“You’ve provided zero proof for your claims, Pelham. Apple has always licensed the software and tech it uses.”
third time’s the charm —
Full scale of Apple’s patent loss to VirnetX is now clear: $440 million
Judge: Apple’s decision to sell after losing a 2012 trial was “unreasonably risky.”
Joe Mullin - 10/16/2017, 6:19 PM
A patent-holding company called VirnetX has won a massive patent case against Apple, for the third time. Today, it became clear just how big the win was.
An order unsealed Friday (PDF) reveals that, not only did a federal judge award VirnetX the full $302 million jury verdict that it won last year, but the judge tacked on $41.3 million in enhanced damages and $96 million in costs, attorneys’ fees, and interest. In all, Apple has been ordered to pay a staggering $439.7 million to VirnetX because its VPN on Demand and FaceTime features were found to infringe VirnetX patents.
In a statement today, VirnetX CEO Kendall Larsen said he’s “elated” with the court’s final judgment.
“This is the third time a jury has ruled in our favor against Apple,” said Larsen. “This Final Judgement amount is large because sales of Apple’s infringing products are large. The cost of our security technology in infringing devices has been apportioned and is less than a quarter of one percent of the device’s cost. We believe this established per device rate for security is very reasonable and will greatly assist us with our domestic and global licensing efforts.”
In his order, US District Judge Robert Schroeder increased the jury’s $1.20 per unit royalty award by 50 percent, targeted to the time frame in which he said Apple was infringing willfully.
VirnetX has won three separate jury trials against Apple, all in the Eastern District of Texas, a longtime hotspot for patent-holding companies seeking to sue tech companies. The first was in 2012, when a jury awarded $368 million in damages and the judge granted an ongoing royalty of one percent. Both holdings were overturned on appeal, however.
In February 2016, a second trial resulted in a $625 million verdict against Apple. That verdict was thrown out by the judge, who didn’t approve of VirnetX lawyers’ references to the 2012 trial. A third trial, in September 2016, resulted in a $302 million verdict, which is what the judge added to in his recent judgment.
Schroeder said enhanced damages were warranted because of Apple’s repeated attempts to stay the litigation due to reviews at the US Patent Office and how the company sought “to inject evidence of the proceedings into the trial, even after receiving adverse rulings from the Court,” Schroeder wrote. He also ruled that Apple’s continued infringement after the first verdict in 2012 could not be justified and therefore must be considered willful.
Continuing to sell products with VPN on Demand and FaceTime features was “unreasonably risky or reckless,” Schroeder held.
Apple also created conflicts on the eve of trial, by hiring a jury consultant who used to work for VirnetX during the first trial, as well as a former VirnetX appellate counsel. Apple’s “failure to ensure that its consultant actually had no conflicts unnecessarily complicated the trial,” and the company’s decision to do so warrants the payment of attorneys’ fees related to the third trial, Schroeder held.
Apple didn’t respond to a request for comment from Ars. In court papers, the industry giant makes clear its intention to appeal the judgment.
The finding of infringement by the jury (Docket No. 598) makes Apple’s continued sales after the verdict of products with the VPN on Demand and the FaceTime features unreasonably risky or reckless.
https://www.macrumors.com/2019/01/15/virnetx-wins-440-million-from-apple/
Apple Must Pay VirnetX $440 Million for Patent Infringement, Appeals Court Rules
Tuesday January 15, 2019 8:50 AM PST by Juli Clover
Apple must pay VirnetX $440 million after an appeals court upheld an earlier judgement in favor of the patent holding company, reports Reuters.
The U.S. Court of Appeals for the Federal Circuit today denied Apple’s appeal of a 2016 verdict that awarded VirnetX $302 million, which increased to $439.7 million when taking into account damages and interest calculated during retrials.
VirnetX first sued Apple in 2010, accusing FaceTime of infringing on patents held by VirnetX. The two companies have been fighting in court since then, and Apple in 2017 said it would appeal the final $440 million judgement.
In a separate case that is also still unsettled, VirnetX was awarded an additional $502.6 million from Apple after a court found that Apple’s FaceTime, iMessage, and VPN on Demand features infringe on four VirnetX patents related to communications security.
Apple in total owes VirnetX $942 million, but is likely to continue to fight both rulings, as the patents in question have been ruled invalid by a separate court. Apple said it is disappointed with the ruling and will once again appeal.
https://blog.patentology.com.au/2015/12/i-dont-care-how-efficient-it-is-its.html
Wilfully Efficient Infringement?
It is, however, one thing to ignore patents altogether, and then pay up only when – and if – legally compelled to do so. This is, in fact, an almost unavoidable strategy in fields, such as software-based technologies, where a comprehensive patent infringement search across all relevant jurisdictions and all components of a commercial offering is a practical impossibility. It is, indeed, more ‘efficient’ in such circumstances to focus patent research on core areas of product differentiation, and rely on patent owners to give notice of rights in non-core areas. In most cases, such patent owners will not be direct competitors, and will be very happy to negotiate a licence agreement.
However, this perfectly reasonable scenario is not what animated Joe Nocera in his recent New York Times column, with which I opened this article. Rather, he was concerned about Apple’s apparently deliberate refusal even to speak to University of Wisconsin commercialisation arm WARF about licensing a patent on
… an innovation that Apple uses to help speed the processing time of several versions of the iPhone and iPad. Apple not only couldn’t be bothered to license the patent; it wouldn’t even let WARF in the door to negotiate. Instead, Apple sent the foundation a link to a page on the Apple website, which says that the company can lay claim to any unsolicited idea.
Ultimately, WARF sued Apple and, in October a jury found the patent valid and infringed, and ordered Apple to pay damages of around $234 million. While this may sound pretty good for WARF, as Nocera points out,
… Apple is actually the big winner. Thanks to efficient infringing, WARF never had the chance to grant an exclusive license to an Apple competitor, which could have hurt Apple while maximizing WARF’s financial gain.
The same big corporations, including Apple, Amazon, Facebook and Google, have been lobbying the US government intensively over further reforms to the patent system, including proposed legislation supposedly targeted at cutting down on the number of abusive lawsuits initiated by so-called patent trolls. As Nocera’s column points out, however, the ‘troll’ narrative provides these companies with a very convenient bogeyman. But the reforms that have been (unsuccessfully) pushed to date would not just target abusive litigation, they would improve the efficiency of ‘efficient infringement’ strategies against all patent owners without the financial might to take on an Apple or a Microsoft on their own terms.
Conclusion – Efficient Infringers, or Big Bullies?
Slapping ‘efficient’ in front of ‘infringement’ should be no more effective than slapping lipstick on a pig. However you dress it up, it is still infringement.
And ‘efficient infringement’ is not a victimless ‘crime’. Whether you are ‘efficiently’ overstaying in free parking spots, evading fares on public transport, or infringing somebody’s patent, your economic benefit comes at someone else’s expense. Reduced turnover and availability of parking spaces harms the local community, including retailers and consumers. ‘Efficient’ fare evasion reduces the income to public transport authorities which (in Melbourne, at least) results in taxpayers making up for the shortfall. And when a large corporation infringes a patent owned by an individual inventor, a small company or a startup, the corporation is robbing the patentee of the benefit and incentive that the patent system was intended to provide.
When you get right down to it, ‘efficient infringement’ is nothing more than another way for the 900 pound gorillas to behave like bullies.
Apple has stated many times that it uses none of Virnetx tech or patents in its technology. Just because they use something similar invented by someone else does not mean they infringed. A non-tech’s jury’s decision really is meaningless on tech. Virnetx is one of those NPEs I mentioned. Nobody uses their tech.