US Supreme Court Declines Review of Apple's Victory in Patent Dispute Worth $503 Million

US Supreme Court Rejects VirnetX Appeal, Upholding Apple's $503 Million Patent Victory

Feb 20, 2024 - 10:47
Feb 20, 2024 - 14:40
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US Supreme Court Declines Review of Apple's Victory in Patent Dispute Worth $503 Million
US Supreme Court Declines Review of Apple's Victory in Patent Dispute Worth $503 Million

US Supreme Court has opted not to review Apple's triumph in a protracted patent battle, marking a major setback for patent-licensing company VirnetX. The decision comes after VirnetX sought to overturn a substantial $502.8 million jury verdict in its favor against tech giant Apple, concerning internet-security patents.

VirnetX, headquartered in Zephyr Cove, Nevada, had appealed to the Supreme Court following a lower court's decision to overturn the initial verdict against Apple, which stemmed from a contentious legal clash in Tyler, Texas. Central to VirnetX's appeal were challenges to the rulings of the US Patent and Trademark Office, which invalidated key patents held by the company.

This legal saga, spanning over 14 years, has witnessed relentless litigation between Apple and VirnetX, entailing multiple trials and appeals revolving around the latter's internet-security patents. Notably, in 2020, a jury had awarded VirnetX a staggering $502.8 million after finding that Apple's popular iPhones and iPads had infringed upon patents related to virtual private networks (VPNs).

At the heart of the matter lies the Patent Trial and Appeal Board's (PTAB) process known as inter partes review (IPR), which allows parties to challenge the validity of specific patents. This mechanism is frequently utilized by prominent tech entities faced with patent infringement lawsuits to contest the patents in question.

Apple's attempts to invalidate VirnetX's patents through the IPR process faced hurdles, with the board rejecting Apple's petitions on grounds of timing. Subsequently, the patents were invalidated based on separate requests initiated by hedge fund Mangrove Partners, with Apple later permitted to join the proceedings.

The US Court of Appeals for the Federal Circuit, specialized in patent law, upheld the decisions to invalidate VirnetX's patents and overturn the earlier jury verdict. In its plea to the Supreme Court, VirnetX contended that upholding these decisions would pave the way for the unwarranted targeting of patent owners through the patent office.

VirnetX underscored a concerning trend wherein entities with minimal stake initiate IPR petitions challenging patents upheld in prior litigations. These entities are often joined by well-resourced defendants, despite being time-barred, effectively shifting the financial burden onto them.

Of particular note is a case cited by VirnetX, where the patent office director imposed sanctions on OpenSky Industries for misconduct in a high-stakes dispute involving Intel and patent owner VLSI Technology. Despite this, the challenge to a VLSI patent proceeded with Intel's involvement.

Furthermore, VirnetX contested the actions of former patent office interim director Drew Hirshfeld, accusing him of exceeding his authority by denying VirnetX's requests for director review.

In response, Apple, Mangrove Partners, and representatives of the Biden administration, representing the patent office, argued that VirnetX's claims lacked substantive support under federal law.

This legal standoff represents a pivotal juncture in the protracted feud between the two corporate behemoths. Notably, Apple had previously disbursed $440 million to VirnetX in the wake of a 2016 verdict, which found Apple guilty of utilizing VirnetX's security technology in features such as FaceTime video calls.

Also Read: EU Set to Impose Record €500 Million Fine on Apple Over App Store Practices

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