive. Moreover, in mentioning RFC 2401 in the application, those
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`substantively involved in the prosecution of the application described RFC 2401 in a way that
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`concealed its materiality, with intent to deceive. Moreover, the materiality of RFC 2401 leads to
`
`an inference of intent to deceive. This conduct, undertaken with the intent to deceive the Patent
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`Office, constitutes inequitable conduct.
`
`21.
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`On or about February 15, 2007, VirnetX filed a lawsuit against Microsoft
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`Corporation (“Microsoft”) in the Eastern District of Texas, Tyler Division, C.A. No. 6:07-CV-80
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`(the “Microsoft Case”), alleging that Microsoft infringed certain VirnetX patents, including the
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`‘135 patent.
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`22.
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`In December 2009, Microsoft filed a reexamination request with the Patent Office
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`requesting reexamination of claims 1-10 and 12 of the ‘135 patent, citing, among other
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`references, the Aventail reference as prior art under 35 U.S.C. § 102(a). Microsoft asserted that
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`the Aventail reference anticipated claims 1-10 and 12 of the ‘135 patent.
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`23.
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`On or about December 31, 2009, the Patent Office ordered reexamination of
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`claims 1-10 and 12 of the ‘135 patent, finding, in part, that the Aventail reference raised a
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`substantial new question of patentability of all of the requested claims of the ‘135 patent.
`
`24.
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`On or about January 15, 2010, the Patent Office issued a non-final action rejecting
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`claims 1, 3, 4, 6-10, and 12 of the ‘135 patent as being anticipated by the Aventail reference.
`
`25.
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`On or about February 22, 2010, VirnetX filed a petition to extend its deadline for
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`responding to the office action, pointing out, in part, that it needed additional time to investigate
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`whether the Aventail reference was proper prior art, including investigating the dates of
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`conception and reduction to practice of the inventions claimed in the ‘135 patent as well as
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`diligence there between. The petition also cited as a basis for extension that the Microsoft Case
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`was causing a “significant drain” on VirnetX’s resources. Moreover, the petition stated that the
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`extension “would likely also permit consideration of any court conclusions regarding the claims
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`presently under reexamination.” The petition was filed by Toby Kusmer of McDermott Will &
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`Emery, the same firm that represented VirnetX in the Microsoft Case until 2009. The Patent
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`Office responded on or about February 24, 2010, granting an extension, setting the deadline for
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`response as April 15, 2010.
`
`26.
`
`On or about March 8, 2010, trial of the Microsoft Case (“Microsoft Trial”)
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`commenced. During the Microsoft Trial, one or more witnesses for VirnetX, including inventor
`
`Edward Munger, testified that the claims of the ‘135 patent were conceived no earlier than three
`
`months after September 23, 1999, placing the date of conception for claims 1-10 and 12 on or
`
`about December 23, 1999. During the Microsoft Trial, Microsoft alleged, in part, that claims 1-
`
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`10 and 12 of the ‘135 patent were anticipated by the Aventail reference, which on information
`
`and belief bears a copyright date 1996 – 1999. Microsoft presented evidence indicating that the
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`Aventail reference may have been published as early as June 1999. Based on a review of the
`
`trial record, VirnetX did not dispute the publication date of the Aventail reference. The
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`Microsoft Trial concluded on or about March 16, 2010. Therefore, at least as of March 16, 2010,
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`VirnetX was aware that the Aventail reference may have been published at least as early as June
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`1999, which is prior to the February 15, 2000, filing date of the application that matured into the
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`‘135 patent and prior to the earliest conception date of December 1999 claimed by the inventor
`
`of the ‘135 patent.
`
`27.
`
`On or about March 25, VirnetX gave notice to the Patent Office of the outcome of
`
`the case and submitted the jury verdict form from the case. On or about March 29, 2010,
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`VirnetX filed a petition requesting that the reexamination proceeding be suspended. The Patent
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`Office did not respond to the request until after the date set for VirnetX’s response to the non-
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`final office action rejection.
`
`28.
`
`On or about April 15, 2010, VirnetX responded to the office action rejection, in
`
`part, by asserting that the Aventail reference should not be considered prior art because no
`
`evidence had been submitted by Microsoft that established the actual publication date of the
`
`Aventail reference. Moreover, VirnetX did not provide the result of any investigation it may
`
`have made with respect to the publication date of the Aventail reference or the dates of
`
`conception or reduction to practice of the ‘135 patent that it indicated it would make in its
`
`petition for an extension of time, nor did VirnetX provide any information that it learned from
`
`the Microsoft Trial that related to the publication date of the Aventail reference. Based on a
`
`review of the prosecution history, VirnetX did not disclose that its conception date for the claims
`
`
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`of the ‘135 patent was no earlier than December 1999, nor did VirnetX disclose that the Aventail
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`reference may have been published as early as June 1999, as it was made aware of during the
`
`Microsoft Trial.
`
`29.
`
`On June 16, 2010, the Patent Office issued an Action Closing Prosecution. In the
`
`action, the examiner recites that he made an attempt to determine the publication date of the
`
`Aventail reference, but was unsuccessful. Based on the lack of evidence of the publication date,
`
`the examiner withdrew all of the rejections that had been based on the Aventail reference.
`
`30.
`
`VirnetX and/or its representatives, agents, and attorneys who were substantively
`
`involved in the prosecution of the reexamination knew or should have known of the Microsoft
`
`trial and the evidence presented regarding the publication date of the Aventail reference. For
`
`example, Mr. Kusmer specifically referenced the Microsoft Trial and the potential for additional
`
`material information to come to light during that trial when seeking an extension to respond to an
`
`office action, as set forth in paragraph 25 above. VirnetX and/or its representatives, agents, and
`
`attorneys withheld this information with the intent to deceive, either willfully or with such gross
`
`negligence or recklessness as constituting an act of willfulness amounting to inequitable conduct.
`
`Moreover, the materiality of the Aventail publication and the aforementioned evid