Guilty is the Verdict Against Apple
Apple (NASDAQ:AAPL) has been ordered by a federal jury to pay VirnetX Holding (AMEX:VHC) $368.2 million for violating the latter’s virtual-private-network patents with its FaceTime program. VirnetX stock jumped 31 percent after the result, its biggest intraday increase since March 2010, and was up more than 25 percent at $32.93 on Wednesday afternoon.
The jury in Tyler, Texas, ruled that Apple’s FaceTime video chatting function violated four VirnetX patents. Apple has insisted that it uses a different technology than covered by the patents. One point of contention had also been that the patented technology was created after work done by the firm SAIC (NYSE:SAI) for the U.S. Central Intelligence Agency. VirnetX was formed by former employees of SAIC and while the latter was named as a party in the complaint, it did not participate in the trial. VirnetX has said in regulatory filings that SAIC may be entitled to a share of the damages or settlement.
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“Apple does not owe money to VirnetX,” Apple lawyer Danny Williams told the jury, according to Bloomberg. “VirnetX is not entitled to money for things they did not invent. The VirnetX technology, if used, is a small part of very large, complex products.”
VirnetX, which reported $36,000 in royalty revenue from the patents in the first half of the year, had sought $708 million in damages in a case that received so much attention that U.S. District Judge Leonard Davis asked the two sides to ask their respective investors to stop calling the court. The firm had won a $200 million settlement from Microsoft (NASDAQ:MSFT) in 2010 over the same technology.
VirnetX has also filed a separate patent lawsuit against Apple with the U.S. International Trade Commission and has made additional claims against Cisco (NASDAQ:CSCO), Avaya, and Siemens Enterprise Communications (NYSE:SI).
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