'Patent troll' VirnetX wins $626m out of Apple over FaceTime and iMessage

East Texas court famous for big patent pay-outs in another big patent pay-out

Apple has been ordered to pay VirnetX, a patent-holding company, $625.6m over the infringement of patents relating to virtual private networking in Apple's FaceTime and iMessage applications.

VirnetX has been accused of patent trolling. The company produces no products, but instead buys up patents of varying quality and tries to enforce them against anyone it suspects of infringing them.

Apple vowed to appeal the judgment, suggesting that the decision reflected the urgent need for reform of the US intellectual property system. "We are surprised and disappointed by the verdict," the company said. "Cases like this simply reinforce the desperate need for patent reform."

However, before that US District Judge Robert Schroeder has been asked by Apple to declare a mistrial. It claims that VirnetX's lawyers misled the jury during closing arguments.

The decision was the latest in a long-running battle between Apple and VirnetX. In 2012, VirnetX won $368m in damages and a running royalty of just under one per cent on all iPhone and iPad revenues. That decision, though, was overturned on appeal.

While Apple has continued to fight VirnetX, Microsoft paid up $23m to bring to an end a similar action brought by the company over Skype. That followed an earlier dispute in which Microsoft paid out $200m to the company.

The four VirnetX patents in this case were originally filed by services company SAIC. They are:

• Agile network protocol for secure communications with assured system availability;
• Agile network protocol for secure communications using secure domain names;
• Establishment of a secure communication link based on a domain name service; (DNS) request;
• Agile network protocol for secure communications using secure domain names.

The case was held in the notorious US patent troll stronghold of Marshall, East Texas, where courts routinely hear and uphold claims of patent infringement - awarding plaintiffs damages of hundreds of millions of dollars in the process.

More than 1,500 patent cases were filed in the small town of Marshall in 2013 - the same as the entire state of Delaware where much of corporate America is legally incorporated, notes the magazine Texas Monthly.

"For more than a decade Marshall juries have meted out billions of dollars in patent awards for and against some of the world's biggest high-tech companies. Apple, Samsung, Motorola, Dell, and Hewlett-Packard are just a few of the household names that have spent time in the Sam B. Hall Jr. federal courthouse," notes the magazine.

Juries in Marshall were, apparently, relatively unsophisticated even by the standards of nearby towns, hence its popularity for complicated intellectual property cases. The town has, however, prospered as a result.