Apple escapes most punitive measures in VirnetX FaceTime, VPN trial

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The contents of a final judgement in the long-running patent case between non-practicing entity VirnetX and Apple have been unsealed, revealing that while both companies had motions denied by the court, VirnetX was granted only half the "sunset royalty" it demanded and was refused an embargo on sales and imports.




Issued on August 30 by Judge Robert Schroeder in a ruling at the U.S. District Court for the Eastern District of Texas, the now-unsealed memorandum opinion and order reveals the motions made by both parties, as well as their results.

The judgement brings to an end a case that, in April, had Apple found by a jury to have infringed on four VirnetX patents with secure communication functions in its products. The case started in 2012 where VirnetX objected to Apple's VPN on Demand technology, FaceTime and iMessage, and other services, demanding damages on cumulative product sales including the iPhone 5, the fourth-generation iPad, Macs running OS X Mountain Lion, and other hardware.

In that trial, the jury awarded VirnetX $502.6 million in damages, which Apple then attempted to appeal.

According to the document, Apple's "omnibus motion for judgement as a matter of law," as well as a request for a new trial was denied in all respects. Despite Apple's arguments, the court "struggles to identify a single basis Apple provides for its JMOL on damages that it has not already considered at length," as well as questioning whether "repeated review of the same arguments in detail is a judicious use of the Court's resources."

On Virnet's motion for Entry of Judgement and Equitable and Statutory Relief, consisting of a list of damages, the court agrees with some requests but not with others. A request for enhanced damages and attorney's fees were denied, but requests for supplemental damages, pre-judgment and post-judgment interest, and costs were granted.

VirnetX was also granted a request for a "sunset royalty," which is set at $1.20 per unit. According to the filing, VirnetX wanted this to be enhanced to $3 per unit based on the "totality of the circumstances," which the court declined.

The filing then returns to Apple's motions, declaring them "denied as moot."

The legal affair started in 2010, with a lawsuit filed against Apple by VirnetX for patent infringement. In 2012, the same Texas court ordered Apple to pay 368 million for infringing just one patent, with the judgement vacated by the CAFC almost two years later.

That case was then rolled in with the original suit in a damages retrial in 2016, which hit Apple with a penalty of $625 million. Judge Schroeder later tossed the award claiming the trial was unfair due to jury confusion. Two retrials led to a $302.4 million victory to VirnetX, enhanced to $439 million, after it was found Apple had willfully infringed on the patents in question.

Apple is still appealing that decision, and likewise could appeal the latest ruling in a higher court.

Unsealed VirnetX Order.pdf by Mikey Campbell on Scribd

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Comments

  • Reply 1 of 7
    Does Apple now use different methods that don't infringe on VirnetX's patents?

    I feel if the final ruling is in VirnetX's favor, no matter what the damages Apple has to pay, it will be a huge windfall for VirnetX.  Aside from lawyer's fees (which could be substantial, especially considering the length of this case) and the cost to initially purchase the patents, how much has VirnetX spent here?
  • Reply 2 of 7
    davendaven Posts: 472member
    Does Apple now use different methods that don't infringe on VirnetX's patents?

    I feel if the final ruling is in VirnetX's favor, no matter what the damages Apple has to pay, it will be a huge windfall for VirnetX.  Aside from lawyer's fees (which could be substantial, especially considering the length of this case) and the cost to initially purchase the patents, how much has VirnetX spent here?
    Yes especially when you consider that VirnetX  is a company founded by former engineers and executives from Science Applications International Corporation (SAIC) which developed security technology for the Department of Homeland Security and other federal agencies. So basically they get a fat government contract. Patent things that are obvious to anyone in the field. Then the executives spin off the patents in a self dealing deal and hold tech companies ransom by trying cases in the Texas district where the plaintiff's attorney is a cousin or in-law of the judge.
    edited September 5 radarthekat
  • Reply 3 of 7
    I don't doubt it. I work for SAIC presently on a federal contract and we're basically just staff augmentation implementing routine tech and software, we aren't inventing anything. 

    In any event, it’s exactly why software shouldn’t be patentable and instead rely on copyright protection to prevent theft. The ideas are separate from the implementation. Parenting “a flying car” (idea) won’t work, but patenting how *your* car flies (implementation) does. Should be the same with software...the idea is free and easy, but the coded solution is the hard part and is already protected by copyright. 
    bonobobwatto_cobra
  • Reply 4 of 7
    maestro64maestro64 Posts: 4,341member
    Does Apple now use different methods that don't infringe on VirnetX's patents?

    I feel if the final ruling is in VirnetX's favor, no matter what the damages Apple has to pay, it will be a huge windfall for VirnetX.  Aside from lawyer's fees (which could be substantial, especially considering the length of this case) and the cost to initially purchase the patents, how much has VirnetX spent here?
    I believe by definition the non practicing entity is a bunch of lawyers, These are a group lawyers who got together along with investors bought up useless patents then went looking for companies to sue. They have no lawyer costs since the patents are owned by lawyers, they are representing their own case.

    This is why these cases are hard to fight from the Apple standpoint. Apple can not bring out its patent portfolio and have counter claims, you can not infringe on anything if you do not make anything. The lawyers with patents hold all the cards, you pay them what they ask, or try to fight them in court and cost you millions to fight and still pay in the end. Or maybe your lucky enough to get their patent invalidated. 
    edited September 5 bb-15watto_cobra
  • Reply 5 of 7
    gatorguygatorguy Posts: 19,444member
    maestro64 said:
    Does Apple now use different methods that don't infringe on VirnetX's patents?

    I feel if the final ruling is in VirnetX's favor, no matter what the damages Apple has to pay, it will be a huge windfall for VirnetX.  Aside from lawyer's fees (which could be substantial, especially considering the length of this case) and the cost to initially purchase the patents, how much has VirnetX spent here?
    I believe by definition the non practicing entity is a bunch of lawyers, These are a group lawyers who got together along with investors bought up useless patents then went looking for companies to sue. They have no lawyer costs since the patents are owned by lawyers, they are representing their own case.

    This is why these cases are hard to fight from the Apple standpoint. Apple can not bring out its patent portfolio and have counter claims, you can not infringe on anything if you do not make anything. The lawyers with patents hold all the cards, you pay them what they ask, of try to fight them in court and cost you millions to fight and still pay in the end. Or maybe your lucky enough to get their patent invalidated. 
    Yup that's part of this one, but a related issue that's going to take awhile to sort. Now it's being claimed there was no basis for the patent claims to be investigated to begin with. It's all very convoluted.
  • Reply 6 of 7
    This is a good example as to why software patents should not be allowed at least 99% of the time.  All of the work is in the implementation.  The idea is generally some arrangement of fundamental algorithms that would take an engineer or lawyer a few days to put together.  The implementation can take years.  Copyright law is much more appropriate.  Additionally, when you have a patent holding company that doesn't actually make anything the Cold War scenario where software companies don't want to sue each other over trivial patents no longer works.  Moreover software companies don't want to look like the bully, so they generally only sue if things escalated pretty far.  A patent holding company has nothing to lose, so it is like giving nukes to a mad man.  There is no reasoning with them, they are ready to push the button.  This might as well be intellectual property terrorism.  We really need the patent system fixed.  Ideally retroactively.
    edited September 5 StrangeDayswatto_cobra
  • Reply 7 of 7
    Left unstated here is that this is just the Texas court adjudication, using lay juries who are not told about  ...
    the parallel system of the USPTO Patent Trial and Appeal Board (PTAB), which has declared the
    patents at issue entirely invalid!    PTAB uses domain experts, not random juries, and has held
    that the VirnetX patents are straightforward, non-novel extensions of various Internet RFC standards
    from eons ago.   The PTAB rulings are basically the patent office admitting that they made a mistake
    issuing these over-broad patents.   The courts meanwhile plod on inside their own bubble, in a twisty
    "race toward finality" between the two systems exhausting the appeals within each system.
    edited September 5 lostkiwi
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