VirnetX Accuses Apple of Seeking ‘Indefinite Delay’ with Latest Motions in Nine-Year Litigation

On August 1, the U.S. Court of Appeals for the Federal Circuit affirmed-in-part, vacated-in-part, and remanded a decision of the Patent Trial and Appeal Board (PTAB) in the case between VirnetX and Apple/ Cisco, and separately denied Apple’s request for rehearing en banc in its appeal from the U.S.  District Court for the Eastern District of Texas ruling awarding VirnetX nearly $440 million. In response, Apple quickly filed motions to stay and vacate those decisions, and requested leave to petition for a second rehearing. Most recently, on August 15, VirnetX filed its reply to Apple’s motions, arguing that the tech giant is merely trying to delay the case in order to give priority to continuing PTAB hearings.

Apple’s Request Could Result in Many More Years of Delay

VirnetX’s brief in opposition called Apple’s implication that Article III courts should give priority to PTAB validity determinations a “false notion” that the Federal Circuit had already dismissed in a previous ruling. VirnetX further argued that such an approach could have far-reaching and negative implications for patent owners:

In the 18-1751 case, claim 5 will be the subject of further PTO proceedings involving a complex question of whether the prior art discloses authentication of DNS queries. And on remand in the 17-1368 case, the PTO will have to go back to the drawing board with respect to the patents infringed by VPN on Demand, including having to revisit claim construction. Those decisions will themselves be subject to appeal. If any claims are ultimately cancelled at the end of those proceedings—and there is no guarantee they will be—such a result may be years away. How that far-off, speculative possibility supports the extraordinary relief of leave to file a second en banc petition in this case, or an indefinite stay of this already decided case, is a mystery.

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One of Apple’s key arguments in its motions to stay and vacate was that the court’s August 1 decision finding claim 5 of patent number 7,921,211 (“the ’211 patent”) unpatentable must mean that claim 5 of patent number 7,418,504 (“the ’504 patent”) is also unpatentable because the two claims are “indistinguishable.”

As a refresher, here are the patents at issue:

• S. Patent No. 6502135, titled Agile Network Protocol for Secure Communications with Assured System Availability. It claims a method of transparently creating a VPN between a client computer and a target computer in a way that overcomes security issues in distributed systems which aren’t solved by traditional firewalls.
• S. Patent No. 7418504, titled Agile Network Protocol for Secure Communications Using Secure Domain Names. It protects a system for providing a domain name service for establishing a secure communication link, the system configured for storing a plurality of domain names and corresponding network addresses, receiving queries for network addresses and indicating whether the domain name service system supports secure communication links.
• S. Patent No. 7490151, titled Establishment of a Secure Communication Link Based on a Domain Name Service (DNS) Request. It claims a data processing device comprising memory storing a module for intercepting DNS requests sent by a client and determining whether those intercepted requests correspond to a secure server.
• S. Patent No. 7921211, same title as the ‘504 patent. It protects a system for providing a domain name service configured and arranged to be connected to a communication network in a way that allows message payloads to be encrypted into tunneled agile routing protocol (TARP) packets which can only be unlocked using a session key.

But VirnetX argued in its brief that Apple had already raised that issue in its previous motions, at oral argument, and in a supplemental brief, and that the court was therefore fully aware of its position but found the arguments “unpersuasive”.

“Apple should not be permitted to further prolong this suit through a successive rehearing petition to relitigate a position this Court has already rejected,” said the VirnetX brief.

Eight Times Too Many

The VirnetX brief also noted that this is Apple’s eighth request to stay the proceedings on the basis that courts should give priority to PTAB validity determinations over Article III courts. “[Apple] seeks indefinite delay to give PTO validity determinations absolute priority over Article III court validity determinations—no matter how far off those PTO decisions and no matter how long the odds Apple will prevail in those decisions,” the brief said.

IPWatchdog has written about the VirnetX case for many years, including how the PTAB has acted as a veritable death squad for the company. As we noted in 2017 in reference to the Federal Circuit’s 2014 affirmation of an Eastern District of Texas jury’s findings that none of the asserted VirnetX patent claims were invalid and that many of the asserted claims of the ‘135 and ‘151 patents were infringed by Apple’s VPN On Demand product:

Obviously, the patent claims VirnetX has used to pursue infringers such as Apple and Microsoft are not the weak patents that opponents of the patent system claim are the scourge of the system. Well — not so fast! Just because an Article III federal district court confirms the validity of a patent doesn’t mean anything anymore. Indeed, federal courts have become subordinate to the PTAB, which is as ridiculous as it sounds but sadly true. A patent is not valid until an Article I executive tribunal says so, and absolutely no deference is paid to Article III judges of the United States federal courts.

From June 2013 through November 2016, VirnetX faced a barrage of 68 inter partes review (IPR) challenges at the PTAB. Apple is listed as a petitioner on 42 of those IPR petitions. Other parties filing petitions include Microsoft, RPX Corporation, Black Swamp IP, LLC, and The Mangrove Partners Master Fund, Ltd. Only one of those petitions resulted in a final written decision finding all claims patentable. 18 final written decisions found that all claims were unpatentable.

Apple Responds

On August 19, Apple filed a reply in support of its August 7 motions, in which it stated that VirnetX’s opposition brief focuses chiefly on procedural, rather than substantive, arguments. Apple also said that VirnetX’s contention that Apple’s latest rehearing request is based on arguments that have already been made is incorrect and that granting its requests is a matter of “basic due process” rather than indefinite delay, as VirnetX contends.

The Federal Circuit is expected to rule on these latest motions soon.

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