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Law360 (July 15, 2020, 8:23 PM EDT ) Apple on Tuesday asked the Eastern District of Texas to hold a pretrial conference for its upcoming $700 million retrial with VirnetX remotely amid a surge of COVID-19 cases, the same day the Patent Trial and Appeal Board struck down parts of two VirnetX patents involved in the companies' battle.
In a motion, Apple urged the district judge to reconsider a pretrial conference in Texas next month, ahead of an Aug. 17 retrial over potentially $700 million in damages. An in-person hearing would needlessly risk the health of everyone involved, especially when the country as a whole — and Texas in particular — has had a "significant upsurge" in COVID-19 in recent weeks, the smartphone giant argued.
VirnetX has opposed the request, instead asking for the conference to be held at a later date, or having Apple's local counsel present and the rest calling in. But Apple said VirnetX failed to show any "unique prejudice" from having a remote conference that it did not also share.
"To the extent there is any prejudice, VirnetX also did not (and cannot) explain why that outweighs the risk to health and welfare, and the interference with Apple's pretrial preparations," Apple wrote Tuesday.
Apple's motion came as the PTAB on Tuesday also invalidated claims of VirnetX's patents-at-issue in the district court case, following the Federal Circuit's decision last year to send the PTAB cases back to the board after finding fault in the board's claim construction and invalidity findings. VirnetX has alleged that Apple's redesigned VPN On Demand feature infringes its patents.
In its latest rulings, the PTAB continued to find the patent claims invalid, concluding that Apple and a hedge fund called Mangrove Partners Master Fund — both of which had requested the reviews — successfully showed that the challenged claims were rendered obvious by an earlier publication known as Kiuchi under the Federal Circuit's new construction.
The PTAB also ruled that VirnetX improperly tried to incorporate arguments that it should get a new hearing under the Federal Circuit's Arthrex ruling, which held that the way administrative patent judges are appointed is unconstitutional. But it had waived the issue by not raising it earlier, the board said.
"We strongly disagree with the PTAB's findings in the decisions issued today," VirnetX CEO and president Kendall Larsen said in a statement. "We intend to consider all available options to rectify the PTAB's decisions."
Representatives for Apple did not immediately respond to a request for comment Wednesday.
A Texas federal jury in 2018 found that Apple infringed four VirnetX patents and ordered the company to pay $600 million, but the damages award was thrown out by the Federal Circuit, which ruled in November that Apple only infringed two of the four patents.
The case is now back in district court to settle the bill based on the trimmed infringement finding. Apple has argued that its customers do not use the redesigned feature, including at an April oral hearing, according to VirnetX.
The patents-in-suit are U.S. Patent Nos. 6,502,135 and 7,490,151.
Mangrove Partners is represented at the PTAB by Abraham Kasdan and Michael Kasdan of Wiggin and Dana LLP and James Bailey of The Law Firm of James T Bailey.
VirnetX is represented at the PTAB by Joseph Palys, Naveen Modi, Daniel Zeilberger and Chetan Bansal of Paul Hastings LLP.
Apple is represented at the district court by Gregory S. Arovas, Robert A. Appleby, Jeanne M. Heffernan, Joseph A. Loy and Leslie M. Schmidt of Kirkland & Ellis LLP and Michael E. Jones of Potter Minton PC.
VirnetX is represented at the district court by Bradley W. Caldwell, Jason D. Cassady, John Austin Curry, Daniel R. Pearson, Hamad M. Hamad, Justin T. Nemunaitis, Chris S. Stewart, John F. Summers and Warren J. McCarty III of Caldwell Cassady & Curry PC, Robert M. Parker, R. Christopher Bunt and Charles Ainsworth of Parker Bunt & Ainsworth PC and T. John Ward Jr. of Ward Smith & Hill PLLC.
The PTAB cases are The Mangrove Partners Master Fund Ltd. et al. v. VirnetX Inc., case numbers IPR2015-01046 and IPR2015-010471, before the Patent Trial and Appeal Board. The district court case is VirnetX Inc. et al. v. Apple Inc., case number 6:12-cv-00855, in the U.S. District Court for the Eastern District of Texas.
--Additional reporting by Ryan Davis. Editing by Abbie Sarfo.
Correction: An earlier version of the story misstated counsel for Mangrove Partners. The error has been corrected.
For a reprint of this article, please contact reprints@law360.com.
