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$368 million VirnetX court victory over Apple upheld

post #1 of 28
Thread Starter 
A judge in U.S. District Court has upheld a $368.2 million prior judgment against Apple in a suit with VirnetX, finding that Apple infringed networking patents with its FaceTime video chat feature.

VirnetX


As noted early on Wednesday by Seeking Alpha, Judge Leonard Davis found in favor of intellectual property and patent holding firm VirnetX, which claimed that Apple's FaceTime feature violates VirnetX's VPN patents. Virnet first filed suit against Apple in November of 2011, claiming that the iPhone 4S infringed on U.S. Patent No. 8,05,181 for a "Method for Establishing Secure Communication Link Between Computers of Virtual Private Network."

Judge Davis' decision awards VirnetX $368,160,000 and denies Apple's request for a new trial. VirnetX will also receive a daily award from Apple in the amount of $330,211 per day until everything regarding royalties in the case, as well as any additional details, is settled.

The judge ordered the two parties to meet in order to decide on royalty arrangements. If the two have not reached an agreement within 45 days ? at which point VirnetX's daily award would reach $14,859,495 ? Judge Davis will make a ruling himself.

In 2010, the company raised similar allegations against Apple, Cisco Systems, Astra Technologies, and NEC corporation. On the day a Texas jury handed down VirnetX's initial victory, the company filed suit against Apple again, adding the iPhone 5, fourth-generation iPad, iPad mini, fifth-generation iPod touch, and "the latest Macintosh computers" to its claim.
post #2 of 28
Originally Posted by AppleInsider View Post
VirnetX will also receive a daily award from Apple in the amount of $330,211 per day until everything regarding royalties in the case, as well as any additional details, is settled.

 

So why isn't Apple getting $1,000,000 per day every day that the Samsung trial goes "unfinished"?

Originally posted by Relic

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Originally posted by Relic

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post #3 of 28

This is VERY significant...Apple should not downplay this.  If you go through the court documents you'll see Apple downplays it and suggests relay servers could support FaceTime and other services that depend on Secure SIP.  Relay servers would be too inefficient, would do too many unnecessary loops, use too much bandwidth, and most importantly have too much latency to be effective for realtime communications.

 

Not good news for Apple or any other Internet Company for that matter now that they have won victories over Microsoft ($200M) and now Apple.  They have plans to go after the rest of the tech Companies.

 

Here is the decision:

 

http://www.scribd.com/doc/127488505/Virnetx-v-Apple-Order-Re-Post-Trial-Motions-2013-02-26


Edited by aitehrani - 2/27/13 at 7:23am
post #4 of 28
Quote:
Originally Posted by Tallest Skil View Post

 

So why isn't Apple getting $1,000,000 per day every day that the Samsung trial goes "unfinished"?

 

Probably because Samsung have not yet exhausted their right to appeal the outcome of that trial?

post #5 of 28
This is when Apple should be buying the company.
post #6 of 28
Originally Posted by stike vomit View Post
Probably because Samsung have not yet exhausted their right to appeal the outcome of that trial?

 

Just as long as you support additional damages due to this interim time when the appeal is finally rejected.

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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post #7 of 28
Quote:
Originally Posted by robogobo View Post

This is when Apple should be buying the company.

robogobo,

 

I think so too...and get on the offensive against Samsung while taking royalties from Microsoft.  The question is, at what price?  Apple should just buy a majority of their shares on the open market because their CEO has his eyes on BIG BIG $$$.  He see's over $200B worth of revenue he wants part of!

post #8 of 28
Quote:
Originally Posted by Tallest Skil View Post

 

Just as long as you support additional damages due to this interim time when the appeal is finally rejected.

 

I'm not sure if it works like that.

post #9 of 28
Quote:
Originally Posted by robogobo View Post

This is when Apple should be buying the company.

VHC VirnetX holding company (does this mean they're not really a company just a couple of programmers?) has a current market cap of 1.83B, much higher than their penalty.

post #10 of 28
VirnetX is a patent troll or "holding corporation" as they like to call themselves. This is not a real company with engineers and scientists and actual products. They have 13 employees and a lot of patents and lawyers. They are located on Lake Tahoe in Nevada just a few miles from the California border.

Their current market cap is 1.8 Billion. So Apple could buy them but unless Apple wants to become a patent troll and go after others, it is probably a lot cheaper to just come to some reasonable licensing terms.
post #11 of 28

This article totally missed the SeekingAlpha's article authors's disclosure at the top of that page. 

 

The author is LONG on VirnetX stock. He has a finacial interest in making VirnetX stock rise. Doom and Gloom for Apple in this lawsuit makes his stock more valuable. Then he insinuates that Cisco is next to lose big. 

post #12 of 28
East Texas has entire countries populated by cranky old people who are professional jurors; that's all they do: sit on patent juries all day.

"Apple should pull the plug on the iPhone."

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post #13 of 28
Quote:
Originally Posted by Tallest Skil View Post

So why isn't Apple getting $1,000,000 per day every day that the Samsung trial goes "unfinished"?

 

Don't worry.  Apple will also be getting post judgement royalties from Samsung, at least on any devices sold since the trial, that still infringe.

 

However, since Samsung has long deployed workarounds for most of the patents, the post-judgement rate will be smaller than for pre-judgement devices.

 

A few interesting notes about the Texas case:

 

  • Apple was found to have willfully induced infringement by their customers, by continuing to promote FaceTime even after they knew the patent was likely to be upheld, after a similar Microsoft settlement.

 

  • Apple wanted royalties to be calculated using a base price of $29 per device, not on the actual device price.   This was because $29 was the price of the software upgrade that added FaceTime to the Mac. (That sounds like a very bad precedent to try to set.  Imagine if everyone started selling "upgrades" with infringing patents for cheap, just to get around paying higher royalties later on.)  This request was denied.  It's not immediately clear what the base ended up being.

 

  • Post-judgement royalties are far better than the alternative, which was a denied VirnetX request for an sales injunction against the infringing Apple products.
post #14 of 28
This might explain the reason FaceTime was never made open source as originally stated would be the case.
post #15 of 28
Quote:
Originally Posted by majjo View Post


Precisely because the trial is "unfinished."

When both parties have exhausted their appeals, and Samsung is still found to infringe, then I'm sure they'll have to pay a daily rate going forward until a license is reached.

The judge also may not want to put anything in place while two odd the patents are undergoing review at the patent office.

 

That's because Samsung is no longer making/selling the infringed models (and I believe Koh is not yet done making adjustment to the $1B judgement) . If Apple wins the appeal, Apple would get to collect $1B, plus interest.  

post #16 of 28
Quote:
Originally Posted by Suddenly Newton View Post

East Texas has entire countries populated by cranky old people who are professional jurors; that's all they do: sit on patent juries all day.

 

 

sounds like Mannheim & Dusseldorf.

post #17 of 28
Texas is the ultimate place for trolls to file suit.

Does Apple have any other federal appeals options before going to the Supreme Court?
post #18 of 28
Quote:
Originally Posted by tooltalk View Post

Quote:
Originally Posted by Suddenly Newton View Post

East Texas has entire countries populated by cranky old people who are professional jurors; that's all they do: sit on patent juries all day.

 

 

sounds like Mannheim & Dusseldorf.


Actually I do not think that the Mannheim and Duesseldorf courts were in fact jury trials , but the Duesseldorf court is widely seen as being blindly pro-plaintiff in Patent disputes. You may recall that they tried to usurp the findings of the UK court on the Apple-Samsung dispute on the iPAD (remember, that was the case where apple got it's butt kicked for playing smart-ass and failing to comply with the court's ruling and publish an apology to Samsung).

post #19 of 28
Quote:
Originally Posted by KDarling View Post

  • Apple wanted royalties to be calculated using a base price of $29 per device, not on the actual device price.   This was because $29 was the price of the software upgrade that added FaceTime to the Mac. 

 

Speaking of the Mac...

 

After winning last November, VirnetX had filed a similar suit against the iPhone 5, iPad Mini, iPad 4G, iPod touch 5G, and all Macs equipped with OS X 10.8 Mountain Lion.

 

Considering the first $368 million award was just for previous models such as the iPhone 4S and first iPad, another judgement for those other device sales could bring the total close to, or even over, Apple's $1B award against Samsung.

 

Seems like Apple needs to do like Microsoft, and quickly negotiate an overall license with VirnetX.


Edited by KDarling - 2/27/13 at 11:22am
post #20 of 28
Quote:
Originally Posted by Johnny Mozzarella View Post

VirnetX is a patent troll or "holding corporation" as they like to call themselves. This is not a real company with engineers and scientists and actual products. They have 13 employees and a lot of patents and lawyers. They are located on Lake Tahoe in Nevada just a few miles from the California border.

Their current market cap is 1.8 Billion. So Apple could buy them but unless Apple wants to become a patent troll and go after others, it is probably a lot cheaper to just come to some reasonable licensing terms.

I really wish people would stop this stupid "patent troll" crap - especially people who don't know what they're talking about.

"holding company" is not synonymous with "patent troll" even if you want to pretend that there is such a thing. Berkshire Hathaway is a holding company.. General Electric is a holding company. I can't imagine anyone calling either of them "patent trolls".
"I'm way over my head when it comes to technical issues like this"
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"I'm way over my head when it comes to technical issues like this"
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post #21 of 28
Quote:
Originally Posted by jragosta View Post

Quote:
Originally Posted by Johnny Mozzarella View Post

VirnetX is a patent troll or "holding corporation" as they like to call themselves. This is not a real company with engineers and scientists and actual products. They have 13 employees and a lot of patents and lawyers. They are located on Lake Tahoe in Nevada just a few miles from the California border.

Their current market cap is 1.8 Billion. So Apple could buy them but unless Apple wants to become a patent troll and go after others, it is probably a lot cheaper to just come to some reasonable licensing terms.

I really wish people would stop this stupid "patent troll" crap - especially people who don't know what they're talking about.

"holding company" is not synonymous with "patent troll" even if you want to pretend that there is such a thing. Berkshire Hathaway is a holding company.. General Electric is a holding company. I can't imagine anyone calling either of them "patent trolls".

 

You post this every time the subject comes up. What, exactly, are you arguing? That patent trolls don't exist, that a particular definition is incorrect, that they exist but the term is inappropriate, or just that they are doing nothing illegal?

 

http://en.wikipedia.org/wiki/Patent_troll

post #22 of 28
Quote:
Originally Posted by MacBook Pro View Post

This might explain the reason FaceTime was never made open source as originally stated would be the case.

I have often wondered why this was the case.  i remember when they were announcing FaceTime they made a big deal about it using open technologies and that it would soon be opened to everybody.

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-- Mike Eggleston
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-- Wii #: 8913 3004 4519 2027
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post #23 of 28
Quote:
Originally Posted by stike vomit View Post

Probably because Samsung have not yet exhausted their right to appeal the outcome of that trial?

Apple still has a right to appeal and it likely will.
post #24 of 28
Quote:
Originally Posted by jragosta View Post

I really wish people would stop this stupid "patent troll" crap - especially people who don't know what they're talking about.

"holding company" is not synonymous with "patent troll" even if you want to pretend that there is such a thing. Berkshire Hathaway is a holding company.. General Electric is a holding company. I can't imagine anyone calling either of them "patent trolls".

You tell us that every time the topic comes up, we obviously disagree. I have taken the time on numerous occasions to point out what makes a patent holder a troll.
post #25 of 28
Quote:
Originally Posted by TBell View Post


Apple still has a right to appeal and it likely will.

 

Really?

 

 

Quotes (from the article):
$368 million VirnetX court victory over Apple upheld...
 
... Judge Davis' decision awards VirnetX $368,160,000 and denies Apple's request for a new trial.

 

Looks pretty final to me.

post #26 of 28
Quote:
Originally Posted by Mike Eggleston View Post

I have often wondered why this was the case.  i remember when they were announcing FaceTime they made a big deal about it using open technologies and that it would soon be opened to everybody.


Great point...SIP has always been open and just about everyone uses it. From my understanding, when Secure SIP was developed, it was also understood to be open...and somewhere along the line VIRNETX scooped up the patents on the cheap (I think I read $30M) and is now going after everyone in the industry...

Just about any Company doing secure VOIP is potentially at risk...this is the sort of thing that kills innovation IMO.

Had the industry suspected Secure SIP would have been commercialized as it has been, competing technologies would have emerged through the years...everyone assumed (incorrectly) this day would never come.


VHC is dangerous as they've based their business model in securing similar patents in hopes of catching the industry with their pants down....brilliant you could say...or ruthless and unethical.
post #27 of 28
Quote:
Originally Posted by Tallest Skil View Post

 

So why isn't Apple getting $1,000,000 per day every day that the Samsung trial goes "unfinished"?

 

Why?  Because this patent is a very specific, patent-worthy operation.  Not a rectangle.  Not icons that have been around for decades.  This is what a patent *really* is supposed to be.  Not broad, vague or all-encompassing patents.  Duh!

post #28 of 28
Quote:
Originally Posted by jragosta View Post


I really wish people would stop this stupid "patent troll" crap - especially people who don't know what they're talking about.

"holding company" is not synonymous with "patent troll" even if you want to pretend that there is such a thing. Berkshire Hathaway is a holding company.. General Electric is a holding company. I can't imagine anyone calling either of them "patent trolls".

This is how Chief Judge Rader of the US Court of Appeals defines a Patent Troll:

 

"Let me tell you my definition of a patent troll — A patent troll is anybody who asserts a patent far beyond the value of its contribution to the art. That means that any institution can be a troll. We all understand that there are entities that are created solely for the purpose of litigating patents, which is not intrinsically bad. Again, if they are properly valuing and properly using the system to vindicate the incentives in investment and opportunities on behalf of the Patent Act there is no problem in that.

The problem comes when they will sue on a minor, minor patent… and then keep the infringement contentions very vague. Then approach and say “wink, wink, you know this is going to cost you $2 to $3 million in discovery expense alone. I’ll be happy to save you money by settling at far less than that.” And, of course, that it litigation blackmail. That’s the tactical use of the expense of the system, which is abusive. And I’m happy to say that the Federal Circuit and its Advisory Council is targeting for some kind of correction."

http://www.ipwatchdog.com/2013/02/28/chief-judge-rader-speaks-out-about-patent-litigation-abuse/id=36252/

He had much more to say for anyone interested.

 

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