Appeals Court Throws Out $368 Million Verdict Against Apple in VirnetX Lawsuit

Back in 2012, patent holding company VirnetX won a patent lawsuit against Apple over virtual private networking (VPN) connectivity related to Apple's FaceTime video calling feature. VirnetX was awarded $368.2 million after a jury trial.

virnetx_logo

The U.S. Court of Appeals for the Federal Circuit today threw out the decision, reports The Wall Street Journal, ruling that the verdict was influenced by the instructions given to the jury during the trial.

The U.S. Court of Appeals for the Federal Circuit, a specialized Washington-based court that handles patent appeals, ruled the verdict was "tainted" by erroneous jury instructions in the case. The court also held some trial testimony from a VirnetX expert should have been excluded from the case.

Despite siding with Apple and reversing some of $368 million verdict, the court did rule that Apple infringed on some of the claims in VirnetX's patents, which means damages will need to be redetermined.

As a result of today's appeals court verdict, Apple and VirnetX will go back to trial court for further proceedings, further drawing out a lawsuit that first began in 2010.

Top Rated Comments

(View all)

Rudy69

57 months ago

So...does this mean we can finally get back peer to peer FaceTime so we get better quality?

Rating: 8 Votes

Doctor Q

57 months ago

Back in 2010 we learned that the judge was known for a willingness to rule in favor of plaintiffs in patent disputes. His jury instructions were apparently biased in the same way, and it caught up with him this time.

Rating: 4 Votes

The WOPR

57 months ago

So...does this mean we can finally get back peer to peer FaceTime so we get better quality?

I am hoping this happens in the future. I use FaceTime regularly and noticed a significant drop in quality after they changed their service due to the lawsuit.

Rating: 3 Votes

zorinlynx

57 months ago

So...does this mean we can finally get back peer to peer FaceTime so we get better quality?

I used tcpdump to check and confirmed that FaceTime is usually Peer to Peer again. I'm guessing Apple found a workaround for the patent at some point and quietly fixed it.

Basically, call quality was notably good so I had to investigate to see if it was still going through a bounce server. I was pleased to find packets going directly to and from the other person's network instead of AWS. :)

Rating: 2 Votes

kdarling

57 months ago

I used tcpdump to check and confirmed that FaceTime is usually Peer to Peer again. I'm guessing Apple found a workaround for the patent at some point and quietly fixed it.

When the royalty rates were being decided, Apple's lawyers claimed that VirnetX's patents were worthless, because they could be worked around very easily. So apparently they did have a workaround in mind.

(After they lost, Apple's lawyers changed to claiming that it would be a huge hardship to change their code. The flip-flop ticked off the judge, who slapped them with a continuous fine amounting to almost 1% of Apple's earnings until they stopped infringing.)

--

This trial is like watching the Apple-Samsung trials in reverse. Apple has used many of the same arguments to defend against VirnetX, that Samsung did to defend against Apple. For example, besides the workaround argument:

- Apple claimed that they shouldn't have to pay high royalties because they had good reason to believe the patents were not novel. (Unfortunately for them, it turned out that an Apple engineer had tried to patent the same ideas, proving that Apple DID think they were patentable. Oops.)

- Apple claimed that the reward was excessive because Facetime was not the driving reason people bought Apple products. (Actually, I personally have bought Apple products just for this reason, but okay.) This is the same argument that Samsung used to prevent owing triple damages to Apple.

Rating: 1 Votes

petsounds

57 months ago

Interesting. Wasn't this lawsuit the reason they never opened FaceTime as an open standard? Or was that just speculation.

Rating: 1 Votes

rdlink

57 months ago

Personally, I'd just like to have back the functionality we lost when we moved from iChat to FaceTime. Specifically, the ability to have three way video, and easily control someone else's computer.

Rating: 1 Votes

Cartaphilus

57 months ago

Bill of Rights be damned, huh?

The Seventh Amendment requires only "trial by jury", and doesn't specify that the jury must be made up only of ordinary randomly-chosen people, although I would agree that a Federal jury of judges is unconstitutional. The Fifth Amendment, which provides for "due process" is offended when a litigant's rights are determined by an under-educated, under-sophisticated, and under-intelligent jury which can't possibly be relied upon to weigh the scientific and engineering issues of fact on which a patent case often turns. I love juries, and when it comes to deciding who is telling the truth and who is lying about events that occur in ordinary life, I trust a lay jury over any alternative. I just don't believe a randomly-selected lay jury is the best way of determining whether a violation of an issued patent has occurred. There is an excellent and balanced law review article on this subject that I'd recommend:

http://www.stlr.org/html/volume2/fisher.pdf (http://www.stlr.org/html/volume2/fisher.pdf)

Rating: 1 Votes

[ Read All Comments ]