Apple Patent Loss Lurches Up To $439M In VirnetX Suit
Share us on: By Dave Simpson
Law360, New York (October 17, 2017, 8:30 PM EDT) -- A Texas federal judge tacked $137 million in fees and enhanced damages onto a $302 million verdict against Apple Inc. over claims it infringed VirnetX Inc.’s patents through Apple's FaceTime technology.
According to an order unsealed Friday, U.S. District Judge Robert W. Schroeder III increased the damages by $41.3 million, upping the per-device payout for a period during which Apple was found to have willfully infringed the patents. Prior to its trial win in September 2016, VirnetX had beaten Apple twice in court in disputes over the same patents, in November 2012 and February 2016. Both of those jury verdicts were later at least partially overturned. But Judge Schroeder said in the recently unsealed ruling that Apple had become aware of its infringement after the first verdict.
“The court finds that Apple willfully infringed VirnetX’s asserted patents through its continued sales of the accused products containing the infringing VPN on Demand and FaceTime features after the 2012 jury verdict that found the patents infringed and not invalid,” he wrote.
As a result, he increased the damages by 50 percent on units sold after the verdict, from $1.20 to $1.80 per unit.
Additionally, Judge Schroeder approved VirnetX’s request for $96 million in attorneys' fees and costs, citing Apple’s repeated attempts to stay the litigation.
Judge Schroeder said that conflict issues, which arose on the eve of the third trial, also made the case exceptional and justified the expanded attorneys’ fees — Apple hired a jury consultant for the third trial who, it turned out, had worked for VirnetX in the first trial.
Apple told the court that before hiring the consultant, the technology giant had received a statement that he had no conflicts.
“However, Apple’s failure to ensure that its consultant actually had no conflicts unnecessarily complicated the trial,” Judge Schroeder said in his unsealed ruling. “Further, Apple asked the court for several advisory opinions regarding either a potential mistrial or disqualification of counsel because of the conflict, all the while refusing to give VirnetX even basic discovery on the matter.”
Apple had also sought multiple advisory opinions on the possibility for conflict created by VirnetX’s appellate counsel joining Apple’s counsel’s firm, Judge Schroeder said.
“While the court finds nothing improper about VirnetX’s former appellate counsel joining Apple’s counsel’s firm, Apple’s haste in seeking advisory opinions, combined with its delay in providing VirnetX with the relevant facts, demonstrates a level of gamesmanship regarding conflicts it created that the court finds weighs in favor of a finding of an exceptional case,” he said.
VirnetX’s counsel Jason D. Cassady of Caldwell Cassady & Curry lauded his client as being made up of “good, decent people who invented groundbreaking technology."
“It's nice to see good things happen to good people, and we are grateful that the court fully affirmed the jury's verdict,” Cassady said in a release.
The case has a long and expensive history.
After the original, 2010 suit was remanded, Judge Schroeder consolidated it with a case filed in 2012, over Apple’s objections.
Later that year, a jury found that Apple had in fact infringed VirnetX's patents. That finding was partially vacated by the Federal Circuit, which tossed the jury’s $368 million damages award.
In February 2016, a jury again found in favor of VirnetX, this time awarding the patent-holding company $625 million. In July 2016, Judge Schroeder vacated that finding, saying it was unfair to Apple to combine two separate VirnetX suits alleging Apple infringed VirnetX network security patents into one trial. He split the suits and ordered a pair of new trials.
Judge Schroeder also said the jury could have been confused or influenced when at that trial VirnetX referred to the jury’s first infringement ruling in 2012.
In September 2016, after roughly three hours of deliberations, the latest jury found that VirnetX sufficiently showed that Apple’s FaceTime infringed the asserted claims of VirnetX’s U.S. Patent Nos. 7,418,504 and 7,921,211.
VirnetX is represented by Jason D. Cassady of Caldwell Cassady & Curry.
Apple is represented by Joseph A. Loy and Gregory S. Arovas of Kirkland Ellis LLP and Michael E. Jones of Potter Minton.
The case is VirnetX Inc. et al. v. Apple Inc., case number 6:10-cv-00417, in the U.S. District Court for the Eastern District of Texas.
--Additional reporting by Kelly Knaub. Editing by Edrienne Su.
