Jury orders Apple to pay VirnetX over $500 million for patent violation

Polycount

Posts: 2,850   +575
Staff member
What just happened? Apple is no stranger to lengthy legal disputes, but even by the company's standards, its decade-long patent infringement battle with VirnetX is starting to drag on. However, and end to one chapter of this saga finally at hand: Apple has been ordered to pay VirnetX a whopping $502.8 million in royalties for allegedly infringing upon VirnetX's technology patents through iOS' VPN on Demand feature.

As we said, this case -- or, more specifically, this legal battle -- goes back more than 10 years, to August 11, 2010. There's been quite a bit of back-and-forth between the two companies over the years, but an appeals court has finally ruled in VirnetX's favor, much to Apple's disappointment.

After roughly 90 minutes of deliberation, according to Bloomberg, the Texas-based court arrived at the $502.8 million figure, which is certainly great news for VirnetX, albeit still a lower sum than they'd hoped for. Initially, VirnetX was shooting for around $700 million in royalties, whereas Apple felt it should have to pay no more than $113 million.

For context, at this point, there's not really a question of Apple's guilt -- that verdict had already been reached. Today's court decision only relates to the amount that Apple has to pay.

"We thank the jury for their time and appreciate their consideration but are disappointed with the verdict and plan to appeal," an Apple spokesperson said...

Obviously, Apple is not pleased with this outcome, and understandably so: right or wrong, $500 million is certainly quite a bit more than the $100 million-and-change payout it was hoping to get away with.

"We thank the jury for their time and appreciate their consideration but are disappointed with the verdict and plan to appeal," an Apple spokesperson said to Bloomberg in a prepared statement. "This case has been going on for over a decade, with patents that are unrelated to the core operations of our products and have been found to be invalid by the patent office. Cases like this only serve to stifle innovation and harm consumers."

We'll see whether or not Apple's appeal will be enough to overturn today's jury decision.

Permalink to story.

 

Plutoisaplanet

Posts: 437   +628
$500,000,000?

Oh my god...how will they ever survive on just $2 trillion?
A company's market capitalization has nothing to do with money that the company owns. In fact, it more closely correlates to how much of the company other people own. Instead, Apple itself has $65B of net assets.

Regardless of how much Apple has, what really matters here is what's fair. Taking into account how large a company is (however you want to measure size), is a form of bias and not something fair.
 

Endymio

Posts: 1,334   +1,216
"Cases like this only serve to stifle innovation and harm consumers"

Says the company that operates a walled garden lol
How do you believe that Apple's garden is stifling innovation? What specifically do you believe would be innovated were Apple to change its policy?

As for it "harming consumers", the majority of those consumers prefer the security that garden wall affords, since all of them have the option to leap over it at any point by choosing a competitor's model instead.
 

Xallisto

Posts: 127   +133
How do you believe that Apple's garden is stifling innovation? What specifically do you believe would be innovated were Apple to change its policy?
A lack of competition by it's very nature stifles innovation. And how would I know what would be innovated if things changed, what a silly question.

As for it "harming consumers", the majority of those consumers prefer the security that garden wall affords, since all of them have the option to leap over it at any point by choosing a competitor's model instead.

Opinion and conjecture, nothing more.
 

Endymio

Posts: 1,334   +1,216
A lack of competition by it's [sic] very nature stifles innovation.
But there is an enormous amount of competition. Dozens of companies make phones besides Apple, and even within the Apple store, there are millions of different apps, developed by hundreds of thousands of different developers, who compete not only with each other, but with themselves by offering those apps on multiple platforms. How do you feel Apple changing its policies would lead to "more" competition than this?
 

Squid Surprise

Posts: 4,036   +3,168
Apple needs to stop stealing other's patents.
Why? It’s been more than 10 years and, other than legal fees, they haven’t had to pay for them yet...

While we’ll never know how much they’ve profited from these patents, the court must think it’s in the hundreds of millions - and even Apple must think it’s a fair amount as they offered to pay over 100 million.

The moral of this story to me seems to be, if you’re a big enough company, and the company you’re ripping off is small enough, you can and should rip off patents!
 

Hexic

Posts: 956   +1,356
TechSpot Elite
Why? It’s been more than 10 years and, other than legal fees, they haven’t had to pay for them yet...

While we’ll never know how much they’ve profited from these patents, the court must think it’s in the hundreds of millions - and even Apple must think it’s a fair amount as they offered to pay over 100 million.

The moral of this story to me seems to be, if you’re a big enough company, and the company you’re ripping off is small enough, you can and should rip off patents!

Apple has been ripping off original ideas/processes for the past 3 decades. Jobs did an excellent job (no pun intended) of creating some original ideas and products off of these that legitimately shaped the industry, and Apple flourished because of this years ago.

Fast forward to today - in the context of iPhones, all you see is upgraded hardware, and more ported Android features from 2-6 years prior that are “just done better”; not hard to do when you’ve had a median of 4 years to perfect 8 year old technology on a walled garden environment... but I digress. Apparently millions of people are OK with “innovation” at a snails pace, as long as it has that Apple icon on the back.
 

Endymio

Posts: 1,334   +1,216
Why? It’s been more than 10 years and, other than legal fees, they haven’t had to pay for them yet...
Incorrect. Apple had previously paid VirtnetX over $400M for an earlier infringement case. Apple has also paid settlements to HTC, Nokia, and several other firms.

The moral of this story to me seems to be, if you’re a big enough company, and the company you’re ripping off is small enough, you can and should rip off patents!
I realize how blindly attracted a simple mindset is to an underdog narrative, but the fact remains that this was almost certainly unintentional infringement. Also, VirtnetX's patents here (for on-demand VPN) generally fail the "obviousness" test -- Apple has already successfully managed to invalidate several of the patents, and the ones at the core of this suit may topple as well, meaning the judgement will wind up being reversed. Also, note that Apple has successfully itself sued for infringement as often as it's been sued. Casting it in the role of evil villain is naively simplistic.
 

Mr Majestyk

Posts: 731   +621
A company's market capitalization has nothing to do with money that the company owns. In fact, it more closely correlates to how much of the company other people own. Instead, Apple itself has $65B of net assets.

Regardless of how much Apple has, what really matters here is what's fair. Taking into account how large a company is (however you want to measure size), is a form of bias and not something fair.

Apple has 2 trillion in cash reserves it's not other peoples holdings it's all the tax they don't pay most governments in the world. They are corporate scum like most mega tech companies.
 

Xallisto

Posts: 127   +133
But there is an enormous amount of competition. Dozens of companies make phones besides Apple, and even within the Apple store, there are millions of different apps, developed by hundreds of thousands of different developers, who compete not only with each other, but with themselves by offering those apps on multiple platforms.
Competition within Apples store is not competition with Apples store.

How do you feel Apple changing its policies would lead to "more" competition than this?

IOS allowing stores other than Apples own would drive prices down for the consumer and drive extortionate rates of distribution down for developers.
 

Endymio

Posts: 1,334   +1,216
Competition within Apples store is not competition with Apples store.
But there are many other app stores besides Apple. Apple's store isn't even the largest in terms of number of apps, nor in number of downloads.

IOS allowing stores other than Apples own would drive prices down for the consumer
Ah, but you claimed it would "drive innovation". Now you're admitting you just want a lower price. Self-interest posing as public-spirited altruism.
 

Xallisto

Posts: 127   +133
But there are many other app stores besides Apple. Apple's store isn't even the largest in terms of number of apps, nor in number of downloads.
Such as?
Ah, but you claimed it would "drive innovation". Now you're admitting you just want a lower price. Self-interest posing as public-spirited altruism.

U don't actually think I own an Apple device do you? The prices on Apples store mean nothing to me, so clearly not self-interest is it.

Also it would be remiss not to point out that it's not mutually exclusive is it? U can want to drive down prices with competition and drive innovation simultaneously can't you. Of course u can.
 

Endymio

Posts: 1,334   +1,216
But there are many other app stores besides Apple
Such as?
You say your phone is not an Apple device, yet you're unaware of any app stores besides Apple's? Are you being disingenuous or merely obtuse?

U can want to drive down prices with competition and drive innovation simultaneously can't you.
You can want to. But you still haven't explained how you believe this would happen. In fact, I can make the case that forcing Apple to hew to the same policies as their competitors would actually reduce innovation in the mobile-app marketplace.
 

Xallisto

Posts: 127   +133
You say your phone is not an Apple device, yet you're unaware of any app stores besides Apple's? Are you being disingenuous or merely obtuse?

Don't evade the question, what other app stores can be installed on IOS that are in direct competition with Apples own store?

You have some nerve calling me disingenuous when 1 post ago you tried to claim that competition and innovation were mutually exclusive, and hope that I did not call you out on it.

You can want to. But you still haven't explained how you believe this would happen. In fact, I can make the case that forcing Apple to hew to the same policies as their competitors would actually reduce innovation in the mobile-app marketplace.
I need to explain why more competition would mean more innovation?

Go ahead, make your case.
 
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Plutoisaplanet

Posts: 437   +628
Apple has 2 trillion in cash reserves it's not other peoples holdings it's all the tax they don't pay most governments in the world. They are corporate scum like most mega tech companies.
This is wrong, please look at their balance sheet. They have $1.88T in market cap, but again that is other people’s money invested into them, not their money, and fluctuates for any or no reason at all.

Apple has over $300B in assets, and just over $250B in liabilities (money they owe) which nets to exactly what I said. In terms of hard cash it’s $38B and as @Endymio said, $150B of their assets are in market securities, 2/3 of which is tied up.

I recommend that you learn to read financial statements that way you don’t feed misinformation to the public.
 

Endymio

Posts: 1,334   +1,216
what other app stores can be installed on IOS that are in direct competition with Apples own store?
You're creating a false dilemma. Other app stores exist, and those stores compete directly with Apple. Companies have a requirement to allow competition. But no company is required to allow competitors inside their own store. Wal-Mart does not sell goods inside Target, and Ford does not allow people to select a Toyota engine as an option on a new vehicle purchase.

You have some nerve calling me disingenuous when 1 post ago you tried to claim that competition and innovation were mutually exclusive[/quote]I said no such thing of course. The post is still there. Which word did you fail to understand?
 

jpuroila

Posts: 332   +183
Incorrect. Apple had previously paid VirtnetX over $400M for an earlier infringement case. Apple has also paid settlements to HTC, Nokia, and several other firms.

I realize how blindly attracted a simple mindset is to an underdog narrative, but the fact remains that this was almost certainly unintentional infringement. Also, VirtnetX's patents here (for on-demand VPN) generally fail the "obviousness" test -- Apple has already successfully managed to invalidate several of the patents, and the ones at the core of this suit may topple as well, meaning the judgement will wind up being reversed. Also, note that Apple has successfully itself sued for infringement as often as it's been sued. Casting it in the role of evil villain is naively simplistic.
If it was "unintentional" the case would have been settled out of court a long time ago.