High Level Explanation of the Apple-VirnetX Patent Case

On February 3, an East Texas jury ruled that Apple must pay patent-holding company VirnetX $625.6 million for infringing for patents. What is interesting about this outcome is that VirnetX is a “non-practicing entity,” or, in layman’s terms, a “patent troll,” as the company does not make any products itself and earns revenue only through patent litigation.

VirnetX is certainly not new to going after large technology companies on patent infringement. Its original patent attack on Microsoft ended in a $200 million settlement, and Microsoft later paid $23 million to end claims that Skype also infringed on patents owned by VirnetX. VirnetX has also sued Cisco Systems in the past, but Cisco took the case to trial and won.

This case is interesting on a number of levels, first being the underlying morality of such a lawsuit. What does it mean for a “company” that is clearly understood to have not actually made the technology being discussed in the case to sue a company (in this case, Apple) that actually developed the technology? On the surface, VirnetX winning this case does not sit right with many people from a competitive standpoint, as they did not actually create the intellectual property at hand. However, the buying and selling of patents is totally legal, and regardless of whether VirnetX actually developed the technology, if they own patents that could potentially incriminate Apple, is it not VirnetX’s “right” to sue and exclude Apple from making products with infringed content?

Secondly, this case has helped shed even greater light on significant inequality in patent case decisions. Both companies involved in the case have no connection to East Texas – but then why did VirnetX file the lawsuit there? Patent holders (like VirnetX) have a higher winning percentage in East Texas than in any other part of the country. According to the New York Times, patent cases are heard faster in Marshall, Texas (where 25% of all patent cases are filed), and patent holders win 78% of the time compared to a nationwide average of 59%.

There are definitely no clear answers on how to solve the problem of “patent trolls,” and there is not even consensus on whether a problem actually exists. Changes to this system will require a multi-faceted approach to address all sides of the issue, especially for plaintiffs and the courts evaluating cases.

Link to my YouTube video: https://youtu.be/zGRnWEfcNhg