Market Insight

For big companies like Apple, patent litigation is one of its everyday businesses

November 11, 2016  | Subscribers Only


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In early October, VirnetX Holding Corporation announced it has been awarded $302 million in a verdict against Apple Corporation for infringing two patents in the United States Court for Eastern District of Texas.

Since the original case was filed in 2010, this case went through a lot of ups and downs before it reached the recent verdict. Just this year alone, the trial held earlier from the same case awarded big damage amount (of $625.6 million) to VirnetX only to be thrown out later. The recently announced verdict that awarded VirnetX $302 million is a retrial that includes two patents from the four patents from the first trial. The second retrial involving the two remaining patents is scheduled to start after the first retrial is concluded.

This article will look into Apple’s recent patent trial verdicts and patent settlements. These cases will be used as examples to provide overview on how a company involved in tens of patent litigation can assess its future potential liability.

The two summary tables shown below contain the list of patent damages awarded at the district courts and the list of known settlements involving Apple Corporation in 2016. Please note the two summary tables only include publically known information that were obtained from company press releases and public filings.

<Damages awarded against Apple at the United States district courts>

Date Company

Damage Amount

(Million, USD)

Link Comments
Oct. 2016 VirnetX $302.4 Link All patents invalidated at PTAB (Sept 2016)
Sept. 2016 Acacia Research $22.1 Link  
Sept. 2016 MobileMedia $3.0 Link  
Feb. 2016 Smart Flash LLC $532.9 Link All patents invalidated at PTAB (Sept 2016)

 

 

 

 

 

 

<Apple's patent litigation settlement>

Date Company

Settlement Amount 

(Million, USD)

Link Comments
Apr. 2016 Marthon Patent Group $24.9 Link  
Jul. 2016 Network-1 / Mirror World $25.0 Link  

 

 

 

 

 

Below are the observations from the summary tables:

  • Apple has either already taken (or about to take) all four district court cases it lost to the Federal Circuit Court of Appeals.
  • For VirnetX and Smart Flash LLC cases, although the district courts have sided with VirnetX and Smart Flash against Apple, the United States Patents Trial and Appeal Board (PTAB) have recently invalidated all the patents used in both suits. Since all the patents in the two cases were invalidated at PTAB, the expected outcome of the both cases at the Federal Circuit Court of Appeals is uncertain at this time.
  • Traditionally, Apple fought almost all of its patent litigations in district courts while it also concurrently tried to invalidate all the patents in suits at the PTAB. If necessary, Apple also took its cases all the way to the court of appeals. However, there has been some changes in this trend this year when they settled with Marathon and Network-1. The two settlements show that if the price is right, Apple is now starting to settle and reduce the number of active litigations.
  • Although, damages award of hundreds of millions of dollars at district courts can grab a lot of attention, the damages award at the district court indicate only the first part of the patent litigation process. Verdict at the district courts are often compared with half-time of a football game.

 

For each active patent litigation case, how do you calculate the expected patent payment amount?

What are the parameters required to calculate the expected patent payment amount?

How does calculating the expected patent payment amount benefit the companies involved in multiple patent litigations?

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Geography
USA
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