Apple Hit With $368 Million Jury Verdict in Patent Trial, Plus New Lawsuit


Apple must pay more than $368 million in damages to VirnetX Inc. according to a jury verdict returned in federal court yesterday (see it below). The same day the verdict was reached, VirnetX and Science Applications International Corporation (SAIC) filed a new patent lawsuit against Apple.

In 2010, VirnetX said that its patent portfolio was “derived from a Central Intelligence Agency security project”

The four (4) patents in this litigation reportedly stem from technology for secure communications developed for the CIA by SAIC.

Each of the following four U.S. patents are related to patent Application No. 09/504,783, an ancestor application for every patent-in-suit :

  • Patent No. 6,502,135 – Agile network protocol for secure communications with assured system availability
  • 7,418,504 – Agile network protocol for secure communications using secure domain names
  • 7,921,211 – Agile network protocol for secure communications using secure domain names
  • 7,490,151 – Establishment of a secure communication link based on a domain name service (DNS) request

A jury trial was conducted over five (5) days starting on Halloween last week, and concluding yesterday, Tuesday November 6, 2012. Surprisingly, the jury returned a $368 million verdict for the VirnetX, Inc. against Apple the same day that they began deliberating:

Somehow, they were able to plow through 29 pages of jury instructions, deliberate, and also decide the amount of damages that they wished to award plaintiff.

Do you believe that a jury can process the technical information entered into evidence at this patent trial, deliberate, and return a verdict, after just five days, and award nearly $400 million in damages in less than a single day? It seems unlikely.

VirnetX accused four companies of patent infringement in the lawsuit that it reached a verdict against the Cupertino company yesterday: Apple, Inc., Cisco Systems, Inc., Avaya, Inc., and German-based Siemens Enterprise Communications GmbH. The claims against Apple were the first to be tried. According to a notice entered on the case docket on September 24, 2012, the claims against the remaining three defendants are scheduled for trial in March 2013 before U.S. District Court Judge Leonard Davis.

What is even more surprising is that VirnetX and SAIC filed a new patent infringement lawsuit against Apple on Tuesday, November 6, 2012 — the exact same day that the jury reached its verdict and awarded the company more than $368 million in damages.

The new lawsuit filed yesterday accuses Apple of violating the exact same for patents named in the earlier lawsuit, claiming that infringement by “Apple’s servers and other Apple computers that support the VPN On Demand functionality,” in addition to patent claims over Apple’s Facetime and iMessage functions. In addition to Apple servers and computers, the new lawsuit also alleges patent infringement via its Mountain Lion operating system, and Apple’s newest generation of mobile devices, including the iPhone 5, iPod Touch 5, iPad 4th Generation, and iPad Mini.

Read the jury’s $368 million dollar verdict (below), and browse the case docket.
Verdict Form (VirnetX, Inc. v. Apple, Inc.)

Image credits: tlegend via Shutterstock (top); Jury verdict in VirnetX, Inc. v. Apple, Inc. (center)