EXHIBIT 1
`
`EXHIBIT 1
`
`

`

`767 FEDERAL REPORTER, 3d SERIES
`
`1308
`
`incomplete that they could not be used
`without undue difficulty.
`
`[10] Contrary to Mukand’s argument,
`the deficiencies in its responses were not
`limited to a discrete category of informa-
`tion. As Commerce noted, Mukand as-
`signed the ‘‘same amount of conversion
`costs per kilogram of bar produced, irre-
`spective of the final size of the product
`produced.’’
` J.A. 1604.
` Mukand thus
`premised all of its production cost data on
`the assumption that product size is not a
`significant cost factor—an assumption it
`failed to support. In general, use of par-
`tial facts available is not appropriate when
`the missing information is core to the anti-
`dumping analysis and leaves little room for
`the substitution of partial facts without
`undue difficulty.12 Without cost data bro-
`ken down by product size, Commerce was
`unable to differentiate between different
`types of steel bar products and could not
`calculate an accurate constructed value for
`any of Mukand’s products. We therefore
`hold that Commerce’s reliance on total
`AFA is supported by substantial evidence.
`
`III
`
`For the reasons set forth above, we
`affirm the decision of the Trade Court.
`
`AFFIRMED
`
`,
`
`
`
`VIRNETX, INC., Plaintiff–Appellee,
`
`and
`
`Science Applications International
`Corporation, Plaintiff–
`Appellee,
`
`v.
`
`CISCO SYSTEMS, INC., Defendant,
`
`and
`
`Apple Inc., Defendant–Appellant.
`
`No. 2013–1489.
`
`United States Court of Appeals,
`Federal Circuit.
`
`Sept. 16, 2014.
`Background:
` Patentee brought action
`against mobile phone manufacturer, alleg-
`ing
`infringement of patents describing
`method of transparently creating virtual
`private network (VPN) between client
`computer and target computer and patents
`disclosing secure domain name service.
`The United States District Court for the
`Eastern District of Texas, Leonard Davis,
`Chief Judge, 2009 WL 2370727 and 2012
`WL 3135639, construed the claims, and
`then denied manufacturer’s post-trial mo-
`tions after jury returned verdict in paten-
`tee’s favor 925 F.Supp.2d 816. Manufactur-
`er appealed.
`Holdings: The Court of Appeals, Prost,
`Chief Judge, held that:
`(1) term ‘‘domain name’’ meant name cor-
`responding to Internet Protocol (IP)
`address;
`link’’
`(2) term
`‘‘secure communication
`meant direct communication link that
`provided data security and anonymity;
`
`12. See Shanghai Taoen Int’l Co. v. United
`States, 360 F.Supp.2d 1339, 1348 n. 13 (Ct.
`
`Int’l Trade 2005).
`
`

`

`VIRNETX, INC. v. CISCO SYSTEMS, INC.
`Cite as 767 F.3d 1308 (Fed. Cir. 2014)
`
`1309
`
`(3) substantial evidence supported jury
`verdict that accused product met ‘‘di-
`rect communication’’ limitation;
`(4) accused feature in mobile phone manu-
`facturer’s product met
`‘‘determining
`whether’’ limitation;
`(5) substantial evidence supported jury’s
`finding that feature in accused product
`created
`‘‘VPN’’ or
`‘‘secure channel’’
`that extended from client to target
`computer;
`(6) security provided by accused system
`that included encryption on insecure
`paths but otherwise relied on security
`provided by private networks was not
`equivalent to ‘‘encrypted channel’’;
`(7) patentee could not rely on entire mar-
`ket value of multi-component product
`containing several non-infringing fea-
`tures with no relation to patented fea-
`ture to approximate reasonable royalty
`base; and
`(8) evidence relying on 50-50 starting
`point based on bargaining solution
`theorem was not admissible.
`Affirmed in part, reversed in part, vacated
`in part, and remanded.
`
`1. Patents O324.5
`Patent claim construction is a question
`of law that is reviewed de novo.
`
`2. Patents O165(3), 167(1)
`The process of construing a patent
`claim term begins with the words of the
`claims themselves; however, the claims
`must be read in view of the specification,
`of which they are a part.
`
`3. Patents O165(5)
`The patent claim differentiation doc-
`trine disfavors reading a limitation from a
`dependent claim
`into an
`independent
`claim.
`
`4. Patents O159
`Although courts are permitted to con-
`sider extrinsic evidence like expert testi-
`mony, dictionaries, and treatises when con-
`struing a patent claim term, such evidence
`is generally of less significance than the
`intrinsic record.
`
`5. Patents O101(2)
`Term ‘‘domain name,’’ in patents that
`disclosed domain name service (DNS) sys-
`tem that resolved domain names and facili-
`tates establishing secure communication
`links, meant name corresponding to Inter-
`net Protocol (IP) address.
`
`6. Patents O101(2)
`Term ‘‘secure communication link,’’ in
`patents that disclosed domain name ser-
`vice (DNS) system that resolved domain
`names and facilitates establishing secure
`communication links, meant direct commu-
`nication link that provided data security
`and anonymity.
`
`7. Courts O96(7)
`In a patent case, the Court of Appeals
`for the Federal Circuit reviews the denial
`of a motion for judgment as a matter of
`law (JMOL) or a new trial under the law
`of the regional circuit.
`
`8. Federal Courts O3602
`The Fifth Circuit requires that a
`jury’s determination must be upheld if it is
`supported by substantial evidence.
`
`9. Patents O312(6)
`Substantial evidence supported jury
`verdict that accused product met ‘‘direct
`communication’’ limitation in patents dis-
`closing secure domain name service; each
`claim required some indication that domain
`name service system supported establish-
`ing secure communication link, relay ser-
`ver created two separate communications,
`network address translators (NAT) used
`by accused products did not impede direct
`
`

`

`1310
`
`767 FEDERAL REPORTER, 3d SERIES
`
`communication but operated like routers
`or firewalls, and NAT router still allowed
`for
`‘‘end-to-end communication between
`the two devices’’ because it merely trans-
`lated addresses from public address space
`to private address space, but did not ter-
`minate the connection.
`
`10. Patents O235(2)
`Accused feature in mobile phone man-
`ufacturer’s product met
`‘‘determining
`whether’’ limitation of patents generally
`describing method of transparently creat-
`ing virtual private network (VPN) between
`client computer and target computer, since
`manufacturer’s accused feature could be
`configured to infringe based on manufac-
`turer’s internal documents and source code
`and ‘‘determining whether’’ step could be
`performed by comparing requested domain
`name against list of domain names; while
`feature could
`initiate VPN connections
`with unsecure websites, feature was not
`intended to be used in that manner and
`there was no requirement in claims for
`verification of security of requested web-
`site or server.
`
`11. Patents O312(6)
`Substantial evidence supported jury’s
`finding that feature in accused product
`created ‘‘VPN’’ or ‘‘secure channel’’ that
`extended from client to target computer
`and thus literally infringed claim of patent
`that required creating ‘‘secure channel’’
`‘‘between’’ client and secure server; path
`extending from virtual private network
`(VPN) server to target computer,
`i.e.,
`within private network, would be secure
`and anonymous owing to protection provid-
`ed by private network, paths beyond VPN
`server could be rendered secure and anon-
`ymous by means of ‘‘physical security’’
`present in private corporate networks, and
`patentee did not have to prove that ac-
`cused product did not have any non-in-
`fringing modes of operation.
`
`12. Patents O237
`Security provided by accused system
`that included encryption on insecure paths
`but otherwise relied on security provided
`by private networks was not equivalent to
`‘‘encrypted channel’’ required by claim in
`patent that generally described method of
`transparently creating virtual private net-
`work (VPN) between client computer and
`target computer, and thus accused product
`did not infringe under equivalents doc-
`trine; ‘‘security’’ of private network could
`not be equated with ‘‘encryption’’ provided
`by VPN server because encryption was
`narrower, more specific requirement than
`security, according to patent.
`
`13. Patents O237
`To find infringement under the equiv-
`alents doctrine, any differences between
`the claimed invention and the accused
`product must be insubstantial; insubstan-
`tiality may be determined by whether the
`accused device performs substantially the
`same function in substantially the same
`way to obtain substantially the same result
`as the patent claim limitation.
`
`14. Patents O314(5)
`Under
`the
`equivalents doctrine,
`whether an accused device performs sub-
`stantially the same function in substantial-
`ly the same way to obtain substantially the
`same result as the patent claim limitation
`is a question of fact.
`
`15. Patents O237
`‘‘Vitiation’’ is not an exception to the
`doctrine of equivalents, but instead is a
`legal determination that the evidence in a
`patent suit is such that no reasonable jury
`could determine two elements to be equiv-
`alent.
`
`16. Patents O112.5
`A party challenging the validity of a
`patent must establish invalidity by clear
`and convincing evidence.
`
`

`

`VIRNETX, INC. v. CISCO SYSTEMS, INC.
`Cite as 767 F.3d 1308 (Fed. Cir. 2014)
`
`1311
`
`17. Patents O324.55(4)
`Anticipation in a patent case is a fac-
`tual question that is reviewed for substan-
`tial evidence.
`
`18. Patents O72(1)
`A patent claim is anticipated only if
`each and every element is found within a
`single prior art reference, arranged as
`claimed.
`
`19. Patents O62(1)
`Substantial evidence supported find-
`that patents generally describing
`ing
`method of transparently creating a virtual
`private network (VPN) between a client
`computer and a target computer and pat-
`ents disclosing secure domain name ser-
`vice were not invalid as anticipated; patent
`owner presented evidence and testimony
`that prior publication failed to disclose sev-
`eral claim limitations including, ‘‘secure
`communication link,’’ ‘‘virtual private net-
`work,’’ ‘‘a DNS proxy server,’’ ‘‘an encrypt-
`ed channel,’’ and ‘‘secure channel.’’ 35
`U.S.C.A. § 102(a).
`
`20. Evidence O146
`District court would not have abused
`its discretion in finding that probative val-
`ue of evidence that mobile phone manufac-
`turer initiated re-examinations of patents
`generally describing method of transpar-
`ently creating a virtual private network
`(VPN) between client computer and target
`computer and patents disclosing secure do-
`main name service was substantially out-
`weighed by risk of unfair prejudice to pat-
`entee, confusion with invalidity on the
`merits, or misleading jury, thereby justify-
`ing exclusion in patent infringement ac-
`tion.
` Fed.Rules Evid.Rule
`403,
`28
`U.S.C.A.
`
`21. Courts O96(7)
`In a patent case, regional circuit law is
`applied to evidentiary issues.
`
`22. Federal Courts O3598(5)
`The Fifth Circuit reviews a district
`court’s exclusion of relevant evidence on
`the basis that its probative value is sub-
`stantially outweighed by danger of unfair
`prejudice for clear abuse of discretion re-
`sulting
`in substantial prejudice.
` Fed.
`Rules Evid.Rule 403, 28 U.S.C.A.
`
`23. Patents O318(4.1)
`Patentee could not rely on entire mar-
`ket value of multi-component product con-
`taining several non-infringing
`features
`with no relation to patented feature to
`approximate base for reasonable royalty
`that manufacturer of accused products
`would have been willing to offer to pay to
`patentee during hypothetical negotiation,
`without attempting to apportion value at-
`tributable
`to patented
`features.
` 35
`U.S.C.A. § 284.
`
`24. Patents O319(1)
`The most common method for deter-
`mining a reasonable royalty is the hypo-
`thetical negotiation approach, which at-
`tempts to ascertain the royalty upon which
`the parties would have agreed had they
`successfully negotiated an agreement just
`before patent
`infringement began.
` 35
`U.S.C.A. § 284.
`
`25. Patents O319(1)
`In a patent case, a reasonable royalty
`may be a lump-sum payment not calculat-
`ed on a per unit basis, but it may also be,
`and often is, a running payment that varies
`with the number of infringing units; in that
`event, it generally has two prongs: a roy-
`alty base and a royalty rate. 35 U.S.C.A.
`§ 284.
`
`26. Patents O319(1)
`Whatever the form of the royalty, a
`patentee must take care to seek only those
`damages attributable to the infringing fea-
`tures. 35 U.S.C.A. § 284.
`
`

`

`1312
`
`767 FEDERAL REPORTER, 3d SERIES
`
`27. Patents O318(4.1)
`When patent claims are drawn to an
`individual component of a multi-component
`product, it is the exception, not the rule,
`that damages may be based upon the value
`of the multi-component product; in the ab-
`sence of a showing that the patented fea-
`ture creates the basis for customer de-
`mand or substantially creates the value of
`the component parts, principles of appor-
`tionment apply. 35 U.S.C.A. § 284.
`
`28. Patents O319(1)
`When determining a reasonable royal-
`ty in a patent case, absolute precision is
`not required when assigning value to a
`feature that may not have ever been indi-
`vidually sold; this process may involve
`some degree of approximation and uncer-
`tainty. 35 U.S.C.A. § 284.
`
`29. Evidence O555.9
`Testimony of patentee’s damages ex-
`pert that relied on entire value of accused
`devices and computers as ‘‘smallest salable
`units’’ without attempting to apportion val-
`ue attributable to patented features was
`not admissible to approximate base for
`reasonable royalty that manufacturer of
`accused products would have been willing
`to offer to pay to patentee during hypo-
`thetical negotiation, for failure to comport
`with settled principles of apportionment;
`where smallest salable unit was multi-com-
`ponent product containing non-infringing
`features with no relation to patented fea-
`ture, patentee had to demonstrate that
`patented features drove demand for ac-
`cused products. 35 U.S.C.A. § 284; Fed.
`Rules Evid.Rule 702, 28 U.S.C.A.
`
`30. Evidence O555.2
`The admissibility of expert testimony
`is governed by the Federal Rules of Evi-
`dence and the principles laid out in Dau-
`bert v. Merrell Dow Pharmaceuticals.
`Fed.Rules Evid.Rule 702, 28 U.S.C.A.
`
`31. Evidence O555.2
`A district court’s ‘‘gatekeeping obli-
`gation’’ applies to all types of expert testi-
`mony.
` Fed.Rules Evid.Rule 702, 28
`U.S.C.A.
`
`32. Evidence O555.9
`While questions regarding which facts
`are most relevant for calculating a reason-
`able royalty in a patent case are properly
`left to the jury, a critical prerequisite is
`that the underlying methodology be sound.
`35 U.S.C.A. § 284; Fed.Rules Evid.Rule
`702, 28 U.S.C.A.
`
`33. Patents O319(1)
`When calculating a reasonable royal-
`ty, a patentee’s obligation to apportion
`damages only to the patented features
`does not end with the identification of the
`smallest salable unit if that unit still con-
`tains significant unpatented features. 35
`U.S.C.A. § 284.
`
`34. Patents O318(4.1)
`When calculating a reasonable royalty
`in a patent case, there is no necessity-
`based exception to the entire market value
`rule; a patentee must be reasonable,
`though may be approximate, when seeking
`to identify a patent-practicing unit, tangi-
`ble or intangible, with a close relation to
`the patented feature. 35 U.S.C.A. § 284.
`
`35. Patents O319(1)
`Patentee must apportion the royalty
`down to a reasonable estimate of the value
`of its claimed technology, or else establish
`that its patented technology drove demand
`for the entire product. 35 U.S.C.A. § 284.
`
`36. Evidence O555.9
`District court did not abuse its discre-
`tion in patent case by permitting testimo-
`ny from damages expert regarding proper
`royalty rate based on allegedly comparable
`licenses; four licenses related to actual pat-
`ents-in-suit and others were drawn to re-
`
`

`

`VIRNETX, INC. v. CISCO SYSTEMS, INC.
`Cite as 767 F.3d 1308 (Fed. Cir. 2014)
`
`1313
`
`lated technology, and differences were
`presented to jury to allow jury to fully
`evaluate
`relevance
`of
`licenses.
` 35
`U.S.C.A. § 284.
`
`37. Patents O319(1)
`When relying on licenses to prove a
`reasonable royalty, alleging a loose or
`vague comparability between different
`technologies or licenses does not suffice.
`35 U.S.C.A. § 284.
`
`38. Evidence O555.9
`Evidence relying on 50-50 starting
`point based on bargaining solution theo-
`rem was not admissible under Daubert to
`approximate reasonable royalty rate that
`manufacturer of accused product would
`have been willing to offer to pay to paten-
`tee during hypothetical negotiation, since
`patentee did not sufficiently show how
`premises of theorem actually applied to
`specific facts of case at hand. 35 U.S.C.A.
`§ 284; Fed.Rules Evid.Rule 702, 28
`U.S.C.A.
`
`39. Patents O319(1)
`A patentee may not balance out an
`unreasonably high royalty base simply by
`asserting a low enough royalty rate.
`
`Patents O328(2)
`6,502,135, 7,418,504, 7,490,151, 7,921,-
`211. Valid and Infringed.
`
`William F. Lee, Wilmer Cutler Picker-
`ing Hale and Dorr, LLP, of Boston, MA,
`argued for defendant-appellant. With him
`on the brief were Mark C. Fleming, Lau-
`ren B. Fletcher, and Rebecca Bact, of Bos-
`ton, MA, and Jonathan G. Cedarbaum,
`Brittany Blueitt Amadi, and Leah Litman,
`
`of Washington, DC. Of counsel on the brief
`was Danny L. Williams, Williams, Morgan
`& Amerson, P.C., of Houston, TX.
`
`J. Michael Jakes, Finnegan, Henderson,
`Farabow, Garrett & Dunner, LLP, of
`Washington, DC, argued for plaintiffs-ap-
`pellees. With him on the brief for Virnetx,
`Inc. were Kara F. Stoll and Srikala Atluri,
`of Washington, DC, and Benjamin R.
`Schlesinger, of Atlanta, GA. Of counsel on
`the brief were Bradley W. Caldwell, Jason
`D. Cassady, and John Austin Curry, Cald-
`well, Cassady & Curry, of Dallas, TX. On
`the brief for Science Applications Interna-
`tional Corporation were Donald Urrabazo,
`Arturo Padilla, and Ronald Wielkopolski,
`Urrabazo Law, P.C., of Los Angeles, CA;
`and Andy Tindel, Mann, Tindel & Thomp-
`son, of Tyler, TX.
`
`Before PROST,* Chief Judge and
`CHEN, Circuit Judge.**
`
`PROST, Chief Judge.
`
`Apple Inc. appeals from a final judg-
`ment of the U.S. District Court for the
`Eastern District of Texas, in which a jury
`found that Apple infringed U.S. Patent
`Nos. 6,502,135 (‘‘8135 patent’’), 7,418,504
`(‘‘8504 patent’’), 7,490,151 (‘‘8151 patent’’),
`and 7,921,211 (‘‘8211 patent’’). The jury
`further found that none of the infringed
`claims were invalid and awarded damages
`to plaintiffs-appellees VirnetX, Inc. and
`Science Applications International Corpo-
`ration
`(‘‘SAIC’’)
`in
`the amount of
`$368,160,000.
`
`For the reasons that follow, we affirm
`the jury’s findings that none of the assert-
`ed claims are invalid and that many of the
`asserted claims of the 8135 and 8151 pat-
`ents are infringed by Apple’s VPN On
`
`* Sharon Prost assumed the position of Chief
`Judge on May 31, 2014.
`
`** Randall R. Rader, who retired from the posi-
`tion of Circuit Judge on June 30, 2014, did
`not participate in this decision.
`
`

`

`1314
`
`767 FEDERAL REPORTER, 3d SERIES
`
`Demand product. We also affirm the dis-
`trict court’s exclusion of evidence relating
`to the reexamination of the patents-in-suit.
`However, we reverse the jury’s finding
`that the VPN On Demand product in-
`fringes claim 1 of the 8151 patent under
`the doctrine of equivalents. We also re-
`verse the district court’s construction of
`the claim term
`‘‘secure communication
`link’’ in the 8504 and 8211 patents and
`remand for further proceedings to deter-
`mine whether the FaceTime feature in-
`fringes those patents under the correct
`claim construction. Finally, we vacate the
`jury’s damages award and remand for fur-
`ther proceedings consistent with this opin-
`ion.
`
`BACKGROUND
`
`The patents at issue claim technology
`for providing security over networks such
`as the Internet. The patents assert pri-
`ority to applications filed in the 1990s,
`originally assigned to SAIC. VirnetX, a
`Nevada-based software development and
`licensing enterprise, acquired the patents
`from SAIC in 2006.
`
`I. The 8504 and 8211 Patents and Face-
`Time
`
`The 8504 and 8211 patents share a com-
`mon specification disclosing a domain
`name service (‘‘DNS’’) system that re-
`solves domain names and facilitates estab-
`lishing ‘‘secure communication links.’’ 8504
`patent col. 55 ll. 49–50. In one embodi-
`ment, an application on the client comput-
`er sends a query including the domain
`name to a ‘‘secure domain name service,’’
`which contains a database of secure do-
`main names and corresponding secure net-
`work addresses. Id. at col. 50 ll. 54–57,
`col. 51 ll. 11–19, col. 51 ll. 29–32. This
`allows a user to establish a secure commu-
`nication link between a client computer
`
`and a secure target network address. Id.
`at col. 51 ll. 34–40.
`Representative claim 1 of the 8504 pat-
`ent recites:
`1. A system for providing a domain
`name service for establishing a secure
`communication link, the system compris-
`ing:
`a domain name service system config-
`ured to be connected to a communication
`network, to store a plurality of domain
`names and corresponding network ad-
`dresses, to receive a query for a network
`address, and to comprise an indication
`that the domain name service system
`supports establishing a secure communi-
`cation link.
`Id. at col. 55 ll. 49–56.
`Before the district court, VirnetX ac-
`cused Apple of infringement based on its
`‘‘FaceTime’’ feature. Specifically, VirnetX
`accused Apple’s servers that run Face-
`Time on Apple’s iPhone, iPod, iPad (collec-
`tively, ‘‘iOS devices’’), and Mac computers
`of infringing claims 1, 2, 5, 16, 21, and 27 of
`the 8504 patent as well as claims 36, 37, 47,
`and 51 of the 8211 patent. In operation,
`FaceTime allows secure video calling be-
`tween select Apple devices. J.A. 1443. To
`use FaceTime, a caller enters an intended
`recipient’s e-mail address or telephone
`number
`into the caller’s device
`(e.g.,
`iPhone). J.A. 1451–52. An invitation is
`then sent to Apple’s FaceTime server,
`which forwards the invitation to a network
`address translator (‘‘NAT’’) which, in turn,
`readdresses the invitation and sends it on
`to the receiving device. J.A. 1821, 1824–
`25. The recipient may then accept or de-
`cline the call. J.A. 1453. If accepted,
`FaceTime servers establish a secure Face-
`Time call. J.A. 1453. Once connected, the
`devices transmit audio/video data as pack-
`ets across the secure communication path
`without passing through the FaceTime
`server. J.A. 1820, 1825.
`
`

`

`VIRNETX, INC. v. CISCO SYSTEMS, INC.
`Cite as 767 F.3d 1308 (Fed. Cir. 2014)
`
`1315
`
`II. The 8135 and 8151 Patents and VPN
`On Demand
`
`A conventional DNS resolves domain
`names (e.g., ‘‘Yahoo.com’’) into Internet
`Protocol (‘‘IP’’) addresses. See 8135 patent
`col. 37 ll. 22–27. A user’s web browser
`then utilizes the IP address to request a
`website. Id. at col. 37 ll. 24–29.
`
`The 8135 and 8151 patents share a com-
`mon specification disclosing a system in
`which, instead of a conventional DNS re-
`ceiving the request, a DNS proxy inter-
`cepts it and determines whether the re-
`quest is for a secure site. Id. at col. 38 ll.
`23–25. If the proxy determines that a
`request is for a secure site, the system
`automatically
`initiates a virtual private
`network (‘‘VPN’’) between the proxy and
`the secure site. Id. at col. 38 ll. 30–33. If
`the browser determines that the request
`was for a non-secure website, then the
`DNS proxy forwards the request to a con-
`ventional DNS for resolution. Id. at col.
`38 ll. 43–47.
`
`Representative claim 1 of the 8135 pat-
`ent recites:
`
`1. A method of transparently creating
`a virtual private network (VPN) be-
`tween a client computer and a target
`computer, comprising the steps of:
`
`(1) generating from the client computer
`a Domain Name Service (DNS) request
`that requests an IP address correspond-
`ing to a domain name associated with
`the target computer;
`
`(2) determining whether the DNS re-
`quest transmitted in step (1) is request-
`ing access to a secure web site; and
`
`(3) in response to determining that the
`DNS request in step (2) is requesting
`access to a secure target web site, auto-
`matically initiating the VPN between the
`
`client computer and the target comput-
`er.
`Id. at col. 47 ll. 20–32.
`Claims 1 and 13 of the 8151 patent are
`similar to claim 1 of the 8135 patent except
`that they recite initiating an ‘‘encrypted
`channel’’ and creating a ‘‘secure channel,’’
`respectively, instead of creating a ‘‘VPN.’’
`8151 patent col. 46 ll. 55–67, col. 48 ll. 18–
`29.
`
`Before the district court, VirnetX ac-
`cused Apple’s
`iPhone,
`iPad, and
`iPod
`Touch of infringing claims 1, 3, 7, and 8 of
`the 8135 patent and claims 1 and 13 of the
`8151 patent because they include a feature
`called ‘‘VPN On Demand.’’ When a user
`enters a domain name into the browser of
`an iOS device, a DNS request is generat-
`ed. J.A. 1393–94. VPN On Demand re-
`ceives the request and checks a list of
`domain names for which a VPN connection
`should be established, known as a ‘‘config-
`uration file.’’ J.A. 1377. If the entered
`domain name matches a domain name in
`the configuration file, VPN On Demand
`contacts a VPN server to authenticate the
`user and, if successful, automatically estab-
`lishes a VPN between the user’s browser
`and the target computer with which the
`requested domain name
`is associated.
`J.A. 1377–78, 1396–98.
`
`III. Five–Day Jury Trial and Post–Tri-
`al Motions
`
`On August 11, 2010, VirnetX filed this
`infringement action, alleging that Apple’s
`FaceTime servers infringe certain claims
`of the 8504 and 8211 patents, and that
`Apple’s VPN On Demand feature infringes
`certain claims of the 8135 and 8151 patents.
`Apple responded that FaceTime and VPN
`On Demand do not infringe, and that the
`asserted claims were invalid as anticipated
`by a 1996 publication by Takahiro Kiuchi
`et al. (‘‘Kiuchi’’).
`
`

`

`1316
`
`767 FEDERAL REPORTER, 3d SERIES
`
`On April 25, 2012, the district court con-
`strued disputed claim terms, and a jury
`trial commenced on October 31, 2012. Af-
`ter a five-day trial, the jury returned its
`verdict, finding all of the asserted claims
`valid and infringed. The jury awarded
`VirnetX $368,160,000 in reasonable royalty
`damages. Apple moved for judgment as a
`matter of law (‘‘JMOL’’) or, alternatively,
`for a new trial or remittitur. On February
`26, 2013, the district court denied Apple’s
`motions. VirnetX, Inc. v. Apple Inc., 925
`F.Supp.2d 816 (E.D.Tex.2013).
`Apple now appeals the denial of its post-
`trial motion for JMOL or a new trial.
`This court has jurisdiction under 28 U.S.C.
`§ 1295(a)(1).
`
`DISCUSSION
`
`I. Claim Construction
`On appeal, Apple argues that the district
`court erred in construing the terms ‘‘do-
`main name’’ and ‘‘secure communication
`link,’’ both recited in the 8504 and 8211
`patents. For the reasons that follow, we
`affirm the construction of ‘‘domain name’’
`and reverse the construction of ‘‘secure
`communication link.’’
`
`[1–4] Claim construction is a question
`of law that we review de novo. Lighting
`Ballast Control LLC v. Philips Elecs. N.
`Am. Corp., 744 F.3d 1272, 1276–77 (Fed.
`Cir.2014) (en banc); Cybor Corp. v. FAS
`Techs., Inc., 138 F.3d 1448, 1456 (Fed.Cir.
`1998) (en banc). The process of constru-
`ing a claim term begins with the words of
` See Vitronics
`the claims themselves.
`Corp. v. Conceptronic, Inc., 90 F.3d 1576,
` Phillips v. AWH
`1582 (Fed.Cir.1996);
`Corp., 415 F.3d 1303, 1312–14 (Fed.Cir.
`2005) (en banc).
` However, the claims
`‘‘must be read in view of the specification,
`of which they are a part.’’ Phillips, 415
`F.3d at 1315 (quoting Markman v. West-
`view Instruments, Inc., 52 F.3d 967, 979
`
`(Fed.Cir.1995) (en banc), aff’d 517 U.S.
`370, 116 S.Ct. 1384, 134 L.Ed.2d 577
`(1996)). Additionally, the doctrine of claim
`differentiation disfavors reading a limita-
`tion from a dependent claim into an inde-
` See
`InterDigital
`pendent
`claim.
`Commc’ns, LLC v. Int’l Trade Comm’n,
`690 F.3d 1318, 1324 (Fed.Cir.2012). Al-
`though courts are permitted to consider
`extrinsic evidence like expert testimony,
`dictionaries, and treatises, such evidence is
`generally of less significance than the in-
`trinsic record. Phillips, 415 F.3d at 1317
`(citing C.R. Bard, Inc. v. U.S. Surgical
`Corp., 388 F.3d 858, 862 (Fed.Cir.2004)).
`
`‘‘Domain Name’’
`A.
`[5] The district court construed ‘‘do-
`main name’’ as ‘‘a name corresponding to
`an IP address.’’ Memorandum Opinion &
`Order at 16, VirnetX, Inc. v. Cisco Sys.
`Inc., No. 6:10–cv–416 (E.D.Tex. Apr. 25,
`2012), ECF No. 266 (‘‘Claim Construction
`Order ’’). Apple argues, as it did below,
`that the proper construction is ‘‘a hierar-
`chical sequence of words in decreasing or-
`der of specificity that corresponds to a
`numerical IP address.’’ Apple insists that
`its construction represents the plain and
`ordinary meaning of the term, relying pri-
`marily on a technical dictionary definition
`and several examples in the specification
`(e.g., ‘‘Yahoo.com’’). We disagree. Intrin-
`sic evidence supports the district court’s
`construction of ‘‘domain name.’’ The spec-
`ification of the 8504 and 8211 patents sug-
`gests the use of the invention for secure
`communications between application pro-
`grams like
`‘‘video conferencing, e-mail,
`word processing programs, telephony, and
`the like.’’ 8504 patent col. 21 ll. 27–29.
`The disclosure of such applications demon-
`strates that the inventors did not intend to
`limit ‘‘domain name’’ to the particular for-
`matting limitations of websites sought by
`Apple, i.e., a top-level domain, second-level
`domain, and host name.
`
`

`

`VIRNETX, INC. v. CISCO SYSTEMS, INC.
`Cite as 767 F.3d 1308 (Fed. Cir. 2014)
`
`1317
`
`Additionally, fundamental principles of
`claim differentiation disfavor reading Ap-
`ple’s hierarchical limitation into the inde-
`pendent claims. Dependent claims in both
`patents require that ‘‘at least one’’ of the
`domain names stored by the system com-
`prise a top-level domain name. See, e.g.,
`8504 patent col. 55 ll. 57–59 (‘‘The system
`of claim 1, wherein at least one of the
`plurality of domain names comprises a top-
`level domain name.’’); 8211 patent col. 57
`ll. 47–50 (‘‘The non-transitory machine-
`readable medium of claim 36, wherein the
`instructions comprise code for storing the
`plurality of domain names and correspond-
`ing network addresses including at least
`one top-level domain name.’’). The specific
`limitation of hierarchical formatting in the
`dependent claims strongly suggests that
`the independent claims contemplate do-
`main names both with and without the
`hierarchical format exemplified by ‘‘Ya-
`hoo.com.’’ See InterDigital, 690 F.3d at
`1324 (‘‘The doctrine of claim differentiation
`is at its strongest TTT ‘where the limitation
`that is sought to be ‘‘read into’’ an inde-
`pendent claim already appears in a depen-
`dent claim.’ ’’ (quoting Liebel–Flarsheim
`Co. v. Medrad, Inc., 358 F.3d 898, 910
`(Fed.Cir.2004))).
`
`is not out-
`intrinsic evidence
`Such
`weighed by the extrinsic evidence of one
`dictionary definition. This is particularly
`true here, where the dictionary definition
`seems to contemplate web addresses on
`the Internet, while the specification makes
`clear that the claim term in question is not
`so limited. See J.A. 6139–40. Thus, we
`affirm the district court’s construction of
`the term ‘‘domain name’’ as ‘‘a name corre-
`sponding to an IP address.’’
`
`1. The district court construed VPN to mean
`‘‘a network of computers which privately and
`directly communicate with each other by en-
`crypting traffic on insecure paths between the
`
`B.
`
`‘‘Secure Communication Link’’
`
`[6] The district court construed ‘‘se-
`cure communication link’’ as ‘‘a direct com-
`munication link that provides data securi-
` Claim Construction Order at 13.
`ty.’’
`Apple argues that this term should be
`construed consistent with ‘‘VPN,’’ which
`the district court construed to require not
`only data security but also anonymity.1
`
`As an initial matter, we note that there
`is no dispute that the word ‘‘secure’’ does
`not have a plain and ordinary meaning in
`this context, and so must be defined by
`reference to the specification. See Oral
`Arg. 31:50–32:40, available at http://www.
`cafc.uscourts.gov/oral-argument-
`recordings/13-1489/all
`(acknowledgement
`by VirnetX’s counsel that construction of
`‘‘secure’’ requires consideration of the
`specification).
`
`Moreover, we agree with Apple that,
`when read in light of the entire specifica-
`tion, the term ‘‘secure communication link’’
`requires anonymity. Indeed, the addition
`of anonymity is presented as one of the
`primary inventive contributions of the pat-
`ent. For example, the Background of the
`Invention states that ‘‘[a] tremendous vari-
`ety of methods have been proposed and
`implemented to provide security and ano-
`nymity for communications over the Inter-
`net.’’ 8504 patent col. 1 ll. 32–35 (emphasis
`added). It goes on to define these two
`concepts as counterpart safeguards against
`eavesdropping that could occur while two
`computer terminals communicate over the
`Internet. Id. at col. 1 ll. 38–54. Security
`in this context refers to protection of data
`itself, to preserve the secrecy of its con-
`tents, while anonymity refers to prevent-
`ing an eavesdropper from discovering the
`
`computers where the communication is both
`secure and anonymous.’’ Claim Construction
`Order at