Patent-holding com nay VirnetX has been awarded almost US$440M in a long running patent dispute with Apple. A Federal Court judge in the Eastern District of Texas ordered the payment because of infringements relating to FaceTime and VPN on Demand. This is Apple’s third loss in the matter, having lost and then won on appeal in previous cases. The four patents being disputed were purchased by VirnetX who have also had a crack at extracting cash from Microsoft and Cisco.
According to SEC filings, VirnetX doesn’t actually generate revenue from any products. They buy patents and then look for where they can apply those to extract money from potential infringers.
Unlike RIM, who was crippled and almost disappeared after losing a $612.5M patent judgement 11 years ago, if Apple decides to simply roll over and pay, the US440M will barely make a dent in their $US260B cash holding. Interestingly, more than 20% of the judgement goes to VirnetX for their legal fees.
It’s clear there is a need for some reform in the US patent system. That a company can buy a bunch of ideas and not use them, only to then use them to extract money through the courts is pretty smelly. At some point, a patent on an unrealised idea should be declared expired or void.
What do you think? Is this a reasonable outcome?
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