appl answer (itc)

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Apple answers ITC Complaint

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UNITED STATES INTERNATIONAL TRADE COMMISSION WASHINGTON, D.C. 20436 Before the Honorable Administrative Law Judge E. James Gildea

In the Matter of CERTAIN DEVICES WITH SECURE COMMUNICATION CAPABILITIES, COMPONENTS THEREOF, AND PRODUCTS CONTAINING THE SAME Investigation No. 337-TA-858

RESPONSE OF RESPONDENT APPLE INC. TO THE COMPLAINT AND NOTICE OF INVESTIGATION

Counsel for Respondent Apple Inc.: Marcia H. Sundeen T. Cy Walker Kenyon & Kenyon LLP 1500 K Street, N.W. Washington, DC 20005 Tel: (202) 220-4200 Fax: (202) 220-4201 Megan Whyman Olesek Michelle N. McLeod Kenyon & Kenyon LLP 1801 Page Mill Road, Suite 210 Palo Alto, CA 94304-1216 Telephone: (650) 384-4700 Fax: (650) 384-4701 Danny L. Williams Terry D. Morgan Ruben S. Bains Christopher N. Cravey Kyung Kim Scott Woloson Richard Groseclose Williams, Morgan & Amerson, P.C. 10333 Richmond, Suite 1100 Houston, TX 77042 Telephone: (713) 934-7000 Fax: (713) 934-7011

Respondent Apple Inc. (Apple), by its undersigned attorneys and pursuant to Rule 210.13 of the Commissions Rules of Practice and Procedure, hereby submits this Response to the Complaint of Science Applications International Corporation (SAIC) and VirnetX, Inc. (VirnetX)(collectively referred to as Complainants) dated September 13, 2012. As an initial matter, Apple denies that it has engaged in unfair competition or violated Section 337 of the Tariff Act of 1930, as amended, by importing, selling for importation, or selling within the United States after importation any devices, products, or articles that infringe any valid and enforceable intellectual property rights at issue in this Investigation. To the extent Complainants rely on evidence not presented in Investigation No. 337-TA-818, or present a position not consistent with a position taken in that Investigation, Apple has not yet had sufficient time and opportunity to collect and review all of the information that may be relevant to those issues. Apple therefore reserves the right to amend or supplement its responses, including raising additional defenses. In this light, Apple denies each and every allegation in the Complaint that is not expressly admitted below. Any factual allegation admitted below is admitted only as to the specific admitted facts, and not as to any purported conclusions, characterizations, implications or speculations that might follow from the admitted facts. Additionally, to the extent the headings used in the Complaint contain any allegations, Apple hereby denies such allegations. Apple includes the headings from the Complaint in this Response solely for purposes of clarity.

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I. 1.

INTRODUCTION Apple admits that Complainants have filed a Complaint under Section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, to remedy allegedly unlawful importation into the United States, the sale for importation, and the sale within the United States after importation by certain entities, but Apple denies that it has engaged in any such unlawful activities as alleged. Apple denies that any Apple products infringe any asserted claim of the 181 patent.

2.

Apple admits that the Complaints name Apple as a proposed respondent in this Investigation.

3.

Apple admits that what appears to be a certified copy of the 181 patent was submitted by Complainants as Exhibit 1 to the Complaint. Apple admits that what purports to be a certified copy of the recorded assignments for the 181 patent was attached as Exhibit 2 to the Complaint, and that what appears to be a more recent certified copy of the same apparently was submitted on or about September 28, 2012. Apple admits that what appear to be copies of agreements between VirnetX and SAIC concerning the rights of each Complainant as to the patent in suit were attached as Confidential Exhibits 3C-6C. Apple admits that SAIC was found by the Commission to be a necessary party to an action asserting the 181 patent in Investigation No. 337TA-818.

4.

Apple denies that an industry under 19 U.S.C. 1337(a)(2) or (a)(3)(A), (B), or

(C) exists and/or is in the process of being established.

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5.

Apple admits that Complainants seek an exclusion order and cease and desist

orders directed to certain Apple products, but Apple denies that there is any basis for granting any such orders. Apple is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 5 and, therefore, denies them. II. THE PARTIES A. 6. Complainants

Apple admits that VirnetX purports that it is a corporation organized under the

laws of Delaware with its principal place of business at 308 Dorla Court, Suite 206, in Zephyr Cove, Nevada. Apple is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 6 and, therefore, denies them. 7. Apple is without knowledge or information sufficient to form a belief as to the

truth of the allegations of Paragraph 7 and, therefore, denies them. 8. Apple is without knowledge or information sufficient to form a belief as to the

truth of the allegations of Paragraph 8 and, therefore, denies them. 9. Apple admits that VirnetX purports to have a patent portfolio of 20 U.S. and 26

international patents and over 120 patent applications. Apple admits that VirnetX purports to have licensed the asserted patent to the entities listed in Exhibit 7C. Apple is without knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 9 and, therefore, denies them. 10. Apple is without knowledge or information sufficient to form a belief as to the

truth of the allegations of Paragraph 10 and, therefore, denies them.

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11.

Apple admits that the Commission in Investigation No. 337-TA-818 determined

not to review the ALJs initial determination (Order No. 15) or Order No. 14. Apple admits that SAIC is identified as a co-complainant in the Complaint. B. 12. Proposed Respondent

Apple admits that it is a California corporation with its principal place of business

at 1 Infinite Loop in Cupertino, California. Apple admits that it designed, manufactures or has manufactured, and sells or has sold Mac computers with the Lion and Mountain Lion operating systems, iPhone 4, iPhone 4S, iPhone 5, iPad 2, The new iPad, iPad (4th generation), iPad mini, iPod touch (4th generation) and iPod touch (5th generation). Apple is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 12 and, therefore, denies them. 13. Apple admits that it imports devices that contain the FaceTime application

including Mac computers with the Lion operating system, iPhone 4, iPhone 4S, iPhone 5, iPad 2, iPad (4th generation), iPad mini, iPod touch (4th generation) and iPod touch (5th generation). Apple denies that FaceTime is largely an entertainment application. It is unclear what Complainants mean by Apple pre-installs FaceTime on the infringing devices. Accordingly, Apple denies this allegation. 14. Apple admits that it designed, markets, and manufactures or has manufactured

iPhone, iPad, iPod, Apple TV, iOS, and Mac OSX operating systems. Apple admits that OS X Mountain Lion was made available in July 2012. Apple admits that Paragraph 14 contains quotations from Exhibit 8, a copy of Apples 2011 10K. Apple further admits that Paragraph 14 of the Complaint also contains a quotation from Exhibit 10, a printout of a www.apple.com website.

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15.

Apple admits that the iPhone 4 was introduced in June 2010 and includes the

ability to make FaceTime video calls. Apple admits that the iPhone 5 was introduced in September 2012 and includes the ability to make FaceTime video calls. Apple admits that Paragraph 15 of the Complaint references Exhibit 26, a printout of a www.apple.com website. Apple denies that the quotation in Paragraph 15 is contained in Exhibit 8 as indicated. 16. Apple admits that the iPad 2 and new iPad included the ability to make FaceTime

video calls. Apple admits that Paragraph 16 of the Complaint references Exhibit 17, a printout of a www.apple.com website and Exhibit 27, a printout of a money.cnn.com article. Apple admits that the iPad (4th generation) and the iPad mini, announced in October 2012, have the ability to make FaceTime video calls. Apple is without knowledge or information sufficient to form a belief as to the truth of any remaining allegations of Paragraph 16 and, therefore, denies them. 17. Apple admits that it has an iPod line of products that includes the iPod touch.

Apple admits that the iPod touch has flash memory, a display, and a Multi-Touch user interface. Apple admits that the iPod touch introduced in September 2010 included features such as the ability to make FaceTime video calls. Apple admits that the 5th generation iPod touch, announced in September 2012, provides FaceTime video calling. Apple denies that the quotation in Paragraph 17 of the Complaint is contained in Exhibit 8 as indicated. Apple is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 17 and, therefore, denies them. 18. Apple admits that FaceTime allows users to make video calls to iPad 2, iPhone 4,

iPod touch (4th and 5th generation) and some Mac computers. Apple denies that

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FaceTime runs on all Mac computers. Apple admits that FaceTime allows users to video-chat. It is unclear what Complainants mean by allows FaceTime users to videochat by making a telephone call. Accordingly, Apple denies this allegation. Apple admits that Paragraph 18 of the Complaint contains quotations from Exhibits 9, 11 and 17, each a printout of a www.apple