Apple to Pay Over $500 Million in Damages to 'Patent Troll"

The iPhone maker will shell out $502.6 million to VirnetX Holding Corp after eight years of fighting it in various court levels.
Shelby Rogers

After eight years of legal battles, VirnetX Holding Corp. won $502.6 million against Apple Inc. A fedeal jury in Texas ruled that the Steve Jobs-founded company would pay up for infringing patents for secure communications. 

The two groups have been embroiled in the courts since 2010. VirnetX Holding Corp. claimed that Apple infringed upon its patents directly related to internet-based communications. The case has gone back and forth between district courts, patent office, and Federal Circuit court in its eight years. There have been a number of trials between the two groups, and each trial dealt with yet another version of an Apple device. 

Kendall Larsen serves as CEO of VirnetX. Larsen told the media that the damages were "fair" and the ruling favorable. 

"The evidence was clear," Larsen said after the verdict was announced. "Tell the truth and you don’t have to worry about anything."

Apple's lawyers have declined to comment to the media and make a statement regarding the ruling. 

After the news broke, VirnetX's stock rose 44 percent on Tuesday. However, the celebration could be short-lived, as Bloomberg pointed out that the Patent Trial and Appeal Board has said that the patents in question are invalid. Those patents are currently being debated before the U.S. Court of Appeals for the Federal Circuit in Washington. 


VirnetX exists as a patent-assertion entity. Its entire business model hangs on being able to sue companies that really develop products and services based on very thin and outdated patent laws. Thus, it has been dubbed a patent "troll" by those familiar with the case. For example, VirnetX filed its suit in East Texas, a location where patent holders often have a better chance of winning in intellectual property cases until the Supreme Court started to change that last year. In 2015 alone, Marshall, Texas saw 2,500 patent cases of which 95 percent were initiateive by non-practicing entities like VirnetX. 

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"At any given moment, there are six to ten teams of lawyers staying in Marshall," according to frequent expert witness Nathaniel Polish. "There's a whole industry catering to the legal teams. They bring in a lot of money."

VirtnetX reported slightly over $1 million in revenue last year. However, with the hope of a win over Apple, investors have boosted stock in VirnetX by over 70 percent. 

Via: Bloomberg

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