Apple Wipes Out $503 Million Verdict Over FaceTime Tech (1)

The Federal Circuit vacated a $503 million jury verdict that VirnetX Inc. secured against Apple Inc., ruling Friday that an earlier patent validity decision undermined the software company’s ability to hold the tech giant liable.

The overturning of the award was triggered by a Federal Circuit decision on Thursday in which the panel agreed with the Patent Trial and Appeal Board that a pair of VirnetX patents asserted against Apple were invalid.

“Now that we have affirmed the Board’s finding of unpatentability, VirnetX has lost its cause of action, and its dispute with Apple is moot,” Judge Leonard P. Stark wrote.

The case concerns US Patent Nos. 6,502,135 and 7,490,151, which are at the center of a broader legal battle that started a dozen years ago when VirnetX alleged that Apple’s FaceTime and VPN on Demand infringed four secure communications patents. In 2021, Chief Judge Rodney Gilstrap of the East District of Texas ruled that Apple wouldn’t get a new trial after VirnetX won $503 million, leading Apple to appeal to the Federal Circuit.

Throughout the saga, VirnetX has faced dozens of challenges to its patents at the PTAB, including from third parties like Mangrove Partners Masters Fund.

Mangrove originally asked the PTAB to examine whether the ‘135 and ‘151 patents were obvious and anticipated by previous designs, with Apple and another third party later joining in the validity challenges.

In 2016, the board knocked out all of the challenged claims in the patents as anticipated, but the Federal Circuit ordered it to reconsider the decisions after an appeal. The PTAB again found the claims couldn’t stand in 2020, and VirnetX appealed that outcome to the Federal Circuit.

During oral arguments, the panel heard that if it found the patents aren’t valid, the nine-figure award against Apple must be vacated.

Chief Judge Kimberly A. Moore and Judge Todd M. Hughes also sat on the panel.

Paul Hastings LLP and MoloLamken LLP represent VirnetX. Wilmer Cutler Pickering Hale and Dorr LLP and Sidley Austin LLP represent Apple. The Law Office of James T. Bailey represents Mangrove.

The case is VirnetX Inc. v. Apple Inc., Fed. Cir., No. 21-01672, vacated 3/31/23.