Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 1 of 15 PageID #: 37364
`
`
`VIRNETX INC. and SCIENCE
`APPLICATIONS INTERNATIONAL
`CORPORATION,
`
`
`Plaintiffs,
`
`
`vs.
`
`APPLE INC.,
`
`
`Defendant.
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`CAUSE NO. 6:12-CV-855
` [LEAD CASE]
`
`MEMORANDUM OPINION & ORDER
`
`Before the Court is Apple Inc.’s (“Apple”) Motion for a New Trial Based Upon the
`
`Consolidation of Cause Nos. 6:10-cv-417 and 6:12-cv-855. Docket No. 463 at 41–45.1 The
`
`combination of the consolidation and numerous statements about the prior jury verdict in Cause
`
`No. 6:10-cv-417 (“Apple I”) (Docket No. 598) introduced, through argument by counsel and
`
`witness questioning, the potential for juror confusion and unfairly prejudiced Apple’s right to a
`
`fair trial. Accordingly, the Motion (Docket No. 463 at 41–45) is GRANTED.
`
`BACKGROUND
`
`In Apple I, the jury found that Virtual Private Network On Demand (“VOD”) in iOS 3–6
`
`(“original VOD”) and FaceTime in iOS 4–6 and OS X 10.7 and 10.8 (“original FaceTime”)
`
`infringed VirnetX Inc.’s (“VirnetX”) asserted patents. Cause No. 6:10-cv-417, Docket No. 598.
`
`The Court entered final judgment and Apple appealed. Cause No. 6:10-cv-417, Docket No. 844.
`
`On appeal, the Federal Circuit upheld the jury’s finding of infringement of original VOD, but
`
`reversed and remanded the finding that original FaceTime infringed based upon a new claim
`
`
`1 Unless otherwise indicated, all docket numbers refer to Cause No. 6:12-cv-855.
`
`
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 2 of 15 PageID #: 37365
`
`construction. See VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1319 (Fed. Cir. 2014)
`
`(“However, the jury was not presented with the question of whether FaceTime infringes the
`
`asserted claims under a construction requiring anonymity. Thus, we remand for further
`
`proceedings to determine whether Apple’s FaceTime servers provide anonymity.”). The Federal
`
`Circuit also remanded the case for a new damages calculation. Id. at 1314. While Cause No.
`
`6:10-cv-417 was pending at the Federal Circuit, VirnetX filed Cause No. 6:12-cv-855, which
`
`accuses the redesigned VOD in iOS 7 and 8 (“new VOD”), the redesigned FaceTime in iOS 7
`
`and 8 and OS X 10.9 and 10.10 (“new FaceTime”) and iMessage of infringing its patents.
`
`After the Federal Circuit remanded Cause No. 6:10-cv-417, VirnetX filed a motion to
`
`consolidate it with Cause No. 6:12-cv-855. Cause No. 6:10-cv-417, Docket No. 864. Although
`
`Apple initially opposed the motion, when given the choice between trying Cause No.
`
`6:12-cv-855 before Cause No. 6:10-cv-417 or consolidating the cases, Apple preferred
`
`consolidation. Cause No. 6:10-cv-417, Docket No. 870 at 4. After reviewing the briefing and
`
`holding a hearing, the Court consolidated the cases. Cause No. 6:10-cv-417, Docket No. 878;
`
`Cause No. 6:12-cv-855, Docket No. 220. In both cases, VirnetX was the plaintiff, Apple was the
`
`defendant, different versions of VOD and FaceTime were accused features and the same patents
`
`were asserted. This consolidation combined the new issues in Cause No. 6:12-cv-855 with the
`
`unresolved remanded issues in Cause No. 6:10-cv-417, which included (1) damages owed to
`
`VirnetX because of the infringement of original VOD and (2) the alleged infringement, damages
`
`and willfulness of original FaceTime. In summary, the effect of Apple I on the issues in the
`
`consolidated case was as follows:
`
`
`
`
`
`Page 2 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 3 of 15 PageID #: 37366
`
`Accused Feature
`
`Original VOD
`New VOD
`
`Original FaceTime
`
`New FaceTime
`
`iMessage
`
`
`Affirmed Portions
`of Apple I
`Infringement
`
`
`Infringement Only If
`Anonymity Is Proven
`
`
`
`
`
`Issues for the Jury in
`the Consolidated Case
`Damages
`Infringement, Damages &
`Willfulness
`Infringement Only If
`Anonymity Is Proven,
`Damages & Willfulness
`Infringement, Damages &
`Willfulness
`Infringement & Damages
`
`Before the trial of the consolidated case, in a motion in limine, Apple raised concerns
`
`regarding Apple I and what aspects of the prior trial would be raised before the jury. Docket No.
`
`308 at 1–3. Apple stressed that the prior verdict “should be precluded as irrelevant and unfairly
`
`prejudicial.” Id. at 1. Again, after reviewing the briefing and conducting a hearing, the Court
`
`denied the motion with respect to VOD and FaceTime and granted the motion with respect to
`
`iMessage, invalidity and damages. Docket No. 389 at 86:22–87:13. Before announcing its
`
`ruling, the Court recognized that Apple I might complicate the trial:
`
`But the way I have sort of broken this out, I think based on some of the issues that
`were raised in the argument leads me to believe that a lot of this we’re just going
`to have to flesh out at trial. And I’m going to have to understand what the
`context is. And it may be that we have a number of sidebars throughout. And
`it—you know, if we have to do that, we have to do that.
`
`Id. at 86:8–14 (emphasis added).
`
`
`
`Apple also filed a motion to exclude the expert opinion of Dr. Mark Jones, VirnetX’s
`
`infringement expert. Docket No. 317. The motion was based on Dr. Jones’s infringement
`
`analysis for the redesigned features that only addressed differences between new and original
`
`VOD and differences between new and original FaceTime, relying on Apple I and the subsequent
`
`procedural history. Id. Consistent with the order consolidating the actions, the Court denied the
`
`Page 3 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 4 of 15 PageID #: 37367
`
`motion, specifically stating, “Although Apple presents valid criticism of Dr. Jones’s opinions,
`
`they go to the weight of the evidence rather than admissibility.” Docket No. 362 at 3.
`
`In light of the partial denial of Apple’s motion in limine and denial of the motion to
`
`exclude, Apple I was discussed more than 50 times by counsel and witnesses during the
`
`eight-day consolidated trial. E.g., Docket No. 433 (1/25/2016 Trial Tr.) at 69:18–70:3,
`
`72:19–73:9, 133:22–134:4, 175:7–176:23, 186:13–19, 187:3–6, 188:7, 191:6–9, 192:23–193:6,
`
`206:5–8, 206:14–20, 213:4–6; Docket No. 434 (1/26/2016 Trial Tr.) at 47:9–19, 108:4–11,
`
`148:13–149:7, 149:14–19, 151:24–152:9, 160:12–161:4, 162:4–9, 165:7–16, 183:11–185:13,
`
`192:5–193:18, 197:7–199:14, 203:25–206:19; Docket No. 436 (1/27/2016 Trial Tr.) at 22:9–11,
`
`122:22–123:20; Docket No. 438 (1/28/2016 Trial Tr.) at 4:18–24, 184:17–185:10, 247:25–248:9;
`
`Docket No. 442 (2/1/2016 Trial Tr.) at 95:21–96:19, 106:3–9, 265:5–13; Docket No. 444
`
`(2/2/2016 Trial Tr.) at 174:13–18, 176:12–14, 176:20–23, 177:14–20, 177:21–23, 180:20–25,
`
`181:16–19, 192:6–10, 194:2–6, 194:15–19, 197:7–8, 198:21–23, 199:6–14, 200:13–15, 223:3–5,
`
`227:14–17, 239:16–17, 240:8–11, 241:20–22, 242:7–8; Docket No. 445 (2/2/2016 Trial Tr.
`
`(SEALED)) at 8:10–13.
`
`In its post-trial briefing, Apple identifies 17 occasions where VirnetX’s counsel
`
`mentioned or alluded to Apple I. See Docket No. 463 at 43–45; see also Docket No. 433
`
`(1/25/2016 Trial Tr.) at 186:13–19, 187:3–6, 191:6–9, 206:14–20; Docket No. 438 (1/28/2016
`
`Trial Tr.) at 4:18–24, 184:17–185:10; Docket No. 442 (2/1/2016 Trial Tr.) at 95:21–96:19,
`
`265:5–13. Comparably, VirnetX identifies 25 times where Apple mentioned or alluded to Apple
`
`I. See Docket No. 470 at 46–49 n.39; see also Docket No. 433 (1/25/2016 Trial Tr.) at
`
`175:7–176:23; Docket No. 436 (1/27/2016 Trial Tr.) at 122:22–123:20. The parties discussed
`
`the Apple I jury finding that original FaceTime infringes—a finding that was ultimately
`
`Page 4 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 5 of 15 PageID #: 37368
`
`reversed—at least five times. Docket No. 433 (1/25/2016 Trial Tr.) at 175:7–176:23, 186:13–19,
`
`191:6–9; Docket No. 436 (1/27/2016 Trial Tr.) at 122:22–123:20; Docket No. 442 (2/1/2016
`
`Trial Tr.) at 95:21–96:19. Of the times that VirnetX mentioned Apple I, Apple objected once
`
`after opening arguments. Docket No. 434 (1/26/2016 Trial Tr.) at 11:11–16:3 (“We said it was a
`
`7th Amendment concern that we were being denied a fair right to a jury trial to have that prior
`
`verdict that was reversed and did not exist anymore brought up in front of this jury . . . .”).
`
`Aware that the parties planned to rely on Apple I throughout the trial (but unaware of the
`
`extent of that reliance), the Court discussed Apple I in the preliminary and final jury instructions.
`
`Docket No. 433 (1/25/2016 Trial Tr.) at 133:22–134:4, 146:23–148:11; Docket No. 444
`
`(2/2/2016 Trial Tr.) at 145:5–19, 157:1–10, 161:1–7. Specifically, from the final jury
`
`instructions:
`
`The parties have stipulated, or agreed, to some facts in this case. When the
`lawyers on both sides stipulate to the existence of a fact, you must, unless
`otherwise instructed, accept the stipulation as evidence and regard the fact as
`proved. Additionally, a prior jury determined that Apple infringed certain
`claims of two patents via its [VOD] feature in iOS 3 through iOS 6, which was
`from 2009 to 2013. Throughout these instructions, I will refer to this feature as
`Apple’s “Original [VOD].” Just like stipulated facts, that determination is
`binding, and you must regard it as proved. However, all other infringement
`allegations are contested and you must determine whether those claims are
`infringed. You may not assume or infer that the other patents and claims are
`infringed simply because of this prior finding of infringement.
`
`Docket No. 444 (2/2/2016 Trial Tr.) at 145:5–19 (emphasis added).
`
`The jury found for VirnetX on all of the disputed issues. Docket No. 425. The jury
`
`selected a royalty rate of $1.41, which was in the upper half of the royalty rate range proposed by
`
`VirnetX’s damages expert, Mr. Roy Weinstein. See id. at 1, 4. Following the verdict, Apple
`
`filed a motion for a new trial based upon the consolidation of Cause Nos. 6:10-cv-417 and
`
`6:12-cv-855. See Docket No. 463 at 41–45.
`
`Page 5 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 6 of 15 PageID #: 37369
`
`LEGAL STANDARD
`
`A new trial may be granted when the trial is not fair to the moving party, such as through
`
`prejudice to that party or potential jury confusion. See Montgomery Ward & Co. v. Duncan, 311
`
`U.S. 243, 251 (1940). Regional circuit law applies to motions for new trial. Z4 Techs., Inc. v.
`
`Microsoft Corp., 507 F.3d 1340, 1347 (Fed. Cir. 2007). The Fifth Circuit states:
`
`Rule 59 of the Federal Rules of Civil Procedure confirms the trial court’s historic
`power to grant a new trial based on its appraisal of the fairness of the trial and the
`reliability of the jury’s verdict. . . . A new trial may be granted, for example, if the
`district court finds the verdict is against the weight of the evidence, the damages
`awarded are excessive, the trial was unfair, or prejudicial error was committed in
`its course.
`
`Smith v. Transworld Drilling Co., 773 F.2d 610, 612–13 (5th Cir. 1985) (footnotes omitted).
`
`PARTIES’ ARGUMENTS
`
`In its motion for a new trial, Apple argues that mentioning Apple I to the jury during the
`
`consolidated trial prejudiced Apple. Docket No. 463 at 42. In other words, according to Apple,
`
`Apple I should have never been raised in a trial involving Cause No. 6:12-cv-855. Id. at 43–44.
`
`To avoid the prejudice, Apple states that the two cases should not have been tried
`
`simultaneously. Id. at 45. Apple asks for a new trial for Cause No. 6:10-cv-417 and then a new
`
`trial for Cause No. 6:12-cv-855. Id.
`
`Apple asserts that the jurors did not decide the consolidated case on the evidence
`
`presented at trial after VirnetX repeatedly told them that the first jury, in Apple I, found that
`
`original VOD and original FaceTime infringed VirnetX’s patents. Id. at 43, 45. Apple states
`
`that the jury in this case improperly deferred to the already determined infringement of original
`
`VOD when determining the infringement of new VOD. Id. Regarding FaceTime, Apple asserts
`
`that referring to Apple I created even more confusion and prejudice because the Federal Circuit’s
`
`remand changed the claim construction, requiring a completely new infringement analysis of
`
`Page 6 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 7 of 15 PageID #: 37370
`
`original FaceTime. Id. at 44; Docket No. 475 at 25 (citing Johns Hopkins Univ. v. CellPro, Inc.,
`
`152 F.3d 1342, 1363 (Fed. Cir. 1998) (“[W]e agree with Hopkins that consideration of the 1995
`
`jury verdict, which was ultimately determined to be premised upon an erroneous claim
`
`construction, had significant potential to confuse the jury.”)). Moreover, according to Apple,
`
`when the jury in this case was deciding whether new FaceTime infringed, it had no way to
`
`disregard VirnetX’s repeated statements that the jury in Apple I had found that original FaceTime
`
`infringed. Docket No. 463 at 43.
`
`Regarding willfulness and damages, Apple argues that consolidation “confused and
`
`prejudiced the jury’s ability to fairly award damages and decide willfulness—confusion that
`
`VirnetX exacerbated by tying damages and willfulness together.” Id. at 44. Immediately after
`
`relying on the Apple I jury verdict for evidence of willfulness, VirnetX allegedly implied that
`
`Apple should be monetarily punished for its actions, a measure of damages not permitted by law.
`
`Id. at 44. When Apple I was repeatedly mentioned by VirnetX during the trial, Apple states that
`
`it had no choice but to attempt to give the verdict context by also discussing it. Docket No. 475
`
`at 25.
`
`In response, VirnetX argues that the cases should not be unconsolidated and retried.
`
`Docket No. 470 at 48. VirnetX asserts that the Court properly consolidated Cause Nos.
`
`6:10-cv-417 and 6:12-cv-855 based upon common questions of law or fact, the same plaintiff,
`
`the same defendant and the same accused products and features. Id. According to VirnetX,
`
`when given the choice between consolidating the cases or having a trial for Cause No.
`
`6:12-cv-855 in October of 2015 and then a trial for Cause No. 6:10-cv-417 at some later date,
`
`Apple chose to consolidate the cases. Id. at 46. Further, VirnetX states that because Apple never
`
`Page 7 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 8 of 15 PageID #: 37371
`
`requested a mistrial based upon VirnetX’s comments about Apple I, it did not properly preserve
`
`its basis for a new trial. Id. at 46–47.
`
`VirnetX further argues that references to Apple I did not prejudice Apple because the jury
`
`needed to hear about the previous findings of infringement as evidence that Apple committed
`
`willful infringement, an issue before the jury. Docket No. 480 at 24. VirnetX asserts that the
`
`facts here directly mirror those in Applied Medical Resources Corp. v. U.S. Surgical Corp., 435
`
`F.3d 1356 (Fed. Cir. 2006). Id. From VirnetX’s perspective, because Apple redesigned original
`
`VOD following Apple I, the Apple I verdict is “clearly relevant to [Apple’s] state of mind” for
`
`willfulness. Docket No. 480 at 24 (citing U.S. Surgical, 435 F.3d at 1366). Because of
`
`VirnetX’s willfulness claims, VirnetX asserts that the jury in Cause No. 6:12-cv-855 would have
`
`needed to hear about Apple I even if the cases had not been consolidated. Docket No. 480 at
`
`25–26.
`
`ANALYSIS
`
`The Court is faced with the difficult question of whether consolidating the cases, coupled
`
`with the repeated witness testimony and argument of counsel regarding the prior jury verdict in
`
`Apple I, was unfairly prejudicial to Apple and potentially confusing to the jury. See Montgomery
`
`Ward, 311 U.S. at 251. The role of the jury in our system of justice is, of course, fundamental.
`
`We leave it to the jury to sort through the facts, even in the most complex of cases. The Court
`
`must “respect the jury’s collective wisdom,” and it may not “simply substitute its opinion for the
`
`jury’s.” Smith, 773 F.2d at 613. However, a new trial should be granted when “prejudicial error
`
`was committed in its course.” Id. Prejudicial error cannot be remedied even through the best
`
`efforts of the jury to sort through the issues, because the jury is not given an opportunity to fairly
`
`evaluate the evidence.
`
`Page 8 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 9 of 15 PageID #: 37372
`
`A party may be prejudiced if the issues in a consolidated case are too similar for a jury to
`
`distinguish. See United States v. Homeward Residential, Inc., Cause Nos. 4:12-cv-461,
`
`4:12-cv-543, 2016 WL 777000, at *3 (E.D. Tex. Feb. 29, 2016) (“However, while OFC is a
`
`defendant in both of the Ocwen and Homeward cases, its roles and reasons for liability are
`
`distinct, and the Court finds that consolidation would blur the legal distinctions and could
`
`confuse the jury.”). Whether to consolidate cases is within the discretion of the Court. See Alley
`
`v. Chrysler Credit Corp., 767 F.2d 138, 140 (5th Cir. 1985).
`
`In addition, describing a prior verdict before a jury often prejudices a party. D.C. Barrett,
`
`Propriety & Prejudicial Effect of Reference by Counsel in Civil Case to Result of Former Trial
`
`of Same Case, or Amount of Verdict Therein, 15 A.L.R.3d 1101 (1967) (collecting cases). “The
`
`admission of a prior verdict creates the possibility that the jury will defer to the earlier result and
`
`thus will, effectively, decide a case on evidence not before it.” Coleman Motor Co. v. Chrysler
`
`Corp., 525 F.2d 1338, 1351 (3d Cir. 1975).
`
`The Court’s decision to consolidate Cause Nos. 6:10-cv-417 and 6:12-cv-855 merged two
`
`cases with incredibly similar issues. Counsel’s and witnesses’ repeated statements about the
`
`Apple I verdict during the trial created the potential for the jury to defer to the previous jury’s
`
`infringement findings, even though those findings were partially reversed on appeal. See
`
`Coleman, 525 F.2d at 1351 (“A jury is likely to give a prior verdict against the same defendant
`
`more weight than it warrants.”). Moreover, the complexity of the issues and extensive
`
`procedural history of the consolidated case magnified the risk of deference to Apple I because of
`
`jury confusion. Trying the cases at the same time required the jury to evaluate different versions
`
`of two accused features, a total of three separate accused features and persistent statements about
`
`a robust procedural history that only applied to certain versions of some of the features. In other
`
`Page 9 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 10 of 15 PageID #: 37373
`
`words, the jury was tasked with using Apple I for the purposes affirmed in Cause No.
`
`6:10-cv-417, while at the same time ignoring Apple I when determining the reversed findings in
`
`Cause No. 6:10-cv-417 and the new infringement and damages issues in Cause No. 6:12-cv-855.
`
`In some instances, Apple I and the complicated procedural history made it potentially difficult
`
`for the jury to distinguish between the disputed issues because it was repeatedly used as a
`
`shortcut for the infringement analysis. See, e.g., Docket No. 434 (1/26/2016 Trial Tr.) at 108:4–
`
`11, 148:13–149:7, 149:14–19, 151:24–152:9, 160:12–161:4, 162:4–9, 165:7–16, 183:11–185:13,
`
`192:5–193:18, 197:7–199:14, 203:25–206:19. In other instances, the statements were gratuitous
`
`and likely exacerbated any reliance on Apple I. See, e.g., Docket No. 433 (1/25/2016 Trial Tr.)
`
`at 175:20–22; Docket No. 444 (2/2/2016 Trial Tr.) at 177:21–23, 192:6–10, 242:7–8.
`
`As discussed during the pretrial conference, Docket No. 389 at 86:8–14, the effect of
`
`Apple I on the jury in the consolidated case could not be fully appreciated until it was given
`
`context within the trial. While the Court allowed Apple I to be discussed through its rulings,
`
`including orders on a motion in limine and a motion to exclude, the parties went well beyond
`
`what was appropriate and should not have referred to Apple I with such frequency. Indeed, many
`
`statements regarding Apple I were unnecessary. See, e.g., Docket No. 433 (1/25/2016 Trial Tr.)
`
`at 175:20–22; Docket No. 444 (2/2/2016 Trial Tr.) at 177:21–23, 192:6–10, 242:7–8. Although
`
`the Court was able to observe the jurors throughout trial and is convinced that they made their
`
`best effort, Docket No. 446 (2/3/2016 Trial Tr.) at 9:13–19, the repeated references to Apple I,
`
`particularly those that were unnecessary, may well have prevented them from evaluating the
`
`evidence without improperly relying on the Apple I verdict. See Conway v. Chem. Leaman Tank
`
`Lines, Inc., 525 F.2d 927, 930 (5th Cir. 1976) (“But if one cannot say, with fair assurance, after
`
`pondering all that happened without stripping the erroneous action from the whole, that the
`
`Page 10 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 11 of 15 PageID #: 37374
`
`judgment was not substantially swayed by the error, it is impossible to conclude that substantial
`
`rights were not affected.”).
`
`VirnetX’s reliance on U.S. Surgical to support its use of Apple I throughout the
`
`consolidated trial is unpersuasive because the circumstances here differ from those in U.S.
`
`Surgical. In U.S. Surgical, the district court made an evidentiary ruling that allowed the plaintiff
`
`Applied Medical Resources to introduce evidence regarding a prior verdict in the same case
`
`(“Applied I”). 435 F.3d at 1365–66. On appeal, the district court’s ruling was affirmed, because
`
`Applied I was relevant to (1) a hypothetical negotiation (i.e., damages) and (2) the defendant U.S.
`
`Surgical’s state of mind when it decided to make the infringing products (i.e., willfulness). Id. at
`
`1366. With respect to willfulness, U.S. Surgical redesigned its infringing product because of
`
`Applied I, making the prior litigation and verdict “clearly relevant to U.S. Surgical’s state of
`
`mind” for willfulness. Id. According to the Federal Circuit, U.S. Surgical did not show that its
`
`probative value was outweighed by the danger of unfair prejudice. Id.
`
`In contrast to U.S. Surgical where the only disputed issues at the trial were damages
`
`owed for the defendant’s infringing sales and whether the infringement was willful,
`
`infringement, damages and willfulness were disputed in this consolidated case. See id. at 1359.
`
`U.S. Surgical did not present the same potential for jury confusion and unfair prejudice as the
`
`consolidated case because liability was undisputed. Although a prior verdict may be relevant in
`
`determining whether a defendant’s infringement is willful, the prior verdict may have an unfair
`
`prejudicial effect when it is discussed in depth with multiple witnesses. See id. at 1366 (“U.S.
`
`Surgical has not shown that its probative value was outweighed by the danger of unfair
`
`prejudice.”). The sheer number of times Apple I was raised in the consolidated trial further
`
`distinguishes the situation here from that in U.S. Surgical. Compare Docket No. 444 (2/2/2016
`
`Page 11 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 12 of 15 PageID #: 37375
`
`Trial Tr.) at 174:13–18, 176:12–14, 176:20–23, 177:14–20, 177:21–23, 180:20–25, 181:16–19,
`
`192:6–10, with U.S. Surgical, 435 F.3d at 1366 (identifying an in-house patent lawyer’s
`
`testimony and an admission that a product redesign was an effort to avoid willful infringement).
`
`By way of example, the following argument by counsel and witness testimony was
`
`proffered during the trial:
`
`But you’ll hear that Apple—I’m sorry—that VirnetX filed a lawsuit
`against Apple—that was way back in 2010, almost five and a half years ago—
`seeking fair compensation.
`And you’ll hear that Apple said no, said [VOD] is not infringing, said
`FaceTime is not infringing. And they said a lot of things that I believe we’ll be
`able to prove to you were wrong.
`There was a trial in November of 2012 right here in this courthouse and
`right here in this courtroom. And at trial Apple said those same remarks about
`not using the patent.
`As you know, the jury didn’t believe them and agreed with us. And there
`was a verdict in late 2012, November, that [VOD] and FaceTime infringes [sic].
`
`Docket No. 433 (1/25/2016 Trial Tr.) at 175:8–22 (VirnetX’s opening argument) (emphasis
`
`added);
`
`Q: Okay. What was the result of the litigation against Apple, Mr. Larsen?
`A: Apple was found to infringe our patents on two different product lines,
`[VOD] as well as FaceTime.
`Q: Okay. And after they were determined to have infringed those patents by the
`jury, what happened?
`A: Apple appealed that decision to the Federal Circuit Court of Appeals in
`Washington D.C.
`
`
`Docket No. 436 (1/27/2016 Trial Tr.) at 122:22–123:5 (Mr. Kendall Larsen’s, VirnetX’s
`
`corporate representative, direct examination) (emphasis added);
`
`Q: And then there was a verdict in 2012. Apple didn’t step up and take
`responsibility for [VOD] then, did it?
`A: No. We didn’t feel we needed to.
`Q: And then an appellate court said, no, Apple you’re wrong, in 2014, you do
`infringe. You didn’t say, we’re responsible, there’s no dispute, did you?
`A: At the appellate court they ruled that [VOD] “always” mode did infringe,
`and we owned that.
`
`
`
`Page 12 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 13 of 15 PageID #: 37376
`
`Docket No. 438 (1/28/2016 Trial Tr.) at 247:25–248:9 (Mr. Frank Casanova’s, Apple’s corporate
`
`representative, cross examination) (emphasis added);
`
`Q: Is this your first trial against Apple?
`A: No, sir, it’s not.
`Q: When was the last one?
`A: 2012, I believe.
`Q: And what did the jury in that trial conclude about [VOD] and FaceTime?
`A: Their conclusion was that it did indeed infringe on our—our patents.
`Q: And am I correct that the finding on [VOD] was affirmed?
`A: That’s my understanding yes, sir.
`
`Docket No. 434 (1/26/2016 Trial Tr.) at 47:9–19 (Dr. Robert Short’s, co-inventor, direct
`
`examination) (emphasis added);
`
`We heard from Mr. Patience, who at the time was right at the top. He had a boss,
`and that boss’s boss was Tim Cook. And he admits that they decided to keep on
`infringing.
`
`Docket No. 444 (2/2/2016 Trial Tr.) at 177:21–23 (VirnetX’s closing argument) (emphasis
`
`added);
`
`But I think this testimony from Mr. Patience is telling of Apple’s attitude towards
`VirnetX’s intellectual property. He didn’t think they had any obligation to make a
`change even after they’d been found liable for infringement. Keep on infringing.
`No change to [VOD].
`
`Id. at 192:6–10 (VirnetX’s closing argument) (emphasis added); and
`
`VirnetX fought to keep the verdict it had because VirnetX wants justice on the
`patents.
`
`Id. at 242:7–8 (VirnetX’s closing argument) (emphasis added). The Court is left with the
`
`conclusion that repeated statements such as these—more than 50 in all, many of which were
`
`either redundant or gratuitous—tipped the balance towards unfairly prejudicing Apple.
`
`Moreover, although iMessage was not part of Apple I, the confusion and unfair prejudice
`
`associated with new VOD, original FaceTime and new FaceTime potentially spilled over into the
`
`jury’s finding of infringement of iMessage. Further, in this consolidated case, there is no way to
`
`Page 13 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 14 of 15 PageID #: 37377
`
`untangle liability from damages. The repeated references to Apple I may have influenced the
`
`royalty rate selected by the jurors. See Docket No. 444 (2/2/2016 Trial Tr.) at 195:20–25,
`
`250:12–25 (“I’m also a little bit bothered by this notion that Apple is saying, basically you
`
`should punish VirnetX and keep the damages down . . . .”) (VirnetX’s closing argument).
`
`Because only certain findings from the previous jury verdict were relevant to the consolidated
`
`case and in light of the repeated references to that prior verdict, there was a substantial risk that
`
`the jury would defer to the prior jury’s findings altogether. To be clear, the consolidated case
`
`could very likely have been tried successfully—and fairly—had the Apple I verdict not been
`
`repeatedly mentioned, often unnecessarily, throughout the trial. Indeed, were the Court
`
`examining a motion for a new trial based upon the consolidation alone, this scenario would in all
`
`likelihood not dictate the same result. However, under the circumstances here, the repeated
`
`references to the prior jury verdict in the consolidated case resulted in an unfair trial.
`
`CONCLUSION
`
`Apple’s Motion for a New Trial Based Upon the Consolidation of Cause Nos.
`
`6:10-cv-417 and 6:12-cv-855 (Docket No. 463 at 41–45) is GRANTED. The Court is acutely
`
`aware of the significant time, effort and considerable resources expended by the parties, counsel
`
`and the Court itself in preparing for and trying this case. The substantial inconvenience to the
`
`jury resulting from eight days of trial and the time jurors were forced to spend away from family,
`
`work and other responsibilities must also be recognized. The Court does not reach this decision
`
`lightly or without considering fully the briefing, argument of counsel and the interests of the
`
`parties in bringing this matter to a final conclusion. Despite these important considerations, the
`
`Court’s paramount obligation—to ensure that both sides receive a fair and impartial trial
`
`—compels this result.
`
`Page 14 of 15
`
`

`

`Case 6:12-cv-00855-RWS Document 500 Filed 07/29/16 Page 15 of 15 PageID #: 37378
`
`Accordingly, the orders consolidating the cases (Cause No. 6:10-cv-417, Docket No. 878;
`
`Cause No. 6:12-cv-855, Docket No. 220) are hereby VACATED. The issue of willfulness in
`
`both cases is BIFURCATED. Cause No. 6:10-cv-417 will be retried with jury selection to
`
`begin on September 26, 2016, unless the parties agree otherwise on an alternative date, and
`
`immediately followed by a second trial on the issue of willfulness. Cause No. 6:12-cv-855 will
`
`be retried after Cause No. 6:10-cv-417.
`
`The parties are ORDERED to meet and confer and file a joint pretrial plan for Cause No.
`
`6:10-cv-417 within ten (10) days of this order. The pretrial plan should include agreed upon
`
`language for the Court to read to the jury that addresses Apple I and the subsequent procedural
`
`history. During the trials, the parties are required to provide fair notice to each other and the
`
`Court before raising Apple I.
`
`Page 15 of 15
`
`.
`
`
`
`____________________________________
`ROBERT W. SCHROEDER III
`UNITED STATES DISTRICT JUDGE
`
`So ORDERED and SIGNED this 29th day of July, 2016.
`
`