VirnetX wins nearly $440 million verdict against Apple, including willful infringement damages

By Steve Brachmann
October 21, 2017

“Hammer, Court, Judge, Justice, Law” by succo. Public domain.

On Monday, October 16th, the Internet security company VirnetX (AMEX:VHC) of Zephyr Cove, NV, announced the results of a patent litigation campaign it had pursued against Cupertino, CA-based consumer tech giant Apple Inc. (NASDAQ:AAPL). According to a press release issued by VirnetX, the Eastern District of Texas increased the damages to be paid by Apple from $302.4 million in a prior jury verdict up to nearly $440 million for Apple’s infringement of patents covering secure communications in applications like FaceTime.

The enhanced damages in VirnetX’s trial against Apple stem from a final judgment entered on September 29th by Eastern Texas Judge Robert Schroeder. As part of the final judgment, all pending motions in the case were denied as moot. According to the VirnetX press release, this included Apple’s motions for judgment as a matter of law (JMOL) for non-infringement, JMOL on damages, motion for a new trial on damages and motion for a new trial on infringement. VirnetX also reported that the Eastern Texas court granted VirnetX’s motion for willful infringement and enhanced the royalty rate during the period of willful infringement by 50 percent, from $1.20 per unit up to $1.80 per unit. These enhanced damages increased VirnetX’s pre-interest damages up for $343.7 million. On October 13th, VirnetX filed a notice of costs which added an additional $96 million in attorney’s fees, costs and prejudgment interest.

The final judgment issued by the Eastern Texas court in September comes six months after the court issued summary judgment in the case which denied as moot a series of motions made by either Apple or VirnetX as well as joint motions filed by both. These include Apple’s motions to preclude VirnetX’s assertions of willfulness against iMessage, partial summary judgment of no infringement and an unopposed motion for leave to file supplemental briefing regarding VirnetX’s request for enhanced damages. VirnetX motions which were denied include an emergency motion to clarify filed in January 2016 and a motion for partial summary judgment of willful infringement.

Executives with VirnetX are very pleased with the ruling as is evidenced in remarks given by VirnetX CEO and president Kendall Larsen:

“We are elated with the Court’s Final Judgement of $439 million in that not only did it affirm the jury’s verdict of $1.20per infringing iPhone, iPad and Mac Product, but also added for willful infringement, interest and attorney fees.  This is the third time a jury has ruled in our favor against Apple. 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.”

Also on October 16th, the Eastern Texas court issued a stipulated order on execution of the judgment against Apple which includes stipulations agreed upon by both parties in the case. As a result, Apple will provide quarterly verifications to VirnetX confirming its ability to satisfy the judgment and will pay any payments due under the judgment within 20 days of the completion of any appeal or decision to remand the case. Apple does plan to appeal the decision according to at least one news source covering the case.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 3 Comments comments. Join the discussion.

  1. Bluejay October 21, 2017 8:55 am

    Read the section on why the judge enhanced the royalty. The willful infringement by Apple and the conduct of its lawyers is astounding.

  2. Bemused October 21, 2017 10:08 am

    Bluejay@1: Can’t find that order either hyper-linked from this article or on PACER. Can you direct me to where I can find this order? Always interested in reading about lawyers who prostitute their ethics in pursuit of the billable hour.

    As an aside Virnetx (unfortunately) shouldn’t be counting its money just yet. This is the third time Virentx has gotten a final judgment against Apple (they first sued Apple back in 2010 or more than 7 years ago) with the two previous judgments thrown out by the CAFC. Also, I believe the patents in suit were invalidated by the PTAB (What a shock! Not.) and those orders are up on appeal to the CAFC. If these adverse PTAB orders are upheld, there goes this most recent judgment against Apple.

    This case is a poster child why the patent licensing markets are dead.

  3. Jerry Artrip November 1, 2017 6:18 pm

    is there a data base of non published patent applications? our patents are not found in the data base of published applications & patents prior to 2012 but are after 2014, and by all means should have been in one or the other. if i can find our patents referenced by their patents it will prove the knowing requirement in 35USC271 C. I WOULD PAY FOR THAT DATA the patents are listed 7344347-7237998-7237999-7234907-7063492-5511920-6022179 & 2 more all listed as ARTRIP PATENTS

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