Federal Circuit Affirms Apple IPR Victory over VirnetX Patent

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.

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2 comments so far.

  • [Avatar for Patent Investor]
    Patent Investor
    January 15, 2019 06:53 pm

    Well, VirnetX finally got their pound of flesh. Rule 36ed on a $400MM+ judgement!!! Looks like Judge Prost informed Apple that she is sick of this one!!!

  • [Avatar for Eric Berend]
    Eric Berend
    January 9, 2019 12:37 pm

    One and only one bite at the apple for inventors – infinite bites at the apple, against patents at the PTAB.

    The infringer-friendly CAFC rides shotgun for the outrages of the PTAB, finding oh-so-correctly and with such great clarity (!) – ONLY when it is the interest of a genuine inventor that is to be destroyed.

    The rest of the time, when it comes to recognizing cases and arguments raised by inventors and patentees, it’s “No Soup For You” at the

    Nose. Of. Wax.

    that is the corrupted, IP-pirate’s sycophant: the CAFC.