Apple Seeks to Cut VirnetX Patent Loss That Could Top $1 Billion


Apple Inc. said its financial penalty for infringing VirnetX Holdings Corp. patents could swell to more than $1 billion if a federal judge in Texas grants requests for additional interest and royalty payments on top of what juries in two separate cases have ordered the iPhone maker to pay.

VirnetX has asked U.S. District Judge Robert W. Schroeder III on to tack at least $116 million in interest onto the $503 million jurors awarded in October after concluding Apple infringed two patents related to secure communications in several iPhone, iPad and iPod Touch models.

Zephyr Cove, Nevada-based VirnetX also asked the judge to award 84 cents in royalties -- the rate determined by the jury -- on each infringing unit Apple sells in the future, including similar models that haven’t been included in the litigation so far. The royalty would apply to models in which Apple includes a virtual private network feature at issue in the litigation.

The October verdict was the second loss for Apple in a decade-long patent fight. In March, Apple paid VirnetX $454 million for a verdict Apple lost in earlier litigation.

Apple urged Schroeder to slash the jury’s October verdict by more than 75% to $113 million, arguing jurors should have been told that VirnetX’s two patents were invalidated by the U.S. Patent and Trademark Office. Apple also disagreed with VirnetX’s damages calculations and said the royalty on future sales should be just 19 cents per unit, if anything at all.

Schroeder told lawyers at a hearing conducted by video Thursday in Tyler, Texas, that he will issue a ruling “in the not-too-terribly-distant future.”

At the hearing, VirnetX lawyers repeatedly accused Apple of recycling arguments and attacking issues Schroeder or the jury had already decided. Apple’s attorneys countered that the company has a right to argue all legal points at its disposal to overturn a verdict that “overcompensates” VirnetX for patents federal regulators issued by mistake.

The case is VirnetX Inc. v. Apple Inc., 12-cv-855, U.S. District Court, Eastern District of Texas (Tyler).

©2020 Bloomberg L.P.

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