VirnetX Inc. v. Apple, Inc.

Docket Nos. 2017-2490, -2494 (IPR2016-00331)

December 10, 2018

Brief summary: Board’s conclusions VirnetX’s claims were shown obvious by Apple affirmed as VirnetX was collaterally estopped from relitigating whether prior art RFC2401 was a § 102(b) printed publication following the FC’s VirnetX I decision (FC 2018).

Summary: VirnetX appealed two IPR decisions finding Apple had demonstrated by a preponderance of the evidence that claims 1-11, 14-25, and 28-30 of VirnetX’s US 8,504,696 were unpatentable as obvious. VirnetX argued that “prior art reference RFC2401 was a printed publication” (the “threshold issue”), but the FC panel considered whether VirnetX was collaterally estopped from relitigating this question. Apple’s instituted IPRs alleged obviousness in view of RFC2401 alone and with other references, during which VirnetX argued “RFC2401 was not a printed publication under § 102(b) as of November 1998”, but the Board disagreed with VirnetX. While its appeal of that decision was pending (i.e., this appeal), VirnetX appealed seven other IPRs (VirnetX, FC 2018 (“VirnetX I”)) and the FC summarily affirmed (Rule 36) the Board’s decision of obviousness in view of RFC2401, over VirnetX’s argument that RFC2401 was not a § 102(b) printed publication. The FC panel here explained that “[a] party is collaterally estopped from relitigating an issue is: (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” (Stephen Slesinger, FC 2012; B&B Hardware, US 2015; Phil-Insul, FC 2017 (“no different in the context of a Rule 36 judgment”)). The FC panel agreed with Apple that the issue of “whether RFC2401 was a printed publication…was necessary or essential to the judgment in VirnetX I”, and that VirnetX was therefore “collaterally estopped…from relitigating the” same question here (e.g., “in three of the seven final written decisions appealed in VirnetX I, the only issue raised was whether RFC2401 was a printed publication…by affirming” those decisions, “this court in VirnetX I necessarily found that RFC2401 was a printed publication.”) The FC panel also noted that “[e]ven if VirnetX were not collaterally estopped, we would affirm the Board’s conclusion that RFC2401 was a printed publication as of November 1998.” VirnetX argued “that RFC2401’s status as a printed publication is not dispositive of all issues raised in this appeal because it preserved in its opening brief the separate issue of whether [IPR] procedures apply retroactively to patents that were filed before Congress enacted the AIA.” The FC panel noted that opening brief was “filed prior to the Supreme Court’s decision in Oil States” (US 2018 (holding that the Seventh Amendment and Article III do not preclude the Board from invalidating patents by IPR)), and found that Virnet X’s brief “in no way provides any arguments specifically preserving the retroactivity issue” (also noting, e.g., that “[a]ll of” VirnetX’s actions “suggests that [its] insistence is likely less than sincere”). Thus, the FC panel affirmed the Board’s obviousness conclusions.

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