Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 1 of 6 PageID #: 69365
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`VIRNETX INC., and
`LEIDOS, INC.,
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`APPLE INC.,
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`Plaintiffs,
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`Defendant.
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`No. 6:12-cv-00855-RWS
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`APPLE’S MOTION FOR COSTS
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`Apple is the “prevailing party” in this action and entitled to its costs. Fed. R. Civ. P.
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`54(d)(1). VirnetX “lost its cause of action” when the United States Court of Appeals for the
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`Federal Circuit affirmed that VirnetX’s asserted patents were unpatentable and vacated its Final
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`Judgment against Apple, directing this Court to dismiss the case against Apple as moot. VirnetX
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`Inc. v. Mangrove Partners Master Fund, Ltd., No. 2020-2271, 2023 WL 2708975, at *11 (Fed.
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`Cir. Mar. 30, 2023); Dkt. 1054 at 2–3; Dkt. 1057 at 1–2. Apple’s motion for costs is thus
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`straightforward: costs “should be allowed to the prevailing party,” which Apple is here. Fed. R.
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`Civ. P. 54(d)(1). Indeed, VirnetX does not dispute the amount of Apple’s taxable bill of costs,
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`which are detailed in Exhibit A. Accordingly, there are no disputes for the Court to resolve
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`regarding the amount of Apple’s taxable costs. Nonetheless, on July 26, 2023—two days before
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`the deadline for Apple to submit its costs—VirnetX indicated that it opposes this motion because
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`it disputes that Apple is the prevailing party. Ex. B at 2. VirnetX’s meritless argument should be
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`rejected and the Court should award Apple costs in the amount detailed in Exhibit A.
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`Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 2 of 6 PageID #: 69366
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`I.
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`Apple Is the Prevailing Party
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`VirnetX contends that Apple cannot be the prevailing party because “another party”—
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`Mangrove Partners Master Fund, Ltd. (“Mangrove”)—successfully invalidated VirnetX’s patents
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`at the Patent Trial and Appeal Board (“PTAB”). Ex. B at 1. This is incorrect: Apple joined
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`Mangrove’s IPR proceeding and thus is entitled to the same prevailing party status as Mangrove.
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`Mangrove Partners Master Fund, Ltd., 2023 WL 2708975, at *1 (“Once the Board instituted
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`review, Apple Inc. (‘Apple’) filed additional IPR petitions and was joined to Mangrove's IPR
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`proceeding.”).
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`But VirnetX’s theory also fails even if Mangrove alone invalidated VirnetX’s asserted
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`patents: Apple is the prevailing party “irrespective of the reason for the court’s decision” because
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`VirnetX’s infringement theories were “rebuffed.” B.E. Tech., L.L.C. v. Facebook, Inc., 940 F.3d
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`675, 678-679 (Fed. Cir. 2019) (quoting CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419, 431
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`(2016)). The Federal Circuit’s decision in B.E. Tech., L.L.C. v. Facebook, Inc., is instructive. In
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`B.E. Tech, the defendant, and two other third parties (Microsoft and Google), each filed petitions
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`for inter partes review of the patent-at-issue, which the PTAB ultimately held unpatentable in
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`three final written decisions. Id. at 676. On appeal, the Federal Circuit affirmed only the PTAB’s
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`decision with respect to Microsoft, dismissing the defendant and Google’s appeals as moot. Id.;
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`see also B.E. Tech., L.L.C. v. Google, Inc., No. 2015-1827, 2016 WL 6803057, at *8 (Fed. Cir.
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`Nov. 17, 2016) (“Because we affirm the Board’s finding … based on Microsoft’s petition, we need
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`not resolve B.E.’s appeals relating to Google’s and Facebook’s parallel petitions and dismiss them
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`as moot.”). The Federal Circuit nonetheless held that the defendant in B.E. Tech was the prevailing
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`party because the case against it was dismissed as moot after the plaintiff’s patent was found
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`unpatentable. B.E. Tech., 940 F.3d at 679. Apple is the prevailing party here for the same reason:
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`Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 3 of 6 PageID #: 69367
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`the Federal Circuit affirmed the PTAB’s decision finding VirnetX’s asserted patents unpatentable
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`and vacated this Court’s prior judgment in favor of VirnetX as moot.
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`VirnetX is also wrong that Apple cannot be the prevailing party because it did not prevail
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`“at the District Court.” Ex. B at 1. The Court vacated Final Judgment in favor of VirnetX and
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`dismissed the case as moot. Dkt. 1057. That is prevailing. E.g., B.E. Tech., 940 F.3d at 679. To
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`the extent VirnetX is suggesting that Apple is not the prevailing party because the Court previously
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`entered judgment against it, that too is incorrect. E.g. Inland Steel Co. v. LTV Steel Co., 364 F.3d
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`1318, 1321 (Fed. Cir. 2004) (defendant determined to be prevailing party despite prior jury finding
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`of infringement after Federal Circuit affirmed PTAB’s finding that patent was invalid), abrogated
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`on other grounds by Raniere v. Microsoft Corp., 887 F.3d 1298 (Fed. Cir. 2018); Engel v.
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`Teleprompter Corp., 732 F.2d 1238, 1240 (5th Cir. 1984) (defendant prevailing party after
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`reversing adverse judgment on appeal); Ross Dress for Less, Inc. v. ML Dev. LP, No. CV H-20-
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`978, 2022 WL 2704545, at *2 (S.D. Tex. July 12, 2022) (plaintiff prevailing party after Fifth
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`Circuit reversed adverse summary judgment ruling).
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`Finally, VirnetX argues that even if Apple is the prevailing party (it is), the Court should
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`exercise its discretion to deny Apple costs. Ex. B at 1. There “is a ‘strong presumption’ that the
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`prevailing party will be awarded costs, and a denial, therefore, is ‘in the nature of a penalty.’”
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`Automation Middleware Sols., Inc. v. Invensys Sys., Inc., No. 2:15-CV-00898-RWS, 2018 WL
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`11229935, at *1 (E.D. Tex. Mar. 19, 2018) (Schroeder III, J.) (quoting Schwarz v. Folloder, 767
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`F.2d 125, 131 (5th Cir. 1985)). Indeed, there must be “some good reason” for denying costs to the
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`prevailing party. Id. VirnetX has articulated no such reason (see Ex. B), and none exists,
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`particularly since VirnetX already received a $439 million windfall on patents that never should
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`Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 4 of 6 PageID #: 69368
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`have been granted in the first place. Case No. 6:10-cv-417, Dkt. 1107 at 2. After almost 13 years
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`of defending against VirnetX’s invalid patents, Apple finally prevailed. It is entitled to its costs.
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`II.
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`Apple’s Undisputed Bill of Costs
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`VirnetX does not dispute the amount of costs to which Apple would be entitled should the
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`Court determine that Apple is entitled to costs. Ex. B at 1. Apple’s taxable bill of costs are detailed
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`on Exhibit A and are as follows:
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`1)
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`Agreed Bill of Costs Amounts
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`a. Fees for transcripts (28 U.S.C. § 1920(2))
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`b. Witness Fees (28 U.S.C. § 1920(3))
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`c. Copying Fees (28 U.S.C. § 1920(4))
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`$82,754.53
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`$12,612.49
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`$62,917,86
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`d. Compensation of Court-appointed experts (28 U.S.C. §1920(6))
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`$62,572,71
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`2)
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`Total
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`DATED: July 28, 2023
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`$220,857.59
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` Respectfully submitted,
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`By: /s/ Joseph A. Loy
`Gregory S. Arovas
`greg.arovas@kirkland.com
`Robert A. Appleby
`robert.appleby@kirkland.com
`Joseph A. Loy
`joseph.loy@kirkland.com
`Leslie M. Schmidt
`Leslie.schmidt@kirkland.com
`Nathaniel L. DeLucia
`nathaniel.delucia@kirkland.com
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, New York 10022
`Telephone: (212) 446-4800
`Facsimile: (212) 446-4900
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`4
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`Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 5 of 6 PageID #: 69369
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`Jeanne M. Heffernan
`jeanne.heffernan@kirkland.com
`KIRKLAND & ELLIS LLP
`401 Congress Avenue
`Austin, TX 78701
`Telephone: (512) 678-9100
`Facsimile: (512) 678-9101
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`Akshay S. Deoras
`akshay.deoras@kirkland.com
`KIRKLAND & ELLIS LLP
`555 California Street
`San Francisco, CA 94104
`Telephone: (415) 439-1400
`Facsimile: (415) 439-1500
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`Michael E. Jones, Lead Attorney
`Texas Bar No. 10929400
`mikejones@potterminton.com
`POTTER MINTON
`A Professional Corporation
`102 N. College Avenue, Suite 900
`Tyler, Texas 75702
`Telephone: (903) 597-8311
`Facsimile: (903) 593-0846
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`ATTORNEYS FOR APPLE INC.
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`5
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`Case 6:12-cv-00855-RWS Document 1058 Filed 07/28/23 Page 6 of 6 PageID #: 69370
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that the foregoing document was filed electronically in the
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`compliance with Local Rule CV-5(a) on July 28, 2023. As such, this document was served on all
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`counsel who are deemed to have consented to electronic service. Local Rule CV-5(a)(3)(A).
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`/s/ Joseph A. Loy
`Joseph A. Loy
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`CERTIFICATE OF CONFERENCE
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`The undersigned hereby certifies that the counsel for Defendant has complied with the meet
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`and confer requirement in Local Rules CV-7(h) and CV-54(b)(2). The personal conference
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`required by the Local Rules was conducted on July 26, 2023 via e-mail and conference call with
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`the following participants: Nathaniel DeLucia for Defendant and Daniel Pearson for Plaintiffs.
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`The parties were unable to reach agreement regarding Apple’s entitlement to costs.
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`/s/ Joseph A. Loy
`Joseph A. Loy
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