Patent Troll Virnetx Beats Apple Again, Awarded $302M In Facetime Damages

from ars technica

An East Texas jury concluded late Friday that Apple must pay a patent troll $302.4 million in damages for infringing two patents connected to Apple’s FaceTime communication application.

The verdict is the third in the long-running case in which two earlier verdicts were overturned—one on appeal and the other by the Tyler, Texas federal judge presiding over the 6-year-long litigation.

The latest outcome is certain to renew the same legal arguments that were made in the earlier cases: Apple, for one, has maintained all along that the evidence doesn’t support infringement. VirnetX, as it did in the past and is now doing, is seeking more damages for what it says is “willful” infringement on Apple’s part. What’s more, in the previous litigation, the Nevada patent-holding company had asked the judge to shutter the Apple service at issue. Apple has maintained that such a demand was made “So that it can be used to extract a massive licensing fee.”

More here.

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6 Responses to Patent Troll Virnetx Beats Apple Again, Awarded $302M In Facetime Damages

  1. Edward Vestergaard October 7, 2016 at 8:55 pm #

    Over the past two centuries, the means by which the world communicates have been constantly changing. From letters delivered by couriers, to telegrams, to telephones, to emails, etc. etc.…staying in touch has gotten progressively simpler. Today, technology has afforded the opportunity to hold conversation through a tiny video camera. Popularized by Skype, the concept caught fire as millions downloaded the software- via computers- to test its effectiveness…and effective it was. Seriously, who wouldn’t appreciate the ability to see- in real time- a friend or family member and converse like he/she was physical there? Distance became irrelevant, for a simple click could connect users thousands of miles apart. As brilliant as Skype was, a major problem arose: a call could only be received if another user was online at the same time. Unlike a telephone which rings to signal an incoming call, Skype would only notify if one was signed in. Obviously, one cannot be signed in 24/7 so plans had to be pre-arranged to ensure both users were logged in simultaneously. Looking to capitalize on Skype’s flaw, Apple introduced FaceTime in 2010. Although identical in function, FaceTime was fashioned specifically for Apple’s flagship smartphone, the iPhone. Just like a standard call, owners could select a contact, push a virtual button, and wait for their video call to be received. On the other end, iPhone would respond with a buzz or ring, indicating a video call was pending. The feature was a smashing hit, as Android owners converted to iPhone for the sole reason to video-call via FaceTime. However, a recent suit alleges Apple violated two patents which holds “patent troll” VirnetX responsible for FaceTime’s communication application. Noted in the “504 patent” and “211 patent,” VirnetX legally had the rights to FaceTime, but Apple branded it as its own and profited tremendously off it. Seeking reparation for being screwed out of a licensing agreement, VirnetX filed for punitive damages. In an initial hearing, the jury concluded that Apple was liable for $625.6 million in damages, but US District Judge Robert Schroeder thought otherwise and ordered a new trial. The result, despite saving Apple hundreds of millions of dollars, was still a substantial sum to be paid over by the tech giant: $302.4 million. Currently, Apple holds its breath while it awaits VirnetX’s next move, for it may file may file for “willful infringement” and demand tens of millions more.

  2. Brent October 9, 2016 at 1:12 pm #

    Patent trolls like VirnetX are the reason businesses like Apple can not innovate as fast as they should be able to. Instead, they are held up in court paying $190 million plus worth of patent infringement that Apple probably never really committed. Patent trolls like VirnetX, a company that only has 12 employees, make all of their money sitting around waiting for someone to infringe on a vaguely worded patent they filed years before the technology was even around.
    VirnetX is also trying to get Apple to get rid of FaceTime and iMessage. VirnetX has zero use for any of these features since the company does not even make phones, so the question begs why are they trying to get rid of these features in the first place. They are, in a sense, attempting to push technology backwards instead of allowing Apple to keep innovating these features. That is the ultimate problem when it comes to patent trolls. They make innovation extremely hard for companies that actually want to better society.
    What’s worse than VirnetX claiming patent infringement on Apple and trying to stifle innovation is the fact the East Texas based judge sided with VirnetX to increase litigation. By doing this, the judge is not only encouraging patent trolls but also driving innovators and small businesses away because they may be afraid of getting sued for patent infringement.

  3. OEF October 17, 2016 at 12:15 am #

    Two patents, three cases, and six long years of litigation later, the legal dispute between Apple and Virnetx continues. Virnetx was awarded $302.4 million in damages through jury verdict, that was then overruled by the judge presiding over the six year litigation. The litigation is to continue, at a yet undisclosed time.

    Although six years seems a rather long time to continue the same dispute, it does make sense that Apple does not want to accept a verdict that declares the company to have infringed on Virntex patents. The two patents being disputed are related to Apple’s Facetime technology. An essential application that helps Apple differentiate its products, and has been incorporated in most of its product lines. If Apple allows an infringement verdict to stand, the company would have to pay damages, and then begin licensing these patents from Virntex.

    The potential consequences of that verdict would be an increase in product cost, which could result in negative effects on primary stakeholders. Apple is a large corporation, so perhaps in the short term the damages and licensing fee would not fee would not faze them. However, since the face-time technology is in most of its hardware products, in the long term the cost of licensing will become an issue. One that might be dealt with, by laying off some of its laborers, leading to a secondary effect in that community. Or perhaps it would result in raised costs for customers, whether to distributors, or directly to the end users. Although Apple’s competitive strategy is to provide high quality products and charge a high price, they too understand that there is a limit to what the market is willing to pay for their products. Therefore, it is important to manage costs that have the potential to alter its business activities in the long term.

  4. Joe Murdaco October 18, 2016 at 4:16 pm #

    Apple was recently in a dispute with VirnetX over a patent issue. Apple allegedly stole a patent from the communications company with their Facetime application. Facetime is a video communication app that allows users to see each other on the screen of the phone while also talking to them. This is similar to how Skype works on the computer. Apple lost the suit and will have to pay the company a whopping $302 million dollars for damages awarded by the courts. Apple and VirnetX will again go to court soon over $109 million worth of damages for other issues over patents. It is nice to see how such a powerful mogul like Apple is still susceptible to lawsuits. We usually see large fortune 500 companies settle lawsuits outside of court to keep the publicity off of them. However, this lawsuit was all over the news and Apple was taken down; multiple times in fact.
    I personally use Facetime daily to talk to family and my girlfriend and I am hoping that Apple is not forced to get rid of the app. The app, and video chatting in general, are a vital part of the business world. The capitalistic world that we live in now calls for everyone to be easily reached for any reason. It can be a matter of minutes that makes the difference between gaining and losing millions of dollars. Think about investing. What if your top advisors suggest you invest and buy thousands of stocks of a particular company but they cannot reach you to tell you? Or think about a grandmother that can’t get to the hospital to see her only daughter give birth to their only grandchild because they cannot catch a flight. How amazing would it be for both the boss of the company and grandmother to be able to see her grandchild in a matter of seconds by just pushing the call button? Technology is an incredible thing when it comes to situations like these. Now I do not have any opinions on the patent situation that this court case is about but I do think Facetime is an amazing invention. Whether it was invented by Apple or not, I do hope that nothing changes with the app.
    The question is whether or not Apple had “willfully infringed” on the patent meaning purposely used Facetime while they knew VirnetX had invented it. This would be very appalling to hear that a top country like Apple is taking another company’s product without remorse. We will see how that court case is resolved but it is important to remember that Apple had in fact infringed on the patents. The courts have to be careful when ruling on cases involving intellectual property and patents because it is a fairly new concept in the world. It is extremely important to protect patents. If the strength of a patent is lost in the courts, a lot of people would stop trying to invent things because their ideas would not be protected. I will be watching this case closely because Facetime is a product I regularly use.

  5. jaymie nieves November 1, 2016 at 5:07 pm #

    Apple should not have to pay for giving consumers what they want. Apple is constantly under the court of law due to infringement by other companies like VirnetX. VirnetX leaches off Apple by patenting a product which VirnetX does not provide. VirnetX is a small company with 20 employees that has been unsuccessful in its own software and depends on patent infringement to keep the company afloat. VirnetX purposely patent FaceTime and Imessage to sue Apple since Apple phones are known for those features. Since VirnetX technically own the rights to the product Apple has to pay $190 million dollars in patent infringement.
    The courts agreeing to this settlement not only supports the action of VirnetX but it punishes Apple for producing a product that satisfies its consumers. These legal implication limit the growth and development that apple can provide. Every time Apple produces a new phone VirtnetX sues for the use of their patent software that VirnetX cannot provide. VirnetX also want Apple to stop utilizing Imessaging and FaceTime to purposely stunt the growth of Apple.
    This case not only supports companies like VirnetX, it sets a bad example to other companies. It supports companies leaching off other companies’ success and it puts fear in new companies providing new products. People would be afraid of getting sued and it will stunt the progression of new products.

  6. Anthony Laverde April 27, 2017 at 3:39 pm #

    According to the U.S. Patent Office, there is currently about 1 million patent applications filed in the United States alone. (This includes design, utility, plant, and patent grants for foreign residents. These numbers include the same categories in the invention field. A patent is a form of protection that provides a person or legal entity exclusive rights for using, making or selling a concept or invention and excludes others from doing the same for the duration of the patent. Patents were created in 1790 in order to encourage innovation. They allow the executive rights to any form of intellectual property. This prevents others from stealing one’s intellectual property and benefiting from it or ruining its reputation. However, a patent only lasts for a certain period of time, usually 14 to 20 years, and then the patent is released to the public and free to use or duplicate by anybody. The two main types of patents are design patents and utility patents. Only an inventor of a product is allowed to file for a patent. (This even excludes financial investors if they had no part in the creation of the product) A patent must then pass 3 tests in order to be approved. These tests include:
    1. Utility Test
    2. Novelty Test
    3. “Unobviousness” test

    The utility test decides how useful the new product is to the real world. The Novelty test requires the invention to be new and innovative. Lastly, the “Unobviousness” test is a comparison of the new item to something similar to it. It is the most difficult test to pass, and in order to do so, the product must not be an obvious re-interpretation of another product. If all of the above listed requirements are met, then a filed patent can be approved, and one will have legal rights to their intellectual property.

    The emergence of millennial entrepreneurs in recent years have used domestic U.S. patents in order to reach the masses with their innovative startups. They are heavily relying on the use of patents, copyright, and trademarks in order to compete with big corporations. The driving force behind that is patents; they allow startups to demand market share when introducing an innovative product to the market, rather than quickly being squashed by huge companies with much more capitol. Millennials are disruptors, and mobile applications like Uber, Air BnB, and Facebook are examples of that. It is obvious that technology is what drives the world, and it will direct the future of business. This makes it extremely important to begin filing for technology and software patents, so that the new age of entrepreneurs can continue to disrupt the norm, and do so exclusively without fear of being unfairly targeted or abused by others. Despite being extremely hard to obtain, a patent truly is the epitome of a shield protecting one’s intellectual property, and it is up to the user of the patent or the creator of the product to use it effectively.

    The beauty of patents are they can be used to secure a form of intellectual property, and then license off their ideas to multiple companies and watch the money come in. This is basically how this company made so much money from Apple, and is the route many people go when deciding how to monetize a licensed product.

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