VirnetX Holding Corp (VHC)

[solarity]

Not my comment but an excellent summary of recent developments by an astute observer of VHC.

"For Apple, a settlement enables negotiation, while it still has some semblance of leverage, of a one time payment granting a worldwide, pre-paid license to VHC's patents booked as an extraordinary item.

If Apple chooses not to settle, it will pay (via Apple 4) a court mandated $1.20 per unit ongoing cash payment on US iPhone revenues; that will fall to the COGS line, and a reduction in gross margin will have a much, much greater impact on Apple's market cap than a discounted aggregation of that payment stream booked as a one time extraordinary item.

If Apple chooses not to settle, the company will certainly use Apple's initial Apple 3 payment to fund litigation against Apple in Europe (Germany), Japan, etc. for patent infringement. Some of those markets issue injunctions first and ask questions later.

If Apple, per your suggestion, waits until Apple 4 is Rule 36'd to phone Zephyr Cove, VirnetX has every incentive to flash the big middle finger and take the actions above. Apple has more leverage today than it will after Apple 3 is denied en banc, when it will have more leverage than it will after Apple 4 is heard, when it will have more leverage than it will when writ is denied or Apple 4 is Rule 36d (which ever comes first), etc. You may think the IPR's remain a factor, for all the reasons discussed ad nauseum on this board over the last couple of weeks, I don't, and I doubt that Apple does either.

As for other infringers, if they don't settle on reasonable terms, VHC will sue for willful infringement. Validity will be established, infringement will be obvious, and damages will certainly include a step up for willfulness.

The infringers, including Apple, played a much longer game than they could have wished for initially. They lost. It's over. Time to pay up."