As per the latest jury verdict, Apple Inc. will pay VirnetX Holding Corp. $502.8 million in royalties over the issue of patents for secure communications. The verdict was reached in 90 minutes by the jury in Tyler, Texas.
Apple will pay VirnetX $502.8 million in royalties for VPN on Demand after a jury verdict
The jury was asked to decide how much the iPhone maker owes VirnetX in royalties for VPN on Demand. It is a feature that enables users to access virtual private networks. The infringement finding regarding the VPN on Demand was upheld by an appeals court.
Both Apple and VirnetX were involved in litigation for a decade. VirnetX claimed that its inventions were based on the technology it developed for the US Central Intelligence Agency. It further stated that both VPN on Demand and Apple’s Facetime features were utilizing its inventions.
Apple Inc. disappointed with the verdict and will appeal
The company had told the jury that it was entitled to an amount close to $700 million. The iPhone giant countered this claim saying that it owed about $113 million, also saying that the royalty rate should not be more than 19 cents per unit. The jury agreed on 84 cents per unit.
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An Apple spokesperson said that they are disappointed with the verdict and will appeal on the same. He further added that the case is going on for a decade and, the patents are unrelated to the core operation of their products, having found invalid by the patent office. Post the verdict, shares of VirnetX rose by 21.8% in after-hours trading and were at $6.64 in New York at 7:46 pm.
Before Apple’s settlement, VirnetX also bagged a $200 million settlement from Microsoft Corp.
Apple has previously paid VirnetX close to $454 million due to a verdict on an earlier version of the features. This trial was regarding a different case with the latest versions of VPN on Demand. The trial was conducted after an appeals court removed part of the infringement finding, saying that the iPhone giant had redesigned its FaceTime feature to prevent VirnetX patents. Hence, the $503 million damages given in the case were recalculated.
VirnetX is presently relying on royalties for its revenue since its Gabriel software has not gained the required traction. Before the Apple judgment, it secured a $200 million settlement from Microsoft Corp. in 2010.
The company is also refuting allegations that Chief Executive Officer Kendall Larsen’s family is responsible for a fifth of the company’s 21 employees. As per a complaint pending in Delaware Chancery Court, the company is troubled by nepotism, waste, and failures from corporate governance.
