Pandemic Prompts 2-Month Delay In Apple, VirnetX Rematch

By Cara Salvatore
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Law360 (August 10, 2020, 9:00 PM EDT) -- Citing the ongoing spread of the coronavirus in Texas, a federal judge ordered a two-month delay Monday in VirnetX's hotly anticipated retrial against Apple over two patents related to the program VPN On Demand.

Apple had requested, and VirnetX had opposed, a delay in the damages retrial in the decade-old case, in which VirnetX originally accused Apple of infringing four network security patents. After the Federal Circuit overturned an earlier $503 million verdict, only two patents will be at issue in the retrial.

U.S. District Judge Robert Schroeder III granted Apple's motion to delay the trial, previously set to start Aug. 17, to Oct. 26.

The judge cited safety in the Eastern District of Texas, a state where the virus is in the throes of a second deadly peak.

Smith County and the Tyler Division of the Eastern District are "in the midst of a COVID-19 outbreak. In fact, three counties in the Tyler Division rank among the top 30 counties for active COVID-19 cases in Texas," Judge Schroeder said. There are 254 counties in Texas.

"The continuance provided herein is relatively short, and its importance is not outweighed by VirnetX's alleged prejudice," the judge said.

The granted delay provides a contrast to Apple's other trial in the same district. U.S. District Judge Rodney Gilstrap refused to delay the in-person infringement jury trial against a company called PanOptis. That trial started Aug. 3 and appears to still be active; PanOptis and Apple both filed motions for judgment as a matter of law on Sunday.

In the VirnetX case, the company had argued at a hearing last week that Apple's request to push back the in-person jury trial was an attempt to delay and gain a tactical advantage.

Apple had pointed to a Georgia Institute of Technology risk assessment tool showing there is a 98% chance that at least one person involved in the trial will be carrying the coronavirus.

A jury found in April 2018 that Apple infringed four patents, but the Federal Circuit threw out the damages award, saying that for two patents related to FaceTime, "No reasonable jury could find infringement under the correct construction" of the claims and so "Apple is entitled to judgment as a matter of law" for those two.

For the other two patents, VirnetX has alleged that a redesigned version of Apple's VPN On Demand infringes the patents. The companies fought a separate lawsuit over infringement regarding an earlier version of the program, before the redesign. In that case, after the Supreme Court declined to take it up earlier this year, Apple finally sent VirnetX a $454 million check, according to VirnetX.

And last month, the Patent Trial and Appeal Board invalidated claims in two of the patents-in-suit, in its second look at the group of patents. The challenged claims were obvious due to an earlier publication called Kiuchi, the PTAB said.

Apple has told the PTAB that VirnetX is seeking more than $700 million in damages in the retrial.

Representatives for the parties were not immediately available for comment.

The patents-in-suit are U.S. Patent Nos. 6,502,135 and 7,490,151.

VirnetX is represented by Bradley Caldwell, Jason Cassady, John Curry, Daniel Pearson, Hamad Hamad, Justin Nemunaitis, Chris Stewart, John Summers and Warren McCarty III of Caldwell Cassady & Curry PC.

Apple is represented by Gregory Arovas, Robert Appleby, Jeanne Heffernan, Joseph Loy and Leslie Schmidt of Kirkland & Ellis LLP.

The case is VirnetX v. Apple, case number 6:12-cv-00855, in the U.S. District Court for the Eastern District of Texas.

--Additional reporting by Dani Kass, Khorri Atkinson, Britain Eakin, Ryan Davis and Tiffany Hu. Editing by Michael Watanabe.

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