A Battle Over VPN Technology Could See Apple Pay VirnetX as Much as $1.1 Billion

By Elijah Labby Friday, January 22, 2021

Technology giant Apple has been locked in legal battles with the internet security company VirnetX for over a decade, but a recent decision over the latter’s virtual private network (VPN) technology swung in its favor.

US District Judge Robert Schroeder, in the middle of January, ruled that Apple had infringed on a VirnetX VPN patent, meaning that, after a lengthy appeal process that ran up to (and was denied by) the Supreme Court of the United States, the electronics business may have to pay out as much as $1.1 billion.

The specifics are still being finalized. About a week after Schroeder made his decision, VirnetX submitted its agreed bill of costs and prejudgement interest — totaling more than $75 million. Now, the two companies have to decide on the amount of post-trial interest and supplemental damages owed, as well as the royalties that Apple will pay for each infringing device.

Lawyers disputing legal matters about business law in an office.

VirnetX’s Business Victories — and the Company’s Future

It’s a significant victory for VirnetX. Stock in the company grew 9% following the decision — signaling investor willingness to bet on the future success of the business.

But VirnetX has more litigation to go. The business has also argued that Apple’s FaceTime and iMessage apps are intellectual property violations. And the fact is that VirnetX is in a valuable sector, so it makes sense that the company wants to keep a tight grip on its property.

The Value of Internet Security Businesses

The internet security market in which the business sits is expected to grow to $46.5 billion before the year is out, according to market research firm Allied Market Research. The firm also notes in its report that the sector’s value is rising at a compound annual growth rate of 8.4%.

But there’s another, less quantifiable value to the technology. Internet crime is a consistent threat that everyone with an electronic device, from everyday consumers to the highest levels of government, has to worry about.

Christopher Wray, the director of the Federal Bureau of Investigation (FBI), the United States’s highest body for investigating cybercrime, said the coronavirus epidemic has exacerbated the problem.

“Schemes like ransomware have always caused disruption and financial loss,” he said at the World Economic Forum’s Annual Meeting on Cybersecurity in 2020, “but today they’ve escalated to a whole new level—shutting down schools, interrupting key governmental services, crippling hospitals, and threatening critical infrastructure.”

Wray’s comments make it clear that VirnetX’s business, as well as that of Apple, which has recently placed data security at the forefront of its newest iOS features, are critically important. It also shows that these two companies, regardless of legal disputes, are increasingly relevant and likely won’t be going anywhere soon.

About the Author

Headshot for author Elijah Labby

Elijah Labby is a graduate of the National Journalism Center. He has previously written for Broadband Breakfast, a technology and internet policy website.

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