Federal judge orders Apple to pay $363K daily to patent-holding firm VirnetX

Upholds $368M jury verdict of last year, orders parties to negotiate licensing deal

A Texas federal judge denied Apple's move to reduce last year's $368 million jury verdict in a patent infringement case it lost, and ordered the Cupertino, Calif., company to pay more than $363,000 daily in interest and damages until a final judgment is awarded, the plaintiff said today.

In a statement, patent-holding company VirnetX reported the findings of U.S. Circuit Judge Leonard Davis, who yesterday issued an order covering post-trial motions.

Davis' order has not yet appeared on the federal court system's Pacer database.

According to VirnetX, Davis rejected Apple's motion to lower the damages awarded by a jury last November, when it found Apple's FaceTime and iMessage applications guilty of infringing four VirnetX patents. The jury awarded VirnetX $368.2 million.

Davis also ordered Apple to pay VirnetX more than $33,000 in interest, and just over $330,000 in damages daily until the two parties agree on a licensing deal, or after 45 days, whichever comes first.

If the payments continue through the 45-day stretch, Apple will have handed nearly $16.4 million to VirnetX.

To push the two companies toward a licensing deal, Davis demanded that they meet with a mediator over the next 45 days. Failing an agreement, the judge will reconsider a motion by VirnetX that would prevent Apple from selling products that include the infringing technologies.

VirnetX filed its lawsuit against Apple in August 2010, naming then-current hardware, including the iPhone 4 and the first-generation iPad. After the November 2012 jury verdict, VirnetX followed with a second filing that targeted a swath of newer Apple products, ranging from the iPad Mini and iPhone 5 to all Macs equipped with OS X Mountain Lion. That second lawsuit is still in its early stages.

Prior to its victory against Apple four months ago, VirnetX was best known for reaching a $200 million settlement with Microsoft in May 2010, after it had accused Windows of infringing on its virtual private networking (VPN) patents. As part of that settlement, Microsoft said it would license the VirnetX technologies.

Apple could yet appeal the Texas jury verdict and judgment.

For its part, VirnetX said it will withdraw a complaint filed with the U.S. International Trade Commission (ITC) against Apple that aimed to block importation of Apple's products.

Not surprisingly, VirnetX applauded Davis' decisions and orders. "We are extremely pleased with the Court's Order in our suit against Apple," said Kendall Larsen, CEO of VirnetX, in the statement. "We look forward to negotiating a license with Apple that includes an ongoing royalty agreement."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

Copyright © 2013 IDG Communications, Inc.

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