Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 1 of 10 PageID #: 57565
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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
`SCIENCE APPLICATIONS
`INTERNATIONAL CORPORATION,
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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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`§
`§
`§
`§
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`§
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`§
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`Civil Action No. 6:12-cv-00855-RWS
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`JURY TRIAL DEMANDED
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`PLAINTIFF VIRNETX’S REPLY IN SUPPORT OF MOTION FOR ENTRY OF
`JUDGMENT
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`FILED UNDER SEAL
`XXXXXXXXXXXXXX
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` PUBLIC VERSION
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`

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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 2 of 10 PageID #: 57566
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`TABLE OF CONTENTS
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`INTRODUCTION ...............................................................................................................1 
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`ARGUMENT .......................................................................................................................2 
`The Jury’s Verdict Supports Damages of $461,433,906 for VPN on
`A. 
`Demand ....................................................................................................................2 
`The Verdict Establishes a $1.20 Per-Unit Royalty for VPN on
`1. 
`Demand ........................................................................................................2 
`The Court Can Determine Damages Without a New Trial ..........................4 
`The Court Should Confirm the Ongoing Royalty and Award
`Other Relief ..................................................................................................5 
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`2. 
`3. 
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`CONCLUSION ....................................................................................................................5  
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`I. 
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`II. 
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`III. 
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`i
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 3 of 10 PageID #: 57567
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`TABLE OF AUTHORITIES
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`Cases 
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`Alaniz v. Zamora-Quezada
` 591 F.3d 761 (5th Cir. 2009) ...................................................................................................... 4
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`Kemin Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V.
` 464 F.3d 1339 (Fed. Cir. 2006)................................................................................................... 5
`
`Oiness v. Walgreen Co.
` 88 F.3d 1025 (Fed. Cir. 1996)..................................................................................................... 4
`
`Omega Patents, LLC v. CalAmp Corp.
` 920 F.3d 1337 (Fed. Cir. 2019)................................................................................................... 5
`
`Promega Corp. v. Life Techs. Corp.
` 773 F.3d 1338 (Fed. Cir. 2014)................................................................................................... 5
`
`Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc.
` 637 F.3d 1269 (Fed. Cir. 2011)................................................................................................... 4
`
`Telcordia Techs., Inc. v. Cisco Sys., Inc.
` 612 F.3d 1365 (Fed. Cir. 2010)................................................................................................... 3
`
`Unisplay, S.A. v. Am. Elec. Sign. Co.
` 69 F.3d 512 (Fed. Cir. 1995)....................................................................................................... 4
`
`VirnetX Inc. v. Apple Inc. (“VirnetX III”)
` 792 F. App’x 796 (Fed. Cir. 2019) ............................................................................................. 4
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`WesternGeco L.L.C. v. ION Geophysical Corp.
` 913 F.3d 1067 (Fed. Cir. 2019)................................................................................................... 5
`
`ii
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 4 of 10 PageID #: 57568
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`I.
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`INTRODUCTION
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`Apple concedes the jury found that
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` iOS devices with VPN on Demand
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`infringe VirnetX’s patents. Opp. 1, 4-5 (Dkt. 825). Apple disputes only the royalty rate. But
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`Apple cannot escape its repeated concessions that “the jury adopted Mr. Weinstein’s theory” of
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`damages and awarded $1.20 for each infringing unit “regardless of what [features] infringe[d].”
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`Dkt. 783 at 8, 10 (emphasis added); see Mot. 8, 14-15 (Dkt. 824). Apple used that fact to attack
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`the jury’s verdict, arguing that “Mr. Weinstein’s (and the jury’s) $1.20 per-unit royalty rate”
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`improperly applied “the exact same royalty rate to [VPN on Demand] and FaceTime.” Dkt. 775
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`at 18, 43. But this Court held “the jury was entitled to credit” Mr. Weinstein’s opinion that,
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`given VirnetX’s licensing history, “the royalty rate was not dependent on the number of accused
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`features.” Dkt. 798 at 29. The Court itself ordered an ongoing royalty applying “the jury’s
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`implied rate of $1.20 per unit” to future sales of infringing devices—including devices that
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`infringe only by virtue of VPN on Demand. Dkt. 798 at 51; see Mot. 9, 15-16. Apple never
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`suggested that the Court misconstrued the jury’s verdict—until now.
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`While Apple now says the damages “the jury awarded for VPN on Demand [are]
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`disputed,” the evidence Apple cites shows only that the parties disputed at trial what damages
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`the jury should award. Opp. 1. There can be no genuine dispute about what the jury actually
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`did: It “adopted Mr. Weinstein’s theory” and awarded a uniform royalty for each device with
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`VirnetX’s secure-communications technology. Dkt. 783 at 8. Apple invokes the right to a jury
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`trial, Opp. 2, 15, but Apple received its jury trial. It simply seeks to escape the outcome and try
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`again before a new jury. Giving effect to what the jury already found—upholding the verdict to
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`the full extent supported by the record—properly respects the jury’s role. The Court should de-
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`cline Apple’s invitation to throw out the jury’s work and hold yet another trial in this already
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`protracted litigation.
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`1
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 5 of 10 PageID #: 57569
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`II.
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`ARGUMENT
`A.
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`The Jury’s Verdict Supports Damages of $461,433,906 for VPN on Demand
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`Because the jury adopted Mr. Weinstein’s damages theory, damages can be recalculated
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`under its verdict without another trial. Mr. Weinstein testified that, under his (and the jury’s) ap-
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`proach, damages for VPN on Demand alone are $461,433,906 (i.e.,
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`units). PDX-442 (attached as Ex. A); Mot. 11-12. Apple’s efforts to resist that result fail.
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`1.
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`The Verdict Establishes a $1.20 Per-Unit Royalty for VPN on Demand
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`Apple’s assertion that the “jury never had to determine the royalty for [VPN on Demand]
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`alone,” Opp. 10, ignores both Apple’s concessions and Mr. Weinstein’s damages theory. Apple
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`conceded that “the jury adopted Mr. Weinstein’s theory” of damages—“his theory that Apple
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`would pay the same royalty regardless of what infringes.” Dkt. 783 at 8, 10 (emphasis added).
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`Mr. Weinstein’s theory and his $1.20 per-unit rate (both of which the jury adopted) were rooted
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`in VirnetX’s licensing history, which reflected a policy of applying “one royalty rate per unit re-
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`gardless of the number of features in the product [using VirnetX’s] patented technology.” Dkt.
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`753 at 126:20-23; see PX1092. Mr. Weinstein analyzed comparable licenses granted under that
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`policy to determine what the “one royalty” should be, concluding it should be $1.20 for each
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`device, “no matter how many features . . . use the patented technology.” Dkt. 753 at 127:5-8; see
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`Mot. 5-6. He expressly addressed infringement by VPN on Demand alone and explained the
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`royalty would still be $1.20 per unit, for a total of $461,433,906. PDX-442; PX1089.6.
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`Adopting Mr. Weinstein’s theory—and his $1.20 per-unit royalty under it—the jury
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`necessarily found that, in a hypothetical negotiation, VirnetX would obtain “one royalty rate” for
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`any Apple device using VirnetX’s secure-communications technology, “regardless of the number
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`of features in the product that use the patented technology.” Dkt. 753 at 126:20-23. It would
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`make no sense for the jury to adopt the $1.20 per-unit rate derived from VirnetX’s past licenses
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`2
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 6 of 10 PageID #: 57570
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`without embracing the one-royalty-rate principle underlying those licenses. Under that principle,
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`the same $1.20 per-unit royalty applies whether a given device infringes by dint of VPN on
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`Demand, FaceTime, or both. This Court recognized as much, holding the jury reasonably “cred-
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`it[ed]” “Mr. Weinstein’s opinion that the per-unit royalty rate should remain constant regardless
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`of the number of accused features present in [a] given device.” Dkt. 798 at 29 (emphasis added).
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`This Court’s ongoing-royalty order thus applied the jury’s $1.20 per-unit rate to devices
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`that infringe solely by virtue of VPN on Demand (because the patents relating to FaceTime
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`expire first). See Mot. 9, 15-16. Apple does not dispute that. Nor does Apple dispute that it
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`never argued—to this Court or on appeal—that the jury’s verdict supported a different approach.
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`Instead, Apple deflects with irrelevancies. Apple says the Court’s award of equitable relief
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`cannot deprive it of a jury trial. Opp. 15. But the Court expressly applied “the jury’s” royalty
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`rate, Dkt. 798 at 51, under its “broad discretion to interpret” the jury’s verdict, Telcordia Techs.,
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`Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1378 (Fed. Cir. 2010). And while Apple protests that
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`“the Court was never asked to consider varying patent expiration dates in determining the
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`ongoing royalty” for VPN on Demand “alone,” Opp. 15, Apple never asked the Court to do so.
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`Apple has not been shy about pursuing perceived advantages in this case. That Apple never
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`sought a different VPN on Demand-only royalty just reinforces its many concessions that “the
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`jury adopted Mr. Weinstein’s theory” that Apple must pay “the same royalty regardless of what
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`infringes,” Dkt 783 at 8, 10—and forecloses Apple’s new, contrary position.1
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`1 Apple’s remaining objections fail. While Apple requested a new trial in the event one feature
`were found non-infringing, Opp. 10-11, its concessions about the jury’s verdict show Apple is
`not entitled to such relief. Apple speculates (at 14) the jury “could have found a different, lower
`amount” for VPN on Demand alone. But the jury found the proper royalty rate is $1.20, irres-
`pective of how many features infringe. And none of the evidence Apple cites purported to com-
`pare the value of FaceTime versus VPN on Demand. The only evidence on that—from Apple’s
`expert—was that VPN on Demand is worth six times as much as FaceTime. Mot. 17-18.
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`3
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 7 of 10 PageID #: 57571
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`2.
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`The Court Can Determine Damages Without a New Trial
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`Despite acknowledging the “normal rule” favoring retrial, the Federal Circuit declined to
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`order a damages retrial here. VirnetX Inc. v. Apple Inc., 792 F. App’x 796, 812 (Fed. Cir. 2019)
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`(“VirnetX III”). The “normal rule” applies only where “‘the verdict does not reveal the means
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`by which the jury calculated damages.’” Id. Here, it is clear how the jury calculated damages.
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`A damages retrial is unnecessary, moreover, where a sustained theory of liability supports
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`an existing damages award. Alaniz v. Zamora-Quezada, 591 F.3d 761, 773 (5th Cir. 2009); see
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`Mot. 12-13. Apple protests that the VPN on Demand infringement verdict does not support “the
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`entire damages award.” Opp. 9. But Apple overlooks the “undisputed” fact “that the jury used a
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`per-unit royalty of $1.20” for each device found to infringe. VirnetX III, 792 F. App’x at 813. It
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`is thus undisputed that the jury awarded $461,433,906 for the 384,528,255 devices with VPN on
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`Demand; the verdict supports the entirety of that award. See also Oiness v. Walgreen Co., 88
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`F.3d 1025, 1030 (Fed. Cir. 1996) (court may “remit the damage award to the highest amount the
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`jury could ‘properly have awarded based on the relevant evidence’”).2
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`In Siemens Medical Solutions USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637
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`F.3d 1269, 1290-91 (Fed. Cir. 2011) (cited Mot. 12), the Federal Circuit affirmed the district
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`court’s reduction of a lump-sum damages award to exclude lost profits from devices sold after
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`the patent expired. 637 F.3d at 1277 & n.2, 1289-90. This Court similarly may reduce the dam-
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`ages award to exclude FaceTime-only devices. In Siemens, moreover, the Federal Circuit direct-
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`ed the district court to “determine a reasonable royalty” for certain devices—but did not order a
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`new trial. Id. at 1291. Instead, the court could “rely on the present record.” Id. So too here.
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`In Omega Patents, LLC v. CalAmp Corp., 920 F.3d 1337, 1350 (Fed. Cir. 2019), in-
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`2 Contrary to Apple’s assertion, Opp. 8-9, the Federal Circuit routinely looks to regional circuit
`law in this context. See Unisplay, S.A. v. Am. Elec. Sign. Co., 69 F.3d 512, 519 (Fed. Cir. 1995).
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`4
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 8 of 10 PageID #: 57572
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`fringement was upheld only for an “unidentified subset” of accused devices. Here, the relevant
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`“subset” of devices (and the damages awarded for them) is identified and undisputed. In Wes-
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`ternGeco L.L.C. v. ION Geophysical Corp., 913 F.3d 1067, 1075 (Fed. Cir. 2019), retrial was un-
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`necessary so long as undisputed evidence showed that the basis for damages (marine surveys
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`causing lost profits) practiced a remaining claim. Here, it is undisputed that the
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`iOS
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`devices for which the jury awarded $461,433,906 infringe the ’135 and ’151 patents. In Pro-
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`mega Corp. v. Life Techs. Corp., 773 F.3d 1338, 1345, 1358 (Fed. Cir. 2014), the district court
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`had vacated the damages award, and the Federal Circuit did not discuss the necessity of a retrial.
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`In none of Apple’s cases, moreover, had the jury adopted a theory requiring the infringer to “pay
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`the same royalty regardless of what infringes,” Dkt. 783 at 8, 10, as is the case here.
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`Apple also asks the Court to order a new trial as a matter of discretion. Opp. 16. But
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`there are no “‘uncertainties’” or risks of “‘injustice,’” id., that might warrant yet another trial—
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`the third in this case and fifth overall. Such a trial would needlessly consume scarce judicial and
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`party resources. The interests of justice favor bringing this protracted litigation to an end.
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`3.
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`The Court Should Confirm the Ongoing Royalty and Award Other Relief
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`Apple does not dispute that ongoing royalties, supplemental damages, and post-judgment
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`interest are proper if the Court enters judgment without a new trial. See Mot. 18-19; Opp. 16-17.
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`Apple admits its pre-judgment interest challenges are foreclosed. Opp. 17 & n.5. Apple raised
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`the same arguments on appeal in the -417 case, see Apple Br. 67-68 in No. 18-1197, and con-
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`ceded that the decision there precludes those arguments here, see Apple Br. 62, 67-68 in No. 19-
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`1050. Finally, entry of a $461 million judgment would entitle VirnetX to costs. Kemin Foods,
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`L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V., 464 F.3d 1339, 1347-48 (Fed. Cir. 2006).
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`III. CONCLUSION
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`The Court should grant VirnetX’s motion.
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`5
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 9 of 10 PageID #: 57573
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`Dated: March 9, 2020
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`Respectfully submitted,
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`/s/ Jason D. Cassady
` 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
`John F. Summers
`Texas State Bar No. 24079417
`Email: jsummers@caldwellcc.com
`Warren J. McCarty, III
`Texas State Bar No. 24107857
`Email: wmccarty@caldwellcc.com
`CALDWELL CASSADY CURRY P.C.
`2121 N. Pearl Street, Suite 1200
`Dallas, Texas 75201
`Telephone: (214) 888-4848
`Telecopier: (214) 888-4849
`Robert M. Parker
`Texas State Bar No. 15498000
`Email: rmparker@pbatyler.com
`R. Christopher Bunt
`Texas State Bar No. 00787165
`Email: rcbunt@pbatyler.com
`PARKER, BUNT & AINSWORTH, P.C.
`100 East Ferguson, Suite 1114
`Tyler, Texas 75702
`Telephone: (903) 531-3535
`Telecopier: (903) 533-9687
`
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`Case 6:12-cv-00855-RWS Document 829 Filed 03/11/20 Page 10 of 10 PageID #: 57574
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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
`Facsimile: (903) 757-2323
`ATTORNEYS FOR PLAINTIFF
`VIRNETX INC.
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`CERTIFICATE OF SERVICE
`The undersigned certifies that a true and correct copy of the foregoing document was
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`served on counsel of record via email on March 9, 2020, to the extent allowed by the Agreed
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`Protective Order.
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`/s/ Jason D. Cassady
`Jason D. Cassady
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`CERTIFICATE OF AUTHORIZATION TO FILE UNDER SEAL
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`The undersigned hereby certifies that the foregoing document is authorized to be filed
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`under seal pursuant to the Agreed Protective Order submitted in this case.
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`/s/ Jason D. Cassady
` Jason D. Cassady
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