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VirnetX Inc. v. Apple Inc.

Possibility of Future Cert Petition After Remand on Non-Validity Issues Insufficient to Avoid Estoppel Under § 317(b)

VirnetX Inc. v. Apple Inc., __ F.3d __, 2019 WL 3483194 (Fed. Cir. Aug. 1, 2019) (PROST, Moore, Reyna (CIP/DIP)) (PTAB) (3 of 5 stars)

Fed Cir part-affirms, part-vacates three IPRx decisions relating to VirnetX’s patents addressing secure links between computers over the Internet.

Estoppel: The PTAB erred in failing to find Apple estopped under 35 U.S.C. § 317(b) from maintaining the reexaminations as to certain claims following the Fed Cir’s 2015 affirmance of a jury verdict rejecting Apple’s invalidity attack. That the Fed Cir had remanded on other issues unrelated to invalidity, including infringement and damages, did not render the invalidity determination non-final for purposes of § 317(b), per Fairchild, 854 F.3d 1364 (Fed. Cir. 2017). The opinion reasons that that case forecloses Apple’s argument for non-finality based on the possibility that the Supreme Court might take up validity issues should it grant certiorari on one of the non-invalidity issues still in play. It criticizes the dissent’s analysis of Fairchild as unsupported, noting that Power Integrations had a live counterclaim for declaratory judgment of invalidity, and thus could pursue an invalidity determination even after it was found not to infringe.

Even if Fairchild did not control, the opinion reasons that § 317(b)’s plain text unambiguously forecloses Apple’s argument. It also rejects Apple’s contention that Fairchild is inconsistent with Bettcher, 661 F.3d 629 (Fed. Cir. 2011), as it was addressing a different estoppel provision, and did not analyze the impact of possible certiorari petitions. The opinion also rejects Apple’s reliance on Fresenius, 721 F.3d 1330 (Fed. Cir. 2013), a res judicata case. And the opinion rejects Apple’s argument for deference to the PTO’s interpretation of § 317(b), finding deference warranted under neither Chevron, 467 U.S. 837 (1984), nor Skidmore, 323 U.S. 134 (1944). The decisions concerning Apple’s reexams for the affected claims are vacated and remanded with instructions to terminate.

Substantive merits: As to the remaining claims, the Board’s decision cancelling them is affirmed. The opinion discusses how the Board correctly construed the claims, and its factual determinations were supported by the record. It also rejects VirnetX’s contention that these reexams are unconstitutional, citing Oil States, 138 S. Ct. 1365 (2018).

Dissent: Judge Reyna would have held that there is no “final decision” on invalidity sufficient to trigger § 317(b) because Apple “has a basis on which to petition for certiorari to the Supreme Court on both infringement and invalidity.” Op. at 6. He distinguishes Fairchild because in that case, the remand issues concerned a different patent, amid other reasons. He also criticizes the majority’s interpretation of Fairchild as inconsistent with Bettcher, cites Supreme Court precedent confirming that Apple may still seek certiorari, and expresses concern that the majority’s approach “fosters piecemeal litigation.”

KEYWORDS: ESTOPPEL; AMERICA INVENTS ACT; INTER PARTES REEXAMINATION; CERTIORARI; FINAL DECISION