Verdict in Apple v. VirnetX IV – $502.8 million

A Tyler jury in Judge Schroeder’s court returned a verdict yesterday in the latest VirnetX trial against Apple.  It found that Apple’s FaceTime and VPN On Demand infringed four VirnetX patents and set damages at $502.6 million.  It comes back today to begin the willful infringement portion of the trial. The first VirnetX trial in 2012 resulted in infringement and an award of $368 million for older Apple products.  The Federal Circuit affirmed the infringement finding but required a new trial on damages. Judge Schroeder combined the damages retrial on the older products with the soup to nuts trial on newer products in February 2016, which resulted in a $625 million verdict. Apple convinced him to set that combined verdict aside, thus requiring the two cases to be retried separately. On the older products damages retrial the jury found $302 million, which the Court later enhanced to $439 million, and that verdict is on appeal – and now the second verdict on the newer products is $502.6 million.  So the separate trials yielded verdicts of $804.6 million before enhancement, compared to the consolidated trial in 2016 of $625 million. How much of that is attributable to post-February 2016 sales I do not know.

Supplementing Initial Disclosures & Sequencing Issues at Trial

The issue of when initial disclosures – not patent rule disclosures, but the Rule 26(a)(1)-ish ones which include lists of persons with knowledge – can be supplemented is one that doesn’t come up often.  And a request that issues be sequenced at trial is even rarer.  This order resolving requests for both is of interest to practitioners, since while these requests don’t come up often, they’re of great interest when they do.

Service of process overseas

Texas lawyers are spoiled when it comes to service of process.  We get to serve process in civil suits using certified mail, return receipt request in state court.  And in the same way that state court procedures tend to bleed into federal court practice, even where the federal rule is not the same (think who pays for expert discovery) the state rules on service of process influence practice in federal court as well.

In part for that reason, in part because other nations have this perplexing tendency not to follow the Texas rules of civil procedure, and in part because agreements tend to eliminate this issue in many cases, the actual requirements for service of process on foreign defendants are terra incognito-ish for many practitioners, and can present obstacles when not rigorously followed, as this decision shows.

Motion to Strike Damages Experts Denied

In the old days, before people had to figure out how Daubert is pronounced (the family in the litigation pronounces it “Dobbert”, so you can be all French and everything, but you’d be all wrong too – and I say that as a French major), experts simply said what they said, and if the expert’s opinions were that poor, the jury not only disregarded them after the expert had been destroyed on cross, but punished the rest of your case too for presuming to waste their time with such awful testimony.  Of course if your expert presenting the termite-ridden opinions was better than the lawyer cross examining them, things got interesting, but we’re not going to talk about George Greene right now.

One of the interesting things about damages testimony, specifically in patent cases, is that since the Federal Circuit has ruled certain economic calculations out as a matter of law for various reasons, the inquiry when determining whether a damages expert can testify as to an opinion at trial is not always simply that the flaws in the opinions go to the weight (with the experienced trial judge knowing that the system tends to be self-correcting because flawed opinions tend to kick harder than they shoot) but sometimes whether the opinion itself is legally impermissible under controlling caselaw.

The attached is a recent opinion out of Tyler where some of these allegations were levelled against a couple of experts, and the Court’s analysis provided hopefully some useful discussion of when flaws in the expert’s opinion fall on weight side of the scale, as opposed to admissibility. The point above – that bad opinions don’t do well at trial – may have been the lesson from this case as well.