U.S Supreme Court upholds Texas jury’s decision of a $440 million charge on Apple for patent violation

Apple Inc. has been in a legal battle with a technology licensing firm, VirnetX for a decade with the latter accusing the former of patents violation. The U.S Supreme Court announced its verdict in favor of VirnetX on Monday and rejected the iPhone maker’s appeal to minimize the $440 penalty that it is required to pay to licensing company.

Announcing it as a major victory over the U.S tech giant, VirnetX celebrated with a 12% increase in its stock on Monday. In after-hours trading, VirnetX extended its rally further and traded around 20% higher in the stock market. VirnetX’s gain on Monday was particularly unique since the Coronavirus emergency had kept the majority of the global stock indices at large under pressure.

VirnetX Accuses Apple Of Violating 4 Of Its Patents

Apple Inc. refused to comment on the Supreme Court’s verdict. The impact on the smartphone manufacturer’s stock wasn’t too significant with it opening the day at $297 per share and closing it at $298.

VirnetX had originally sued Apple in 2010 for its VPN on Demand and FaceTime applications that were claimed to be in violation of 4 of VirnetX’s patents. Being a holding company, VirnetX had boasted 70 tech-related patents in the U.S in 2018. With annual revenue of $63,000 in the same year, the company sees its intellectual property portfolio as a fundamental component of its business model.

The Eastern District Court of Texas had originally declared a $302 million penalty on Apple in 2016 for violating 4 of VirnetX’s patents. Apple had appealed against the decision in the U.S Court of Appeals that supported the decision by the Texas jury in 2019. Apple then approached the U.S Supreme Court that again upheld the original decision on Monday. Apple’s penalty is now valued higher at around $440 million due to the fees and interest.

Apple Argues VirnetX’s Patents Are No Longer Valid

In its argument in the court, Apple highlighted that a few of VirnetX’s patents under discussion are invalid that makes the $440 million charge grossly excessive. Apple’s appeal to the Patent Trial and Appeal Board resulted in substantial evidence that one of VirnetX’s technology patents is indeed no longer valid. The remaining three, as per the board, are still under evaluation.

Following the Supreme Court upholding the Texas jury’s decision, the Eastern District Court in Texas will again take on the responsibility of enforcing a $440 million payment from Apple to VirnetX.