Apple loses $626 million lawsuit over multiple patent violations

Apple Inc. is now required to pay the VirnetX Holding Corporation over $600 million for patent infringements.

A Texas Federal court ruled during a retrial this year that the tech-giant illegally used VirnetX’s technology in its popular FaceTime video chat service and virtual private networks’ on-demand services. The trial marks one of the largest patent infringement awards in Texas history.

The VirnetX Holding Corporation is a publicly-traded Internet software security and technology company with headquarters in Zephyr Cove, Nevada.

Recognized for its 4G LTE security as well as real-time communication applications, VirnetX boasts a secure platform of communication across all types of media devices, including but not limited to instant messaging, smart phones, eReaders, tablets, etc.

All of these technologies are not sold by VirnetX but are held in the form of patents. VirtnetX is considered by many to be a “troll” company, or a company that generates its revenue not by selling products but through litigation.

The company holds over 80 Internet security international patents and has 100 pending as of January 2016.

The charges brought against Apple are not new to the Cupertino-based company. Apple has had unresolved relations with VirnetX since 2012, when the latter first accused the company of violating four of its patents.

These patents involve: Facetime, iMessage and other Apple software. In 2012, a jury first found Apple guilty of violating patents and ordered that the company pay VirnetX $368 million.

Apple appealed and subsequently won the case after VirnetX failed to prove that consumers were buying Apple products because of VirnetX-specific software. The lack of evidence cost them the case, and Apple was acquitted.

The charges resurfaced, after an East Texas court was ordered to review the case. In turn, a retrial was ordered. After several intense weeks of deliberation, three years since VirnetX faced Apple in the original lawsuit between the companies, the Texas jury reached a decision. The lawfirm Caldwell Cassady is accredited with winning a $533 million settlement against Apple in March 2015 in the same court, as well as a 2012 case.

The verdict includes $290.7 million worth of royalties awarded to VirnetX based on the earlier patent infringement against Apple.

The jury found that Apple’s modified VPN On-Demand, iMessage and FaceTime services infringed VirnetX’s patents and that Apple’s infringement was not accidental, bur rather “willful.” According to sources, Apple, despite knowing of the patents, used the technology in its iPhone and iPad devices and in some desktop computers.

For these reasons, Robert Schroeder, a district judge, increased the award by three times much as the initial case.

VirnetX attorney Brad Caldwell, of the firm Caldwell Cassady, represented VirtnetX in the case.  After VirnetX’s success, he released the following, “We are very happy for VirnetX. Its employees are our friends,” He added, “We have enjoyed watching the development of [Virtnetx’s] products and their technologies over the years.

My friends and I have been blessed to represent them for around seven years, and we are proud to have helped them get to this day.”

After the ruling, Apple filed a motion for mistrial, which was subsequently denied, according to court documentation.

Apple released the following statement: “We are surprised and disappointed by the verdict and we’re going to appeal. Our employees independently designed this technology over many years, and we received patents to protect this intellectual property. All four of VirnetX’s patents have been found invalid by the patent office. Cases like this simply reinforce the desperate need for patent reform.”

Within a day after the ruling, shares in the VirnetX company stock soared 47 percent.

They have since nearly doubled in price, from $3.69 before the case to almost $7 as of Feb. 10th. The price is expected to drop back down as the news of the verdict looses steam.

Kendall Larsen, VirnetX CEO and president, said in a press release after the verdict, “We are extremely pleased with the jury verdict. The jury agreed once again that Apple has been using the technology developed by our inventors.”

Apple has filed for a mistrial following the verdict. The motion is currently pending.

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