Federal Judge Upholds $368 Million Patent Infringement Verdict Against Apple, Inc.

Federal Judge Upholds $368 Million Patent Infringement Verdict Against Apple, Inc.

On Tuesday, Feb. 26, 2013, Texas Federal District Judge Leonard Davis denied Apple, Inc.'s motion for post-trial relief from a substantial verdict that had been awarded to plaintiff VirnetX in November of 2012 (VirnetX, Inc. v. Cisco Systems, Inc., et al., No. 6:12-cv-00855-LED; 6:10-cv-00417-LED, E.D. Texas).

The suit, which was filed in the Eastern District of Texas in August of 2010, involved a number of infringement claims relating to VirnetX's patents for virtual private network (VPN) technology. VirnetX claimed that several companies, including Cisco Systems, Inc. and Apple Inc., infringed on the claims. Judge Davis had granted the motion for separate trials against the Apple and Cisco defendants, with the claims against Apple going to trial in October of 2012 and the claims against Cisco going to trial in March of 2013.

During the trial of the claims against Apple, Inc., VirnetX maintained that Apple's VPN On Demand and FaceTime features infringed on the VirnetX patents. Both of the Apple products featured secure communications, with FaceTime providing a secure communication link for users when video-chatting and the On Demand product creating VPN when a user requested access to a secure website or server. The trial focused on FaceTime functionality and/or iMessage functionality that were provided on Apple iPhones, iPads and iPods. On Nov. 6, 2012, the jury reached a verdict in favor of VirnetX, finding that the claims were not invalid and that the patents had been infringed. The jury awarded VirnetX damages of $ 368.16 million. 2012 Jury Verdicts LEXIS 16023.

In ruling on the post-trial motions, Judge Davis upheld the jury's findings of infringement, refusing to vacate or reduce the award. In addition, he ordered Apple to pay pre-and post-judgment interest. Interestingly, he denied VirnetX's motion for injunctive relief, balancing hardship against public interest and finding that an injunction would not only harm Apple, but that it would also harm Apple's customers and other third parties.

The claims against Cisco remain pending, and the VirnetX VPN patents continue to be the subject of litigation. A recent Law360 article stated that VirnetX immediately filed a new lawsuit against Apple in the wake of the November verdict, claiming that the latest versions of Apple's devices - like the iPhone 5 and iPad 4 - infringed the same four patents. Moreover, before VirnetX filed the VPN patent infringement actions against Cisco and Apple, it had filed a 2007 suit against Microsoft. 2010 Jury Verdicts LEXIS 9496, 1 Exp. Wit. 149091. At the conclusion of that trial, also presided over by Judge Davis, the jury awarded VirnetX over $34 million against Microsoft. The claims in that suit focused on allegations that VirnetX's VPN patents were infringed by a variety of Microsoft products, including Windows Server 2003, Windows XP, Windows Vista, Live Communication Server, Windows Messenger, Microsoft Office Communicator, Microsoft Office suites and related applications (such as Word, Excel, and Outlook). In the Microsoft case, however, the parties subsequently resolved the dispute, and on June 1, 2010, the action was dismissed by stipulation. 

For other recent cases involving Apple, Inc., see 2013 Jury Verdicts LEXIS 1515 (Settlement of California Federal Class Action Brought by Parents of Children Who Paid for Downloaded Apps), 2012 Jury Verdicts LEXIS 11700, 1 Exp. Wit. 257657 ($ 1.05 Billion Award to Apple in California Infringement Action Against Samsung), 2012 Jury Verdicts LEXIS 4179 (DOJ Settlement in New York Federal Suit for Alleged Conspiracy to Price-Fix E-book Prices), 2012 Jury Verdicts LEXIS 2036 (Preliminary Approval of California Class Action Brought by Apple iPhone 4 Users)

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