Friday, 26 April 2013 22:28

What Is Apple’s Fight against the VirnetX Patent Ruling Really About?

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In November 2012 a jury found Apple guilty of patent infringement against patent troll… sorry non-participating entity, VirnetX. VirnetX claimed that Apple was in violation of a few patents that they own. These patents relate to video and text messaging. VirnetX has also filed a new suit against Microsoft for some of the same patents claiming that Microsoft’s license for Skype does not cover what they are using these technologies for. So you can see that VirnetX keeps themselves busy.

Of course Apple was not happy about the verdict and who would be considering that the award was $386 Million in damages. That is a nice and hefty sum of money even for a company like Apple. Apple tried to get the award reduced and it was rejected. Now they have issued a 10-Q to the SEC that says they are going to fight the verdict so they are not going to record the $368 Million as a loss. There it is… that one line really spells it out. Apple does not want (or need) to show a $368 Million dollar loss on their books any time soon.

Apple must know that they have little chance of winning this and they also have no intention of licensing the technology from VirnetX (that is not what they do). In fact Apple is still being compelled to pay $330,000 per day (yes per day) until they reach a licensing agreement with VirnetX. That particular order was made back in February which means that Apple owes another 26 million or so on top of the $368. Not a good place to be when your stock is tumbling as rapidly as Apple’s is. How many more investors will jump ship if they saw a $394 million dollar loss on the books?

Apple needs to fight this in any way they can and also to avoid looking like they are in the wrong. This is why they did not make the change they were required to in iOS6. They knew that those changes would not look good to their customer base and might push them to Google or worse Windows Phone. However, eventually Apple will have to record this as a loss and pay it, but we know that will not happen until they manage to get a winning product under their belts. Maybe if the next generation iPhone and iPad bring in better sales Apple will be able to write this one off, if not we expect them to keep trying to drag it out for as long as they can.

What do you think about Apple’s decision to fight? Tell us in our Forum

Read 3095 times Last modified on Thursday, 02 May 2013 14:35

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