Apple was handed a rare defeat in a patent case today, with virtual private network (VPN) company VirnetX granted a $625.6 million verdict in the FaceTime patent damages retrial. While the attorneys for VirnetX claim that this is the second time a federal jury has found Apple liable for infringing patented technology, the hearing was not about finding infringement for the devices in the first trial, but determining what damages VirnetX should be paid for Apple's continued unlicensed use of the company's technology.
By the time the company sued Apple in 2011, it was already able to successfully reach a
$200 million settlement with Microsoft. In addition to Apple and Microsoft, VirtnetX also targeted Cisco, Avaya and Siemens
with little success. This week-long trial focused on FaceTime itself, and did not cover Apple's VPN on Demand implementation. Arguments about the validity of the patents that are involved in the suit were not allowed in the retrial, as the retrial was about damages only, and not the patents themselves.
The
previous verdict for $368.2 million in VirnetX's favor was
overturned in appeal in 2014 over incorrect jury instructions, with a new trial ordered over some of the claims made. The retrial offered VirnetX the opportunity to add newer devices to the complaint
originally made in 2011, including everything from the iPhone 5c, iPhone 5s and newer, up to the new iPod Touch.
In order to avoid further infringement and subsequent penalties while it negotiates a license and royalty structure with VirnetX, Apple has been using relay companies to complete FaceTime connections since before the original verdict. An estimate claims that between five and 10 percent of FaceTime calls were being handled by relay servers before the shift, with most going through direct VPN connections. Apple is said to be paying $2.4 million per month to lease more relay servers to handle the routing and connection of FaceTime calls, as a result of the ruling.
The jury found in today's ruling that Apple's VPN On Demand, iMessage and FaceTime services infringed VirnetX's patents and that Apple's infringement was willful, so VirnetX was awarded $334.9 million. In addition to determining the royalty owed by Apple for its prior infringement, today's verdict also includes an award based on the jury's finding that Apple's modified technologies after the initial verdict didn't go far enough to not infringe VirnetX's patents. Between the inadequate alteration of the technology, new devices added to the suit, and the willful violation finding of the jury, Apple was fined an additional $290.7 million above and beyond the findings for damages from the first suit.
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