Welcome to Skilled in the Art. I’m Law.com IP reporter Scott Graham. Here’s what’s cooking today:

• The full Federal Circuit has signed off on a $440 million patent infringement judgment against Apple.

• Litigation Funders and Universities: A Match Made in IP Heaven?

• Broadcasters Belatedly Beat Up on TV Retransmission Service.

Let’s get right to it. As always you can email me your own thoughts and follow me on Twitter.

Photo: Shutterstock

Apple Gets Final Answer: $440 Million

It’s been quite a ride for VirnetX.

The IP holding company won a $368 million judgment against Apple in 2012, only to have it fail on appeal due to claim construction and damages issues. VirnetX went back to the Eastern District of Texas and won again, this time earning two trial judgments, one for $440 million and the second for about $600 million. The company contends that Apple’s FaceTime and VPN on Demand infringe four of its patents on secure online communications.

As Apple has pointed out repeatedly, the Patent Trial and Appeal Board has ruled “several times over” that the patents supporting the verdicts are invalid. But VirnetX has been unwinding those decisions bit by bit at the Federal Circuit. The latest came Thursday—this time accompanied by the full court’s formal sign-off on the $440 million judgment.

“We are extremely pleased with the Federal Court’s decisions, which vindicate many of VirnetX’s positions before both the Patent Board and the district court,” VirnetX CEO Kendall Larsen said in a written statement.

It’s a big win and massive turnaround for Caldwell Cassady & Curry, which tried the district court cases; MoloLamken, which spearheaded the district court appeal; and Paul Hastings, which has chipped away at the PTAB decisions just enough to get the first verdict through the Federal Circuit. The second, $600 million judgment remains on appeal.

For Apple, which is represented by Wilmer Cutler Pickering Hale and Dorr, a five-year-old decision to hold in reserve a potential Supreme Court validity challenge came back to bite it Thursday.

VirnetX v. Apple was a 2-1 squeaker that addressed two of the four patents supporting the verdict. The Federal Circuit agreed with the PTAB that all claims of U.S. Patent No. 7,921,211 are invalid and many of No. 7,418,504 are too. But Chief Judge Sharon Prost and Judge Kimberly Moore ruled that Apple never should have been allowed to challenge other claims of the ’504, including several that support the verdict, because the Federal Circuit already affirmed their validity way back in 2014 in the first appeal of the district court case.

Prost pointed to a pre-AIA law that barred litigants from going to the PTAB “once a final decision” on validity is entered in a civil action. Apple chose not to petition for certiorari following the 2014 ruling, so that decision is final, Prost reasoned.

Judge Jimmie Reyna dissented on the ground that Apple can still ask for cert once the appeal of the retrial is over. “Whether Apple’s decision was based on litigation strategy or a desire to conserve resources is not at issue,” Reyna wrote. “This court should not dictate to Apple when or whether it should appeal.”

Last month the Federal Circuit ruled in VirnetX’s favor on two IPRs, and in June it remanded still another IPR that had invalidated claims of the ’504.

All of these reversals were apparently enough for the Federal Circuit to end Apple’s appeal of the $440 million judgment. The court had summarily affirmed the award in January, and on Thursday the full court rejected Apple’s petition for en banc rehearing.

Apple will now no doubt argue to the Supreme Court that it’s been socked with a $440 million judgment that was affirmed without an appellate opinion, based on at least one patent that the Federal Circuit now agrees is invalid.

Jeff Lamken of MoloLamken argued the district court appeal for VirnetX, with support from MoloLamken’s James Barta, Rayiner Hashem, Michael Pattillo Jr.and Allison Gorsuch. Brad Caldwell, Jason Cassady and J. Austin Curry of Caldwell Cassady & Curry were also on the briefs. Paul Hastings’ team on the PTAB appeals included partners Naveen Modi, Joseph Palys, Stephen Kinnaird, Igor Timofeyev and associate Daniel Zeilberger.

Photo: Adbar via Wikimedia Commons

Going to School on Litigation Funding

On the surface, it seemed like a fairly ordinary NPE infringement action. The complaint asserts LED lighting patents against a slew of big retailers, including Walmart, Target, IKEA, Bed Bath & Beyond and Amazon.com. It accuses them of providing “an illegal outlet for infringing products from unlicensed foreign sources”—namely, China.

The twist, as my ALM colleague Dan Packel reports, is that the patentee here is the University of California. And it’s teaming up with litigation funder Longford Capital and Nixon Peabody to bring the suits.

Longford has announced that it will be paying attorneys fees and expenses, so that there’s no risk to the university. Longford gets a cut of any settlement or award, and the university defends the IP of a Nobel laureate-led team of researchers at UC-Santa Barbara.

This surely isn’t the first time a university and a funder have teamed up. But why aren’t such arrangements more common? Many universities hold rich patent portfolios, and “The University of ___” figures to carry more cachet with juries than, say, Lighting Innovations LLC.

Fisch Sigler’s Adam Allgood says UC’s venture “will certainly raise the profile of this approach within academia. A wave of first-time academic plaintiffs may well be on the horizon.”

And UC seems to be sounding an explicit call to arms. The regents are bringing the complaint “to spearhead a broader, national response to the existential threat to university technology transfer that is posed by the widespread disregard for university patent rights,” states the complaint, which is signed by Nixon Peabody partner Shawn Hansen.

Networks Pounce on Locast

What took them so long?

The major television networks sued the company behind the Locast retransmission service on Wednesday, accusing it of taking their copyrighted content from the airwaves and sending it to registered users “at will over the internet.”

I wrote about Locast and its founder, David Goodfriend, last month. He’s organized the company as a nonprofit, and retransmits CBS, NBC, ABC, Fox and other local programming in exchange for $5 a month donations. Section 111(a)(5) of the Copyright Act provides safe haven for nonprofits to retransmit broadcasts if they act “without any purpose of direct or indirect commercial advantage.”

The networks charge that Locast is gaining plenty of commercial advantage. Goodfriend, who’s named personally in the suit, is doing the bidding of his former employer, DISH Network, by driving down retransmission values and filling a void in Dish’s Sling TV product, the networks allege. AT&T is playing the same game by “donating” $500,000 in exchange for adding the Locast app to its DIRECTV and U-verse receivers, say the networks, who are represented by Williams & Connolly.

“Locast is not the noncommercial, community public service it purports to be,” states the complaint, which is signed by Williams partner Gerson Zweifach. “It is a strategic play funded by and functioning for the benefit of decidedly commercial interests.”

Locast, which is represented by Orrick, Herrington & Sutcliffe, said in a statement that its activities are expressly permitted under the Copyright Act. “The fact that no broadcasters have previously filed suit for more than a year and a half suggests that they recognize this,” the company said. “We look forward to defending the claims — and the public’s right to receive transmissions broadcast over the airwaves — in the litigation.”

That’s all for today. Skilled in the Art will be on hiatus next week, but I’ll see you all again on August 13.