The Federal Circuit recently issued an opinion affirming the decision of the Patent Trial and Appeal Board (“Board”) invalidating a VirnetX patent challenged by Apple. The Court held that VirnetX was collaterally estopped from relitigating whether a prior art reference was a printed publication. The Court further declined to address VirnetX’s argument that inter partes review (“IPR”) procedures could not be retroactively applied to patents filed before enactment of the America Invents Act (“AIA”) because VirnetX failed to preserve that issue for appeal. See VirnetX Inc. v. Apple Inc., No. 17-2490, 2018 U.S. Dist. LEXIS 6212 (Fed Cir. Dec. 10, 2018) (Before Newman, O’Malley, and Chen, Circuit Judges) (Opinion for the court, O’Malley, Circuit Judge).
In 2015, Apple filed two IPR petitions challenging the obviousness of VirnetX’s ‘696 patent in part over the prior art reference RFC 2401. During the IPR, VirnetX argued that RFC 2401 was not a printed publication under §102(b). The Board rejected this argument and invalidated the patent as obvious, and VirnetX appealed. While the present appeal was pending, the Federal Circuit summarily affirmed the Board’s seven other final written decisions finding the ‘696 patent as obvious over RFC 2401 in combination with other references. See VirnetX Inc. v. Apple, Inc., No. 17-1131, 715 F. App’x 1024 (Fed Cir. Mar. 16, 2018) (“VirnetX I”). Apple notified the Court of the relevance of the VirnetX I decision for the present appeal and argued that, in light of VirtneX I, VirnetX was collaterally estopped from relitigating the printed publication status of RFC 2401.
“A party is collaterally estopped from relitigating an issue if: (1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party.” The only disputed issue in the present appeal was whether RFC 2401’s printed publication status was necessary or essential to the judgment in VirnetX I. Each ground of unpatentability appealed by VirnetX in VirnetX I relied on RFC 2401. By affirming the Board’s decisions, the Court in VirnetX I necessarily found that RFC 2401 was a printed publication. VirnetX was thus stopped from relitigating this issue.
Next, VirnetX did not preserve for appeal the issue of whether IPR procedures apply retroactively to patents filed before the enactment of the AIA. In its Opening Brief, VirnetX asked the court to set aside the Board’s IPR decision if the Supreme Court in Oil States were to find IPR procedures unconstitutional. VirnetX did so in a single paragraph and only after Apple identified VirtneX I as supplemental authority in the present appeal. The single, generic paragraph raised a general constitutionality challenge without providing any specific arguments on the retroactivity issue. VirnetX’s failure to further brief this issue was fatal to its argument. Because the issue was not preserved for appeal, RFC 2401’s status as a printed publication remained dispositive in this case. And, because VirnetX was estopped from further relitigating this issue by the Court’s decision in VirnetX I, the Court affirmed the invalidity of the patent.