IP Law Daily In patent damages retrial over VirnetX security tech, jury bites Apple for $502.8M award
Monday, November 2, 2020

In patent damages retrial over VirnetX security tech, jury bites Apple for $502.8M award

By Thomas Long, J.D.

A previous $502.6 million award was vacated by the Federal Circuit in November 2019 after it held that two of four VirnetX patents-in-suit were not infringed by Apple’s FaceTime.

A jury in the federal district court in Tyler, Texas, issued a verdict on October 30 of nearly $503 million in favor of Internet security software and technology company VirnetX Holding Corporation against Apple, for Apple’s infringement two of VirnetX’s network security patents in Apple’s VPN on Demand and FaceTime features. The jury verdict form specified damages of $0.84 per accused device sold since the 2013 launch of Apple's iOS 7 operating system. The damages figure represents 598,629,580 infringing units from U.S. sales only. On March 13, 2020, VirnetX was awarded a judgment of over $454 million in a separate case against Apple over earlier versions of the accused features.

The patents-in-suit were U.S. Patent Nos. 6,502,135, titled "Agile network protocol for secure communications with assured system availability," and 7,490,151, titled "Establishment of a secure communication link based on a domain name service (DNS) request." The patents disclosed improvements in techniques for securely and privately transmitting communications over public networks. In July 2019, the U.S. Court of Appeals for the Federal Circuit reinstated the validity of the patents after determining that the Patent Trial and Appeal Board made a number of errors in its determination that the patents were invalid in light of prior art.

In November 2019, the Federal Circuit vacated a $502.6 million damages award granted to VirnetX in the case, after it affirmed the district court’s judgment of infringement as to the ’135 and ’151 patents but reversed as to two others. The Federal Circuit held that, under the proper claim construction, a reasonable jury could not conclude that FaceTime was a "domain name service system" as required to infringe two of the patents-in-suit, because FaceTime did not return an IP address to the caller device. Therefore, Apple was entitled to judgment as a matter of law with respect to those patents, and the Federal Circuit reversed the district court’s decision to the contrary. The district court’s judgment of infringement with respect to the other two patents was affirmed because the record contained substantial evidence that the redesigned version of VPN on Demand performed every step of the methods claimed in the asserted claims. In light of its partial reversal on infringement, the appellate court vacated the damages award and remanded to the district court, which held a new trial limited to damages, leading to the current verdict of $502,848,847.20.

"We are very pleased with the jury's verdict," said Kendall Larsen, VirnetX CEO and President. "Once again the value of our technology has been upheld in a court of law. We are grateful to the jury for their attention, diligence and commitment during these challenging times."

Apple reportedly plans to appeal. "This case has been going on for over a decade, with patents that are unrelated to the core operations of our products and have been found to be invalid by the patent office," said an Apple spokesperson. "Cases like this only serve to stifle innovation and harm consumers."

The case is VirnetX Inc. v. Apple Inc., N.D. Tex., No. 6:12-CV-00855.

Attorneys: Bradley Wayne Caldwell (Caldwell Cassady & Curry P.C.) for VirnetX, Inc. Michael E. Jones (Potter Minton A Professional Corp) for Apple Inc.

Companies: VirnetX, Inc.; Apple Inc.

MainStory: TopStory Patent TechnologyInternet GCNNews TexasNews

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