Samsung and Apple Patent Saga -- The Hell with That, Let's Talk VirnetX vs. Apple on Patents Instead

By Tony Rizzo August 15, 2013

Last Friday, we waited around for the order to come down on how the International Trade Commission (ITC) would rule on several issues concerning the Apple and Samsung patent saga. Earlier that same week, President Obama weighed in on a recent ITC ruling that would have prevented Apple from bringing into the United States certain early models of its iPhone and iPad, meaning Apple wouldn't be able to sell them. President Obama essentially overruled the ITC ruling, favoring Apple over Samsung as a result (notably to the applause of a number of business publications, and most notably The Wall Street Journal).

We won't rehash the logic behind the overruling or even why the president was in a position to overrule anything with the name "International" as part of its title. Nevertheless, he was able to and he did. The president's ruling was the very last thing standing in the way of Samsung winning a patent battle over Apple. We leave it to interested readers to track down the details of that, but our own interest is more in line with the almost amazing coincidence that last Friday the ITC was expected to rule on another patent issue concerning Samsung and Apple - only this time it was anticipated the ruling would favor Apple being able to ban Samsung from selling certain older products. And when the ruling came down it most certainly did.

Image courtesy Shutterstock

Well, now, here was an interesting issue -- would the president step in and overrule the ITC yet again? This time in favor of Samsung? After all, that would only be fair, right? Samsung scoffed and noted that it has already created technology that no longer infringes on Apple's patents. Nevertheless, the general patent war on both this and other patent issues continues apace, though we'd hugely prefer they would simply come to an end.

Meanwhile, the president's veto has as its underpinnings a simple point - that Apple's violations were against FRAND patents and that the ban was simply far in excess of what penalties such an infringement should carry. Hence the rationale for the veto. Samsung's loss last Friday was not based on standard essential patents, but rather on true patents providing real differences in products - so that the President is essentially off the hook for returning the favor to Samsung. The patent saga between the two companies continues wearily on.

VirnetX -- A Troublesome Patent Issue for Apple

Back in 2010 VirnetX won an outright patent victory against Apple. Apple not only lost the lawsuit but also lost its appeal. The loss, which is based on a number of security patents VirnetX holds, resulted in an award of $368.2 million to VirnetX - a very nice win indeed against a giant.

On Tuesday of this week, VirnetX once again stepped up to the patent wars plate against Apple (other large vendors have been successfully sued by VirnetX - including Microsoft, but we only care about Apple in this particular story we are telling). The problem for Apple and others is that VirnetX continues to be granted patents for a variety of security technology, including patents that affect Apple's VPN capabilities on both iOS and Mac OS hardware (in other words, most of Apple's products).

Most recently it has been awarded two new security patents, and unfortunately for Apple one of them is very relevant to more recent litigation VirnetX has put into play against Apple. This latest round covers very recent Apple hardware that includes the iPhone 5, the newest iPad, the iPad Mini and the latest iPod Touch. As we noted above, the VirnetX also believes the patents cover Mac OS-based hardware.

VirnetX is in an interesting position -- it stands to make a good deal of money from Apple. Apple meanwhile, knows it won't be able to simply litigate away this patent problem. VirnetX has a serious hold on victory here and won't be deterred (it can't be) by Apple trying to overwhelm it in any way through superior legal dollar resources. At some point Apple will have to pay up and VirnetX will walk away a happy company.

Still, there need to be negotiations, and unfortunately for Apple time is not on its side but on VirnetX's side. One interesting patent in VirnetX's quiver is an LTE Advanced patent. Apple -- and other mobile device manufacturers -- will eventually have to pay up on this front as well if they choose to make LTE Advanced available (and there isn't really a choice here), as all advanced smartphones will need to deliver LTE Advanced. Finally, should Apple try to move ahead with delivery of products that infringe on VirnetX IP without having negotiated a deal with the company, it will find itself facing a serious claim of willful infringement -- which can (and mostly likely would) triple the costs for Apple to resolve infringement damages. 

We'll be watching to see how Apple ultimately plays this. Hopefully it will keep its eye on the ball and do what's right. The Samsung and Apple patent saga needs to simply go away. On the other hand, the VirnetX patent issue needs to be resolved. VirnetX will have its day at the bank - we hope Apple comes through with a negotiated settlement and doesn't end up paying a more massive willful infringement cost.

It is not unlike Nero fiddling while Rome burns … Apple needs to stop fiddling and put out the VirnetX fire.

Edited by Rory J. Thompson

TechZone360 Senior Editor

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