U.S. Supreme Court Rejects Apple’s Appeal Against $440 Million in Damages to VirnetX

Feb 24, 2020
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The United States Supreme Court has rejected Apple’s appeal to not pay $440 million in damages to VirnetX Inc, as a result of a patent infringement case. VirnetX had sued Apple in 2010 for infringing its patents through technology used in FaceTime video calls, as well as VPN functionality in iOS.

Apple was originally slapped with damages of $302 million, which were raised to $439.7 million after the inclusion of interest and “other costs”. Later, in 2018, a federal jury in Texas awarded $502.6 million in damages to VirnetX. Through various appeals and rulings, the damages were reduced to $440 million again.

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In this latest turn of events, Apple had appealed to the Supreme Court last year, and requested the damages to be reduced. Apple’s reason was that parts of the patents held by VirnetX, which were the basis of the lawsuit, were deemed invalid by the United States Patent and Trademark Offices.

Bloomberg shared Apple’s stance on the matter:

There is no need or justification to require a defendant to pay massive damages for infringing patent claims that the PTO has decided should never have issued in the first place.

However, the Supreme Court decided to not entertain Apple’s appeal.

As per Reuters:

Apple in a court filing called the Federal Circuit’s refusal to entertain its demands “legally wrong and grossly unfair.” The company also said the lower courts impermissibly allowed VirnetX to request damages far beyond the value of the patented invention.

VirnetX responded in court with the following:

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“The entire damages award ... remains supported by claims that a jury - and the Federal Circuit - found valid years ago and that have not been canceled since.”

Although VirnetX is on the verge of receiving a hefty amount in damages from Apple, the company posts less than $2 million in annual revenue. VirnetX’ business model revolves around holding patents and suing companies to make money. Also known as a patent troll, VirnetX previously sued and received $200 million in damages from Microsoft.

In another case, revolving around the same patents but newer Apple products, VirnetX was awarded $503 million in damages. The Federal court ordered a new trial on that case as Apple’s new devices did not infringe on VirnetX’ patents.

Keen observers would remember that Apple had originally announced during iPhone 4 launch event that FaceTime would be converted into an open standard. VirnetX is the reason that Apple could not go down that path and had to rewrite FaceTime to avoid infringing patents.

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