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Virnetx Inc. v. Apple Inc.

United States District Court, E.D. Texas, Tyler Division

January 12, 2018


v.
APPLE INC., Defendant.

          MEMORANDUM OPINION

          ROBERT W. SCHROEDER III UNITED STATES DISTRICT JUDGE

         Defendant Apple Inc. (“Apple”) filed a Motion to Stay (Docket No. 518) on February 28, 2017. On September 29, 2017, the Court denied the motion with memorandum order to follow and ordered Plaintiff VirnetX Inc. (“VirnetX”) and Apple to meet and confer on a trial date for this case. Docket No. 527.[1] The Court now issues this memorandum opinion detailing the reasons for its ruling.[2]

         BACKGROUND

         The case has both a lengthy and complex procedural history. On August 11, 2010, VirnetX filed Case No. 6:10-cv-417 against Apple alleging infringement of U.S. Patent Nos. 6, 502, 135 (“the '135 Patent”), 7, 418, 504 (“the '504 Patent”), 7, 490, 151 (“the '151 Patent”) and 7, 921, 211 (“the '211 Patent”) (collectively, “the asserted patents”). Case No. 6:10-cv-417 (“417 action”), Docket No. 1. On November 6, 2012, a jury found that Apple's accused VPN On Demand and FaceTime features infringed the asserted patents and that the asserted patents were not invalid. 417 action, Docket No. 790. On the same day, VirnetX filed Case No. 6:12-cv-855. Docket No. 1.

         In the 417 action, Apple and VirnetX both filed post-trial motions, which the Court ruled on. 417 action, Docket No. 851. The matter was appealed, and the Federal Circuit affirmed-in-part, reversed-in-part and remanded for further proceedings. 417 action, Docket No. 853; see VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1313-14 (Fed. Cir. 2014).

         The Federal Circuit affirmed the jury's finding of infringement of VPN On Demand and affirmed the Court's denial of Apple's motion for judgment as a matter of law on invalidity. Id. The Federal Circuit vacated the infringement finding for FaceTime based upon a change in claim construction, holding that the term “secure communication link” requires both “security and anonymity, ” and vacated damages for VPN On Demand and FaceTime because it found that the jury relied on a flawed damages model. Id. at 1314.

         Upon receipt of the Federal Circuit's mandate, the Court solicited the parties' proposals on how to proceed. 417 action, Docket No. 855. The parties submitted a status report in which VirnetX proposed the Court consolidate the remaining issues in the 417 action with the upcoming trial in the 855 action. Docket No. 864 at 4. Apple opposed the consolidation. See 417 action, Docket No. 873 at 45:20-46:6. After a status conference on March 10, 2015, the Court consolidated the 855 and 417 actions, designating the 855 action as the lead case with a revised schedule. Docket No. 220. After extensive motion practice (see Docket Nos. 315, 317-323, 326; see also Docket Nos. 362, 468), the case was tried to a jury, and the jury returned a verdict finding infringement of the '135, '151, '504 and '211 patents.

         Again, both Apple and VirnetX filed post-trial motions (Docket Nos. 462, 463). On July 29, 2016, the Court granted Apple's Motion for a New Trial Based Upon the Consolidation of Cause Nos. 6:10-cv-417 and 6:12-cv-855. Docket No. 500. The Court reasoned that the consolidation and repeated discussion of the complex procedural history and previous jury verdict in front of the jury resulted in an unfair trial. Docket No. 500 at 14. In its Order, the Court explained that “Cause No. 6:10-cv-417 will be retried with jury selection to begin on September 26, 2016, unless the parties agree otherwise on an alternative date, and immediately followed by a second trial on the issue of willfulness. Cause No. 6:12-cv-855 will be retried after Cause No. 6:10-cv-417.” Id. at 15.

         After another round of extensive motion practice (see, e.g., 417 action, Docket Nos. 930- 931, 937, 944-945), the 417 action was again tried to a jury. The jury returned a verdict finding that FaceTime infringed the '211 and '504 patents and awarded approximately $302 million in damages for the collective infringement of the VPN On Demand and FaceTime features in the accused Apple products. 417 action, Docket No. 1025. After the September trial, both parties submitted post-trial motions (see Docket Nos. 1018-1019, 1047, 1062-1063).

         While the post-trial motions were pending, on February 9, 2017, the Court requested that the parties meet and confer about the timing of the 855 trial and propose a schedule. The parties each filed a response (Docket Nos. 519, 520), and Apple simultaneously filed this motion to stay (Docket No. 518). The Court held a telephonic hearing regarding the parties' responses, during which VirnetX requested that a schedule for this case not be entered until the post-trial motions from the 417 retrial had been ruled upon. Docket No. 521 at 6:5-11. The Court took no further action on the remaining 855 retrial until September 29, 2017, when the Court issued its memorandum opinion and order on the post-trial motions and issued final judgment in the 417 action. 417 action, Docket Nos. 1079, 1082. At that point, the Court denied Apple's motion to stay the 855 action explaining that this memorandum opinion would follow. Docket No. 527.

         LEGAL STANDARD

         A district court has the inherent power to control its own docket. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). The party seeking a stay bears the burden of showing that the stay is appropriate. Landis, 299 U.S. at 254-55. This inherent power includes “the authority to order a stay pending conclusion of a PTO reexamination.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426- 27 (Fed. Cir. 1988). In deciding whether to stay litigation pending PTO proceedings, courts typically consider: (1) whether the stay will unduly prejudice the nonmoving party, (2) whether the proceedings before the court have reached an advanced stage, including whether discovery is complete and a trial date has been set and (3) whether the stay will likely result in simplifying the case before the court. NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015) (Bryson, J.) (citing Lennon Image Techs., LLC v. Macy's Retail Holdings, Inc., No. 2:13-cv-235, 2014 WL 4652117, at *2 (E.D. Tex. Sept. 17, 2014); Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., 922 F.Supp.2d 486, 489 (D. Del. 2013); Soverain Software LLC v. Amazon.com, Inc., 356 F.Supp.2d 660, 662 (E.D. Tex. 2005)).

         These factors are not exclusive, and, ultimately, deciding whether to stay proceedings “calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.” Landis, 299 U.S. at 254-55; see also TruePosition, Inc. v. Polaris Wireless, Inc., No. 12-646, 2013 WL 5701529, at *2 (D. Del. Oct. 21, 2013) (citing SoftView ...


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