Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 1 of 23 PageID #: 57490
`
`IN THE UNITED STATES DISTRICT COURT FOR
`THE EASTERN DISTRICT OF TEXAS TYLER DIVISION
`
`VIRNETX INC. AND
`LEIDOS, INC.,
`
`Plaintiffs,
`
`v.
`
`APPLE INC.
`
`Defendant.
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`Civil Action No. 6:12-cv-00855
`
`
`
`
`
`
`
`JURY TRIAL DEMANDED
`
`APPLE’S OPPOSITION TO VIRNETX’S MOTION FOR ENTRY OF JUDGMENT AND
`BRIEF IN SUPPORT OF A NEW TRIAL ON DAMAGES
`
`
`
`
`
`

`

`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 2 of 23 PageID #: 57491
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`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`INTRODUCTION .............................................................................................................. 1
`
`BACKGROUND ................................................................................................................ 2
`
`A.
`
`B.
`
`C.
`
`Damages Evidence at Trial ..................................................................................... 3
`
`Verdict Form and Jury Instructions ........................................................................ 4
`
`The Federal Circuit’s Decision ............................................................................... 5
`
`III.
`
`ARGUMENT ...................................................................................................................... 6
`
`A.
`
`The “Normal Rule” Requires a New Trial on Damages ......................................... 6
`
`1.
`
`2.
`
`3.
`
`A New Trial on Damages Is Required So a Jury Can Determine the
`Reasonable Royalty for Infringement by VOD Alone ............................... 7
`
`VirnetX Identifies No Reason to Depart from the Normal Rule .............. 10
`
`At the Very Least, this Court Should Grant a New Damages Trial
`As a Matter of Discretion .......................................................................... 16
`
`Any Forward-Looking Ongoing Royalty or Supplemental Damages Should
`Be Decided after a New Damages Trial ............................................................... 16
`
`Prejudgment Interest Should Not Be Awarded ..................................................... 17
`
`VirnetX’s Request for Post-Judgment Interest Is Premature ................................ 17
`
`B.
`
`C.
`
`D.
`
`IV.
`
`CONCLUSION ................................................................................................................. 17
`
`
`
`
`
`
`
`i
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`

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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 3 of 23 PageID #: 57492
`
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Adrea, LLC v. Barnes & Noble, Inc.,
`No. 13 Civ. 4137, 2016 WL 859685 (S.D.N.Y. Feb. 24, 2016) ................................................8
`
`Alaniz v. Zamora-Quezada,
`591 F.3d 761 (5th Cir. 2009) .....................................................................................................9
`
`Apple Inc. v. Motorola, Inc.,
`757 F.3d 1286 (Fed. Cir. 2014), overruled by on other grounds by Williamson
`v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) ...........................................................13
`
`Beacon Theatres, Inc. v. Westover,
`359 U.S. 500 (1959) .................................................................................................................15
`
`Biodex Corp. v. Loredan Biomedical, Inc.,
`946 F.2d 850 (Fed. Cir. 1991)....................................................................................................9
`
`Chrimar Holding Co., LLC v. ALE USA Inc.,
`732 F. App’x 876 (Fed. Cir. 2018), as amended (June 1, 2018) .............................................11
`
`Delta Eng’g Corp. v. Scott,
`322 F.2d 11 (5th Cir. 1963) .....................................................................................................16
`
`Denton v. Morgan,
`136 F.3d 1038 (5th Cir. 1998) ...........................................................................................10, 14
`
`Finjan, Inc. v. Secure Computing Corp.,
`626 F.3d 1197 (Fed. Cir. 2010)..................................................................................................8
`
`Fiskars, Inc. v. Hunt Mfg. Co.,
`279 F.3d 1378 (Fed. Cir. 2002)..................................................................................................8
`
`Fuji Photo Film Co., Ltd. v. Jazz Photo Corp.,
`394 F.3d 1368 (Fed. Cir. 2005)..........................................................................................14, 15
`
`Gasperini v. Center for Humanities, Inc.,
`518 U.S. 415 (1996) .................................................................................................................16
`
`Greatbatch Ltd. v. AVX Corp.,
`No. 13-cv-723, 2018 WL 1568872 (D. Del. Mar. 30, 2018) .....................................................8
`
`Grenada Steel Indus., Inc. v. Ala. Oxygen Co., Inc.,
`695 F.2d 883 (5th Cir. 1983) ...................................................................................................15
`
`ii
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`

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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 4 of 23 PageID #: 57493
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`
`McDonald v. Bennett,
`674 F.2d 1080 (5th Cir. 1982) .................................................................................................10
`
`Memphis Cmty. Sch. Dist. v. Stachura,
`477 U.S. 299 (1986) ...................................................................................................................7
`
`Mutuelle Electrique D’Assurances v. Hammermills, Inc.,
`786 F.2d 840 (8th Cir. 1986) ...................................................................................................16
`
`Omega Patents, LLC v. CalAmp Corp.,
`920 F.3d 1337 (Fed. Cir. 2019)..................................................................................................8
`
`Promega Corp. v. Life Techs. Corp.,
`773 F.3d 1338 (Fed. Cir. 2014), rev’d on other grounds, 137 S. Ct. 734 (2017) ......................8
`
`Rousseau v. Teledyne Movible Offshore, Inc.,
`812 F.2d 971 (5th Cir. 1987) ...................................................................................................16
`
`Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc.,
`637 F.3d 1269 (Fed. Cir. 2011)..................................................................................................9
`
`SmithKline Diagnostics, Inc. v. Helena Labs. Corp.,
`926 F.2d 1161 (Fed. Cir. 1991)................................................................................................15
`
`TCL Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM Ericsson,
`943 F.3d 1360 (Fed. Cir. 2019)......................................................................................2, 13, 15
`
`Telcordia Techs, Inc. v. Cisco Sys., Inc.,
`612 F.3d 1365 (Fed. Cir. 2010)................................................................................................13
`
`Verizon Servs. Corp. v. Vonage Holdings Corp.,
`503 F.3d 1295 (Fed. Cir. 2007)........................................................................................ passim
`
`VirnetX Inc. v. Apple Inc.,
`792 F. App’x 796 (Fed. Cir. 2019) .................................................................................. passim
`
`WesternGeco LLC v. ION Geophysical Corp.,
`913 F.3d 1067 (Fed. Cir. 2019)....................................................................................1, 7, 9, 10
`
`Whitserve, LLC v. Comput. Packages, Inc.,
`694 F.3d 10 (Fed. Cir. 2012)....................................................................................................13
`
`iii
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 5 of 23 PageID #: 57494
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`
`I.
`
`INTRODUCTION
`
`A new trial on damages is required. Having found that FaceTime infringes the ’211 and
`
`’504 patents and that VPN on Demand (“VOD”) infringes the ’135 and ’151 patents, the jury
`
`entered a general damages verdict, awarding $502,567,709 as a reasonable royalty, “but did not
`
`indicate which portions of the award were allocated to which patents.” VirnetX Inc. v. Apple Inc.,
`
`792 F. App’x 796, 812 (Fed. Cir. 2019). The jury applied a per-unit rate of $1.20 to the “over 384
`
`million units having both FaceTime and VPN on Demand and over 34 million units having only
`
`FaceTime.” Id. at 813. The Federal Circuit has since held that two of the four patents that were
`
`the basis for this verdict (and the only patents asserted against FaceTime) are not infringed as a
`
`matter of law. See id. at 809, 812. “[B]ecause the jury found infringement by FaceTime as well
`
`as VPN On Demand, and FaceTime was installed on all units, the jury did not have to decide
`
`whether the $1.20 per-unit figure would be correct if only VPN on Demand infringed.” Id. at
`
`813 (emphasis added). In these circumstances, the “normal rule” requires a new trial. Verizon
`
`Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007) (“where the jury
`
`rendered a single verdict on damages, without breaking down the damages attributable to each
`
`patent, the normal rule would require a new trial as to damages.”).
`
`VirnetX has provided no basis to deviate from the normal rule. Not only is the amount of
`
`damages the jury awarded for VPN on Demand (“VOD”) disputed (compare 4/5/2018 (AM) Tr.
`
`at 89:17–94:7 (Weinstein testifying damages range of $1.20-$1.67 per-device) with 4/9 (PM) Tr.
`
`263:22–25 (Bakewell testifying damages of “less than $0.06 per unit” if only VOD infringed), it
`
`is unknowable from the verdict itself. See WesternGeco LLC v. ION Geophysical Corp., 913 F.3d
`
`1067, 1074 (Fed. Cir. 2019) (explaining new trial could be avoided only if there is “undisputed
`
`evidence that [the surviving patent claim was] necessary to perform the surveys upon which the
`
`lost profits award is based.”). VirnetX concedes as much, arguing that the Court should find
`
`1
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`

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`something the jury did not, i.e., the amount of damages for VOD alone. Having the Court decide
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`that issue in the first instance would deny Apple its Seventh Amendment right to have damages
`
`tried to a jury. TCL Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, 943 F.3d
`
`1360, 1373 (Fed. Cir. 2019) (finding district court denied defendant Seventh Amendment right to
`
`a jury trial on patent damages because release payment calculated by court “function[ed] as a
`
`substitute for patent [] damages”). VirnetX’s argument that Apple has somehow waived its ability
`
`to argue that a new trial is required under the present circumstances is equally unavailing. Far
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`from waiving this argument, Apple made this argument in its post-trial briefing, consistently
`
`explaining that “[s]hould the Court set aside the jury’s infringement verdict as to either VOD or
`
`FaceTime, a new trial on damages should be granted because the damages verdict for one feature
`
`is not separable from the damages verdict for the other.” Dkt. 775 at 38. That has now come to
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`pass and a new trial is required. Indeed, it would be legal error to deny a new trial based on
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`speculation about the royalty the jury would have assigned to VOD alone—the only issue to be
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`tried on remand and a question the jury was never asked to consider. The Constitution dictates
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`that a new trial must occur to determine damages for VOD alone.
`
`II.
`
`BACKGROUND
`
`On November 6, 2012, VirnetX filed this action against Apple, alleging infringement of
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`four patents: U.S. Patent Nos. 6,502,135 (“the ’135 patent”); 7,418,504 (“the ’504 patent”);
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`7,490,151 (“the ’151 patent”); and 7,921,211 (“the ’211 patent”). Dkt. 1. VirnetX alleged Apple’s
`
`VOD infringed certain claims of the ’135 and ’151 patents and that FaceTime infringed certain
`
`claims of the ’504 and ’211 patents. Id. The case was tried to a jury from April 2 to April 11,
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`2018. Dkt. 680; Dtk. 719.
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`2
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`

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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 7 of 23 PageID #: 57496
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`A.
`
`Damages Evidence at Trial
`
`During trial, VimetX presented its damages case through its expert Roy Weinstein. 4/5
`
`(AM) Tr. 25:21-4/5 (PM) Tr. 187:10. Mr. Weinstein opined that reasonable royalty damages for
`
`Apple 's use of VimetX's patents "range from $1.20 per accused unit sold, to $1.67 per accused
`
`unit sold with respect to FaceTime and [VOD]." 4/5 (AM) Tr. 26:10-16, 86:19- 87:1. Mr.
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`Weinstein applied those per-unit royalty figures to sales of units with Face Time and VOD. 4/5
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`(AM) Tr. at 89:9- 91:18. Although the accused iPhones, iPads, and iPod Touches had multiple
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`features accused of infringement (both Face Time and VOD at ti·ial, along with iMessage prior to
`
`ti·ial), Mr. Weinstein testified that only one royalty rate would apply:
`
`Q. So if the jmy detennines that FaceTime and [VOD] infringe,
`what's the number at a $1.20 that they should provide for VimetX?
`
`A. That would be the $502,569,709 number. That is, you don't add
`those two numbers together that I just presented to the jmy. If the
`jmy believes thatFaceTime infringes, then you use this $502 million
`number. If you believe that only [VOD] infringes, you would use
`the other number. And if you believe that they both infringe, again,
`you only use the $502 million number. You don't add them together.
`
`4/5 (AM) Tr. 92:7- 24. Mr. Weinstein summarized his damages opinions in two exhibits presented
`
`to thejmy:
`
`PX1089.03
`
`PX1089.06
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`3
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`

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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 8 of 23 PageID #: 57497
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`See also 4/5 (AM) Tr. at 89:17–91:8. Because every unit with VOD also included FaceTime, and
`
`there were additional units with FaceTime only, Mr. Weinstein testified that if the jury concluded
`
`both FaceTime and VOD infringed, they should “use the $502 million number” associated with
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`FaceTime. Id. at 92:15–24.
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`Apple presented damages opinions through its damages expert, Christopher Bakewell, who
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`disagreed with Mr. Weinstein regarding the appropriate royalty rate. Although Mr. Bakewell
`
`agreed with Mr. Weinstein regarding the number of accused units and which accused features they
`
`included, Mr. Bakewell testified that different royalty rates would apply if only one feature were
`
`found to infringe: $0.01 per unit if FaceTime infringed and VOD did not (4/9 (PM) Tr. 262:3–
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`17), $0.06 if both FaceTime and VOD were found to infringe (4/9 (PM) Tr. 262:12–263:2), and
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`“less than $0.06 per unit” if only VOD infringed (4/9 (PM) Tr. 263:22–25).
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`B.
`
`Verdict Form and Jury Instructions
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`Before the case was submitted to the jury, the parties disputed the portion of the verdict
`
`form regarding damages. VirnetX advocated for a verdict form that instructed the jury to
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`determine a per-device royalty. See Dkt. 704-1 at 2 (Court’s April 9, 2018 Proposed Final Verdict
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`Form); Dkt. 621-5 at 3 (VirnetX’s Proposed Verdict Form). Apple objected to that proposed
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`verdict form because Mr. Bakewell testified that a per-feature royalty should be awarded if the
`
`jury determined that either FaceTime or VOD alone infringes. See Dkt. 704 at 1; Dkt. 621-7 at 3
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`(Apple’s Proposed Verdict Form). As Apple explained, while Mr. Bakewell’s per-feature royalties
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`“ultimately result in per-device royalties, they do not result in the same per-device royalty for all
`
`devices if both features infringe. The jury could still reasonably rely on Mr. Bakewell’s testimony
`
`to award a different royalty amount for Mac devices (in which only FaceTime is accused) than for
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`iOS devices (in which both FaceTime and [VOD] are accused).” Dkt. 704 at 1. VirnetX ultimately
`
`agreed that if the Court were concerned about the fact that a jury could award a different royalty
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`4
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`rate depending on the feature, “VirnetX would rather just have a single damages line that wasn’t
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`per device.” 4/10 Tr. at 6:6–9. The Court adopted this approach in the final verdict form and
`
`instructed the jury that “[i]n considering the evidence of a reasonable royalty, you're not required
`
`to accept one specific figure or another for the reasonable royalty. You are entitled to determine
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`what you consider to be a reasonable royalty based upon your consideration of all of the evidence
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`presented by the parties, whether that evidence is of a specific figure or a range of figures.” 4/10
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`Tr. 139:13–19; see also Dkt. 721 (Final jury instructions) at 21.
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`The jury found that VOD infringed the ’135 patent (claims 1 and 7) and the ’151 patent
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`(claim 13) and that FaceTime infringed the ’504 patent (claims 1, 2, 5, and 27) and the ’211 patent
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`(claims 36, 47, and 51). For the collective infringement of the ’135, ’151, ’504, and ’211 patents,
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`the jury awarded $502,567,709 in reasonable royalty damages:
`
`3. ·what royalty do you find, by a preponderance of the evidence, would fairly
`and reasonably compensate VirnetX for any infringement that you have
`found?
`
`Dkt. 722 at 2. The jury was not asked to determine what royalty rate applied for VOD separately.
`
`I
`
`I
`
`
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`Id.
`
`C.
`
`The Federal Circuit’s Decision
`
`On appeal, the Federal Circuit concluded that the term “domain name service system” as
`
`used in the asserted claims of the ’504 and ’211 patents “requires that the system include what a
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`‘domain name service’ requires under its construction[.]” VirnetX, 792 F. App’x at 809. “Because
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`no reasonable jury could find infringement under the correct construction[,] Apple is entitled to
`
`judgment as a matter of law of non-infringement as to [the ’504 and ’211] patents” and the
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`judgment of infringement as to FaceTime was reversed. Id. at 809.
`
`5
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`The Federal Circuit then considered the effect of its decision on the damages award. The
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`Court observed that “[t]he jury’s verdict provided that VirnetX was entitled to a damages award
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`of $502,567,709.00 but did not indicate which portions of the award were allocated to which
`
`patents.” Id. at 812. The Court explained the “normal rule” requires a new trial on damages
`
`“where the jury rendered a single verdict on damages, without breaking down the damages
`
`attributable to each patent.” Id. (quoting Verizon Servs. Corp., 503 F.3d at 1310). Surveying the
`
`jury’s verdict and expert testimony, the Court explained “[i]t appears . . . that the jury found that
`
`FaceTime by itself was worth $1.20 per unit. But because the jury found infringement by
`
`FaceTime as well as [VOD], and FaceTime was installed on all units, the jury did not have to
`
`decide whether the $1.20-per-unit figure would be correct if only VPN On Demand infringed.”
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`Id. at 813. Explaining that it had “not received full briefing on the issue of whether, despite the
`
`normal rule, this is a case in which a new trial on damages is unnecessary,” the Federal Circuit
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`remanded to this Court. Id. The Federal Circuit further stated it was “leav[ing] it to the parties
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`and the district court to consider in the first instance relevant aspects of whether to hold a limited
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`damages-only retrial given the reduced basis of liability.” Id.
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`III. ARGUMENT
`A.
`
`The “Normal Rule” Requires a New Trial on Damages
`
`The Federal Circuit’s decision establishes that the ’504 and ’211 patents are not infringed
`
`and FaceTime is not an infringing feature. VirnetX, 792 F. App’x at 809, 813. The jury’s general
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`damages verdict was based on the opposite conclusion. Dkt. 722 at 1–2. Apple has consistently
`
`argued that a new damages trial would be required in this very circumstance. Dkt. 775 at 38
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`(“Should the Court set aside the jury’s infringement as to either VOD or FaceTime, a new trial on
`
`damages should be granted because the damages verdict for one feature is not separable from the
`
`damages verdict for the other.”). This is what the “normal rule” requires. Specifically, “where the
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`6
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 11 of 23 PageID #: 57500
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`jury rendered a single verdict on damages, without breaking down the damages attributable to each
`
`patent, the normal rule would require a new trial as to damages.” Verizon Servs. 503 F.3d at 1310;
`
`see also WesternGeco, 913 F.3d at 1074; Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 312
`
`(1986) (“When damages instructions are faulty and the verdict does not reveal the means by which
`
`the jury calculated damages, the error in the charge is difficult, if not impossible, to correct without
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`retrial, in light of the jury’s general verdict.”) (internal quotations omitted). The standard for
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`departing from the normal rule is exacting. See WesternGeco, 913 F.3d at 1075 (“The district
`
`court may deny a new trial on lost profits if, but only if, it concludes that WesternGeco established
`
`at trial with undisputed evidence that [the surviving patent claim was] necessary to perform the
`
`surveys upon which the lost profits award is based.”). VirnetX identifies no reason to depart from
`
`this normal rule, and a new trial on damages should be granted.
`
`1.
`
`A New Trial on Damages Is Required So a Jury Can Determine the
`Reasonable Royalty for Infringement by VOD Alone
`
`This case falls squarely within the Federal Circuit’s “normal rule.” See Verizon Servs.
`
`Corp., 503 F.3d at 1310; WesternGeco LLC, 913 F.3d at 1074. A new trial is required because
`
`there is no way to tell from the jury’s damages verdict the royalty rate it would have applied had
`
`it only found infringement of the ’135 and ’151 patents by VOD alone. As the Federal Circuit
`
`explained, “because the jury found infringement by FaceTime as well as [VOD], and FaceTime
`
`was installed on all units, the jury did not have to decide whether the $1.20-per-unit figure would
`
`be correct if only [VOD] infringed.” VirnetX, 792 F. App’x at 813 (emphasis added); see also
`
`Dkt. 824 at 7 (admitting jury “awarded … the exact amount Mr. Weinstein had testified would be
`
`appropriate if both [VOD] and FaceTime infringed.” (emphasis added)); 4/5 (AM) Tr. at 92:15–
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`24. This is because, as VirnetX admits, each of the devices the jury found to infringe had either
`
`“both features” or “only FaceTime.” Dkt. 824 at 7. The parties presented conflicting testimony
`
`7
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 12 of 23 PageID #: 57501
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`about the amount of damages to award if only VOD infringed, but that was a dispute the jury did
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`not need to settle given its (now reversed) finding that FaceTime infringed as well. Compare 4/5
`
`(AM) Tr. at 89:17–91:8 (Mr. Weinstein testifying that damages if only VOD infringed would be
`
`$1.20/unit), with 4/9 (PM) Tr. 263:22–25 (Mr. Bakewell testifying damages if only VOD infringed
`
`would be less than $0.06/unit). Thus, “there is no way to discern, beyond mere speculation, how
`
`the jury” might have come to a decision about damages for VOD alone and a new trial should be
`
`granted. Greatbatch Ltd. v. AVX Corp., No. 13-cv-723, 2018 WL 1568872, at *4–5 (D. Del. Mar.
`
`30, 2018) (ordering a new trial after one of the asserted patents was found not to infringe “because
`
`the damages ‘are tied up in a single damages verdict’”); see also Omega Patents, LLC v. CalAmp
`
`Corp., 920 F.3d 1337, 1350–51 (Fed. Cir. 2019) (remanding for new trial on damages where
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`infringement of only “unidentified subset of the accused [] devices” was affirmed on appeal and
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`“[s]uch evidence cannot support an award of damages with respect to all [accused] devices”);
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`Promega Corp. v. Life Techs. Corp., 773 F.3d 1338, 1358 (Fed. Cir. 2014) (vacating damages
`
`award and remanding case “[s]ince the challenged claims of four of the five asserted patents on
`
`which the jury based its damages verdict are invalid”), rev’d on other grounds, 137 S. Ct. 734
`
`(2017); Adrea, LLC v. Barnes & Noble, Inc., No. 13 Civ. 4137, 2016 WL 859685, at *7 (S.D.N.Y.
`
`Feb. 24, 2016) (ordering a new trial on damages where the jury’s damage award “did not allocate”
`
`damages between two patents, one of which was subsequently held invalid).
`
`VirnetX attempts to dodge this binding Federal Circuit precedent by arguing that Fifth
`
`Circuit law applies. Dkt. 824 at 17. But Federal Circuit law controls “the distinctive characteristics
`
`of patent damages law.” Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed. Cir. 2002); see
`
`also Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1207 (Fed. Cir. 2010). There is “an
`
`essential relationship between [the Federal Circuit’s] exclusive statutory mandate” and
`
`8
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 13 of 23 PageID #: 57502
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`determining whether disturbing a jury’s infringement or invalidity verdict (themselves unique to
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`patent cases) requires a new trial. Biodex Corp. v. Loredan Biomedical, Inc., 946 F.2d 850, 855,
`
`858 (Fed. Cir. 1991) (Federal Circuit law applies when deciding whether “a post-verdict motion
`
`is a prerequisite to appellate review of the sufficiency of the evidence underlying a jury verdict”).
`
`That essential relationship is apparent in Verizon’s holding: “where the jury rendered a single
`
`verdict on damages, without breaking down the damages attributable to each patent, the normal
`
`rule would require a new trial as to damages.” 503 F.3d at 1310 (emphasis added); see also
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`WesternGeco, 913 F.3d at 1075 (describing standard for departing from the normal rule).1
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`VirnetX’s failure to address this binding precedent is fatal to its motion.
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`Even if Fifth Circuit law applied, none of the Fifth Circuit cases VirnetX cites supports its
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`argument that the Court can enter judgment in this case without a new damages trial. See Dkt. 824
`
`at 12–13. For example, in Alaniz v. Zamora-Quezada, 591 F.3d 761 (5th Cir. 2009), a new
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`damages trial was not required because, “irrespective of the quid pro quo claims, the verdict for
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`retaliation constitutes a predicate for backpay and the verdicts for retaliation and harassment
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`support the other damages awards.” Id. at 773. Thus, the retaliation and harassment claims
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`supported the entire damages award for those plaintiffs, whereas here, the verdict of infringement
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`for VOD does not. Even VirnetX acknowledges this when it admits that at least Mac computers
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`(which have FaceTime, but not VOD) cannot be included in a new damages judgment. See id.;
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`Dkt. 824 at 7.
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`1 Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637 F.3d 1269,
`1290–91 (Fed. Cir. 2011), is not to the contrary. In that case, the Federal Circuit did not order
`remittitur. Rather, the Court “vacate[d] the damages award and remand[ed] for the court to
`consider a reasonable royalty for the additional 18 infringing scanners, to be added to the
`$44,937,545 in lost profits for the 61 scanners that were sold.” Id.
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`9
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 14 of 23 PageID #: 57503
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`VirnetX’s remittitur cases are also inapposite: in each case, the jury differentiated its
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`damages award. In Denton v. Morgan, 136 F.3d 1038 (5th Cir. 1998), the jury awarded three
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`categories of damages and the district court awarded a remittitur for each category based on
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`plaintiff’s expert’s testimony. See id. at 1046. Likewise, in McDonald v. Bennett, 674 F.2d 1080
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`(5th Cir. 1982), the jury awarded specific categories of damages for the various claims. See id. at
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`1083 (noting the jury answered “sixty-nine special issues”). Here, the jury did not award separate
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`categories of damages for VOD and FaceTime, and did not even decide the amount of damages
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`for VOD alone. Because it is not possible to discern how the jury might have awarded damages
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`for VOD alone, a new trial should be granted. See Verizon, 503 F.3d at 1310; see also
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`WesternGeco, 913 F.3d at 1075.
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`2.
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`VirnetX Identifies No Reason to Depart from the Normal Rule
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`VirnetX agrees that the jury did not award damages for any unit with VOD alone and that
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`the jury “did not expressly state that a $1.20 per unit royalty applies if only [VOD] infringes.”
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`Dkt. 824 at 14. Nonetheless, VirnetX claims that the Court should not apply the normal rule here
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`because $1.20/unit for VOD “is the unavoidable result of Mr. Weinstein’s methodology.” Id. It
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`is not. The jury never had to determine the royalty for VOD alone because it found both VOD and
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`FaceTime infringed and awarded a single amount of undifferentiated damages. The Federal
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`Circuit has explained that in such circumstances a new trial is required. See § III.A.1, supra. As
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`explained below, none of VirnetX’s arguments justifies departing from the Federal Circuit’s
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`normal rule requiring a new trial.
`
`a.
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`the
`that disturbing
`Apple’s position has always been
`infringement findings for FaceTime or VOD would require a
`new damages trial.
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`Apple has always maintained that “[s]hould the Court set aside the jury’s infringement
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`verdict as to either VOD or FaceTime, a new trial on damages should be granted because the
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`10
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 15 of 23 PageID #: 57504
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`damages verdict for one feature is not separable from the damages verdict for the other.”2 Dkt.
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`775 at 38. That is the very circumstance the Court now faces. Despite Apple’s clear statement,
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`VirnetX mischaracterizes the record to argue that Apple has, at various points, conceded the
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`opposite. For example, VirnetX plucks another statement from Apple’s post-trial briefing out of
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`context to suggest Apple “conceded” that the jury determined a per-unit royalty rate for VOD.
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`Dkt. 824 at 14. To be sure, Apple argued that VirnetX’s theory required Apple to pay “the same
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`per-unit rate regardless of whether one feature or two features infringed.” Dkt. 775 at 44. But
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`Apple never argued, and the Court never found, that the jury adopted Mr. Weinstein’s royalty rate
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`for VOD alone. Nor did Apple agree that in adopting Mr. Weinstein’s $1.20/unit royalty for
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`infringement for both FaceTime and VOD, the jury implicitly adopted Mr. Weinstein’s proposed
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`royalty of $1.20/unit for infringement by VOD alone. Rather, Apple’s one-versus-two argument
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`was made in the context of apportionment, i.e., that the jury failed to apportion between the features
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`because it awarded the same per-unit rate regardless of whether the unit included FaceTime only
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`or both VOD and FaceTime. Dkt. 775 at 44. Although the Court found the jury’s lack of
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`apportionment was justified when both FaceTime and VOD infringed, Dkt. 798 at 29, that lack of
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`apportionment makes it impossible to determine what, if any, value the jury attributed to VOD
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`alone—as even VirnetX admits. Dkt. 824 at 14 (admitting the jury “did not expressly state that a
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`$1.20 per unit royalty applies if only [VOD] infringes” (emphasis added)). These are precisely
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`the circumstances in which the normal rule mandates a new trial on damages, as Apple argued in
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`its post-trial briefs. See Dkt. 775 at 38; Verizon Servs., 503 F.3d at 1310.
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`2 This case is therefore unlike Chrimar, where the defendant did not even ask for a new trial on
`damages when the Federal Circuit adopted its construction of a claim term and remanded for a
`new infringement determination. See Chrimar Holding Co., LLC v. ALE USA Inc., 732 F. App’x
`876, 886 (Fed. Cir. 2018), as amended (June 1, 2018). Chrimar is further distinguishable because
`the same accused units infringed the remaining patents, which is not the case here. See id.
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`11
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`Case 6:12-cv-00855-RWS Document 826 Filed 03/09/20 Page 16 of 23 PageID #: 57505
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`VirnetX is also wrong in suggesting that Apple told the Federal Circuit that $1.20/unit
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`applies to VOD in this case. VirnetX argues that because (i) the jury in the -417 action awarded
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`$1.20/unit for devices that had VOD only; and (ii) “Apple conceded before the Federal Circuit that
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`the damages approach in the -417 case was ‘the same’ as in this case,” the jury in this case must
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`have valued VOD identically to the jury in the -417 case. Dkt. 824 at 14–15. This Court, however,
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`already rejected VirnetX’s attempts to import the -417 action verdict into this case, holding that
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`“[b]ecause the infringing products are different between the 417 and 855 actions, the damages
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`question between the two cases is not identical, and issue preclusion does not apply.” Dkt. 624 at
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`7. Moreover, Apple never conceded (or argued) on appeal, or elsewhere, that that jury’s valuation
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`of VOD in the -417