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Virnetx Inc. v. Apple, Inc.

United States Court of Appeals, Federal Circuit

December 10, 2018

VIRNETX INC., Appellant
v.
APPLE, INC., Appellee

          Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2016-00331.

          Igor Victor Timofeyev, Paul Hastings LLP, Washington, DC, argued for appellant. Also represented by Naveen Modi, Stephen Blake Kinnaird, Joseph Palys, Michael Wolfe, Daniel Zeilberger.

          John C. O'Quinn, Kirkland & Ellis LLP, Washington, DC, argued for appellee. Also represented by Nathan S. Mammen; Scott Border, Jeffrey Paul Kushan, Sidley Austin LLP, Washington, DC.

          Before Newman, O'Malley, and Chen, Circuit Judges.

          O'MALLEY, CIRCUIT JUDGE.

         VirnetX Inc. ("VirnetX") appeals from two final written decisions of the Patent Trial and Appeal Board ("Board") finding that Apple Inc. ("Apple") had demonstrated by a preponderance of the evidence that claims 1- 11, 14-25, and 28-30 of U.S. Patent No. 8, 504, 696 ("the '696 patent") were unpatentable as obvious. VirnetX Inc. v. Apple Inc., No. IPR2016-00331 (P.T.A.B. June 22, 2017) ("331 Board Decision"); VirnetX Inc. v. Apple Inc., No. IPR2016-00332 (P.T.A.B. June 22, 2017) ("332 Board Decision"). Because VirnetX is collaterally estopped from relitigating the threshold issue of whether prior art reference RFC 2401[1] was a printed publication and because VirnetX did not preserve the only remaining issue of whether inter partes review procedures apply retroactively to patents that were filed before Congress enacted the America Invents Act ("AIA"), we affirm.

         I. Procedural History

         In December 2015, Apple filed two petitions for inter partes review of the '696 patent. In the first petition, Apple challenged claims 1-11, 14-25, and 28-30 as obvious over U.S. Patent No. 6, 496, 867 and RFC 2401. In the second petition, Apple challenged these same claims, except claim 29, as obvious over various other combinations also involving RFC 2401. The Board instituted inter partes review in both proceedings. VirnetX filed patent owner responses in which it argued, as a threshold matter, that RFC 2401 was not a printed publication under § 102(b) as of November 1998. In its final written decisions, the Board found that RFC 2401 was a printed publication and concluded that the '696 patent was unpatentable as obvious. VirnetX appeals.

         During the pendency of VirnetX's appeal in this case, this court decided VirnetX Inc. v. Apple, Inc., No. 17-1131, 715 Fed.Appx. 1024 (Fed. Cir. Mar. 16, 2018) ("VirnetX I"). In VirnetX I, VirnetX appealed seven final written decisions in which the Board found that RFC 2401, in combination with other references, rendered obvious a number of patents related to the '696 patent. In relevant part, VirnetX argued to the Board that RFC 2401 was not a printed publication as of November 1998. The Board disagreed. On March 16, 2018, we summarily affirmed the Board's decisions pursuant to Federal Circuit Rule 36. VirnetX I, 715 Fed.Appx. at 1024.

         After the mandate issued in VirnetX I, Apple submitted a notice of supplemental authority in this case, notifying the court of the relevance of our Rule 36 judgment in VirnetX I to the present appeal. The issue was also discussed by the parties during oral argument. According to Apple, VirnetX is collaterally estopped by our judgment in VirnetX I from relitigating the printed publication issue. VirnetX responds that it is not collaterally estopped, and, even if it were, such a finding would not resolve all issues in this appeal because VirnetX preserved a separate constitutional challenge in its opening brief. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4).

         II. Discussion

         A party is collaterally estopped from relitigating an issue if:

(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, Inc. v. Disney Enterprises, Inc., 702 F.3d 640, 644 (Fed. Cir. 2012). Collateral estoppel or "issue preclusion applies where the[se] . . . [elements] of collateral estoppel are carefully observed." B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S.Ct. 1293, 1306 (2015) (quotations omitted). This is no different in the context of a Rule 36 judgment. Phil-Insul Corp. v. Airlite Plastics Co., 854 F.3d 1344, 1356 (Fed. Cir. 2017). While not all Rule 36 judgments will "satisfy those ordinary elements, that does not mean none will." See B & B Hardware, 135 S.Ct. at 1306. Accordingly, we have held that a Rule 36 judgment may serve as a basis for collateral estoppel so long as these elements-including the ...


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