Case 6:12-cv-00855-RWS Document 454 Filed 02/11/16 Page 1 of 8 PageID #: 33688

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
VIRNETX INC. AND
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
Plaintiffs,
v.
APPLE INC.,
Defendant.

Civil Action No. 6:12-cv-00855-RWS

LEAD CONSOLIDATED CASE

JURY TRIAL DEMANDED

VIRNETXS SURREPLY TO APPLES WRITTEN OBJECTION TO CLOSING

ARGUMENT BY VIRNETX AND MOTION FOR MISTRIAL

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Apples Reply shockingly states that [VirnetX] offers no record support for the
statements it made at closing. Dkt. 450 at 1. Apples steadfast refusal to recognize the
significant evidence unfavorable to it demonstrates that Apple has blinders on or is
determined to soil VirnetX and its counsel no matter what. All arguments by VirnetXs
counsel were fair interpretations of the record evidence that Apple cannot wish away.1
VirnetX Fairly Argued Mr. Patiences Incredible Testimony. In 2014, when the
events were fresh in his mind, Simon Patience testified under oath as to two key facts related
to opinions of counsel: (a) that he received the written opinions in about March 2014, and (b)
that he first learned that Apple was even seeking opinions within mere weeks of receiving
those written opinions in March 2014. See Ex. B (1/28/2016 Tr. at 212:3-213:7). That is six
months after the September 2013 iOS 7 release. Yet so intent was Apple to convey the
(false) impression of good faith before releasing iOS 7, Mr. Patience told the jury a story
likely at counsels urgingthat was irreconcilable with his prior testimony and, in fact,
literally impossible. See 1/28/2016 Tr. at 197:16-198:21.
Mr. Patience indicated he received an executive summary of Mr. Van Pelts opinions
in May, June, or July of 2013. This is impossible. Mr. Van Pelt testified that his alleged oral
opinions were not given until August 2013 at the earliest. Compare 1/28/2016 Tr. at 150:2-9
with 2/1/2016 Tr. at 104:4-12. Later, Mr. Patience even said he knew Apple had sought such
an opinionthe event he said was very close in time to receiving the opinions themselves
around April 2013. This is equally impossible, as Apple was then still months away from
retaining Mr. Van Pelt. Compare 1/28/2016 Tr. at 210:8-16 with 2/1/2016 Tr. at 153:17-25.

1 Apples suggestion in its Reply that VirnetXs arguments were egregious is especially
stunning in view of Apples own characterizations of evidence in closing. See, e.g., Ex. A
(Apple arguments versus the evidence). The Parties just see the evidence differently.
1

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In its Reply, Apple does not defend Mr. Patiences trustworthiness.2 Rather, Apple
seems to complain that VirnetX disparaged Mr. Patience by arguing that he claimed to
receive Mr. Van Pelts opinions in April 2013 (impossible) rather than that Mr. Patience
claimed to receive them in May-July 2013 (equally impossible). This quibble demonstrates
how far Apple reaches. First, the April 2013 inference is quite reasonable: Mr. Patience
testified both that he learned Apple sought an opinion around April 2013 and that he
learned that fact within a few weeks of receiving the [written] opinion. 1/28/2016 Tr. at
210:12-16, 212:15-23. But, second, even if the April 2013 inference were somehow
unwarranted, there is literally no harm. Even Apple must concede that VirnetX could have
argued that Mr. Patience told you he got the opinion in May-July 2013 when those
opinions did not even exist, at the earliest, until August. Compare 1/28/2016 Tr. at 150:2-9
with 2/1/2016 Tr. at 104:4-12. Whether in April, May, June, or July, Mr. Patiences
testimony was just wrong (and contradicted by his prior sworn testimony). It was clearly
appropriate for VirnetX to argue these discrepancies. And if a different interpretation of the
evidence suggests VirnetX was off by a month (or that the April falsehood was slightly
different than Mays), that technicality would simply not be relevant when the demonstrated
falsity of the testimony is confirmed with either set of dates. This is no basis for a mistrial.

best Apple implies that there were three distinct events related to the opinions whose
timing might be configurable in some fashion that would make Mr. Patiences testimony
meaningfully less untrue: (1) learning Apple was seeking opinion of counsel; (2) receiving
the sought opinion orally; and (3) receiving the sought opinion in writing. Dkt. 450 at 2-3.
Apple had Mr. Patience tell the jury that events 1 and 2 occurred before the September 2013
release of iOS 7. 1/28/2016 Tr. at 198:10-18. For starters, impeachment of Mr. Patience
confirmed thats just not true. His deposition testimony ties events 1 and 3 closely together
in 2014 with no meaningful room for any interim event 2. Id. at 212:3-213:7. But any way
you slice it, Mr. Patiences testimony was not trustworthy; he positively could not have
known even a summary of Mr. Van Pelts opinion by April-July of 2013 when no opinion
existed, under any set of facts, until late August or September. 2/1/2016 Tr. at 104:4-12.
2 At

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VirnetX also did not misrepresent who decided to make the change to VPN On
Demand (VOD) in iOS 7. See Dkt. 450 at 3. Apples complaint on this point is hard to
even understand. First, Apples cited portion of closing does not even relate to iOS 7; it
pertains to Apples decision to cancel its planned removal of infringing features in the iOS
6.1 update. Further, although Mr. Patience initially suggested he was the ultimate
authority for VPN On Demand, he then conceded the decision not to take out the infringing
feature was one in which his bossone step down from Tim Cookwas particularly
influential. Id. at 129:2-25, 135:18-22. VirnetX fairly argued this at closing (and didnt
argue that Tim Cook himself made the decision, if thats Apples contention). This argument
is not improper simply because Apple preferred a different wording.
Apples final complaint related to Mr. Patience makes no sense. Apple argues that
VirnetX could not argue [Apple] didnt think they had any obligation to make a change
because Mr. Patiences actual words were Apple was not required to make a change. This
argument is puzzlingthe words are essentially synonymous. See Ex. C. The balance of
VirnetXs argument similarly tracked Mr. Patiences testimony: He testified that Apple
cancelled its plan to alter VPN On Demand in iOS 6.1, deciding instead to keep having
people use the VPN On Demand functionality that had already been found to infringe.
1/28/2016 Tr. at 134:23-135:2. That probably conveyed Apples attitude toward the patents.
Nobody argued that Apple should be punishedApples own actions prejudiced Apple.3
VirnetX Did Not Misrepresent the Damages Evidence. In closing, VirnetX argued
to the jury that everyone agreed that the jury should award a running royalty. This argument

3 And asking the jury not to award Apples proposed royalty (conveniently a low
interpretation of the lowest rate) is plainly not asking for Apple to be punished, it is seeking
to avoid a windfall to Apple. Cf. Monsanto Co. v. McFarling, 488 F.3d 973, 980 (Fed. Cir.
2007) (explaining that a royalty lower than the standard rate creates a windfall for infringers).
3

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is not improper; it is simply true. Apple even cross-examined Mr. Weinstein to confirm this
universal agreement. 1/27/2016 Tr. at 115:13-17 (Q: Mr. Weinstein, you and Mr.
Bakewell and the parties agree that the reasonable royalty in this case is just through the
date of trial . . . ? A. . . . [Y]es.). Apple repeatedly admitted that it was presenting only a
running royalty analysis. See id at 107:23-109:3. And although Apple contends a running
royalty structure was not among Mr. Bakewells agreements with Mr. Weinstein, Apple is
just wrong. Dkt. 450 at 4. During his direct, Mr. Bakewell showed that the royalty base
(number of units) was an area of agreement. See Ex. D. By agreeing on the number of units
and applying a per unit rate to those units, Mr. Bakewell was expressly confirming his
opinion that the jurys award should be in the form of a running royalty, not a lump sum. See
Lucent Technologies, Inc v. Gateway, Inc., 580 F.3d 1301, 1330 (Fed. Cir. 2009) (Most
running royalties fall into one of two categories: fixed price per unit and percentage . . . .).
VirnetX is also surprised that Apple has not retreated from its initial
misrepresentations of Mr. Larsens testimony even when VirnetX confronted Apple on this
point in its response brief. Again, Mr. Larsen irrefutably testified that the royalty in this case
would be a one-time payment per infringing device sold (i.e., a running royalty), not a onetime lump sum payment for a license to use VirnetXs patents through their expiration,
regardless of units. 1/26/2016 Tr. at 143:3-144:12; see also id. at 138:7-11. In a motion
accusing counsel of affirmatively misrepresent[ing] the evidence, Apples failure to
apparently even read Mr. Larsens testimony is alarming.
Apples complaints about VirnetXs closing argument concerning Dr. Weckers
surveys are also wrong. VirnetX did not ask the jury to rely on Dr. Weckers survey to
calculate damages. Instead, VirnetX argued inferences based on the evidence, which showed

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that (1) 12% of customers would not have bought their device without the Accused Features;
and (2) Apple had given no indication that it could offer the Accused Features without
VirnetXs technology. Based on this, a jury could infer that 12% of potential customers
would not have bought their device if not for VirnetXs technology. VirnetX correctly
referred to this evidence as showing the quantified importance of these features and
VirnetXs technologyan importance that eclipsed Mr. Weinsteins much more conservative
license-based calculations and rebutted Apples arguments that his proposed rates were
unfair and unjustified. In any event, as VirnetX already noted, the argument about which
Apple now complains concerned testimony offered at trial without objection. See 1/27/2016
Tr. at 290:6-12. Arguing admitted evidence is not improper.
Finally, there was nothing improper about VirnetXs analogy to the price of a song.
Again, that price was in evidence, and the song was not a damages methodology. Instead,
it was an argument to the jurys reason and common sense on which they were entitled to
rely.4 The entire trial showed the importance of VirnetXs technology to Apple and its
customers. Mr. Weinstein put a specific price range on that value. By analogizing to a wellknown, similar price point in closing argument (as it had in opening without objection),
VirnetX merely appealed to the jurys common sense that the per-unit rate, otherwise
supported by Mr. Weinsteins opinions, was fair. This is a perfectly appropriate argument,
especially in light of Apples accusations that VirnetX was seeking an unfair and unjustified
royalty that was really unprecedented. See United States v. Cruz-Valdez, 773 F.2d 1541,
1546 (5th Cir. 1985); see also 1/25/2016 Tr. at 188:11-22. Apples Motion should be denied.

4
Apple made similar arguments appealing to the jurys common sense. 2/3/2016 Tr. at
203:6-7 ([A]nd thats one of the reasons these cases are presented to juries is because you
can use your common sense. . . . ); 237:16-18 (similar); 219:2-6 (referring to a flood of
emails after a flight, a notion outside the evidence, to argue that iMessages are indirect).
5

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DATED: February 11, 2016

Respectfully submitted,
CALDWELL CASSADY & CURRY
/s/ Bradley W. Caldwell_________
Bradley W. Caldwell
Texas State Bar No. 24040630
Email: bcaldwell@caldwellcc.com
Jason D. Cassady
Texas State Bar No. 24045625
Email: jcassady@caldwellcc.com
John Austin Curry
Texas State Bar No. 24059636
Email: acurry@caldwellcc.com
Daniel R. Pearson
Texas State Bar No. 24070398
Email: dpearson@caldwellcc.com
Hamad M. Hamad
Texas State Bar No. 24061268
Email: hhamad@caldwellcc.com
Justin T. Nemunaitis
Texas State Bar No. 24065815
Email: jnemunaitis@caldwellcc.com
Christopher S. Stewart
Texas State Bar No. 24079399
Email: cstewart@caldwellcc.com
John F. Summers
Texas State Bar No. 24079417
Email: jsummers@caldwellcc.com
Jason S. McManis
Texas State Bar No. 24088032
Email: jmcmanis@caldwellcc.com
Warren J. McCarty, III
Illinois State Bar No. 6313452
Email: wmccarty@caldwellcc.com
CALDWELL CASSADY CURRY P.C.
2101 Cedar Springs Road, Suite 1000
Dallas, Texas 75201
Telephone: (214) 888-4848
Facsimile: (214) 888-4849
Robert M. Parker
Texas State Bar No. 15498000
Email: rmparker@pbatylor.com
R. Christopher Bunt
Texas State Bar No. 00787165
6

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Email: rcbunt@pbatyler.com
PARKER, BUNT & AINSWORTH,
P.C.
100 East Ferguson, Suite 1114
Tyler, Texas 75702
Telephone: (903) 531-3535
Telecopier: (903) 533-9687
T. John Ward, Jr.
Texas State Bar No. 00794818
Email: jw@wsfirm.com
Claire Abernathy Henry
Texas State Bar No. 24053063
Email: claire@wsfirm.com
WARD, HILL & SMITH, PLLC
P.O. Box 1231
1127 Judson Road, Suite 220
Longview, Texas 75606
Telephone: (903) 757-6400
Facsimile: (903) 757-2323
ATTORNEYS FOR PLAINTIFF
VIRNETX INC.

CERTIFICATE OF SERVICE
The undersigned certifies that a true and correct copy of the foregoing document was
served on all counsel of record via the Courts ECF system on February 11, 2016.
/s/ Bradley W. Caldwell
Bradley W. Caldwell