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VirnetX, Inc. v. Cisco Systems, Inc.

United States Court of Appeals, Federal Circuit

September 16, 2014

VIRNETX, INC., Plaintiff-Appellee,

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Appeal from the United States District Court for the Eastern District of Texas in No. 10-CV-0417, Chief Judge Leonard Davis.

WILLIAM F. LEE, Wilmer Cutler Pickering Hale and Dorr, LLP, of Boston, Massachusetts, argued for defendant-appellant. With him on the brief were MARK C. FLEMING, LAUREN B. FLETCHER, and REBECCA BACT, of Boston, Massachusetts, and JONATHAN G. CEDARBAUM, BRITTANY BLUEITT AMADI, and LEAH LITMAN, of Washington, DC. Of counsel on the brief was DANNY L. WILLIAMS, Williams, Morgan & Amerson, P.C., of Houston, Texas.

J. MICHAEL JAKES, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for plaintiffs-appellees. With him on the brief for Virnetx, Inc. were KARA F. STOLL and SRIKALA ATLURI, of Washington, DC, and BENJAMIN R. SCHLESINGER, of Atlanta, Georgia. Of counsel on the brief were BRADLEY W. CALDWELL, JASON D. CASSADY, and JOHN AUSTIN CURRY, Caldwell, Cassady & Curry, of Dallas, Texas. On the brief for Science Applications International Corporation were DONALD URRABAZO, ARTURO PADILLA, and RONALD WIELKOPOLSKI, Urrabazo Law, P.C., of Los Angeles, California; and ANDY TINDEL, Mann, Tindel & Thompson, of Tyler, Texas.

Before PROST,[*] Chief Judge and CHEN, Circuit Judge.[**]


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PROST, Chief Judge.

Apple Inc. appeals from a final judgment of the U.S. District Court for the Eastern District of Texas, in which a jury found that Apple infringed U.S. Patent Nos. 6,502,135 (" '135 patent" ), 7,418,504 (" '504 patent" ), 7,490,151 (" '151 patent" ), and 7,921,211 (" '211 patent" ). The jury further found that none of the infringed claims were invalid and awarded damages to plaintiffs-appellees VirnetX, Inc. and Science Applications International Corporation (" SAIC" ) in the amount of $368,160,000.

For the reasons that follow, we affirm the jury's findings that none of the asserted claims are invalid and that many of the asserted claims of the '135 and '151 patents are infringed by Apple's VPN On

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Demand product. We also affirm the district court's exclusion of evidence relating to the reexamination of the patents-in-suit. However, we reverse the jury's finding that the VPN On Demand product infringes claim 1 of the '151 patent under the doctrine of equivalents. We also reverse the district court's construction of the claim term " secure communication link" in the '504 and '211 patents and remand for further proceedings to determine whether the FaceTime feature infringes those patents under the correct claim construction. Finally, we vacate the jury's damages award and remand for further proceedings consistent with this opinion.


The patents at issue claim technology for providing security over networks such as the Internet. The patents assert priority to applications filed in the 1990s, originally assigned to SAIC. VirnetX, a Nevada-based software development and licensing enterprise, acquired the patents from SAIC in 2006.

I. The '504 and '211 Patents and FaceTime

The '504 and '211 patents share a common specification disclosing a domain name service (" DNS" ) system that resolves domain names and facilitates establishing " secure communication links." '504 patent col. 55 ll. 49-50. In one embodiment, an application on the client computer sends a query including the domain name to a " secure domain name service," which contains a database of secure domain names and corresponding secure network addresses. Id. at col. 50 ll. 54-57, col. 51 ll. 11-19, col. 51 ll. 29-32. This allows a user to establish a secure communication link between a client computer and a secure target network address. Id. at col. 51 ll. 34-40.

Representative claim 1 of the '504 patent recites:

1. A system for providing a domain name service for establishing a secure communication link, the system comprising:
a domain name service system configured to be connected to a communication network, to store a plurality of domain names and corresponding network addresses, to receive a query for a network address, and to comprise an indication that the domain name service system supports establishing a secure communication link.

Id. at col. 55 ll. 49-56.

Before the district court, VirnetX accused Apple of infringement based on its " FaceTime" feature. Specifically, VirnetX accused Apple's servers that run FaceTime on Apple's iPhone, iPod, iPad (collectively, " iOS devices" ), and Mac computers of infringing claims 1, 2, 5, 16, 21, and 27 of the '504 patent as well as claims 36, 37, 47, and 51 of the '211 patent. In operation, FaceTime allows secure video calling between select Apple devices. J.A. 1443. To use FaceTime, a caller enters an intended recipient's e-mail address or telephone number into the caller's device (e.g., iPhone). J.A. 1451-52. An invitation is then sent to Apple's FaceTime server, which forwards the invitation to a network address translator (" NAT" ) which, in turn, readdresses the invitation and sends it on to the receiving device. J.A. 1821, 1824-25. The recipient may then accept or decline the call. J.A. 1453. If accepted, FaceTime servers establish a secure FaceTime call. J.A. 1453. Once connected, the devices transmit audio/ video data as packets across the secure communication path without passing through the FaceTime server. J.A. 1820, 1825.

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II. The '135 and '151 Patents and VPN On Demand

A conventional DNS resolves domain names (e.g., "" ) into Internet Protocol (" IP" ) addresses. See '135 patent col. 37 ll. 22-27. A user's web browser then utilizes the IP address to request a website. Id. at col. 37 ll. 24-29.

The '135 and '151 patents share a common specification disclosing a system in which, instead of a conventional DNS receiving the request, a DNS proxy intercepts it and determines whether the request is for a secure site. Id. at col. 38 ll. 23-25. If the proxy determines that a request is for a secure site, the system automatically initiates a virtual private network (" VPN" ) between the proxy and the secure site. Id. at col. 38 ll. 30-33. If the browser determines that the request was for a non-secure website, then the DNS proxy forwards the request to a conventional DNS for resolution. Id. at col. 38 ll. 43-47.

Representative claim 1 of the '135 patent recites:

1. A method of transparently creating a virtual private network (VPN) between a client computer and a target computer, comprising the steps of:
(1) generating from the client computer a Domain Name Service (DNS) request that requests an IP address corresponding to a domain name associated with the target computer;
(2) determining whether the DNS request transmitted in step (1) is requesting access to a secure web site; and
(3) in response to determining that the DNS request in step (2) is requesting access to a secure target web site, automatically initiating the VPN between the client computer and the target computer.

Id. at col. 47 ll. 20-32.

Claims 1 and 13 of the '151 patent are similar to claim 1 of the '135 patent except that they recite initiating an " encrypted channel" and creating a " secure channel," respectively, instead of creating a " VPN." '151 patent col. 46 ll. 55-67, col. 48 ll. 18-29.

Before the district court, VirnetX accused Apple's iPhone, iPad, and iPod Touch of infringing claims 1, 3, 7, and 8 of the '135 patent and claims 1 and 13 of the '151 patent because they include a feature called " VPN On Demand." When a user enters a domain name into the browser of an iOS device, a DNS request is generated. J.A. 1393-94. VPN On Demand receives the request and checks a list of domain names for which a VPN connection should be established, known as a " configuration file." J.A. 1377. If the entered domain name matches a domain name in the configuration file, VPN On Demand contacts a VPN server to authenticate the user and, if successful, automatically establishes a VPN between the user's browser and the target computer with which the requested domain name is associated. J.A. 1377-78, 1396-98.

III. Five-Day Jury Trial and Post-Trial Motions

On August 11, 2010, VirnetX filed this infringement action, alleging that Apple's FaceTime servers infringe certain claims of the '504 and '211 patents, and that Apple's VPN On Demand feature infringes certain claims of the '135 and '151 patents. Apple responded that FaceTime and VPN On Demand do not infringe, and that the asserted claims were invalid as anticipated by a 1996 publication by Takahiro Kiuchi et al. (" Kiuchi" ).

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On April 25, 2012, the district court construed disputed claim terms, and a jury trial commenced on October 31, 2012. After a five-day trial, the jury returned its verdict, finding all of the asserted claims valid and infringed. The jury awarded VirnetX $368,160,000 in reasonable royalty damages. Apple moved for judgment as a matter of law (" JMOL" ) or, alternatively, for a new trial or remittitur. On February 26, 2013, the district court denied Apple's motions. VirnetX, Inc. v. Apple Inc., 925 F.Supp.2d 816 (E.D. Tex. 2013).

Apple now appeals the denial of its post-trial motion for JMOL or a new trial. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).


I. Claim Construction

On appeal, Apple argues that the district court erred in construing the terms " domain name" and " secure communication link," both recited in the '504 and '211 patents. For the reasons that follow, we affirm the construction of " domain name" and reverse the construction of " secure communication link."

Claim construction is a question of law that we review de novo. Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744 F.3d 1272, 1276-77 (Fed. Cir. 2014) (en banc); Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). The process of construing a claim term begins with the words of the claims themselves. See Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996); Phillips v. AWH Corp., 415 F.3d 1303, 1312-14 (Fed. Cir. 2005) (en banc). However, the claims " must be read in view of the specification, of which they are a part." Phillips, 415 F.3d at 1315 (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc), aff'd 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996)). Additionally, the doctrine of claim differentiation disfavors reading a limitation from a dependent claim into an independent claim. See InterDigital Commc'ns, LLC v. Int'l Trade Comm'n, 690 F.3d 1318, 1324 (Fed. Cir. 2012). Although courts are permitted to consider extrinsic evidence like expert testimony, dictionaries, and treatises, such evidence is generally of less significance than the intrinsic record. Phillips, 415 F.3d at 1317 (citing C.R. Bard, Inc. v. U.S. Surgical Corp., 388 F.3d 858, 862 (Fed. Cir. 2004)).

A. " Domain Name"

The district court construed " domain name" as " a name corresponding to an IP address." Memorandum Opinion & Order at 16, VirnetX, Inc. v. Cisco Sys. Inc., No. 6:10-cv-416, (E.D. Tex. Apr. 25, 2012), ECF No. 266 (" Claim Construction Order " ). Apple argues, as it did below, that the proper construction is " a hierarchical sequence of words in decreasing order of specificity that corresponds to a numerical IP address." Apple insists that its construction represents the plain and ordinary meaning of the term, relying primarily on a technical dictionary definition and several examples in the specification (e.g., "" ). We disagree. Intrinsic evidence supports the district court's construction of " domain name." The specification of the '504 and '211 patents suggests the use of the invention for secure communications between application programs like " video conferencing, e-mail, word processing programs, telephony, and the like." '504 patent col. 21 ll. 27-29. The disclosure of such applications demonstrates that the inventors did not intend to limit " domain name" to the particular formatting limitations of websites sought by Apple, i.e., a toplevel domain, second-level domain, and host name.

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Additionally, fundamental principles of claim differentiation disfavor reading Apple's hierarchical limitation into the independent claims. Dependent claims in both patents require that " at least one" of the domain names stored by the system comprise a top-level domain name. See, e.g., '504 patent col. 55 ll. 57-59 (" The system of claim 1, wherein at least one of the plurality of domain names comprises a top-level domain name." ); '211 patent col. 57 ll. 47-50 (" The non-transitory machine-readable medium of claim 36, wherein the instructions comprise code for storing the plurality of domain names and corresponding network addresses including at least one toplevel domain name." ). The specific limitation of hierarchical formatting in the dependent claims strongly suggests that the independent claims contemplate domain names both with and without the hierarchical format exemplified by "" See InterDigital, 690 F.3d at 1324 ( " The doctrine of claim differentiation is at its strongest . . . 'where the limitation that is sought to be " read into" an independent claim already appears in a dependent claim.'" (quoting Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 910 (Fed. Cir. 2004))).

Such intrinsic evidence is not outweighed by the extrinsic evidence of one dictionary definition. This is particularly true here, where the dictionary definition seems to contemplate web addresses on the Internet, while the specification makes clear that the claim term in question is not so limited. See J.A. 6139-40. Thus, we affirm the district court's construction of the term " domain name" as " a name corresponding to an IP address."

B. " Secure Communication Link"

The district court construed " secure communication link" as " a direct communication link that provides data security." Claim Construction Order at 13. Apple argues that this term should be construed consistent with " VPN," which the district court construed to require not only data security but also anonymity.[1]

As an initial matter, we note that there is no dispute that the word " secure" does not have a plain and ordinary meaning in this context, and so must be defined by reference to the specification. See Oral Arg. 31:50-32:40, available at (acknowledgement by VirnetX's counsel that construction of " secure" requires consideration of the specification).

Moreover, we agree with Apple that, when read in light of the entire specification, the term " secure communication link" requires anonymity. Indeed, the addition of anonymity is presented as one of the primary inventive contributions of the patent. For example, the Background of the Invention states that " [a] tremendous variety of methods have been proposed and implemented to provide security and anonymity for communications over the Internet." '504 patent col. 1 ll. 32-35 (emphasis added). It goes on to define these two concepts as counterpart safeguards against eavesdropping that could occur while two computer terminals communicate over the Internet. Id. at col. 1 ll. 38-54. Security in this ...

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