Last month, it was reported that patent troll VirnetX is seeking $532 million in damages from Apple, claiming that the company has taken its intellectual property without permission. The suit focused on a variety of VirnetX patents relating to technology used in creating Virtual Private Networks, or VPNs. VirnetX said that Apple’s own VPN technology, as well as its iMessage and FaceTime services, infringe on its patents. After another week of hearing, the East Texas Federal District Court has now unanimously ruled that Apple owes VirnetX $625 million in damages.
All the way back in 2012, VirnetX was awarded $368.2 million in damages from Apple, but an appeals court threw out that ruling and ordered a new trial. VirnetX then went into the new trial requesting $532 million from Apple. Accounting for willful infringement and royalty calculations however, the court ruled that Apple actually owes VirnetX $625 million.
The ruling was unanimous by the East Texas Federal District, with it ruling that Apple’s VPN on Demand feature, FaceTime, and iMessage all infringed on a handful of different VirnetX patents, coming out to the grand total of $625 million (via AI). The location of the court is notable as East Texas district tends to favor the patent owner in patent-related suits.
At the beginning of the trial, VirnetX explained that Apple had “not played fair” when it came to licensing intellectual property, while Apple argued that it believes in fairness and protecting IP, but that VirnetX kept “moving the boundary, asking for more and more.”
Apple has yet to comment on the ruling, but it will likely seek an appeal. This isn’t the first time Apple has fallen victim to a patent troll, though. In 2015, it was ordered to pay $532.9 million for infringing on gaming patents of SmartFlash LLC. Not satisfied with that amount, SmartFlash then came back again looking for more, saying Apple had released products too late to be included in the initial trial. In 2014, Apple voiced its displeasure with patent trolls, saying that it is the subject of more patent-related lawsuits than any other company.
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I would like to know how much money those judges in east Texas get with all these patent troll trials.
Wait, so you are accusing judges of trousering money (and breaking the law), rather than criticising a company who has, according to these judges, broken the law?
Says it all really.
You have apparently never litigated a case as defense counsel in any of the gulf state plaintiff-friendly forums, of which E.D. Tex. is the worst. There’s a reason plaintiff attorneys file everything there, including nationwide class action cases. You should see the lengths they go to in order to find a local plaintiff who, at some time in their lives, briefly used some product or service of a large company, in order to sue that company and use the E.D. Tex. judges’ exceptionally plaintiff-friendly discovery practices to drive up the litigation costs and force a settlement. This is eminently well-known in attorney circles.
The stock of this company just soared, so a whole lot of investors just got a nice payday before Apple even paid a penny!
Apple will appeal to a higher up court that actually handles things more professional and a more reasonable outcome…
I also think something should be done about the judges in Texas… a bet most of these patent trolls who go through the texan courts actually live nowhere near texas.
By more professional and more reasonable you mean they will handle it in a way that aligns with your views.
compared to the dealings in other courts in other states and countries – these courts in texas are more likely to lean towards those small guys who are abusing the system.
These patent holders who sit on paperwork waiting for the opportunity to jump on companies get lots of money from large companies, and make smaller companies go out of business — they also prevent tech from advancing…
As i mentioned – if they were using the patents, or obtained them for a future project they are working on – then fine… but they are keeping them in a file unit waiting to take companies to court to get money — this is abusing the system.
The 5th Circuit Court of Appeals is a little bit better, but unfortunately not by much. This could be another Supreme Court case at the end of the day.
I just love biased reporting, as contained in this article. It’s funny how companies are labeled patent trolls when suing Apple, but when Apple sues them for infringement (e.g., Samsung), everything’s fine and dandy. I can understand that, given that this publication is devoted to Apple. But consider the history of Apple, with Steve Jobs commenting that ‘stealing’ is perfectly ok in order to build great products. Apple has consistently followed that philosophy. The writer of this article should at least get his facts straight. The patents were purchased from a well known company, SAIC, the same company that provides security for CIA communications. In fact, the very same IP technology that is used for the CIA is used by Apple in VPNoD, FaceTime and iMessage. The very same. In fact, Apple engineers some years ago tried to patent this technology, only to find that VHC had already done so a few years before their discovery. Did that stop Apple from using it? NO. Did that make Apple request a license from VHC for the technology? NO. So Apple did what Apple does best in these cases: it has tried to run out the clock, hoping that tiny VHC would go bankrupt before any final ruling comes down.No such ruling has happened yet, even with this verdict. Apple will appeal it to the CAFC, who earlier had remanded the first trial that Apple lost to VHC back to the Tyler TX court for getting the damages correct (the CAFC didn’t like how the damages were calculated the first time around). It is not clear what grounds that Apple will try to use this time around. Will the appeal work or will Apple have to use the last bullet in the gun, that being an appeal to the Supreme Court (again, on what grounds?). This is the short accurate story. From my perspective, I don’t think Apple smells so good on this one.
It’s defense in the courtroom sucked big time, with witnesses contradicting each other and a lot of “I don’t know”s from an executive two steps below Tim Cook who should have known. Apple conducted a survey to see how important “security” was to buyers of iPhones or iPads, etc. This would have been useful except the people conducting the survey used this question:”How important is encryption to you in buying your Apple product?” The jury asked the Apple witness: “Why didn’t you just use “security” instead of encryption?” The jury saw right through Apple’s attempt at obfuscation. And that’s pretty much how it went, as Apple tried to confuse the jury and belittle the VHC technology. (Recall earlier after the first trial that Apple tried to find a workaround for the VHC tech using relay servers and ended up getting over 500,000 complaints, thus causing Apple to go back to using VHC’s tech.
Are you familiar with what the term “Patent Troll” actually means? Samsung wouldn’t be referred to as a patent troll as they actually create and produce products that use their patents, instead of just trying to create and buy-up patents and not do anything other than try to sue other companies to get them to settle out of court.
It very simple. If you are awarded mln. $600 for a patent you never actually used to manufacture real products – You are a patent troll. #endThread
Nice to see someone who knows the full story. Has anyone here watched Flash of Genius? Was he a Patent Troll or was he an inventor trying to make a mark for himself and had his invention stolen by big business? There is no question here as to who created the software Apple is using.
Thanks Mark, for your insights. Don’t mind the fanboys that take Apples side no matter how much of a lie it is.
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The fact the trial was heard in East Texas is indicative the plantiff is a patent troll. So get off your soapboxes. It doesn’t matter what the company is. The court is so biased towards patent trolls, it’s beyond laughable.
This is not an Apple or VirnetX issue, it’s an issue with the patent laws. They are fundamentally flawed. They allow a person/company to acquire a patent for an idea or concept, but do not require that person/company to execute that idea or concept. Want to get rich… patent an idea for a technology then sue those who come up with it after you have it ‘protected’. No matter that you had no intention on ever building anything with your concept. In fact, just leak that idea after you have it protected, then the idea is out there. Wait for a big name with big pockets to use it, then sue. You’re rich and you’re a patent troll. VirnetX sounds like they are low life scum to me, but they are just taking advantage of a completely legal process.
That’s not the case here they actually developed the technology.
I despise patent troll companies. But I can care less if two of these go at each other. LOL :D
Anyone else tired of the term ‘patent troll”? meh
Take a look at this: https://virnetx.com/licensing/current-licensees/
These guys have made a large chuck of change by suing and winning patent infringement cases against large technology companies.