Apple Ordered to Pay VirnetX Another $502.8 Million for Patent Infringement

[cmaier]

You missed out some important steps you should undertake when creating a product, e.g. check that someone else has not invented something like you're doing first, just in case you might be infringing on their IP.

Apple clearly didn't do that step, or chose to ignore their findings if they did undertake it [or perhaps they just took it; wouldn't be the first time]. For the record Apple acknowledge infringment and the only argument has been what were reasonable royalties for the use of someone's else property.

As for why a jury gets to decide, well because both parties must have accepted that would be the mechanism and of course the jury would have been guided by the judge as to the limitations of their authority on the matter.

As hard as it appears for you to accept, the legal system works when you win and you lose; every case has one of each!

Almost no business checks for patents first. There are more than 10 million issued patents in the US. Many millions more world wide. Even putting aside expired patents, there are millions. And each patent can have dozens of different claims. It would easily cost millions of dollars to do an analysis of every patent that could have something to do with technology found in a product like the iPhone. And the end result would be six dozen patents that look pretty relevant. Then you’d have to determine whether the patents are valid (the ones in the virnetx case turned out not to be, by the way) which means you search for prior art which costs a lot more money. And outside lawyers then perform the analysis and draft formal opinion letters, which cost fifty thousand dollars per patent.

And if your lawyers tell you the patent that looked scary really isn’t a problem because it requires round corners, and you have diagonal corners, but a jury decides otherwise, then you now may have to pay triple monetary damages because you were already aware of the patent.

This process simply isn’t done. It would be insanity.

I mean, go to google.patents.com and try to tell me if the things you do all day infringe any patents. I guarantee you that you are infringing patents every day just by USING your devices, using the internet, etc. (The law says that you are infringing if you merely USE an infringing device).

 

[shplock]

I agree with most of your post, but why call VirnetX “vultures?” They didn’t buy this patent from anyone; it is their own invention and this case has been going on for more than 10 years probably before “troll” was in language.

When companies collapse, their IP can be a very valuable asset to their creditors and so are sold on to settle outstanding debts. Usually, these patents are mopped up by their competitors and sometimes by companies who see an unrelated value, but nevertheless value. Much of Apples value is in their unrealised ideas, that is their IP stream of ideas that may or may not find their way into their future products. Apple mops up plenty smaller companies to acquire their IP rather than for what they doing now. Just because a “patent troll” (or by definition someone who has the audacity to sue and win against Apple) doesn’t build phones or cars and buys up “ideas” doesn’t make their reasons for doing so, any less legitimate than Apples’

Yes it does. That is why Apple make stuff and Virnetx do not.

 

[shplock]

You missed out some important steps you should undertake when creating a product, e.g. check that someone else has not invented something like you're doing first, just in case you might be infringing on their IP.

Apple clearly didn't do that step, or chose to ignore their findings if they did undertake it [or perhaps they just took it; wouldn't be the first time]. For the record Apple acknowledge infringment and the only argument has been what were reasonable royalties for the use of someone's else property.

As for why a jury gets to decide, well because both parties must have accepted that would be the mechanism and of course the jury would have been guided by the judge as to the limitations of their authority on the matter.

As hard as it appears for you to accept, the legal system works when you win and you lose; every case has one of each!

You missed the point where you mention that you can check for previous patents but that is not as easy as you stupidly think it is. I should know because my dad sued a guy for patent infringement and when my dad took out his patent he checked for previous patents but that did not stop the guy who infringed on my dad's work from showing my dad's patent infringed on previous patents.
The problem is that many patent are written in such vague language it is impossible to tell if your patent infringes on it or not.

 

[shplock]

Robert Kearns thought up the wiper delay and approached the big three, they all refused to buy or licence the IDEA, but then fitted it anyway, they stole his IDEA, he was not a patent troll. IP is intellectual property - it's an IDEA, not a THING.

In my career I've worked alot with the Chinese, they don't believe in IP they believe they can steal any IDEA and just use it without paying, which is now coming to bite them in the arse, because after years of copying they are starting to innovate and now they are starting to understand that ideas have value, the time taken to initially see the problem, the time taken to frame the problem, the time taken to come up with a working solution to the problem, now of course they want their ideas protected !!!

The problem is inventors need to paid so they keep inventing to make other peoples lives better, because without them we'd still be sleeping in a cave, wearing animal skins and hunting your food with a spear - and living to about 30.

Patents and inventions have quite a lot in common with the music industry, both systems clearly have problems, but the world would be a poorer place without either.

Ultimately there are rules and Apple knowing broke them, so now it's time to pay the fine.

Inventors need to b paid but not patent trolls who are basically scum and thieves.

 

[Ramchi]

The penalty is greater than the market cap of VirtnetX as of the closing bell on Friday (393.66M). Apple should have just bought VirtnetX.

It is sort of 30% cut Apple takes for hosting chargeable Apps in their platform. If the App is worth $1 and as per the reports the number of active iPhones being 1 billion, it could argue that Apple has to pay 70% of the money ($700 millions) but the court has charged apparently lesser than that. The company lost its opportunity to monetise the infringed tech. Market value has no meaning here.

 

[shplock]

If it is okay to steal from companies that don't make products, why does Apple pay money to use ARM-technology.

BTW, does Apple *make* products. As far as I know Apple designs and sells products, which are made by other companies somewhere in China.

It's ok to hold companies to ransom simply because you refuse to produce a product or do any actual work ?

 

[shplock]

The law should prevent that happening. Having to buy your competitor for less than the value of the penalty after fleecing their property is not a deterrent for bad behaviour.

The law should stop patent trolls like Virnetx from existing.

 

[shplock]

Hard to objectively determine that someone is a patent troll.



VirnetX doesn't really have products of their own. Their main business is in patent litigation. Ergo, they're a patent troll.

Yes you can, it is easy. Virnetx are patent trolls. fixed it for you.

 

[I7guy]

It is sort of 30% cut Apple takes for hosting chargeable Apps in their platform. If the App is worth $1 and as per the reports the number of active iPhones being 1 billion, it could argue that Apple has to pay 70% of the money ($700 millions) but the court has charged apparently lesser than that. The company lost its opportunity to monetise the infringed tech. Market value has no meaning here.

How is that again?

 

[shplock]

What goes around comes around.

I will remember that when Virnetx (your bioss?) gets it's punishment

 

[Carnegie]

Ahhh, no. They simply wanted out of a stupid case. I'm pretty sure the settlement wouldn't have said they did violate a patent. And This sh**ball company doesn't do untying but shakedown other companies. The company needs to be stopped and the folks making all the money from this should be held accountable.

I'm not aware that Apple ever offered to settle this case, at least not before it was found to have infringed certain patents.

What some might be referring to is Apple arguing that a lower damages award was justified. After Apple was found to have infringed two of the patents, and those findings were upheld by the Federal Circuit, the damages amount had to be reconsidered. That's because the Federal Circuit overruled the finding that Apple had infringed two other patents which the original damages award had been based on.

So for purposes of this new damages trial, Apple had to effectively accept that it was guilty of infringement. (Though, it still disputed that on the basis of the two remaining patents having been invalidated by the PTAB.) What Apple was left to argue was that the damages award should be considerably lower.

 

[Nuno Lopes]

When Steve Jobs announced FaceTime on stage he said it would be open source. ...and then VirnetX came along.

Unfortunately SJ is not here anymore and I believe that with him, today the company products would be more connected rather than ”disconnected” with a paywall charging for connection.

In an sense, Apple is becoming a threat to interconnected computing using fear based marketing strategy around privacy and security. Much like MS once was until it got hit by regulators. An event that allowed Apple and others to emerge years later into a more dynamic and innovative marketplace.

As far as Patents go VirnetX is just doing what Apple also does when it comes to protecting their property. Actually Apple can be far more aggressive suing companies due to its name, say Prepear.

Apple Sues Small Business With Pear Logo Because 'People Can Get Confused' | Entrepreneur

Users are furious at Apple's attitude toward the five-employee company.

www.entrepreneur.com

 

[Carnegie]

All this mess started when Einstein decided to become a scientist rather than do a real job.

Ha! No doubt.

 

[Carnegie]

I agree with most of your post, but why call VirnetX “vultures?” They didn’t buy this patent from anyone; it is their own invention and this case has been going on for more than 10 years probably before “troll” was in language.

When companies collapse, their IP can be a very valuable asset to their creditors and so are sold on to settle outstanding debts. Usually, these patents are mopped up by their competitors and sometimes by companies who see an unrelated value, but nevertheless value. Much of Apples value is in their unrealised ideas, that is their IP stream of ideas that may or may not find their way into their future products. Apple mops up plenty smaller companies to acquire their IP rather than for what they doing now. Just because a “patent troll” (or by definition someone who has the audacity to sue and win against Apple) doesn’t build phones or cars and buys up “ideas” doesn’t make their reasons for doing so, any less legitimate than Apples’

I don't know that I'd refer to VirnetX as a troll in this context. But it didn't originally own these patents. They were originally assigned to, or applied for by, SAIC. VirnetX gained the right to sue (or otherwise seek compensation) based on them through a licensing and assignment agreement with SAIC.

 

[Carnegie]

So three of the four patents at issue have been invalidated, but Apple still has to pay up front because that invalidation is challenged -- and thus it could take years for a final decision to be made. And in the last appeals court, Apple couldn't argue that the patents at issue were invalidated, because it has been Apple's legal argument from day one that these patents should never have been issued in the first place. The court of appeals ruled that while the patents may have been invalidated, that argument can't be made in this case anymore, because such claims failed in earlier cases. So it doesn't matter if the actual patents have been invalidated since, Apple simply can't make the case anymore. Weird.

Or maybe I am not understanding the case. Anyway, it is a mess, and in the end, and Apple may finally be 80% right. So FaceTime could arguably have been an open standard thing.

The procedural histories in these VirnetX cases are complicated. A lot of things have happened.

But relating to this case (which involves Apple's redesigned VPN on Demand and involved Apple's redesigned FaceTime), Apple was originally found to have infringed 4 patents. The Federal Circuit overruled the finding of infringement for two of those patents. This judgment is based on the two remaining patents. But those patents (i.e. all of the relevant claims) have been invalidated by the PTAB in a decision that is not yet final - i.e., the Federal Circuit (or, in theory, the Supreme Court) hasn't ruled on it yet.

When it comes to the two patents for which the Federal Circuit overruled the infringement finding (in this case), there are final decisions (from the PTAB and Federal Circuit) which invalidate most of the patent claims. That doesn't matter for this case because Apple wasn't ultimately found to have infringed those patents.

The situation is somewhat different when it comes to the earlier VirnetX-Apple case. That one related to versions of Apple's VPN on Demand and FaceTime from before the redesigns.

 

[Carnegie]

It’s definitely weird for a jury of laypeople to determine damages. It’s like a jury deciding sentences, which in the US they don’t. We have judges for that. And it’s why these awards often later get reduced, sometimes dramatically.

Yeah, I understand the sentiment. But the proper damages in a situation like this is a question of fact which the parties have a constitutional right to have a jury decide.

 

[Carnegie]

Correct. Whoever disagrees with your statement needs to do some research.

FaceTime was originally going to be open. However due to changes in which Apple needed to proxy/establish the connection (to work around the infringement), they decided to limit this off to Apple devices.

Yeah, Apple made some changes to how VPN on Demand and FaceTime worked in response to the earlier case (or the possibility of infringement).

But, to be clear, the judgment in this case doesn't relate to FaceTime. It is only based on (the redesigned) VPN on Demand. The Federal Circuit ruled, in effect, that the redesigned FaceTime didn't violate VirnetX's patents.

 

[Carnegie]

You may not have been paying attention, but this whole thing has been answered. It may not be the answer you want it to be, but it has been emphatically answered on multiple occasions. The courts have sided with VirnetX over and over. If you're genuinely curious about the case, and not just rhetorically "needing answers", there's ample information about the cases and conclusions. All right on the cyber.

Apple has had its share of legal defeats in these VirnetX cases. But it's also had its share of victories, both when it comes to the infringement cases and the PTAB invalidations.

In this case, e.g., the Federal Circuit overruled the infringement findings for two of the patents-in-suit. That resulted in a lowered per-unit damages award, i.e. the award referred to in the OP.

The total of this new damages award is about the same as the previous damages award it's replacing. But that's only because the number of units considered is much larger because this award came later. With the previous award, Apple most likely would have ended up having to pay damages based on those later devices anyway - they're just incorporated in the base jury award this time around. But the per-device rate, and what Apple will eventually end up paying (if it does, but there's still an invalidation issue that could factor in) is lower.

It's worth noting that claims from all four of the patents which Apple was found to have infringed - in this case and the earlier one - have now been invalidated.

 

[Carnegie]

Except that Virnetx now own ALL the rights to the patent and not any previous owners. Virnetx keep all the money and nt a single cent goes anywhere else to any previous owners. That is reality and how it works.

Virnetx are the current owners and thus get all of any payments.

That's how it would work in some situations. But that's not how it works in this situation.

The licensing and assignment agreement which VirnetX entered into with SAIC (later Leidos) entitled Leidos to a portion of what's recovered - through, e.g., settlements or judgments - from infringement actions based on the related IP. The terms are laid out generally in, e.g., VirnetX's 10-Ks and in more detail in the licensing and assignment agreement itself.

 

[Carnegie]

They run a yearly loss of about $20 - 30 million (https://www.marketwatch.com/investing/stock/vhc/financials). In 2019 they had $85,000 in revenue, which was down from their $1.5 million in 2015.

All evidence suggests they are a patent troll (they also might be a business that exists to generate consistent losses to reduce tax burdens).

Yeah, my big picture recollection from having looked at their 10-Ks some time ago is this...

VirnetX had some decent sized settlement or licensing agreements years ago, or at least one such agreement with Microsoft. Since then, it had been using the funds it netted from such agreements to fund its legal battles with Apple and maybe a little R&D which hadn't, at least at that point, led to much ongoing revenue. It was slowly burning through the money it had from those prior agreements (and other sources) and all that was really left of value were its prospects for judgments from (or settlements with) Apple.

 

[monster620ie]

you steal, you pay for it!

 

[ani4ani]

You missed the point where you mention that you can check for previous patents but that is not as easy as you stupidly think it is. I should know because my dad sued a guy for patent infringement and when my dad took out his patent he checked for previous patents but that did not stop the guy who infringed on my dad's work from showing my dad's patent infringed on previous patents.
The problem is that many patent are written in such vague language it is impossible to tell if your patent infringes on it or not.

It's not stupid and stop talking about things you clearly are clueless about. When you have an idea, the first thing a responsible company would do is set out to see if it can be protected, be it be with patents, trademarks or copyright etc [or they should be doing that]; part of that process is look for the absence of prior art; yes the language is ambigious in patents, intentionally to get as wider coverage of the claims as they can try to imagine / getaway with. Yes, a one man band and small businesses struggle with this stuff and can choose to take the risk; only time will tell in those circumstances if they end up being granted a patent, that remains valid and can stand up to expert scrutiny or face a desist instruction.

A responsible company will employ experts to see if they infringe, again some cannot afford those experts.

Ultimately Apple is not this little underdog who can't afford these things and absolutely 100% should be responsibily challenging their inventors to demonstrate true invention. For Apple to get stuff like this wrong, can cost $billions.

They will have 100's of patent lawyers scouring for prior art everyday, trying to acquire patents or invalidating existing patents.

They'll have litigation lawyers who will also weighing up the cost of infringment and whether or not infringment is likely to cost less than a royalty; Apple will be making these types of decision every day.

 

[MaxinMusicCity]

It's no coincidence that they never "violate" the patents of a company that actually makes products. I'm not saying holding a patent requires using it, but at some point it gets suspicious when there are so many companies whose only income is lawsuits, always against tech giants, always in Texas courts.

And besides, you really think Apple, MSFT, and Cisco need to steal technology to develop basic software?

Deleted

 

[jz0309]

No, that is not what is being discussed. Virnextx can not get away with patent trolling and not working for a living, instead wanting to leech of other people's work.

wrong, like the law or not, they are within their rights ...
I don't like it either, but ...

 

[jz0309]

Different tis that Apple tends to use most of the stuff they patent whereas Virnetx and others like them Never use a dam thing!

most, but not all ... and take a look at Qualcomm ... and a lot of others ...
again, the current law is what it is and everyone has to follow it until it is changed, end of story