Apple, Google Lose Big Patent Cases To Trolls

from the but-of-course dept

While Apple and Google (or their proxies) are fighting it out on a number of big patent battles, both companies (and basically every other successful tech company) are still facing a whole bunch of troll lawsuits. Jury verdicts came down in two such cases this week, with the big one being Apple losing to VirnetX in East Texas, and being told to pay a whopping $368.2 million. Just as a point of reference, VirnetX admitted in court that in the first half of 2012 it made a grand total of $36,000. And now the jury thinks it deserves $368.2 million? The patents in question (which can be seen here) cover some concepts around virtual private networks. The company, a spinout of secretive government contractor behemoth SAIC, claims that Apple's Facetime product infringes.

Apple, of course, claims that it doesn't infringe, leading VirnetX's lawyer to make a truly bizarre statement:
“For years Apple refused to pay fair value for the VirnetX patents,” Doug Cawley, a lawyer with McKool Smith in Dallas who represents VirnetX, said in closing arguments. “Apple says they don’t infringe. But Apple developers testified that they didn’t pay any attention to anyone’s patents when developing their system.”
In a sane world, the fact that Apple clearly did not copy or rely on these patents for its offering should be enough proof to dump the case. Unfortunately, our broken patent system still refuses to recognize a true independent inventor defense -- leading lawyers to make statements like the one above, in which they gleefully cheer on the fact that they are blocking companies from innovating on their own. Shameful.

Of course, given Apple's own aggressive patent litigation strategy, many probably won't have much sympathy for the company here. And, indeed, there is a "live by stupid patent litigation, die by stupid patent litigation" schadenfreude in seeing this result. But, no matter what, it's another example of the patent system gone haywire.

The other verdict came out of Eastern Virginia, rather than Eastern Texas, which perhaps explains why the verdict, while silly, is not quite as silly. It involves Vringo, who was in a patent infringement case against Google, AOL, IAC and Gannett. The original patents were actually from a troll called Innovate/Protect Engine (I/P Engine), but somewhere along the way Vringo bought them. The ruling here did find infringement, but the award to Vringo was much lower than what it was asking for. In the tradition of crazy verdicts (like the one above) Vringo had asked for $696 million combined from the companies. However, the jury here awarded $30 million. Perhaps they should have filed in East Texas, since the juries there seem to have no connection to reality when it comes to the award numbers.

These cases are quite similar to pretty much every other patent troll case out there. Tragically, these kinds of stories are becoming so common that they barely feel like news any more, other than as a painful reminder of just how much money is being absolutely squandered on ridiculous lawsuits like this, where any award seems to go to non-productive operations, rather than companies who actually bring products to market.

Both cases will likely be appealed. In the Apple case, Apple has already filed for a motion for judgment as a matter of law, which is a way to effectively ask the district court judge to overrule the jury -- a tactic unlikely to get very far in this case. Either way, it's going to be a few years before the various appeals are sorted out in these cases.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Alexander Edbom, Nov 8th, 2012 @ 12:37am

    Sad but true, broken laws

    Well, this is sad but that's how reallity looks like with laws from 1900.

     

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    Shadow Dragon (profile), Nov 8th, 2012 @ 12:52am

    Just like Copyright trolls they don't care about patient laws they want to make money.

     

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    Zakida Paul (profile), Nov 8th, 2012 @ 1:21am

    Karma's a bitch

    You reap what you sow. Whatever, pick your own platitude.

    Both companies do enough patent trolling themselves and it is nice to know that they can fall victim to it as well. The only way there will be any chance of reforming the broken system is when the large corporations are losing vast sums of money because of it.

     

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      Anonymous Coward, Nov 8th, 2012 @ 3:00am

      Re: Karma's a bitch

      Corporations simply pass their costs on to their customers, so it all ends up coming out of the public’s pockets. Only when they end up having to price goods and services at a level where they lose customers will they try and repair a broken system.
      When the public realize that they are bearing the cost of patents and litigation they might put pressure on the lawmakers to change the system.

       

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    nospacesorspecialcharacters (profile), Nov 8th, 2012 @ 1:58am

    “For years Apple refused to pay fair value for the VirnetX patents,” Doug Cawley, a lawyer with McKool Smith in Dallas who represents VirnetX, said in closing arguments. “Apple says they don’t infringe. But Apple developers testified that they didn’t pay any attention to anyone’s patents when developing their system.”


    That quote in and of itself demonstrates that this is a patent troll that knows nothing of actual invention or software development, as well as the courts general ignorance.

    Anyone who can trot out an asinine statement like that should immediately have their patents invalidated.

    Not only is it a legal necessity that software developers do not look up patents in order to avoid 'willful' infringement - it would be insane!

    If you had to trawl the patent database full of legally jargonised crap every time you wanted to solve a problem you'd probably not only lose the will to develop anything, you'd lose the will to live.

     

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    Anonymous Coward, Nov 8th, 2012 @ 2:45am

    Lol change one word of that quote and itbecomes a defense for apple

    “Apple says they don’t infringe. Because Apple developers testified that they didn’t pay any attention to anyone’s patents when developing their system.”

     

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    Jan Bilek (profile), Nov 8th, 2012 @ 2:54am

    impact?

    I live in EU and Silicon Valley has always been 'the Paradise' for all start-ups here - everybody dreamed about going to the Valley and those who got there were adored and celebrated. But I feel this is slowly changing. I have nothing to prove it - it's just some anecdotal evidence but when I talk to people sometimes it's like "Silicon Valley is the best... but you get hit by a patent lawsuit as soon as you are successful so what's the point... maybe let's go to Chile or London instead, those places are also cool."

    Do you observe anything like that in the Valley?

     

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      John Fenderson (profile), Nov 8th, 2012 @ 9:39am

      Re: impact?

      The only reason to be in silicon valley is if you want to get VC money, so it's only attractive to a certain segment of startups. Silicon valley has lost a lot of its allure amongst that crowd for a few reasons.

      First, there are other places that are equally good in terms of attracting VC money, but have a substantially lower cost associated with them (Silicon valley is an expensive place to be).

      Also, more people are realizing that VC money comes with some major, potentially business-killing downsides and are avoiding it.

       

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      Mike Masnick (profile), Nov 8th, 2012 @ 10:14am

      Re: impact?

      I live in EU and Silicon Valley has always been 'the Paradise' for all start-ups here - everybody dreamed about going to the Valley and those who got there were adored and celebrated. But I feel this is slowly changing. I have nothing to prove it - it's just some anecdotal evidence but when I talk to people sometimes it's like "Silicon Valley is the best... but you get hit by a patent lawsuit as soon as you are successful so what's the point... maybe let's go to Chile or London instead, those places are also cool."

      Do you observe anything like that in the Valley?


      I don't think it's quite reached that stage entirely, but it is absolutely happening at the margins. I know of a bunch of companies in Europe and Asia who won't enter the US market for fear of a patent suit.

       

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        Wally (profile), Nov 8th, 2012 @ 1:50pm

        Re: Re: impact?

        I agree. But I also know from experience there are a lot of places in Hong Kong Province where you can make your own devices with chips and printed circuit boards made on the spot. China already has a share in manufacturing and a lot of places offer things that aren't liscensed in the US. So the fear I see in them coming over is other companies getting blamed for defective products they didn't make.

        The only particularly dangerous part in that is that almost nothing is standardized in some countries which means that there would be a safety hazard involved.

        I wrote an amazing story/post a while back about how a certain gas compressor piston broke and the company that made/copied it in China had given bogus warranty information giving a company my uncle retired from a hard time for almost a year.

         

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    Anonymous Coward, Nov 8th, 2012 @ 2:55am

    This is what happens when you put 12 morons in the same room. Jesus Christ our patent system fucking sucks and our court system is a fucking circus..

     

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      anon, Nov 8th, 2012 @ 12:09pm

      Re:

      The problem is that the big industry Goliath would love patent law to be removed totally, then they can steal others ideas use them and not pay the original innovator anything, this is what we need to protect the small business against.
      I think the best thing would be to have patents that are real not stupid and obvious, like apple with there round edges and snap to screen.

      I fear that all these patent cases will be used to weaken the small business owner who comes up with ideas and cannot or do not get paid for there innovations.

      Maybe there should be a pot of money from every device, say $20 that is used to pay for anyone that believes there patent is being used, give a reasonable time for them to put a claim forward say 6 months and that is it.

       

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    Mesonoxian Eve (profile), Nov 8th, 2012 @ 3:32am

    The Apple doesn't fall far from the tree.

    Many of us understand our patent system is broken, but this article demonstrates a great example of cause and effect. Apple has the highest number of court cases regarding patent infringement (and some are on design), that now it cries wolf?

    Personally, I hope these large businesses sue each other out of existence so small businesses can finally have a chance.

     

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      Wally (profile), Nov 8th, 2012 @ 5:19am

      Re: The Apple doesn't fall far from the tree.

      First I want to point out it was Nokia who started the Patent Wars.

      Second, this company was a spinoff of a patent trolling organization and figured it could go to the richest company in the nation for a cash grab prize on a patent the doesn't exist in hardware. Furthermore, FaceTime is a secured Peer2Peer connection and not a VPN. So basically this case should have not even cost Apple more than $10,000 in legal fees had the jurors had actually done their jobs.

       

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        John Fenderson (profile), Nov 8th, 2012 @ 9:10am

        Re: Re: The Apple doesn't fall far from the tree.

        "but they started it" stops being an effective retort after grade school.

        Furthermore, FaceTime is a secured Peer2Peer connection and not a VPN.


        Please explain the difference. The VPN I use (OpenVPN) is a VPN, but is also implemented as a "secured Peer2Peer connection".

         

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          Wally (profile), Nov 8th, 2012 @ 1:34pm

          Re: Re: Re: The Apple doesn't fall far from the tree.

          Works on the same Peer2Peer process as a phone. Apple servers ID your device with your iTunes account. The thing is, if it were a true VPN, you wouldn't need Apple's servers as the switch board. VPN is a more direct connection where as Peer2Peer technologies implemented in FaceTime use the same principe as a POTS line.

           

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    Pamela Anderson, Nov 8th, 2012 @ 3:58am

    to be fair to Vringo

    Their CTO, Andrew Lang, did actually write the code and hold the patents in question.

    If those patents do infringe, accepting current laws, then I commend the jury for awarding an amount that recognises the infringement, but is small enough to deter other such suits.

     

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      David "The Hoff" Hasselhoff, Nov 8th, 2012 @ 3:59am

      and to be fair to Apple.

      HA HA HA HA HA HA HA parp

       

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      That One Guy (profile), Nov 8th, 2012 @ 5:24am

      Re: to be fair to Vringo

      I'm sorry, but what world do you have to live in to think $30 million is a 'small' amount?

      As an additional bit of crazy regarding the company you're trying to defend, that initial $696 million they were asking for? That's over twice the company's market value, making it insanely obvious this had nothing to do with recouping lost profits, and everything to do with trying to use the legal system to shake down other companies of as much money as they could get away with.

       

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      Anonymous Coward, Nov 8th, 2012 @ 5:30am

      Re: to be fair to Vringo

      Software is protected by copyright, it should not be patentable.

       

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        pkj, Nov 8th, 2012 @ 6:33pm

        Re: Re: to be fair to Vringo

        No, software is not necessarily protected by copyright. Copyright and patents are two totally different mechanisms. Nothing wrong with using both. And both apply to software just fine.

         

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      PRMan, Nov 8th, 2012 @ 7:59am

      Re: to be fair to Vringo

      I was about to say the same thing. The Vringo case looks like one in which the system worked correctly. They

      1. actually invented the technology
      2. had working example in use in commerce
      3. got a reasonable award based on the volume of usage

      #1 yeah, that's ridiculous.
      #2 actually makes sense.

       

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    Thomas (profile), Nov 8th, 2012 @ 5:19am

    East Texas again...

    The judges and juries must get a lot of money from the trolls. Does anyone ever pay attention to laws about bribing judges and juries? I'm picturing unemployed jury members suddenly driving fancy new SUVs, and judges taking vacations to Bali.

    The patent system is broken and East Texas is the absolute best place in the world for patent trolls. Has there ever been a patent troll who lost a case in East Texas? I doubt it. Going to East Texas guarantees a win.

     

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    Anonymous Coward, Nov 8th, 2012 @ 6:02am

    Although I agree that many patents like those here are obvious, I disagree with the statement, "the fact that Apple clearly did not copy or rely on these patents for its offering should be enough proof to dump the case." In fact, Apple saw other examples of video phone technology in the market. They said to themselves that they should make something like that, and they probably even bought some of the technology from outside firms. This technology didn't spontaneously appear, and it was proven in court that the patent preceded Apple's innovation of the patented technology. Apple clearly copies (and innovates) many facets of consumer electronics; to release a product without adequate patent search is simply asking for a knee to the balls.

     

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    crade (profile), Nov 8th, 2012 @ 7:41am

    Of course the developers didn't pay any attention to patents, you can only pay attention to patents or do actual work, not both.

     

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    Stephen B Coulson, Nov 8th, 2012 @ 3:51pm

    feed the trolls

    Big tech companies asked for the stupid broken system we have now mostly to protect themselves from upstart innovators - knowing that even if you create something new you won't be able to do it without inadvertently infringing on numerous (silly) patents.
    Let the trolls feast on the big offenders, the more the merrier, until the big players get sick enough of it to ask for a better system.

     

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    anon, Nov 8th, 2012 @ 6:39pm

    First, the company's revenue has no relation to the value of the patent. Microsoft killed Burst years ago - they were a hair away from going out of business. But microsoft stole their patented ideas. How could anybody reasonably conclude that because microsoft was able to illegally use the patent and destroy Burst's profits that microsoft should pay less than if Burst had been more successful? Thats crazy.

    Second, no country that I am aware of says "if you invent it on your own you don't infringe". That idea is preposterous. Arguing the case should have been thrown out on those grounds isn't an argument that the patent system is broken but rather that there should be no patent system.

    Well done techdirt - once again showing that if you read anything about patents on the internet from a techish site its going to be written from the point of view of ignorance.

     

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    identicon
    staff, Nov 9th, 2012 @ 4:51pm

    more dissembling by Masnick

    “Patent troll”

    Call it what you will...patent hoarder, patent troll, non-practicing entity, shell company, etc. It all means one thing: “we’re using your invention and we’re not going to pay or stop”. This is just dissembling by large invention thieves and their paid puppets to kill any inventor support system. It is purely about legalizing theft. The fact is, many of the large multinationals and their puppets (some say Masnick is one) who defame inventors in this way themselves make no products in the US or create any American jobs and it is their continued blatant theft which makes it impossible for the true creators to do so. All they know about patents is they don't have any.

    It’s about property rights. They should not only be for the rich and powerful. Show me a country with weak or ineffective property rights and I’ll show you a weak economy with high unemployment. Does that remind you of any present day country?

    Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don’t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

    Those wishing to help fight big business giveaways should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

    For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.

    Masnick and his monkeys have an unreported conflict of interest-
    https://www.insightcommunity.com/cases.php?n=10&pg=1

    They sell blog filler and "insights" to major corporations including MS, HP, IBM etc. who just happen to be some of the world’s most frequent patent suit defendants. Obviously, he has failed to report his conflicts as any reputable reporter would. But then Masnick and his monkeys are not reporters. They are hacks representing themselves as legitimate journalists receiving funding from huge corporate infringers. They cannot be trusted and have no credibility. All they know about patents is they don’t have any.

     

    reply to this | link to this | view in chronology ]


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