Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 1 of 12 PageID #: 69384
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`VIRNETX INC., and
`LEIDOS, INC.,
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` Plaintiffs,
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`v.
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`APPLE INC.,
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` Defendant.
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` No. 6:12-cv-00855-RWS
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`JURY TRIAL DEMANDED
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`PLAINTIFF VIRNETX INC.’S RESPONSE IN OPPOSITION TO
`APPLE’S MOTION FOR COSTS
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 2 of 12 PageID #: 69385
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` I.
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`TABLE OF CONTENTS
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`Procedural History .............................................................................................................. 1
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`II.
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`Apple Was Time-Barred from Bringing the Mangrove IPRs Themselves ......................... 3
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`III. Mangrove is Distinguished from the Petitioners in B.E. Tech. ........................................... 4
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`IV.
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`The Mangrove IPRs Relied on Precluded Invalidity Arguments ....................................... 5
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`V.
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`The Court Should At Least Exercise Discretion and Deny Costs ...................................... 6
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`VI.
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`Apple’s Undisputed Bill of Costs ....................................................................................... 6
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 3 of 12 PageID #: 69386
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`TABLE OF AUTHORITIES
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`Cases
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`Apple Inc. v. VirnetX Inc.
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`IPR2013-00348, Paper 1 (PTAB Jun. 12, 2013) .................................................................... 4, 5
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`Apple Inc. v. VirnetX Inc.
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`IPR2013-00348, Paper 14 (PTAB Dec. 13, 2013)...................................................................... 1
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`Apple Inc. v. VirnetX Inc.
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`IPR2013-00354, Paper 1 (PTAB Jun. 12, 2013) .................................................................... 4, 5
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`Apple Inc. v. VirnetX Inc.
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`IPR2013-00354, Paper 20 (PTAB Dec. 13, 2013)...................................................................... 1
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`Apple Inc. v. VirnetX Inc.
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`IPR2016-00062, Paper 1 (PTAB Oct. 26, 2015) ........................................................................ 2
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`Apple Inc. v. VirnetX Inc.
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`IPR2016-00063, Paper 1 (PTAB Oct. 26, 2015) ........................................................................ 2
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`B.E. Tech., L.L.C. v. Facebook, Inc.
` 940 F.3d 675 (Fed. Cir. 2019)............................................................................................ passim
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`Facebook Inc. v. B.E. Technology, L.L.C.
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`IPR2014-00053, Paper 1 (PTAB Oct. 9, 2013) .......................................................................... 3
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`Morris v. Grecon, Inc.
` 388 F. Supp. 3d 711 (E.D. Tex. 2019) ........................................................................................ 6
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`Sheets v. Yamaha Motors Corp., USA
` 891 F.2d 533 (5th Cir. 1990) ...................................................................................................... 6
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`VirnetX Inc. v. Apple Inc.
` 792 F. App'x 796 (Fed. Cir. 2019) .................................................................................. 1, 2, 3, 5
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`VirnetX Inc. v. Apple Inc.
` No. 2021-1672, 2023 WL 2770074 (Fed. Cir. Mar. 31, 2023) ................................................... 3
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`VirnetX Inc. v. Mangrove Partners Master Fund, Ltd.
` No. 2020-2271, 2023 WL 2708975 (Fed. Cir. Mar. 30, 2023) ................................................... 2
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 4 of 12 PageID #: 69387
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`Statutes
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`35 U.S.C. § 315(b) .............................................................................................................. 1, 2, 3, 4
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`Rules
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`Fed. R. Civ. P. 54(d)(1)................................................................................................................... 1
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 5 of 12 PageID #: 69388
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`Apple is not the prevailing partying in this action and therefore is not entitled to costs. Fed.
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`R. Civ. P. 54(d)(1). Apple’s motion attempts to improperly extend the Federal Circuit’s holding in
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`B.E. Tech., L.L.C. v. Facebook, Inc. beyond what is equitable.
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`After having its own IPR petitions denied,1 Apple’s present motion attempts to ride the
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`coattails of a third party in order to deem itself a prevailing party. Dkt. 1058 at 2 (“Apple joined
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`Mangrove’s IPR proceeding and thus is entitled to the same prevailing party status as
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`Mangrove”).2 Specifically, Apple improperly bases its prevailing party status on IPRs that Apple
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`could not have independently sought due to the time limitation of 35 U.S.C. § 315(b). Furthermore,
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`such IPRs primarily relied on a specific Kiuchi reference that Apple previously litigated and was
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`precluded from litigating in this case. These factual circumstances significantly distinguish this
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`case from B.E. Tech., L.L.C. v. Facebook, Inc. and support the fact that Apple is not a prevailing
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`party.
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`I.
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`Procedural History
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`Apple’s motion is based on the Federal Circuit’s affirmation of two PTAB final written
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`decisions, wherein the challenged claims of U.S. Patent Nos. 6,502,135 (“’135 patent”) and
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`7,490,151 (“’151 patent”) were found unpatentable. See Dkt. 1058 at 1.
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`The parties originally litigated these two patents in a prior case (“Apple I”). Dkt. 181 at 2.
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`During the Apple I trial in 2012, the only invalidity theory Apple presented was based on a 1996
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`publication by Takahiro Kiuchi entitled “C-HTTP - The Development of a Secure, Closed HTTP-
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`1 See Apple Inc. v. VirnetX Inc., IPR2013-00348, Paper 14 (PTAB Dec. 13, 2013) (Denying
`institution of challenge to claims of U.S. Patent No. 6,502,135); Apple Inc. v. VirnetX Inc.,
`IPR2013-00354, Paper 20 (PTAB Dec. 13, 2013) (Denying institution of challenge to claims of
`U.S. Patent No. 7,490,151).
`2 Apple’s statement regarding Mangrove’s “prevailing party status” is incoherent, given that
`Mangrove is not a party to a district court case involving these patents.
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 6 of 12 PageID #: 69389
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`based Network on the Internet” (“Kiuchi”). Id. The jury in Apple I found that both patents were
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`valid and that Apple infringed. Following the Apple I verdict, this present action was filed.
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`Given the history of Apple I, VirnetX filed a Motion for Partial Summary Judgment in this
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`case based on the prior litigation. See generally Dkt. 149. After extensive argument from each side,
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`the court determined that certain invalidity positions were precluded by issue preclusion as a result
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`of Apple I. Dkt. 181 at 9. During this process, Apple never asserted the Kiuchi reference, instead
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`conceding that “Kiuchi was fully litigated in Apple I.” 3 Id. at 7.
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`In April 2015, the two IPRs that form the basis of Apple’s present motion (the “Mangrove
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`IPRs”) were filed by Mangrove Partners Master Fund, Ltd.4 Neither patent had ever been asserted
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`against Mangrove. Every argument in both Mangrove IPRs relied on the same Kiuchi reference
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`that was presented at trial in Apple I. See VirnetX Inc. v. Mangrove Partners Master Fund, Ltd.,
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`No. 2020-2271, 2023 WL 2708975, at *1–2 (Fed. Cir. Mar. 30, 2023).
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`In October 2015, Apple separately filed petitions for two IPRs on the same patents and
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`based on the same Kiuchi reference from Apple I.5 Both petitions admitted that Apple was past the
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`one-year time limitation bar of 35 U.S.C. § 315(b).6 This meant that Apple could not bring either
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`3 Apple additionally admitted that “Apple’s other invalidity defenses, including those based on
`prior art, neither depend on the factual determinations made regarding Kiuchi nor are governed by
`the same legal standard.” Dkt. 155 at 13.
`4 See Mangrove Partners Master Fund, Ltd. v. VirnetX Inc., IPR2015-01046, Paper 1 (PTAB April
`27, 2015) (challenging the claims of U.S. Patent No. 6,502,135); Mangrove Partners Master Fund,
`Ltd. v. VirnetX Inc., IPR2015-01047, Paper 1 (PTAB April 27, 2015) (challenging the claims of
`U.S. Patent No. 7,490,151).
`5See generally, Apple Inc. v. VirnetX Inc., IPR2016-00062, Paper 1 (PTAB Oct. 26, 2015)
`(challenging the claims of U.S. Patent No. 6,502,135); Apple Inc. v. VirnetX Inc., IPR2016-00063,
`Paper 1 (PTAB Oct. 26, 2015) (challenging the claims of U.S. Patent No. 7,490,151).
`6 Apple Inc. v. VirnetX Inc., IPR2016-00062, Paper 1 at 2 (PTAB Oct. 26, 2015); Apple Inc. v.
`VirnetX Inc., IPR2016-00063, Paper 1 at 2 (PTAB Oct. 26, 2015).
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 7 of 12 PageID #: 69390
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`of these IPRs independently. However, because Apple moved for joinder with the Mangrove IPRs,
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`Apple was allowed to position itself within an IPR that it could not have brought itself.
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`In 2018, the Court entered final judgment in this case in VirnetX’s favor. Dkt. 801. After
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`an appeal and remand, wherein the Federal Circuit affirmed issue preclusion based on Apple I, this
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`Court once again entered final judgment in this case in VirnetX’s favor. VirnetX Inc. v. Apple Inc.,
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`792 F. App'x 796, 813 (Fed. Cir. 2019); Dkt. 1035. Once again, Apple appealed the decision.
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`Finally, in March 2023, the Federal Circuit remanded this case with instruction to dismiss it as
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`moot because of its decision to affirm unpatentability in the Mangrove IPRs. VirnetX Inc. v. Apple
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`Inc., No. 2021-1672, 2023 WL 2770074 (Fed. Cir. Mar. 31, 2023).
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`In its present motion, Apple primarily relies on a single case to support that it is a prevailing
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`party in light of the Mangrove IPRs: B.E. Tech., L.L.C. v. Facebook, Inc., 940 F.3d 675 (Fed. Cir.
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`2019). However, Apple’s reliance on B.E. Tech. fails to account for the substantial differences
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`between its current position and the position of the prevailing party in that case: Facebook.
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`II. Apple Was Time-Barred from Bringing the Mangrove IPRs Themselves
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`Apple cannot be a prevailing party under B.E. Tech. because it merely joined an IPR that
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`it could not have brought itself.
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`In B.E. Tech., Facebook properly filed its own petition under 35 U.S.C. § 315(b) within
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`one-year after service of a complaint alleging infringement. Facebook Inc. v. B.E. Technology,
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`L.L.C. IPR2014-00053, Paper 1 at 1 (PTAB Oct. 9, 2013). As a result, Facebook’s IPR was
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`subsequently instituted and Facebook battled for, and won, a final written decision holding
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`unpatentability. As explained by Apple in its motion, the same can be said of each of the petitioners
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`in B.E. Tech. Dkt. 1058 at 2. (“In B.E. Tech, the defendant, and two other third parties (Microsoft
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 8 of 12 PageID #: 69391
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`and Google), each filed petitions for inter partes review of the patent-at-issue, which the PTAB
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`ultimately held unpatentable in three final written decisions.”).
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`Thus, the Federal Circuit decision in B.E. Tech. reasonably affirmed one of the three final
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`written decisions and held the other two moot. Regardless of the specific posture at the Federal
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`Circuit level, each petitioner in fact properly filed their own IPR and battled in front of the PTAB
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`to win a final written decision. Because of this, it was reasonable for the court in B.E. Tech. to hold
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`that Facebook prevailed by “rebuffing” the plaintiff's claim and “by a winning a battle on the merits
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`before the PTO.” B.E. Tech., 940 F.3d at 679.
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`Here, Apple did not have the right to battle before the PTO to begin with. In 2013, prior to
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`the Mangrove IPRs, Apple actually filed petitions for the ’135 patent and ’151 patent and was
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`denied institution for both.7 Having lost the battle in front of PTAB on these two patents, Apple
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`knew that it could not bring its own IPR due to the time-bar of 35 U.S.C. § 315(b). Rather than
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`accept its loss, Apple instead chose to join a third-party’s battle in front of the PTAB.
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`Here, Apple attempts to overextend the Federal Circuit’s B.E. Tech. holding to apply to a
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`circumstance where Apple had already lost in front of the PTAB, was barred from bringing a
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`subsequent battle in front of the PTAB, and then positioned itself into another party’s battle in
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`front of the PTAB. Thus, even if the battle for the Mangrove IPRs was won, such battle was
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`Mangrove’s to bring and win, and cannot make Apple a prevailing party.
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`III. Mangrove is Distinguished from the Petitioners in B.E. Tech.
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`Mangrove’s role as a disinterested party further distinguishes the facts of this case from
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`B.E. Tech. Apple’s position relative to Mangrove substantively differs from the IPR petitioners in
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`7 See Apple Inc. v. VirnetX Inc., IPR2013-00348, Paper 1 (PTAB Jun. 12, 2013); Apple Inc. v.
`VirnetX Inc., IPR2013-00354, Paper 1 (PTAB Jun. 12, 2013).
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 9 of 12 PageID #: 69392
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`B.E. Tech. In B.E. Tech., Facebook, Microsoft, and Google were all actually sued and accused of
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`infringing the patent at issue. B.E. Tech. at 676. Thus, Facebook, Microsoft, and Google could
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`actually become prevailing parties in their own cases depending on their fight in front of the PTAB.
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`In that sense, Facebook, Microsoft, and Google were paralleled as potential prevailing parties.
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`Here, Apple confusingly asserts they are “entitled to the same prevailing party status as
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`Mangrove.” Dkt. 1058 at 2. However, it is impossible for Mangrove to have prevailing party status
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`since it was not sued. This is a significant departure from the facts of B.E. Tech. Unconvincingly,
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`Apple’s prevailing party argument here depends on paralleling itself with an IPR that could not
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`have produced a prevailing party to begin with.
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`IV. The Mangrove IPRs Relied on Precluded Invalidity Arguments
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`A further reason Apple cannot rely on the Mangrove IPRs to establish its prevailing party
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`status is because the Mangrove IPRs rely primarily on the same Kiuchi reference that Apple was
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`precluded from asserting in this case.
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`Once again, Apple is attempting to establish prevailing party status based on a battle that
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`it had already lost in the past. Apple elected Kiuchi as its sole argument in front of a jury during
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`Apple I. Apple fully litigated Kiuchi and lost the invalidity battle then. Apple’s 2013 IPR petitions
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`did not even mention Kiuchi as Apple knew that it could not raise it as a reference after Apple I.8
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`In this case, this Court, as well as the Federal Circuit, have both affirmed that issue preclusion
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`based on Apple I should apply. VirnetX, 792 F. App'x at 813.
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`Apple now attempts to rely on the Mangrove IPRs to establish a sense of “prevailing,” even
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`though the Mangrove IPR arguments were precluded from ever prevailing in this case. It is both
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`8 See generally, Apple Inc. v. VirnetX Inc., IPR2013-00348, Paper 1 (PTAB Jun. 12, 2013); Apple
`Inc. v. VirnetX Inc., IPR2013-00354, Paper 1 (PTAB Jun. 12, 2013).
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 10 of 12 PageID #: 69393
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`incoherent and inequitable to determine that Apple is a prevailing party, as such a determination
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`would effectively allow for the precluded Kiuchi reference to “prevail” in this present case.
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`In conclusion, there is no evidence that B.E. Tech., nor any other case, allows for a party
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`to prevail based on an IPR that (1) the party could not have brought itself without joinder, (2) was
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`brought by a disinterested third-party instead, and/or (3) relied entirely on arguments that the party
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`was precluded from bringing in the present case.
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`V. The Court Should At Least Exercise Discretion and Deny Costs
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`In the event that the Court finds that it is nevertheless possible for Apple to be a prevailing
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`party, Plaintiff requests that the Court still exercise its discretion to not award Apple its costs. Such
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`denial of costs would serve the purposes of equity for the prior reasons explained in this response
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`as well as the fact that Apple’s current market capitalization is nearly $3 trillion dollars. See Morris
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`v. Grecon, Inc., 388 F. Supp. 3d 711, 717–18 (E.D. Tex. 2019) (citing Sheets v. Yamaha Motors
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`Corp., USA, 891 F.2d 533, 539-40 (5th Cir. 1990)) (“When analyzing costs of court… a district
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`court may exercise its discretion and refuse to do so if it provides justification for its refusal.”).
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`VI. Apple’s Undisputed Bill of Costs
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`VirnetX does not dispute the calculation of the maximum amount of costs to which Apple
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`would be entitled should the Court determine that Apple is entitled to costs. Apple’s taxable bill
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`of costs are detailed in its motion. Dkt. 1058 at 4.
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 11 of 12 PageID #: 69394
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`DATED: August 11, 2023
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` Respectfully submitted,
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` CALDWELL CASSADY & CURRY
`
`/s/ Bradley W. Caldwell________________
`Bradley W. Caldwell
`Texas State Bar No. 24040630
`Email: bcaldwell@caldwellcc.com
`Jason D. Cassady
`Texas State Bar No. 24045625
`Email: jcassady@caldwellcc.com
`John Austin Curry
`Texas State Bar No. 24059636
`Email: acurry@caldwellcc.com
`Daniel R. Pearson
`Texas State Bar No. 24070398
`Email: dpearson@caldwellcc.com
`Hamad M. Hamad
`Texas State Bar No. 24061268
`Email: hhamad@caldwellcc.com
`Justin T. Nemunaitis
`Texas State Bar No. 24065815
`Email: jnemunaitis@caldwellcc.com
`Christopher S. Stewart
`Texas State Bar No. 24079399
`Email: cstewart@caldwellcc.com
`Warren J. McCarty, III
`Texas State Bar No. 24107857
`Email: wmccarty@caldwellcc.com
`CALDWELL CASSADY CURRY P.C.
`2121 N. Pearl St., Suite 1200
`Dallas, Texas 75201
`Telephone: (214) 888-4848
`Facsimile: (214) 888-4849
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`Robert M. Parker
`Texas State Bar No. 15498000
`Email: rmparker@pbatylor.com
`R. Christopher Bunt
`Texas State Bar No. 00787165
`Email: rcbunt@pbatyler.com
`PARKER, BUNT & AINSWORTH, P.C.
`100 East Ferguson, Suite 418
`Tyler, Texas 75702
`Telephone: (903) 531-3535
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`Case 6:12-cv-00855-RWS Document 1059 Filed 08/11/23 Page 12 of 12 PageID #: 69395
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`Telecopier: (903) 533-9687
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`T. John Ward, Jr.
`Texas State Bar No. 00794818
`Email: jw@wsfirm.com
`Claire Abernathy Henry
`Texas State Bar No. 24053063
`Email: claire@wsfirm.com
`WARD, SMITH & HILL, PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`Telephone: (903) 757-6400
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`
`ATTORNEYS FOR PLAINTIFF
`VIRNETX INC.
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that all counsel of record who have consented to electronic
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`service are being served with a copy of this document via the Court’s CM/ECF system pursuant
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`to Local Rule CV-5(a)(3) on this the 11th day of August, 2023.
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`/s/ Bradley W. Caldwell
`Bradley W. Caldwell
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