Case 6:12-cv-00855-LED Document 28 Filed 01/23/13 Page 1 of 25 PageID #: 362
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`
`
`
`Civil Action No. 6:12-cv-855
`
`
`VirnetX Inc. and
`Science Applications International
`Corporation,
`
`Plaintiffs,
`
`
`
`v.
`
`Apple Inc.,
`
`Defendant.
`
`
`
`
`
`DEFENDANT APPLE INC.’S ORIGINAL ANSWER, AFFIRMATIVE DEFENSES, AND
`COUNTERCLAIMS TO PLAINTIFF VIRNETX INC.’S AND PLAINTIFF SCIENCE
`APPLICATIONS INTERNATIONAL CORPORATION’S ORIGINAL COMPLAINT
`
`
`
`Defendant Apple Inc. (“Apple”) files this Original Answer, Affirmative Defenses, and
`
`Counterclaims to Plaintiff VirnetX Inc.’s (“VirnetX”) and Plaintiff Science Applications
`
`International Corporation’s (“SAIC”) (collectively, “Plaintiffs”) Original Complaint (Dkt. No.
`
`1).
`
`ANSWER
`
`THE PARTIES
`
`
`
`1.–2. Apple is without sufficient information or knowledge to either admit or deny the
`
`allegations in paragraphs 1–2 and therefore denies the same.
`
`JURISDICTION AND VENUE
`
`
`
`3.
`
`Apple admits that Plaintiffs allege a civil action for patent infringement under the
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`patent laws of the United States, Title 35. Apple admits that this Court has subject matter
`
`jurisdiction over VirnetX’s claims for patent infringement. Apple denies all other allegations
`
`contained in paragraph 3 of the Complaint.
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`
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`Page 1 of 25
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`
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`VIRNETX EXHIBIT 2007
`Apple v. VirnetX
`Trial IPR2016-00063
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`

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`
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`4.
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`Apple admits that venue is proper in this Court, but Apple denies that this judicial
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`district is the more convenient forum for this case. Apple denies all other allegations in this
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`paragraph.
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`
`
`5.
`
`Apple admits that this Court has personal jurisdiction over Apple. Apple admits
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`that it has conducted business in the State of Texas. Apple admits that it has and does sell
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`products and provide services to persons within the State of Texas and this District, but it denies
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`that it has committed any acts of infringement within this District or the State of Texas, and
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`specifically denies any wrongdoing, infringement, inducement of infringement, or contribution
`
`to infringement. Apple denies all other allegations in this paragraph.
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`
`
`ASSERTED PATENTS
`
`
`
`6.
`
`Apple admits that, according to the face of the patent, United States Patent No.
`
`6,502,135 (“the ’135 patent”) is entitled “Agile Network Protocol for Secure Communications
`
`with Assured System Availability” and reflects an issue date of December 31, 2002. Apple
`
`admits that Edmund Colby Munger, Douglas Charles Schmidt, Robert Dunham Short, III, Victor
`
`Larson, and Michael Williamson are listed as inventors on the face of the patent. Apple admits
`
`that what appears to be a copy of the ’135 patent is attached as Exhibit A to the Complaint.
`
`Apple denies all other allegations contained in paragraph 6 of the Complaint.
`
`7.
`
`Apple admits that, according to the face of the patent, United States Patent No.
`
`7,418,504 (“the ’504 patent”) is entitled “Agile Network Protocol for Secure Communications
`
`Using Secure Domain Names” and reflects an issue date of August 26, 2008. Apple admits that
`
`Victor Larson, Robert Dunham Short, III, Edmund Colby Munger, and Michael Williamson are
`
`listed as inventors on the face of the patent. Apple admits that what appears to be a copy of the
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`2
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`’504 patent is attached as Exhibit B to the Complaint. Apple denies all other allegations
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`contained in paragraph 7 of the Complaint.
`
`8.
`
`Apple admits that, according to the face of the patent, United States Patent No.
`
`7,490,151 (“the ’151 patent”) is entitled “Establishment of a Secure Communication Link Based
`
`on a Domain Name Service (DNS) Request” and reflects an issue date of February 10, 2009.
`
`Apple admits that Edmund Colby Munger, Robert Dunham Short, III, Victor Larson, and
`
`Michael Williamson are listed as inventors on the face of the patent. Apple admits that what
`
`appears to be a copy of the ’151 patent is attached as Exhibit C to the Complaint. Apple denies
`
`all other allegations contained in paragraph 8 of the Complaint.
`
`9.
`
`Apple admits that, according to the face of the patent, United States Patent No.
`
`7,921,211 (“the ’211 patent”) is entitled “Agile Network Protocol for Secure Communications
`
`Using Secure Domain Names” and reflects an issue date of April 5, 2011. Apple admits that
`
`Edmund Colby Munger, Robert Dunham Short, III, Victor Larson, and Michael Williamson are
`
`listed as inventors on the face of the patent. Apple admits that what appears to be a copy of the
`
`’211 patent is attached as Exhibit D to the Complaint. Apple denies all other allegations
`
`contained in paragraph 9 of the Complaint.
`
`COUNT I
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`ALLEGED PATENT INFRINGEMENT BY APPLE
`
`
`
`10.
`
`Apple incorporates by reference paragraphs 1–9 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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`
`
`
`
`11.
`
`12.
`
`Denied.
`
`Denied.
`
`3
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`
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`13.
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`Apple admits that it provides or has provided the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`Lion operating system to others in the United States. Apple denies that these or any other Apple
`
`products infringe any asserted claims of the ’135 patent. Apple further denies all other
`
`allegations contained in paragraph 13 of the Complaint.
`
`
`
`
`
`
`
`14.
`
`15.
`
`16.
`
`Denied.
`
`Denied.
`
`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
`
`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
`
`distributes or distributed within and from the United States the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`Lion operating system, but Apple denies that these or any other Apple products infringe any
`
`claim of the ’151 patent. Apple further denies all other allegations contained in paragraph 16 of
`
`the Complaint.
`
`
`
`17.
`
`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
`
`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
`
`distributes or distributed within and from the United States the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`Lion operating system, but Apple denies that these or any other Apple products infringe any
`
`claim of the ’151 patent. It is not clear what is referenced by “media that store, cache, or
`
`distribute iPhone OS.” As such, Apple denies allegations in paragraph 17 regarding the
`
`foregoing statement. Apple further denies all other allegations contained in paragraph 17 of the
`
`Complaint.
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`4
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`
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`18.
`
`Apple admits that it provides or has provided the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`Lion operating system to others in the United States. Apple denies that these or any other Apple
`
`products infringe any asserted claims of the ’151 patent. It is not clear what is referenced by
`
`“media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
`
`paragraph 18 regarding the foregoing statement. Apple further denies all other allegations
`
`contained in paragraph 18 of the Complaint.
`
`
`
`
`
`19.
`
`20.
`
`21.
`
`22.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
`
`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
`
`distributes or distributed within and from the United States the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, Apple computers containing the Mountain Lion
`
`operating system, and Apple computers that can run Apple’s FaceTime for Mac application, but
`
`Apple denies that these or any other Apple products infringe any claim of the ’504 patent. It is
`
`not clear what is referenced by “Apple computers running ... iMessage” and “Apple’s servers,
`
`master discs and other media that store, cache, or distribute iPhone OS.” As such, Apple denies
`
`allegations in paragraph 22 regarding the foregoing statements. Apple further denies all other
`
`allegations contained in paragraph 22 of the Complaint.
`
`23.
`
`24.
`
`Denied.
`
`Apple admits that it provides or has provided the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`5
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`Lion operating system to others in the United States. Apple denies that these or any other Apple
`
`products infringe any asserted claims of the ’504 patent. It is not clear what is referenced by
`
`“media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
`
`paragraph 24 regarding the foregoing statement. Apple further denies all other allegations
`
`contained in paragraph 24 of the Complaint.
`
`25.
`
`26.
`
`27.
`
`28.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Apple admits that it makes or has made, uses or used, sells or sold, offers for sale
`
`or offered for sale, imports or imported, exports or exported, supplies or supplied, and/or
`
`distributes or distributed within and from the United States the iPhone 5, iPod touch (5th
`
`generation), iPad (4th generation), iPad mini, and Apple computers containing the Mountain
`
`Lion operating system, but Apple denies that these or any other Apple products infringe any
`
`claim of the ’211 patent. It is not clear what is referenced by “Apple’s servers, master discs and
`
`other media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
`
`paragraph 28 regarding the foregoing statement. Apple further denies all other allegations
`
`contained in paragraph 28 of the Complaint.
`
`29.
`
`30.
`
`Denied.
`
`Apple admits that it provides or has provided the iPhone 5, iPod Touch 5th
`
`Generation, iPad 4th Generation, iPad mini, and Apple computers containing the Mountain Lion
`
`operating system to others in the United States. Apple denies that these or any other Apple
`
`products infringe any asserted claims of the ’211 patent. It is not clear what is referenced by
`
`“media that store, cache, or distribute iPhone OS.” As such, Apple denies allegations in
`
`6
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`paragraph 30 regarding the foregoing statement. Apple further denies all other allegations
`
`contained in paragraph 30 of the Complaint.
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`31.
`
`32.
`
`33.
`
`34.
`
`35.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Denied.
`
`Apple admits that it received notice of infringement of the asserted patents after
`
`the filing of the lawsuit in the VirnetX Inc. v. Cisco Inc., 6:10-CV-417 (E.D. Tex.) action but
`
`denies that any Apple products infringe the ’135, ’151, ’504, or ’211 patents. Apple further
`
`denies all other allegations contained in paragraph 35 of the Complaint.
`
`36.
`
`Denied. Apple also incorporates by reference the Stipulation between Apple and
`
`VirnetX filed in the VirnetX Inc. v. Cisco Inc., 6:10-CV-417 (E.D. Tex.) action (Dkt. No. 551) as
`
`it relates to willful infringement.
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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
`
`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 1–15 of this Section of the
`
`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
`
`Complaint that are directed at Apple.
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`
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`AFFIRMATIVE DEFENSES
`
`Apple asserts the following Affirmative Defenses.
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`FIRST AFFIRMATIVE DEFENSE
`(No Infringement)
`
`37.
`
`Apple does not infringe and has not infringed any valid and enforceable claim of
`
`
`
`
`
`the ’135, ’151, ’504, and ’211 patents.
`
`SECOND AFFIRMATIVE DEFENSE
`(Invalidity)
`
`
`
`38.
`
`Claims of the ’135, ’151, ’504, and ’211 patents are invalid for failure to satisfy
`
`the conditions for patentability set forth in Title 35 of the United States Code, including without
`
`limitation 35 U.S.C. §§ 101, 102, 103, and 112.
`
`THIRD AFFIRMATIVE DEFENSE
`(Laches)
`
`39.
`
`VirnetX’s claims are barred in whole or in part by laches.
`
`FOURTH AFFIRMATIVE DEFENSE
`(Waiver)
`
`40.
`
`VirnetX’s claims are barred in whole or in part by waiver.
`
`FIFTH AFFIRMATIVE DEFENSE
`(Estoppel)
`
`41.
`
`VirnetX’s claims are barred in whole or in part by estoppel.
`
`SIXTH AFFIRMATIVE DEFENSE
`(Notice, Damages, and Costs)
`
`42.
`
`VirnetX’s claims for damages, if any, against Apple are statutorily limited by 35
`
`
`
`
`
`
`
`
`
`U.S.C. § 286 and/or § 287.
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`
`
`43.
`
`VirnetX’s claims for damages, if any, against Apple are limited by the one
`
`compensation rule.
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`8
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`
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`44.
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`VirnetX is barred from recovering costs in connection with this action under 35
`
`U.S.C. § 288.
`
`SEVENTH AFFIRMATIVE DEFENSE
`(Sales to Government)
`
`45.
`
`VirnetX’s claims are limited by 28 U.S.C. § 1498.
`
`EIGHTH AFFIRMATIVE DEFENSE
`(Res Judicata and Collateral Estoppel)
`
`46.
`
`VirnetX’s claims are limited by the doctrines of res judicata and collateral
`
`
`
`
`
`estoppel.
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`NINTH AFFIRMATIVE DEFENSE
`(Unclean Hands and Inequitable Conduct)
`
`
`
`47.
`
`As more fully outlined in Apple’s Count III, specifically paragraphs 10–46 in
`
`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,
`
`and/or unclean hands committed by the inventors, their counsel, VirnetX, and/or others
`
`substantively involved in the prosecution of the ’135, ’151, ’504, or ’211 patents.
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`RESERVATION OF AFFIRMATIVE DEFENSES
`
`
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`48.
`
`Apple hereby reserves the right to supplement additional affirmative defenses as
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`discovery proceeds in this case.
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`COUNTERCLAIMS
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`
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`Apple asserts the following counterclaims against VirnetX Inc. and SAIC (collectively,
`
`VirnetX).
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`PARTIES
`
`
`
`1.
`
`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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`
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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. is a Delaware corporation, having its principal place of business at 308 Dorla Ct.,
`
`Zephyr Cove, NV 89448.
`
`
`
`3.
`
`On information and belief based on the Complaint, Counterclaim Defendant
`
`Science Applications International Corporation (SAIC) is a Delaware corporation having its
`
`principal place of business at 1710 SAIC Drive, Mclean, Virginia 22102.
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`JURISDICTION AND VENUE
`
`
`
`4.
`
`These counterclaims arise under the patent laws of the United States as enacted
`
`under Title 35 of the United States Code and the provisions of the Federal Declaratory Judgment
`
`Act. The jurisdiction of this Court is proper under 28 U.S.C. §§ 1331, 1338, 2201, and 2202.
`
`
`
`
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`5.
`
`Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and 1400.
`
`COUNT I—DECLARATION OF NON-INFRINGEMENT
`
`6.
`
`Based on the filing of this action, SAIC’s ownership interest in the asserted
`
`patents, and Apple’s Affirmative Defenses, an actual controversy has arisen and now exists
`
`between Plaintiffs and Apple as to whether Apple has infringed or is infringing one or more
`
`claims of U.S. Patent Nos. 6,502,135 (the ’135 patent), 7,490,151 (the ’151 patent), 7,418,504
`
`(the ’504 patent), and 7,921,211 (the ’211 patent).
`
`
`
`7.
`
`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
`
`any valid and enforceable claim of the ’135, ’151, ’504, and ’211 patents.
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`COUNT II—DECLARATION OF PATENT INVALIDITY
`
`
`
`8.
`
`Based on the filing of this action, SAIC’s ownership interest in the asserted
`
`patents, and Apple’s Affirmative Defenses, an actual controversy has arisen and now exists
`
`10
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`between Plaintiffs and Apple as to the validity of the asserted claims of the ’135, ’151, ’504, and
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`’211 patents.
`
`
`
`9.
`
`Pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. 2201 et seq., Apple
`
`requests the declaration of the Court that the ’135, ’151, ’504, and ’211 patents are invalid.
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`COUNT III—DECLARATION OF UNENFORCEABILITY
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`10.
`
`Based on VirnetX’s filing of this action, SAIC’s ownership interest in the asserted
`
`patents, and Apple’s Affirmative Defenses, an actual controversy has arisen and now exists
`
`between Plaintiffs and Apple as to the enforceability of the ’135, ’151, ’504, and ’211 patents.
`
`11.
`
`The ’135 patent, which issued on December 31, 2002, was filed with the United
`
`States Patent and Trademark Office (Patent Office) on February 15, 2000 as U.S. Patent
`
`Application No. 09/504,783 (the ’783 application).
`
`12.
`
`The ’151 patent, which issued on February 10, 2009, was filed with the Patent
`
`Office on September 30, 2002 as U.S. Patent Application No. 10/259,494 (the ’494 application).
`
`13.
`
`The ’504 patent, which issued on August 26, 2008, was filed with the Patent
`
`Office on November 18, 2003 as U.S. Patent Application No. 10/714,849 (the ’849 application).
`
`14.
`
`The ’211 patent, which issued on April 5, 2011, was filed with the Patent Office
`
`on August 17, 2007 as U.S. Patent Application No. 11/840,560 (the ’560 application).
`
`15.
`
`On information and belief, the applications that matured into the ’135 and ’151
`
`patents were assigned to SAIC. On information and belief, SAIC assigned to VirnetX certain
`
`rights in the ’135 patent after issuance and certain rights in the application that matured into the
`
`’151 patent. On information and belief, the applications that matured into the ’504 and ’211
`
`patents were assigned to VirnetX.
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`The ’135 Patent
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`16.
`
`The ’135 patent is unenforceable due to inequitable conduct. Based on a review
`
`of the file history and based on Apple’s understanding of the allegations by VirnetX, one or more
`
`of the people substantively involved in the prosecution of the application leading to the ’135
`
`patent, including a reexamination, were aware of information material to the patentability of the
`
`claims of the ’135 patent, but withheld that information from the Patent Office with the intent to
`
`deceive.
`
`17.
`
`The withheld information includes U.S. Patent Application No. 09/399,753 (the
`
`Miller Application), which was pending during the prosecution of the ’135 patent. The pendency
`
`of the Miller Application was information material to patentability of the ’135 patent based on
`
`Apple’s understanding of the allegations by VirnetX. The withheld information also includes
`
`RFC 2401-Security Architecture for the Internet Protocol (RFC 2401) and information
`
`concerning the publication date of the Aventail Administrator’s Guide (Aventail), which are
`
`material to patentability based upon Apple’s understanding of the allegations by VirnetX. This
`
`withholding of information material to patentability with the intent to deceive the Patent Office
`
`constitutes inequitable conduct.
`
`18.
`
`The Miller Application, RFC 2401, and the Aventail reference are not cumulative
`
`to the prior art made of record during prosecution of the ’135 patent. On information and belief,
`
`there is a substantial likelihood that a reasonable examiner would have considered this art in
`
`determining whether to allow the ’135 patent to issue.
`
`19.
`
`During the prosecution of the application leading to the ’135 patent, one or more
`
`of the people substantively involved in its prosecution (including Ross Dannenburg) were aware
`
`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
`
`of the ’135 patent at least as early as January 28, 2002, when he signed a Transmittal Form for an
`
`Amendment / Response in the prosecution file history of the ’135 patent. Therefore, Mr.
`
`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
`
`involved in the prosecution of the application intentionally failed to disclose this material
`
`information to the Patent Office at any time during the prosecution of the ’135 patent with intent
`
`to deceive. Moreover, the materiality of the Miller Application leads to an inference of intent to
`
`deceive. This withholding of information material to patentability with the intent to deceive the
`
`Patent Office constitutes inequitable conduct.
`
`20.
`
`During the prosecution of the application leading to the ’135 patent, one or more
`
`of the people substantively involved in its prosecution were aware of RFC 2401, including Mr.
`
`Dannenburg, because it is mentioned in the specification of the ’135 patent. Based on Apple’s
`
`understanding of the allegations by VirnetX, RFC 2401 is material prior art. Nonetheless, those
`
`substantively involved in the prosecution of the application intentionally failed to submit this
`
`material prior art reference to the Patent Office as required by 37 C.F.R. 1.56 and 37 C.F.R. 1.97,
`
`with intent to deceive. Moreover, in mentioning RFC 2401 in the application, those
`
`substantively involved in the prosecution of the application described RFC 2401 in a way that
`
`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
`
`Office, constitutes inequitable conduct.
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`21.
`
`On or about February 15, 2007, VirnetX Inc. filed a lawsuit against Microsoft
`
`Corporation (Microsoft) in the Eastern District of Texas, Tyler Division, C.A. No. 6:07-CV-80
`
`(the Microsoft Case), alleging that Microsoft infringed certain VirnetX Inc. patents, including the
`
`’135 patent. SAIC was eventually added to that case as a plaintiff.
`
`22.
`
`In December 2009, Microsoft filed a reexamination request with the Patent Office
`
`requesting reexamination of claims 1–10 and 12 of the ’135 patent, citing, among other
`
`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.
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`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.
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`25.
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`On or about February 22, 2010, VirnetX Inc. filed a petition to extend its deadline
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`for responding to the office action, pointing out, in part, that it needed additional time to
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`investigate whether the Aventail reference was proper prior art, including investigating the dates
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`of 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 Inc.’s resources. Moreover, the petition stated that
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`the extension “would likely also permit consideration of any court conclusions regarding the
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`claims presently under reexamination.” The petition was filed by Toby Kusmer of McDermott
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`Will & Emery, the same firm that represented VirnetX Inc. in the Microsoft Case until 2009.
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`The Patent Office responded on or about February 24, 2010, granting an extension, and setting
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`the deadline for response as April 15, 2010.
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`26.
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`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 Inc., including
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`inventor Edward Munger, testified that the claims of the ’135 patent were conceived no earlier
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`than three months after September 23, 1999, placing the date of conception for claims 1–10 and
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`12 on or about December 23, 1999. During the Microsoft Trial, Microsoft alleged, in part, that
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`claims 1–10 and 12 of the ’135 patent were anticipated by the Aventail reference, which on
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`information and belief bears a copyright date 1996–1999. Microsoft presented evidence
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`indicating that the Aventail reference may have been published as early as June 1999. Inventor
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`Edward Munger was present in the courtroom as VirnetX’s corporate representative when this
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`evidence was presented. Based on a review of the trial record, VirnetX Inc. did not dispute the
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`publication date of the Aventail reference. The Microsoft Trial concluded on or about March 16,
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`2010.
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` Therefore, at least as of March 16, 2010, VirnetX Inc. and its corporate
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`representative/inventor Edward Munger were aware that the Aventail reference may have been
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`published at least as early as June 1999, which is prior to the February 15, 2000, filing date of the
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`application that matured into the ’135 patent and prior to the earliest conception date of
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`December 1999 claimed by the inventor of the ’135 patent.
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`27.
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`On or about March 25, VirnetX Inc. gave notice to the Patent Office of the
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`outcome of the case and submitted the jury verdict form from the case. On or about March 29,
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`2010, VirnetX Inc. filed a petition requesting that the reexamination proceeding be suspended.
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`The Patent Office did not respond to the request until after the date set for VirnetX Inc.’s
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`response to the non-final office action rejection.
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`28.
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`On or about April 15, 2010, VirnetX Inc. responded to the office action rejection,
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`in part, by asserting that the Aventail reference should not be considered prior art because no
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`evidence had been submitted by Microsoft that established the actual publication date of the
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`Aventail reference. Moreover, VirnetX Inc. did not provide the result of any investigation it may
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`have made with respect to the publication date of the Aventail reference or the dates of
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`conception or reduction to practice of the ’135 patent that it indicated it would make in its
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`petition for an extension of time, nor did VirnetX Inc. provide any information that it learned
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`from the Microsoft Trial that related to the publication date of the Aventail reference. Based on
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`a review of the prosecution history, VirnetX Inc. did not disclose that its conception date for the
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`claims of the ’135 patent was no earlier than December 1999, nor did VirnetX Inc. disclose that
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`the Aventail reference may have been published as early as June 1999, as it was made aware of
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`during the Microsoft Trial.
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`29.
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`On June 16, 2010, the Patent Office issued an Action Closing Prosecution. In the
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`action, the examiner recites that he made an attempt to determine the publication date of the
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`Aventail reference, but was unsuccessful. Based on the lack of evidence of the publication date,
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`the examiner withdrew all of the rejections that had been based on the Aventail reference.
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`Therefore, VirnetX’s withholding and misrepresentations were the “but-for” cause of the Patent
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`Office dismissing the reexamination proceeding of the ’135 patent that was initiated by
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`Microsoft.
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`30.
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`On July 11, 2011. Apple filed a request for inter partes reexamination of the ’135
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`patent. Apple’s request for inter partes reexamination asserted, among other things, that claims
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`1–10, 12–15, and 18 of the ’135 patent were anticipated by the Aventail reference. Apple’s
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`request for inter partes reexamination included declarations from three different people with
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`knowledge of Aventail’s public availability, corroborating the evidence produced in the
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`Microsoft Trial establishing that Aventail was publicly available and disseminated by Aventail
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`Corporation at least as early as June 1999. Notwithstanding the considerable documentary and
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`testimonial evidence establishing that Aventail is prior art to the ’135 patent, VirnetX continues
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`to argue to the Patent Office that Aventail is not prior art, for example in its May 15, 2012 Patent
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`Owner’s Response to Office Action at 5–6. In particular, VirnetX stated “And, for Aventail, the
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`only support provided are the uncorroborated declarations of three individuals whom Patent
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`Owner has no ability to depose.” That statement is demonstrably false and further evidence of
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`VirnetX’s intent to deceive the Patent Office with respect to the Aventail reference. One of the
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`submitted declarations was from Chris Hopen, a co-founder of Aventail Corporation who has
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`consistently sworn and testified that the Aventail reference was publicly disseminated by
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`Aventail in June or July 1999. VirnetX has deposed Mr. Hopen twice—once in the Microsoft
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`litigation and once in prior litigation with Apple. The other two declarations were from persons
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`disclosed on Apple’s initial disclosures in the prior litigation with Apple—individuals whom
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`VirnetX had every opportunity to subpoena and depose.
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`31.
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`The inter partes reexamination of the ’135 patent initiated by Apple in July 2011
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`confirms that the Aventail reference (and its priority date) is but-for material to the claims of the
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`’135 patent. In granting Apple’s request for reexamination, the Patent Office found that the
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`Aventail reference raised a substantial new question of patentability for claims 1–10, 12–14, and
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`18 of the ’135 patent and that arguments by the Patent Owner in the previous reexamination, that
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`the Aventail reference was not prior art, warranted consideration of the reference in a new light
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`relative to its prior consideration. On February 12, 2012 the Patent Office issued an Office
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`Action rejecting claims 1, 3, 4, 6–10, and 12–14 as anticipated by the Aventail reference.
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`32.
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`VirnetX Inc. and/or its representatives, agents, and attorneys who were
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`substantively involved in the prosecution of the reexamination knew or should have known of
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`the Microsoft trial and the evidence presented regarding the publication date of the Aventail
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`reference. For example, Mr. Kusmer specifically referenced the Microsoft Trial and the potential
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`for additional material information to come to light during that trial when seeking an extension to
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`respond to an office action, as set forth in paragraph 25 above. VirnetX Inc. and/or its
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`representatives, agents, and attorneys withheld this information with the intent to deceive, either
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`willfully or with such gross negligence or recklessness as constituting an act of willfulness
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`amounting to inequitable conduct. Moreove