VirnetX Soars 47 Percent on $625 Million Win Against Apple

VirnetX Holding Corp. soared 47 percent after a federal jury in Texas said it was owed $625.6 million by Apple Inc. over patented technology related to secure communications.

Shares rose $2.27 to close at $7.06 in New York trading of about 17 million shares, more than 22 times the three-month daily average. VirnetX’s share price reached its highest since April 2015.

Apple has pledged to appeal Wednesday’s jury finding that its FaceTime, iMessage and newer VPN on Demand services infringe VirnetX patents, as well as the high damage award. Even before the jury reached its decision, Apple had filed for a mistrial, claiming VirnetX lawyers made improper arguments to “confuse, mislead and inflame the jury.”

The jury in Tyler, Texas, found that the infringement was willful, meaning Apple knew of the patents and used the technology anyway. That would enable District Judge Robert Schroeder to increase the award by as much as three times.

Invalid Patents?

Judges normally increase awards by less than that amount. The U.S. Supreme Court has taken up the issue of when patent owners are entitled to increased awards.

The U.S. Patent and Trademark Office has made preliminary findings that two of the VirnetX patents are likely invalid, and invalidated other VirnetX patents.

That will set up a sort of race between the district court case and the patent office review, though all of the patent issues will ultimately wind up before the U.S. Court of Appeals for the Federal Circuit in Washington.

The dispute is over private networks, through which a website owner can interact with customers, employees can work at home and access company files, or people can see each other as they talk over the phone.

Federal Circuit

VirnetX had previously won a $368.2 million verdict against Apple only to see it thrown out by the Federal Circuit. The court did uphold the infringing finding regarding VPN on Demand and ordered a new trial on damages for that. The jury said that was worth $334.9 million.

Separately, the jury had to find if newer versions of VPN on Demand, FaceTime and iMessage infringed the patents. The jury said they did, and valued that at $290.7 million.

VirnetX can ask that Apple be ordered to remove any infringing features, a request that’s hard to win. It also can ask that Apple be ordered to pay additional money for ongoing infringement.

VirnetX’s lawyer in the case, Brad Caldwell of Caldwell Cassady, said the company is considering its options.

The case is VirnetX Inc. v. Apple Inc., 12cv855, U.S. District Court for the Eastern District of Texas (Tyler).

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