`1204
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`VIRNETX INC., ET AL,
`
`PLAINTIFFS,
`
`VS.
`
`APPLE INC.,
`
`DEFENDANTS.
`
`
`
`CIVIL ACTION NO.
`6:12-CV-855-RWS
`
`
`)(
`)(
`)(
`)(
`)(
`TYLER, TEXAS
`)(
`)( OCTOBER 30, 2020
`)(
`12:54 P.M.
`)(
`
`TRANSCRIPT OF JURY TRIAL
`AFTERNOON SESSION
`BEFORE THE HONORABLE JUDGE ROBERT W. SCHROEDER, III
`UNITED STATES DISTRICT JUDGE
`
`APPEARANCES:
`
`FOR THE PLAINTIFF:
`BRADLEY W. CALDWELL
`JASON D. CASSADY
`JOHN AUSTIN CURRY
`CALDWELL CASSADY & CURRY
`2121 N. Pearl St., Suite 1200
`Dallas, Texas 75201
`T. JOHN WARD, JR.
`WARD, SMITH & HILL PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`R. CHRISTOPHER BUNT
`PARKER BUNT & AINSWORTH
`100 East Ferguson, Suite 418
`Tyler, Texas 75702
`
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`Case 6:12-cv-00855-RWS Document 996 Filed 11/02/20 Page 2 of 92 PageID #: 64539
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`FOR THE PLAINTIFFS:
`
`ANDY TINDEL
`MT2 LAW GROUP
`MANN TINDEL THOMPSON
`112 E. Line Street
`Suite 304
`Tyler, Texas 75702
`
`FOR THE DEFENDANT:
`GREGORY S. AROVAS
`ROBERT A. APPLEBY
`JEANNE M. HEFFERNAN
`JOSEPH A. LOY
`LESLIE M. SCHMIDT
`AARON D. RESETARITS
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, New York 10022
`AKSHAY S. DEORAS
`KIRKLAND & ELLIS LLP
`555 California Street
`San Francisco, California 94104
`MICHAEL E. JONES
`POTTER MINTON
`110 North College Avenue, Suite 500
`Tyler, Texas 75702
`
`COURT REPORTER:
`
`Ms. Shelly Holmes, CSR, TCRR
`Official Court Reporter
`United States District Court
`Eastern District of Texas
`Marshall Division
`100 E. Houston
`Marshall, Texas 75670
` (903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`P R O C E E D I N G S
`
`(Jury out.)
`COURT SECURITY OFFICER: All rise.
`THE COURT: Anything before we have the jury
`brought in?
`MR. WARD: No.
`MS. HEFFERNAN: No.
`THE COURT: Okay. Let's have the jury brought in,
`Mr. Haddix.
`(Jury in.)
`THE COURT: Please be seated.
`You may proceed.
`MS. HEFFERNAN: Thank you, Your Honor.
`I have no additional questions for this witness.
`THE COURT: Okay. Very well.
`Mr. Bakewell, you may step down.
`THE WITNESS: Thank you, Your Honor.
`MS. HEFFERNAN: Thank you, Mr. Bakewell.
`Your Honor, Apple would like to move the admission
`of certain exhibits.
`THE COURT: Okay.
`MS. HEFFERNAN: Apple -- Defendant's Trial Exhibit
`DTX-1076, which is the Avaya phone used with Mr. Binns.
`DTX-1056, which I used with Mr. Bakewell. It's
`the Microsoft 2014 amendment demonstrative.
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`THE COURT: All right.
`MS. HEFFERNAN: DTX-1066, which I used with
`Mr. Bakewell. It's the reasonable royalty demonstrative.
`And DTX-1086, which is the Avaya Flare, which was
`used with Mr. Binns yesterday.
`THE COURT: Okay. Any objections to any of those?
`MR. CASSADY: Your Honor, I have no objections to
`those as demonstrative exhibits. I think she was referring
`to them as DTX instead of DDX. I believe that's the
`designation for the demonstratives. I'm just making sure
`we're not using them as exhibits, they're demonstratives.
`MS. HEFFERNAN: That's correct, Your Honor.
`They're demonstratives.
`THE COURT: Only demonstratives. Very well. They
`will be received.
`MS. HEFFERNAN: Thank you. And then finally I
`will hand up to Ms. Schroeder Defendant's exhibit list of
`admitted exhibits.
`THE COURT: Okay.
`MS. HEFFERNAN: And I've given a copy to opposing
`
`counsel.
`
`THE COURT: All right.
`MR. CASSADY: No objection.
`THE COURT: Have those been received,
`Ms. Heffernan, or you're moving the admission of those now?
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`MS. HEFFERNAN: These have already been received,
`Your Honor.
`THE COURT: Okay. Very well.
`MS. HEFFERNAN: And then finally, also moving
`DTX-1300.05, .06, and .47, and those are from Mr. Bakewell.
`THE COURT: All right. Any objection to those?
`MR. CASSADY: No objection, Your Honor.
`THE COURT: Very well. They will be received.
`MS. HEFFERNAN: And with that, Your Honor, Apple
`rests its case.
`THE COURT: All right. Very well. Can I ask
`counsel to approach?
`MR. CASSADY: Your Honor, can I place one thing on
`the record first?
`THE COURT: Yes, of course.
`MR. CASSADY: Just to make the record clear, Your
`Honor, the plaintiff admits PX-12 -- or requests admission
`of PX-1236 used on the cross-examination of Mr. Bakewell,
`and then we also provide our Plaintiff's VirnetX's October
`30th final admitted trial exhibit list, Your Honor.
`THE COURT: Any objection?
`MS. HEFFERNAN: None to the list.
`Let me see. I may have an objection to PX-1236,
`I'll just need to check with my counsel.
`THE COURT: Okay. Fair enough. But the others
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`can be received?
`MS. HEFFERNAN: Yes, Your Honor.
`THE COURT: All right. Let me ask counsel to
`approach.
`(Bench conference.)
`THE COURT: Okay. So are we -- are you all
`putting Mr. Weinstein back on or not?
`MR. CALDWELL: I don't think so.
`THE COURT: Okay.
`MR. CALDWELL: I think we're about to close and --
`THE COURT: Okay. Anything -- any other issues
`that we need to deal with? I mean, I think that at the
`close of -- I mean, I'll give you an opportunity to rest,
`and then I'll ask you both to rest on your entire cases.
`We can take up JMOLs very briefly if you want to after
`having sent the jury back. We do probably need a few
`minutes to sort of get reconfigured and get instructions
`distributed. Thoughts about how we proceed?
`MR. CALDWELL: I think that's fine, or we could --
`I don't know if you want them to file the JMOLs instead or
`if you want to do it verbally. That's up to you.
`The one thing I would request if you could is if
`you do go back and you're finalizing instructions, would
`you mind electronically shooting us whatever you settle on
`for the verdict form just in case I think we need to work
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`it into a slide or something.
`THE COURT: Yes. And I think it's probably not a
`bad idea for us to discuss that. I mean, I do think
`we'll -- as I indicated earlier, we'll include the word
`"rate" in both questions. I do think for reasons that I'm
`happy to go into that the dollar figure is appropriate
`there.
`
`Ms. Heffernan, you used a dollar figure throughout
`the -- throughout Mr. Bakewell's examination. And -- and
`then -- but, yes, we'll provide those. And they're final
`as far as I'm concerned.
`MR. AROVAS: As far as the verdict form goes.
`THE COURT: Yes, sir.
`MR. AROVAS: Will you put the decimal place in?
`Is that acceptable to the Court?
`THE COURT: Do you have any problem with the
`decimal point?
`MR. CALDWELL: I don't think so.
`THE COURT: Okay.
`MR. CALDWELL: We've got decimal points in our
`numbers.
`MR. AROVAS: That was used by --
`THE COURT: We'll put the dollar sign and a
`decimal point. And then you guys can -- you're welcome to
`explain it however you want to explain it to the jury.
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`I -- just for -- since we're discussing this, my
`plan is to explain the verdict form at the conclusion of
`the instructions and to make sure they understand that
`their math has to be correct. I'm not going to use a
`number of -- as an example. I'm just going to say whatever
`you decide the royalty rate is per unit, you'll put it in
`this first blank, and then you have to do the math, and
`you'll fill in whatever that factor is on the -- on the
`second blank, which is the total royalty, and the math has
`to -- has to be correct.
`MR. CALDWELL: Okay.
`THE COURT: And we'll check the math before we
`have you brought into the courtroom. I'll just explain it
`that way, and then y'all are welcome to argue it however
`you want to argue it.
`MR. CALDWELL: Okay.
`THE COURT: Is that fair enough?
`MR. AROVAS: Yes.
`THE COURT: Okay.
`MR. CALDWELL: Should we rest on the record?
`THE COURT: We'll let you rest on the record.
`Anybody can make any additional comments that you -- that
`you want to make.
`I think Mr. Summers said he wanted to argue
`something.
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`I think y'all are filing yours, are you not?
`MS. HEFFERNAN: Yes.
`MR. AROVAS: Yes, yes.
`THE COURT: Okay. So we can tend to whatever.
`And we'll hopefully try to start as quickly as we can.
`MR. CALDWELL: So we're going to do about 20
`seconds now and then let the jury go?
`THE COURT: Right.
`MR. CALDWELL: Okay.
`(Bench conference concluded.)
`THE COURT: Okay. Ladies and gentlemen of the
`jury, the -- the -- the defendant has rested at this point.
`Let me ask counsel for the plaintiff, does the
`plaintiff rest on its entire case?
`MR. CALDWELL: I think we are still waiting --
`sorry. I think we're still waiting to see if Ms. Heffernan
`has an objection to the exhibit that was just --
`MR. WARD: It was a 2009 10-K, for the record, of
`VirnetX.
`MS. HEFFERNAN: No objection, Your Honor.
`THE COURT: All right. Very well. PX-1236 will
`be received into evidence.
`MR. CALDWELL: Then the plaintiff rests and
`
`closes.
`
`THE COURT: All right. Thank you, Mr. Caldwell.
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`MR. CALDWELL: Yes, sir.
`THE COURT: Does the defendant rest on its entire
`
`case?
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`MR. AROVAS: Yes, Your Honor.
`THE COURT: All right. Thank you, Mr. Arovas.
`Ladies and gentlemen of the jury, I have some very
`brief legal and evidentiary matters I need to discuss with
`the parties, and then following that, we'll have you
`brought back into the courtroom, and I will begin my
`instructions -- my final instructions to you about the law
`that you'll be required to follow as you begin your
`deliberations.
`And then after that, as you know, the parties will
`present their closing -- closing arguments to you.
`So if you will bear with us for just a few more
`minutes, we'll get you back into the courtroom, and we'll
`begin instructions right after that.
`COURT SECURITY OFFICER: All rise.
`(Jury out.)
`THE COURT: Y'all be seated.
`Okay. So we had brief discussion at the sidebar
`regarding the way forward. The parties have rested. I'm
`happy to hear any oral presentation on motions for judgment
`as a matter of law. I had understood, I guess from
`Mr. Summers last evening, that VirnetX was -- did want to
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`present something orally, but, Mr. Caldwell, you tell me
`that -- that VirnetX is going to file its JMOL; is that
`right?
`
`MR. CALDWELL: That's what I'm told, Your Honor.
`Although I just checked and I don't see an ECF for it. So
`I'm trying to -- I'm either having Mr. Summers run down
`here right now or else someone's going to say they filed
`it.
`
`THE COURT: Well, I mean, I -- how do we -- Apple
`is filing its JMOLs in written form, right, Ms. Schmidt?
`Yet another thing you're responsible for in this trial,
`Ms. Schmidt?
`MS. SCHMIDT: No, we have a whole team but, yes,
`that's been filed.
`THE COURT: All right.
`MR. CALDWELL: And I'm told that our paralegal is
`at the computer right in there submitting it as we speak.
`THE COURT: All right. And Plaintiffs aren't
`waiving anything, Mr. Arovas, are they, if they file it
`this afternoon?
`MR. AROVAS: No, Your Honor.
`THE COURT: All right. Fair enough.
`So we have by email sent you a PDF of the final
`instructions, should be in your inbox or certainly on its
`way to you, use that however you think appropriate.
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`The parties at the bench briefly discussed the
`verdict form, which was the only thing outstanding from
`this morning's conversation. I do intend to use the dollar
`sign in the blank. The dollar sign has been used
`throughout the trial by both sides and experts for both
`sides. So I think that is appropriate.
`We -- we'll use -- so you'll have the verdict
`form, you should have it in your email.
`The way the first question is posed is: What
`royalty rate expressed as a dollar amount per device do you
`find by a preponderance of the evidence would fairly and
`reasonably compensate VirnetX for Apple's infringement?
`It has a dollar sign, a blank, a decimal point,
`and a blank. And then it says per device.
`And then the second question remains the same, but
`we've included the term "rate" in the second sentence
`multiplying the per-device royalty rate in Question 1.
`So what I intend to do when I get to the
`explanation of the verdict form after the instructions is
`to basically go through the form and to make sure they
`understand what it is we're asking them to do. And when I
`explain Question 1, I'll say, you know, you can express
`this in dollars and/or cents. That's my plan.
`Are the parties agreeable to that approach? I
`won't use an example. I'll explain to them that the math
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`has to work out right, that the parties agree on what the
`total number of infringing units is, and that there's no
`dispute about that at all. They'll take that first number,
`multiply it by the number of infringing units, and end up
`with the second number to put in the blank there, and that
`all that math needs to be correct.
`Is that fair enough?
`MR. CALDWELL: Yes, sir.
`MR. AROVAS: Yes, Your Honor.
`THE COURT: Okay. Good.
`What else?
`MS. SCHMIDT: Your Honor, Apple just has its final
`admitted trial list that we'd like to submit.
`THE COURT: Very well.
`MS. SCHMIDT: Thank you.
`THE COURT: That will be received.
`Anything from the plaintiffs?
`MR. CALDWELL: No, Your Honor.
`THE COURT: Why don't we take a short recess, and
`then when we return, we'll have the jury brought in and
`we'll distribute paper copies of the instructions for you
`all to have as we go along, and copies of the verdict form,
`as well.
`MR. WARD: Your Honor --
`THE COURT: Yes, sir.
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`MR. WARD: Mr. Caldwell and I are splitting the
`closing.
`THE COURT: Yes.
`MR. WARD: 20 minutes and 10 minutes.
`THE COURT: Okay.
`MR. WARD: Can I get a two-minute warning when I'm
`almost done?
`THE COURT: You're starting?
`MR. WARD: Yes, sir.
`THE COURT: Okay. Yeah, two-minute warning when
`you're at the end of your 20?
`MR. WARD: Yes, sir.
`THE COURT: That's fine.
`MR. WARD: When I'm at 18, I've got two minutes.
`THE COURT: That's fine.
`MR. WARD: Thank you.
`THE COURT: Y'all want warnings? Mr. Arovas, are
`you doing all of it?
`MR. AROVAS: Yes.
`THE COURT: Okay.
`MR. AROVAS: Five minutes will be great.
`THE COURT: Five minutes? I'll give you a
`five-minute warning.
`Okay. We'll take a short recess.
`COURT SECURITY OFFICER: All rise.
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`(Recess.)
`(Jury out.)
`COURT SECURITY OFFICER: All rise.
`THE COURT: Okay. Is everybody ready? We need a
`few more minutes to get situated?
`Okay. Y'all just give me the thumb's up when
`you're ready. Are y'all ready? Plaintiffs ready?
`MR. CALDWELL: Yes.
`THE COURT: Mr. Arovas, are you ready?
`MR. AROVAS: Yes, sir.
`THE COURT: All right. Let's have the jury
`brought in, please.
`(Jury in.)
`THE COURT: Please be seated.
`Okay. Ladies and gentlemen of the jury, as I
`think you know, the time has come for me to go through the
`final jury instructions that you will -- will follow in
`your deliberations in this case. I'm going to read those
`instructions to you.
`When you get back to the jury room, each of you
`will have a copy of the instructions for your use. While
`I'm going through the instructions now, you're certainly
`welcome to take whatever notes you want to, but each of you
`will have a copy of this for your use during your
`deliberations.
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`And then, once I have gone through the
`instructions with you, the parties will present their
`closing arguments to you.
`And following that, you'll retire to the jury room
`to begin your deliberations.
`Okay. Members of the jury, you've now heard the
`evidence in this case, and I will instruct you now on the
`law you must apply. It's your duty to follow the law as I
`give it to you.
`On the other hand, you, the jury, are the sole
`judges of the facts. Do not consider any statement I may
`have made during the trial or make in these instructions as
`an indication that I have any opinion about the facts of
`the case.
`After I instruct you on the law, as I suggested,
`the attorneys will have an opportunity to make their
`closing arguments. Statements and argument of the
`attorneys are not evidence and are not instructions on the
`law. They are intended only to assist you in understanding
`the evidence and what the parties' contentions are.
`A verdict form has been prepared for you, and you
`will take this form with you to the jury room.
`When you have reached a unanimous agreement as to
`your verdict, you will have your foreperson fill in, date,
`and sign the form.
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`At the end of these instructions, I'm going to
`take you through the verdict form before the parties begin
`their closing arguments.
`There are two questions on the verdict form, and
`you should answer the questions from the facts as you find
`them. You should not decide who you think should win and
`then answer the questions accordingly.
`A corporation and all other persons are equal
`before the law and must be treated as equals in a court of
`justice.
`With respect to both the questions that are asked,
`your answers and your verdict must be unanimous.
`In determining whether any fact has been proven in
`this case, you may, unless otherwise instructed, consider
`the testimony of all witnesses, regardless of who may have
`called them, and all exhibits received into evidence,
`regardless of who may have produced them.
`At times during the trial, it was necessary for
`the Court to talk with the lawyers here at the bench out of
`your hearing or by calling a recess. We met at the bench
`or when you were in the jury room because during trial,
`sometimes things come up that don't involve the jury. You
`should not speculate on what was discussed during such
`times. You are the jurors, and you are the sole judges of
`the credibility of the witnesses and the weight and effect
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`Case 6:12-cv-00855-RWS Document 996 Filed 11/02/20 Page 18 of 92 PageID #: 64555
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`of all of the evidence.
`By the Court allowing testimony or other evidence
`to be introduced over the objection of an attorney, the
`Court did not indicate any opinion as to the weight or
`effect of such evidence.
`You alone are to determine the questions of
`credibility or truthfulness of the witnesses. In weighing
`the testimony of the witnesses, you may consider the
`witness's manner and demeanor on the witness stand, any
`feelings or interest in the case, or any prejudice or bias
`about the case that he or she may have, and the consistency
`or inconsistency of his or her testimony considered in the
`light of the circumstances. Has the witness been
`contradicted by other credible evidence? Has he or she
`made statements at other times and places contrary to those
`made here on the witness stand?
`You must give the testimony of each witness the
`credibility that you think it deserves.
`Even though a witness may be a party to the action
`and, therefore, interested in its outcome, the testimony
`may be accepted if it's not contradicted by direct evidence
`or by any inference that may be drawn from the evidence if
`you believe the testimony.
`You are not to decide this case by counting the
`number of witnesses who have testified on the opposing
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`sides. Witness testimony is weighed. Witnesses are not
`counted.
`The test is not the relative number of witnesses
`but the relative convincing force of the evidence. The
`testimony of a single witness is sufficient to prove any
`fact even if a greater number of witnesses have testified
`to the contrary if after considering all of the other
`evidence you believe that witness.
`In determining the weight to give to the testimony
`of the witness, you should consider whether there was
`evidence that at some other time the witness said or did
`something or failed to say or do something that was
`different from the testimony given at the trial.
`A simple mistake by a witness does not necessarily
`mean the witness did not tell the truth as he or she
`remembers it. People may forget some things or remember
`other things inaccurately.
`If a witness made a misstatement, you should
`consider whether that misstatement was an intentional
`falsehood or simply an innocent mistake. The significance
`of that may depend on whether it has to do with an
`important fact or with only an unimportant detail.
`Certain testimony in this case has been presented
`to you through a deposition. A deposition is the sworn,
`recorded answers to questions asked to a witness in advance
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`Case 6:12-cv-00855-RWS Document 996 Filed 11/02/20 Page 20 of 92 PageID #: 64557
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`of the trial.
`Under some circumstances, if a witness cannot be
`present to testify from the witness stand, the witness
`testimony may be presented under oath in the form of a
`deposition.
`And some time before this trial, attorneys
`representing the parties in this case questioned the
`witness under oath. A court reporter was present and
`recorded the testimony, and this deposition testimony is
`entitled to the same consideration and is to be judged by
`you as to the credibility and weight and otherwise
`considered by you insofar as possible the same as if the
`witness had been present and had testified from the witness
`stand here in court.
`While you should consider only the evidence in
`this case, you are permitted to draw such reasonable
`inferences from the testimony and exhibits as you feel are
`justified in the light of common experience. In other
`words, you may make deductions and reach conclusions that
`reason and common sense lead you to draw from the facts
`that have been established by the testimony and evidence in
`the case.
`The testimony of a single witness may be
`sufficient to prove any fact, even if a greater number of
`witnesses may have testified to the contrary if you believe
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`that single witness.
`There are two types of evidence that you may
`consider in properly finding the truth as to the facts in
`this case. One is direct evidence, such as the testimony
`of an eyewitness.
`The other is indirect or circumstantial evidence,
`the proof of a chain of circumstances that indicates the
`existence or non-existence of certain other facts.
`As a general rule, the law makes no distinction
`between direct and circumstantial evidence but simply
`requires that you find the facts from all of the evidence,
`both direct and circumstantial.
`The parties have stipulated or agreed to certain
`facts in this case, and when the lawyers on both sides of a
`case stipulate to the existence of a fact, you must, unless
`otherwise instructed, accept that stipulation as evidence
`and regard that fact as proved.
`The parties previously have stipulated that
`damages for infringement in this case would be calculated
`as starting on September 18, 2013.
`Attorneys representing clients in courts such as
`this one have an obligation during the course of trial to
`assert objections when they believe testimony or evidence
`is being offered that's contrary to the Rules of Evidence.
`The essence of a fair trial is that it be
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`conducted pursuant to the Rules of Evidence and that your
`verdict be based only on legally admissible evidence.
`So you should not be influenced by the objection
`or by the Court's ruling on it. If the objection is
`sustained, ignore the question. If the objection is
`overruled, then you may treat the answer to that question
`just as you would treat the answer to any other question.
`When knowledge of a technical subject matter may
`be helpful to the jury, a person who has special training
`or experience in that technical field, he or she is called
`as an expert, is permitted to state his or her opinion on
`those technical matters.
`However, you are not required to accept that
`opinion. As with any other witness, it is up to you to
`decide whether the witness's testimony is believable or
`not, whether it is supported by the evidence, and whether
`to rely upon it.
`In deciding whether to accept or rely upon the
`opinion of an expert witness, you may consider any bias of
`the witness.
`I'm first going to give you a summary of each
`side's contentions in this case. And then I will tell you
`what each side must prove to win on these issues.
`It has been determined that the VPN on Demand
`feature infringes Claims 1 and 7 of the '135 patent and
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`Case 6:12-cv-00855-RWS Document 996 Filed 11/02/20 Page 23 of 92 PageID #: 64560
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`Claim 13 of the '151 patent. The parties agree that
`VirnetX is entitled to damages for this infringement but
`disagree on the amount of those damages.
`The amount of damages for the infringement by VPN
`on Demand is the issue yo