Apple Hit With $502M Patent Infringement Award

The verdict in a trial over four secure communication patents is the latest twist in a longrunning battle between Apple and patent holder VirnetX.
Matthew HellerApril 12, 2018

A Texas jury has awarded $502.6 million in damages against Apple in a long-running legal battle between the tech giant and the holder of four patents for secure internet-based communication.

The award came in the second of two lawsuits that Nevada-based patent holder VirnetX has filed against Apple since 2010. It said the verdict covered infringement by the VPN on Demand feature in iOS 7 to iOS 11 and FaceTime in iOS 7 to iOS 11 and OS X 10.9 and later.

VirnetX describes itself as “an internet security software and technology company” but according to Ars Technica, “it has no meaningful source of income outside of patent litigation.”

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“This is the fourth time a jury has confirmed that Apple has been using the technology developed by our inventors,” VirnetX CEO Kendall Larsen said in a news release.

In its original suit, which covered earlier versions of Apple mobile devices, VirnetX won three separate jury trials against Apple, all in U.S. District Court for the Eastern District of Texas, a longtime hotspot for patent holders seeking to sue tech companies.

The first victory was in 2012, when a jury awarded $368 million in damages and the judge granted VirnetX an ongoing royalty of 1%. Both holdings were overturned on appeal, however.

A second trial resulted in a $625 million verdict against Apple, which was thrown out by the judge, while a third, in September 2016, ended in a $302 million verdict.

All the verdicts pale in comparison with Apple’s profits, which reached $20 billion in the most recent quarter. And VirnetX’s latest victories may be negated by litigation related to the validity of its patents that is now before the U.S. Court of Appeals for the Federal Circuit in Washington.

VirnetX was assigned the four patents by Science Applications International Corp. in 2006, according to court papers, and reported slightly over $1 million in revenue last year. “The company’s financial future largely rests on the outcome of lawsuits against Apple,” Ars Technica said.