A jury in East Texas this week ruled that Apple must pay VirnetX, a patent holding company, $625.6 million for infringing on four patents. It’s a significant victory for VirnetX, a company that has no products but makes money through patent litigation.
The jury found that Apple infringed on every patent claim that was disputed. The first issue was how much Apple should pay relating to two patents that it was already ruled to infringe, and the jury decided on $334.9 million. The panel also ruled against Apple relating to two other claims and ordered the company to pay $290.7 million. The accused products include Apple’s software including VPN on Demand, FaceTime, and iMessage.
The showdown could be one of the last of its kind in which a “patent troll” style company gets a nine figure verdict from a tech company. The practice of “patent trolling” is still common and seems to be concentrated in East Texas. But recently such huge verdicts have been dampened by changes in case law, especially the Supreme Court’s ruling in 2014 between Alice Corp v CLS Bank that made it easier for defendant to get software-related patents to be thrown out.
The trial is partly related to a 2012 jury trial in which VirnetX won $368 million in damages. On top of that, the firm was to get an even larger reward – a running royalty of almost 1 percent of iPhone and iPad revenue. However the ongoing royalty (and the initial $368 million) were overturned after an appeal.
VirnetX has also had some huge victories in the past. Its original attack on Microsoft resulted in a $200 million settlement. Microsoft subsequently pad $23 million to end claims that Skype infringed the firm’s patents. VirnetX also sued Cisco, who took the case to trial and won.
VirnetX’s four patents in question at the Apple trial came froma company called Science Applications International Corporation. VirnetX has said for any years it plans to market various products, but for now solely makes income from licensing patents. The firms has just 14 employees and leases a small office suite in Zephyr Cove, Nevada, for $5,000 a month, according to its most recent financial statement.
In future, VirnetX may try to impose a “running royalty” on Apple products. In the meantime, Apple is likely to appeal the verdict.
“We are thankful for the jurors’ hard work and attention in this case, and for reaching a just verdict“, said VirnetX lawyer Jason Cassady in a statement. “The jury saw what we have been saying all along: Apple has been infringing VirnetX’s patented technology for years”.
Larry Banks is a keen follower of technology and finance. He has worked for a variety of online publications, writing about a diverse range of topics including mobile networks, patents, and Internet video delivery technologies.