Here’s Why a Federal Judge Just Threw Out a $625 Million Judgment Against Apple

August 1, 2016, 3:22 PM UTC
Federal Judge Rules Against Apple In EBook Price Fixing Lawsuit
SAN FRANCISCO, CA - JULY 10: A pedestrian walks by an Apple Store on July 10, 2013 in San Francisco, California. A federal judge ruled today that Apple Inc. conspired with five major book publishers to increase the retail prices of e-books in an effort to undercut Inc's stronghold of online e-book sales.
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A federal judge has thrown out a verdict requiring Apple (AAPL) to pay VirnetX (VHC) $625.6 million for infringing four patents relating to Internet security technology, causing VirnetX’s share price to plunge.

VirnetX shares were down $1.93, or 44.6%, at $2.40 in Monday morning trading, after earlier falling to $2.14.

In a decision late Friday, U.S. District Judge Robert Schroeder in Tyler, Texas said it was unfair to Apple that two VirnetX lawsuits had been combined into a single trial.

He said jurors may have been confused by more than 50 references to the earlier case, though it contained “incredibly similar” issues, and deferred improperly to the prior jury’s findings when it found Apple’s liable for willful infringement.

“The repeated references to the prior jury verdict in the consolidated case resulted in an unfair trial,” Schroeder wrote.


He ordered that both cases be retried separately, with the first trial beginning on Sept. 26.

VirnetX is a Zephyr Cove, Nevada-based company that derives most of its revenue from licensing patents.

It accused Cupertino, California-based Apple of infringing patents used in products including FaceTime and iMessage.

The $625.6 million verdict announced in February was one of the highest in a U.S. patent case.

“We are disappointed,” VirnetX Chief Executive Kendall Larsen said in a statement on Monday. “We are reviewing all our options and will follow the court’s direction as we start preparing for these retrials.”

Apple did not immediately respond to a request for comment.

Many patent cases are handled in the Texas court, which has a reputation for awarding favorable verdicts to plaintiffs alleging infringement.

VirnetX had been assigned the four patents by Science Applications International Corp in 2006, court papers show.

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