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Apple To Pay $368 Million For FaceTime Violation

November 7, 2012
Image Credit: Apple

Michael Harper for redOrbit.com — Your Universe Online

While most Americans were busy keeping up-to-date with last night´s elections, an East Texas court was handing down a ruling in the lawsuit between Apple and VirnetX over patents relating to “secure communications”: More specifically, the use of FaceTime.

VirnetX brought the suit against Apple and others (Aastra, Cisco and NEC) in August in a Tyler, Texas court over 4 different patents and sought damages and injunctive relief.

Last night, the Tyler court ruled that Apple had infringed upon VirnetX´s patents and would therefore have to pay $368.2 million to the company. While $368.2 million isn´t a small sum, it´s a small sum to pay for a company who has $123.1 billion of on-hand cash. This reward is also nearly half what VirnetX was originally seeking from the case. They are also still trying to bring a ban on all infringing Apple devices, including every iPhone model and the iPad 1 and 2.

Apple has yet to make a comment on the case, and they still have a right to appeal the decision.

According to VirnetX, Apple´s FaceTime and iMessage services violate their patents which involve establishing a secure communications link. The company also held that Apple should have paid them a licensing fee before using the technology in their Macs, music players, tablets and smartphones.

As a result of this ruling, shares in VirnetX have risen by as much as 23%, according to Bloomberg, the largest intraday increase in nearly 3 years.

“This victory further establishes the importance of our patent portfolio,” said CEO of VirnetX Kendall Larsen in a statement.

According to the BBC, this isn´t the first time VirnetX has won a patent trial against a very large computer company. Previously, VirnetX was able to emerge victorious from a suit against Microsoft over their use of similar patents.

“Apple says they don’t infringe, but Apple developers testified that they didn’t pay any attention to anyone’s patents when developing their system,” explained a lawyer for VirnetX, according to the BBC.

This ruling could also help the company as they seek to have Apple products banned in the States for their alleged violation of these patents.

While Apple has yet to announce an appeal of this decision, one of their lawyers based in Houston, TX has given some pretty strong words during the case.

“Apple does not owe money to VirnetX,” stated Danny Williams, a partner with Williams, Morgan & Amerson, speaking to the jury during the case. “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.”

According to some news sites, however, VirnetX is nothing more than a patent troll who happened to get lucky. VirnetX describes themselves as a holding company, saying: “Our portfolio of intellectual property is the foundation of our business model.”

The company only reported $36,000 in revenue last year from their 45 patents.

The Mac Observer also points out that the East Texas courts are often chosen for these kinds of lawsuits as they often rule in favor of the smaller company and move the cases through quickly.


Source: Michael Harper for redOrbit.com – Your Universe Online



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