`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`VIRNETX INC.,
`Appellant
`
`v.
`
`APPLE, INC.,
`Appellee
`______________________
`
`2017-2490, 2017-2494
`______________________
`
`Appeals from the United States Patent and Trade-
`mark Office, Patent Trial and Appeal Board in No.
`IPR2016-00331.
`
`______________________
`
`Decided: December 10, 2018
`______________________
`
`IGOR VICTOR TIMOFEYEV, Paul Hastings LLP, Wash-
`ington, 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.
` ______________________
`
`
`

`

`2
`
`VIRNETX INC. v. APPLE, INC.
`
`Before NEWMAN, O’MALLEY, and CHEN, Circuit Judges.
`O’MALLEY, Circuit Judge.
`VirnetX Inc. (“VirnetX”) appeals from two final writ-
`ten decisions of the Patent Trial and Appeal Board
`(“Board”) finding that Apple Inc. (“Apple”) had demon-
`strated 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 24011 was a printed publication and be-
`cause VirnetX did not preserve the only remaining issue
`of whether inter partes review procedures apply retroac-
`tively 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 obvi-
`ous 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 combina-
`tions 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 mat-
`ter, that RFC 2401 was not a printed publication under
`§ 102(b) as of November 1998. In its final written deci-
`
`1 S. Kent & R. Atkinson, “RFC 2401, Security Ar-
`chitecture for the Internet Protocol” (November 1998)
`(J.A. 2268).
`
`

`

`VIRNETX INC. v. APPLE, INC.
`
`3
`
`sions, the Board found that RFC 2401 was a printed
`publication and concluded that the ’696 patent was un-
`patentable 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 F. App’x 1024 (Fed. Cir. Mar. 16, 2018) (“VirnetX I”).
`In VirnetX I, VirnetX appealed seven final written deci-
`sions in which the Board found that RFC 2401, in combi-
`nation 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 F. App’x at 1024.
`After the mandate issued in VirnetX I, Apple submit-
`ted a notice of supplemental authority in this case, notify-
`ing 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 es-
`topped, and, even if it were, such a finding would not
`resolve all issues in this appeal because VirnetX pre-
`served 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 identi-
`
`

`

`4
`
`VIRNETX INC. v. APPLE, INC.
`
`cal 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 Hard-
`ware, 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 collat-
`eral estoppel so long as these elements—including the
`element that the resolution of the issue was essential or
`necessary to the Rule 36 judgment—are carefully ob-
`served. Phil-Insul, 854 F.3d at 1356–57.
`Here, Apple is correct that VirnetX is collaterally es-
`topped by our Rule 36 judgment in VirnetX I from reliti-
`gating the question of whether RFC 2401 was a printed
`publication. The parties dispute only the question of
`whether the issue was necessary or essential to the judg-
`ment in VirnetX I. We find that it was. Each ground of
`unpatentability that VirnetX appealed in VirnetX I relied
`on RFC 2401. Even VirnetX conceded during oral argu-
`ment that the printed publication issue was a threshold
`issue
`in VirnetX
`I.
` See Oral Arg. at 5:04,
`http://oralarguments.cafc.uscourts.gov/default.aspx?fl=
`2017-2490.mp3 (“[T]he finding that RFC 2401 was a
`printed publication was indeed a threshold issue [in
`VirnetX I] so I think, under that analysis, the court would
`have addressed that question.” (emphasis added)). Indeed,
`in three of the seven final written decisions appealed in
`VirnetX I, the only issue raised was whether RFC 2401
`was a printed publication. Accordingly, by affirming all
`seven of the Board’s decisions, this court in VirnetX I
`
`

`

`VIRNETX INC. v. APPLE, INC.
`
`5
`
`necessarily found that RFC 2401 was a printed publica-
`tion. Therefore, VirnetX is collaterally estopped by our
`Rule 36 judgment in VirnetX I from relitigating the issue
`in this appeal.
`Even if VirnetX were not collaterally estopped, we
`would affirm the Board’s conclusion that RFC 2401 was a
`printed publication as of November 1998. This is because,
`as VirnetX admits, “this appeal presents a similar record
`with respect to RFC 2401’s status as a printed publication
`as [VirnetX I],” and thus, if we reached the merits, we
`would be “likely to reach the same conclusion in this
`appeal as [we] did in [VirnetX I].” VirnetX’s Resp. to
`Apple’s Notice, ECF No. 43.
`VirnetX next argues that RFC 2401’s status as a
`printed publication is not dispositive of all issues raised in
`this appeal because it preserved in its opening brief the
`separate issue of whether inter partes review procedures
`apply retroactively to patents that were filed before
`Congress enacted the AIA. To demonstrate that it pre-
`served this issue, VirnetX points to a single paragraph in
`its Opening Brief, filed prior to the Supreme Court’s
`decision in Oil States Energy Services, LLC v. Greene’s
`Energy Group, LLC, 138 S. Ct. 1365 (2018). In this para-
`graph, VirnetX asks this court to “set aside the Board’s
`IPR decision” “[i]f the Supreme Court decides[, in Oil
`States,] that the Seventh Amendment and Article III of
`the Constitution preclude the Board from invalidating
`patents through IPR proceedings.” Appellant’s Br. at 54.
`This paragraph explicitly raises the specific question later
`decided in Oil States of whether the “IPR process violates
`the Constitution by extinguishing private property rights
`through a non-Article III forum without a jury.” Appel-
`lant’s Br. at 54 (internal quotations omitted). And, under
`a very generous reading, the paragraph also arguably
`raises a general challenge under the Seventh Amendment.
`But, we find that it in no way provides any arguments
`specifically preserving the retroactivity issue.
`
`

`

`6
`
`VIRNETX INC. v. APPLE, INC.
`
`Indeed, VirnetX conceded at oral argument that it
`“didn’t specifically brief” the retroactivity issue. See Oral
`Arg.
`at
`18:01,
`http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
`17-2490.mp3. It attempts to justify this failure by argu-
`ing that our precedent prior to Oil States generally upheld
`the constitutionality of inter partes review proceedings
`and thus, foreclosed the argument. But we have never
`decided this issue, and, even if we had, VirnetX never
`sought to provide supplemental briefing or to otherwise
`develop this argument following the Supreme Court’s
`decision in Oil States. Rather, VirnetX insists it pre-
`served this issue by way of a single, generic paragraph. It
`did so only after Apple filed its notice of supplemental
`authority identifying our Rule 36 judgment in VirnetX I,
`which VirnetX acknowledges significantly weakens an
`otherwise dispositive issue in this appeal.2 All of this
`suggests that VirnetX’s insistence is likely less than
`sincere. Thus, we conclude that VirnetX did not preserve
`the issue of whether inter partes review procedures apply
`retroactively to patents that were filed before Congress
`enacted the AIA and that, therefore, our conclusion that
`VirnetX is collaterally estopped from raising the printed
`publication issue resolves all other issues in this appeal.3
`
`
`2 Despite acknowledging this, VirnetX chose to pur-
`sue this appeal through oral argument. But on November
`28, 2018, VirnetX filed an opposed motion to dismiss this
`appeal in which it expressly admitted for the first time
`that our Rule 36 judgment in VirnetX I has collateral
`estoppel effect in this case and any future cases in which
`this issue is raised. We denied the motion.
`3 The other issues VirnetX raises on appeal are is-
`sues appealed from the 332 Board Decision. Our finding
`of collateral estoppel disposes of those issues even though
`
`
`

`

`VIRNETX INC. v. APPLE, INC.
`
`7
`
`CONCLUSION
`Because VirnetX is collaterally estopped from raising
`a threshold question in this case and because that issue is
`dispositive of all issues preserved on appeal, we affirm the
`Board’s conclusion that claims 1–11, 14–25, and 28–30 of
`the ’696 patent were unpatentable as obvious.
`AFFIRMED
`COSTS
`
`Costs to Appellee.
`
`
`they do not relate to RFC 2401 or to its status as a print-
`ed publication. This is because, in the 331 Board Deci-
`sion, the Board found unpatentable every claim that it
`found unpatentable in the 332 Board Decision. And, the
`only issue VirnetX appeals from the 331 Board Decision is
`the printed publication issue, which we now uphold.
`Because we affirm the Board’s ultimate conclusion in the
`331 Board Decision that the challenged claims are un-
`patentable as obvious, we need not address any additional
`issues VirnetX raises in its appeal from the 332 Board
`Decision regarding those same claims.
`
`