Apple fails to overturn VirnetX patent verdict, could owe over $1.1B

https://www.reuters.com/article/us-apple-virnetx-idUSKBN29K2DU

by clairity • 6 years ago

129 89 6 years ago

akersten3• 6 years ago

Of course it's the Eastern District of Texas.

The intention of the patent system was to promote the useful proliferation of the sciences and arts. Billion-dollar verdicts to companies that do not even produce a marketable product are the antithesis of that intention. It is not clear to me how to solve this problem aside from tearing down the patent system and never rebuilding it. Gone are the days when an inventor in their garage is prevented from the exploitation of a large company by virtue of a patent they filed for their invention. Now, holding companies exist to absorb patents that describe the most abstract and nebulous ideas in order to leech the maximal value from real companies, and courts like this enable them.

End the patent system. (I'd be happy if we even just got rid of software patents on the existing basis that math cannot be patented, but while I'm on my soapbox, might as well go all the way.)

loceng4• 6 years ago

I've liked the idea of an exponential cost to holding a patent - as in, the cost to maintain it doubles every year. If you're producing a product that's highly successful, profitable, then you'll be able to afford to keep the patent for more years. If you're a patent troll not producing anything, it's going to get expensive quick.

Edit to add: I just realized patents are definitely part of the legal industrial complex..

akersten3• 6 years ago

If that could be implemented fairly (scaling costs based on total revenue so small-time businesses aren't locked out of the system, without giving non-producers/patent trolls a free $0 patent) then that seems like a good compromise.

erk__• 6 years ago

But this will not solve anything else about patents, there will be less reason to license them and such as the amount of time they can run for without any special income through the patent will be much less. Thus giving companies and inventors with a large capital a larger one up on the people that patents are also supposed to protect.

tehjoker• 6 years ago

That changes the game only slightly. Large companies will then be able to hold out over smaller ones far larger reentrenching monopolist behavior. Basically, market mechanisms always favor the rich. You need a fair system not one based on money assuming you even think patents are defensible.

goldcd• 6 years ago

I like that - but there are other options randomly thinks of something

When you file your patent, you add blind optional licensing terms to it. For $x your company can use this. Or for $y you can license each device that uses it. For $z you can buy this (not invalidating any other registered uses).

That way when developing something, you can work out whether it's cost efficient to use/avoid/buy - and remove all the risk of litigation and the overhead of lawyers.

Patent system is broken - but on one hand don't think cancelling it is the answer, but resent the sink of cash that it sucks in by existing in its current form.

chongli3• 6 years ago

How does this protect an individual inventor who invents (for example) a revolutionary new battery but is unable to secure the enormous capital needed to manufacture it? If the cost to maintain the patent is exponential then the existing battery makers need only wait for the inventor to go broke.

ehvatum• 6 years ago

Great - so if I’m dependent on a patented product, it’s going to get exponentially more expensive and all that money will be funneled to the patent office. This helps nobody.

bhupy4• 6 years ago

Aren’t software patents already all but abolished?

akersten3• 6 years ago

That would be (wonderful!) news to me. Not in the US, as far as I know, they're alive and well.

monocasa2• 6 years ago

Alice Corp forbids patents for a normal, noncomputer action just taken on a computer (calculate interest, but on a computer!), but allows software patents otherwise.

zucker423• 6 years ago

The Supreme Court ruling you might be thinking prevents patents of the form "[unpatentable thing], but on a computer".

tooltalk2• 6 years ago

That's what they said about design patents too, but Apple managed to dig it out of grave to use it against their competitor [1]. I guess they are everywhere and they never die.

[1] https://www.japantimes.co.jp/opinion/2016/10/25/commentary/w...

lotsofpulp• 6 years ago

The entire country should be united against the eastern district of Texas. It’s insane how much money and opportunity those idiots have cost the entire populace.

api2• 6 years ago

I wonder why the Eastern District is like this? I wonder if it goes back to the oil industry and what I'm sure was a brutal fight over patents on drilling and refinery technology during the heyday of Texas wildcatting.

jimbob45• 6 years ago

Doesn’t the appeals system make every case federal in theory, if not necessarily so in practice?

joshspankit4• 6 years ago

Apple had to set up Facetime proxy servers because a company had a patent on what was essentially “direct communication between two devices on the internet”.

Amazon’s patent on “one-click” buying.

Just utter nonsense that any company would be allowed to hold such a patent.

Apologies: I’m mobile rn and would otherwise research the actual details, but it really gets me riled up and I had to comment without citations.

gregsadetsky• 6 years ago

Apple Facetime proxy: https://arstechnica.com/tech-policy/2013/08/report-after-pat...

Amazon 1-Click: https://en.wikipedia.org/wiki/1-Click#Patent

galkk2• 6 years ago

Personally, I think that "one-click" buying idea and implementation is a brilliant, and deserves to be patented.

disc: former Amazon employee

slivanes• 6 years ago

Amazon's U.S. patent on one-click expired on September 11, 2017.

zucker423• 6 years ago

One thing that needs to happen is clear opposition to the current patent system from technology companies and employees of those companies. Too many people and companies are willing attack "patent trolls" but still defend the patent system in general and even software patents in particular. Apple, for example, received a large settlement for design patents from Samsung[1], apparently including, for example, a patent for the "home screen app grid".

My guess is that the leadership in large companies like the fact that the company owns patents, since it's some manifestation of the company's innovative capabilities, without realizing the pernicious effect the patent system has on their ability to innovate. I seriously think the patent system could contribute greatly to the end of worldwide U.S. technological prowess, especially as it seems to me the trend is toward more restriction.

Ideally, all tech companies should commit to complete patent non-aggression. And employees should pressure legislators for radical patent reform.

[1] https://www.theverge.com/2018/6/27/17510908/apple-samsung-se...

bsder• 6 years ago

Of course it's the Eastern District of Texas.

I thought that there was a rule change that killed this venue shopping with patent cases?

Presumably, this was a case that was already in flight when the rule change went through?

Thus the "rejected Apple’s request for a new trial"?

SOLAR_FIELDS• 6 years ago

I presume you are referring to TC Heartland v. Kraft Foods: https://en.m.wikipedia.org/wiki/TC_Heartland_LLC_v._Kraft_Fo...

I’m not a lawyer and don’t really know the implications of this case fully but a cursory reading of that page as a layman seems to support what you are saying (note the “Impact” section of the Wikipedia page).

annoyingnoob• 6 years ago

I think there is still room for the little guy to build something that can be replicated in reasonable time by a behemoth tech company. That isn't to say that I'm a big fan of patents. The reality is that the world moves much faster than it did when patents first became a thing. I'd advocate for reducing the term of patents to 5 years, down from 20 years. You can get some protection but you're going to need to compete before long.

qppo• 6 years ago

I don't know how this should be structured but there has to be some principle of "use it or lose it" for IP protections, and some limitations on transference of IP.

Obviously there are a lot of negatives to implementing some kind of legal framework around those ideas but something has got to give here, the existence of patent trolls and defensive patent strategies is offensive to the notion that we should encourage innovation.

Spivak• 6 years ago

It’s always going to be that one district for the same reason basically all businesses are incorporated in Delaware, because their court system has heard a ton of cases on the subject and is a known quantity to everyone involved. It sucks that our patent system sucks but given enough time and case volume any district will turn into the same thing.

1vuio0pswjnm7• 6 years ago

Of course software patents are a fairly recent idea and are not the only class of patents

Myopia

End an entire system because of one class of patents that probably should never have been created anyway

Hmmm

Why not just put an end to software patents

Then observe how many people complain about the patent system

Wonder if many programmers would keep complaining about the patent system if software was not patentable

Self-interest

eloff• 6 years ago

Yes, I think the harm caused by the broken system as it stands is more than the benefits it provides. I'd love to see it abolished. Especially software patents.

kevincox• 6 years ago

Billion-dollar verdicts to companies that do not even produce a marketable product are the antithesis of that intention.

It depends on how exactly you define "a product". I think that if one could do research and come up with valuable technology that they hope to license. If this is a useful idea then I think they should be able to sue over it even if they don't have a "product".

I think it depends more on the patent itself. If the patent is very clever and something that people are unlikely to discover themselves then it makes sense to exist and be enforceable. However if it is something obvious or simple to independently discover than it should not be, irrespective if you are producing a product or not.

jedberg• 6 years ago

I think it depends more on the patent itself. If the patent is very clever and something that people are unlikely to discover themselves then it makes sense to exist and be enforceable.

Not really, not if the holder isn't actively exploiting it. The whole point of patents is to encourage expensive innovation so you don't come up with something and then have it stolen after doing the hard work.

But if you did the hard word and aren't exploiting it, then it shouldn't be withheld from society. Let someone else exploit it.

If you did the research but can't mass market it, then you should be forced to sell the patent, so that society can benefit from your invention.

At the end of the day, the patent system is supposed to benefit society, not the inventor.

vmception• 6 years ago

As someone whose contributions to society would require much greater licenses and capital than I would ever get, but can alternatively stretch my finances to get a patent because of brief time periods where I notice something that others overlooked, I absolutely understand why people do what they do.

I would be a non-practicing entity too.... Why should I get vilified for that? because I will never have the licenses or capital needed to execute that idea, but I still put it in the public sphere - yes, even the broadened vague version that my patent attorney altered my ideas to. The patent attorneys themselves say it is a waste of time and money otherwise.

So, what is the argument? That I should dedicate my life to one idea? I mean I know people that think thats their plan if they ever got a viable idea. The rest of us know better and churn out and dismiss ideas every week.

What distinction is there, does that make me a patent troll worthy of your ire? Let me level with you, maybe there could be statutory tweaks to limit what purchasers of patents can get from infringement claims (The non practicing entities that buy up patents and find organizations to sue), if the current patent owner is not the named inventor.

I agree that if all the incentives are misaligned and no individual entity is acting maliciously and just working with the rights they have, then we should revisit the patent system itself. I agree that judges in patent litigation are doing some strange/corrupt things. I just don't see how any preference is still addressing how to compensate people for ideas.

1ncorrect• 6 years ago

An idea I’ve been chewing on for a while is reframing how value is derived. Broadly, the predominant mechanisms used today requires resources to be finite in order for their value to be meaningfully quantified. This makes sense for physical and temporal entities, and I see the copyright and patent systems as the mechanisms we came up with to impose artificial scarcity of intrinsically abundant resources. I see this as ultimately rewarding self interested behaviour, which wild gesturing at everything.

Rather than remove or replace it, I’d propose building a competing mechanism which values and rewards sharing abundant resources as broadly as possible.

To my mind, the value of an idea should be quantified on the breadth and depth of its application, not by how tightly it can be restricted.

One candidate would be a neural network akin to PageRank. Ideas would be the neurones (value sinks), and dependency links would be the synapses (value sources). The greater the links in size and number, the greater the value attributed to the ideas. Neurones and links could have ‘owners’ attached to facilitate accounting. There’s also a potential MMT component, where part or all of the generated value is instantiated by a currency issuer.

tooltalk2• 6 years ago

Why? forum shopping is nothing new. The EU has a similar problem with Germany's Dusseldorf court, also popular among patent trolls . That's for instance where Apple sued Samsung to gain a quick preliminary injunction years ago with a doctored image of Samsung tablet[1] -- and Apple did get one -- though all of Apple's claims were overturned later, in large part due to Germany's higher legal standard for infringement.

Now, do you believe that universities or medical research institutions that do not produce or manufacture a product themselves shouldn't be able to patent their invention only because they are not in the business of producing themselves?

A patent is usually for very specific methods or utility that usually doesn't cover a product in entirety (trade dress is a different matter and deals mostly with overall impression). According to an old estimate from RPX, there are over 250+K active patents in modern mobile devices -- you aren't saying that thousands of other inventors not employed by Apple, Samsung or other modern portable device makers, should have no say in patent business?

In case of VirnetX, the key executives at the company are also the inventors of the infringed patents -- Robert Dunham Short, Victor Larson. They were granted while they were working for SIAC and later bought by and re-assigned to VirnetX.

[1] "Why Apple Went To Dusseldorf," https://www.forbes.com/sites/parmyolson/2011/08/24/why-apple...

thaumasiotes4• 6 years ago

In a decision issued on Friday, U.S. District Judge Robert Schroeder in Tyler, Texas rejected Apple’s request for a new trial and several other claims.
These included that [...] jurors should have been told the U.S. Patent and Trademark Office had deemed VirnetX’s claims “unpatentable.”

This article really should have elaborated on why jurors didn't need to be told that they were (apparently) awarding damages for infringement of unpatentable claims. Or really why, if the claims weren't patentable, the case wasn't thrown out of court.

Or perhaps the claims were patentable, and the article needed to elaborate on exactly what Apple was trying to describe there.

Either way, this is absolutely worthless coverage.

ada1981• 6 years ago

Yes this struck me as odd. The article makes it seem that they are being awarded $1B for infringing on a parent that is not valid. Is this correct?

BugsJustFindMe• 6 years ago

In a decision issued on Friday, U.S. District Judge Robert Schroeder in Tyler, Texas rejected Apple’s request ... that ... jurors should have been told the U.S. Patent and Trademark Office had deemed VirnetX’s claims “unpatentable.”

If the USPTO deemed them unpatentable, where did the patents come from?

mikeyouse• 6 years ago

Looks like it's a concurrent case that Apple is pursuing, so VirnetX were granted the patents and sued Apple on that behalf. Apple is fighting this patent infringement lawsuit, and at the same time, seeking to invalidate the patents in a separate case in front of the US PTO:

Apple contends that it is entitled to a new trial because the Court excluded evidence from parallel PTO proceedings. Docket No. 775 at 39. Apple suggests that the fact that the PTO has issued final written decisions finding each claim unpatentable over the prior art is relevant to damages.
The Court is not persuaded that exclusion of the PTO proceedings warrants a new trial. VirnetX’s appeals of those proceedings are ongoing, and none of the asserted claims has been cancelled. It is particularly unclear what probative value the PTO proceedings have in light of the fact that invalidity is not an issue in this case.
To the extent Apple argues the decisions are relevant to damages, the relevance of the decisions is minimal because a number of the “decisions” cited in Apple’s offer of proof2 on PTO proceedings were issued afterthe parties’ alleged hypothetical negotiation date of September 2013. Compare Docket No. 721 at 18 (“If infringement is found, the date of the hypothetical negotiation would be September 2013, when the redesigned versions of VPN on Demand and FaceTime were released.”), with Docket No. 692 (Apple’s offer of proof).
Apple suggests that the evidence would have been relevant to the utility and advantages of the patented property over old modes or devices. Id. But, contrary to its assertions, Apple was not precluded from introducing evidence that the claimed invention “has no utility or advantages over old modes or devices.” Id. The Court only prohibited the use of the PTO proceedings, and Apple was free to present whatever evidence relating to Georgia-Pacific factors 9 and 10 it so chose.
Apple is not entitled to a new trial on this basis.

Page 36 here: https://patentlyo.com/media/2018/09/Apple500MLoss.pdf

monocasa2• 6 years ago

It is particularly unclear what probative value the PTO proceedings have in light of the fact that invalidity is not an issue in this case.

How can invalidity possibly not be a factor?

r00fus• 6 years ago

The field of patent law seems to go against reason all the time. I'm so glad I don't deal with that scene anymore.

coolspot• 6 years ago

Those are VirnetX US Patents No. 6,502,135 and No. 7,490,151 .

https://patents.google.com/patent/US6502135B1/en

https://patents.google.com/patent/US7490151B2/en

TheDong3• 6 years ago

These patents sound like they loosely describe a worse version of ssl/tls.

They talk about the client having a whitelist of IPs to form secure channels to, and using a combination of a dns proxy and cooperating client to form secure communication layers.

The actual described thing sounds a little different (i.e. 'requests for 192.168/24 have a transparently encrypted link' rather than tls handshakes), but not different enough that it's not obvious.

From the existence of SSL, dns, and a VPN, this idea seems quite obvious to me. In 1998, all of those things existed. The existence of SSL (in 1995), should have by itself invalidated this patent entirely IMO.

From the case filings, it sounds like the supposedly infringing part of Apple's tech is "VPN On Demand" and "FaceTime".

I am not a patent lawyer, I likely don't know what I'm talking about.

zucker423• 6 years ago

I am not a patent lawyer, I likely don't know what I'm talking about.

I'm not so sure patent lawyers, and more importantly judges and jurors, know what they are talking about when it comes to technical details.

LoSboccacc• 6 years ago

the solution for routing voip on a mesh network wasn't obvious.

data? yeah, albeit p2p sharing was popularized a year late, aggregating multiple channels for data transfer was something common.

but voip has some unique challenges, as you cannot reconstruct data as easily, you have strict time constraint as your call would exhibit disruptive latency otherwise, so your mesh cannot pump packet downstream at their own leisure, the goal is not to saturate the channel but to provide a ordered stream whee packets arrive in a timely matter.

as a matter of fact the first consumer available p2p voip app was skype, 5 years or so after this patent, and they couldn't stabilize it with a true mesh so their software elected supernodes across their own network to act as relay.

totalZero• 6 years ago

I am not a patent lawyer, I likely don't know what I'm talking about.

The point of a patent nowadays is to be as vague as possible while still unmistakably protecting the core invention, so that a future patent infringement lawsuit receives the benefits of claims with broad scope. My cofounder and I were once told by our patent attorney (himself a startup founder) that he views a patent application as a failure if the USPTO approves it on the first attempt, because that means he was too specific with his claims.

Frankly, as ugly as it sounds, I don't blame the attorneys for working that angle. The patent system itself is structured in such a way as to reward gamesmanship.

Technologists are used to viewing clarity and conciseness as positive attributes for technical writing, but straightforwardness is kind of naive and undesirable in the patent world.

api2• 6 years ago

These are basically patents on something talking to somethings securely over the Internet. It's absolutely outrageous. Luckily the first one is expired.

savant_penguin• 6 years ago

Are patent trolls really different from IBM (+others)?

I generally see strong backlash against "companies that produce nothing" yet sue everyone else. However it's really easy for large companies with mountains of patents (many of which will never be products) to strong-arm smaller companies into cross-licensing (anything you build will surely breach some patent). So they would only get paid by their patents and hardly ever have to pay anyone else due to the patent system.

By this principle, only a company that produces nothing could ever hope to sue the technology behemoths for patent breaching.

Point here being that it's not the eastern district of texas that's at fault, nor the patent trolls (because other companies use the patent system in very similar ways). It's the patent system that's complete utter bullshit

wahern• 6 years ago

By this principle, only a company that produces nothing could ever hope to sue the technology behemoths for patent breaching.

True, there's a fair amount of hypocrisy. Patent trolls (NPEs) suck for everybody, but they especially suck for large corporations as large patent portfolios and cross-licensing agreements (actual and potential) mean they usually don't have to worry about an endless train of trivial patents posing an existential threat to every line of product development. The rise of patent trolls has meant that the pain of software patents is distributed more equitably. And, of course, theoretically this makes it easier for individuals and small companies to monetize patents.

But patent trolls also pose a unique problem for smaller players because the ability of big companies to threaten small players is limited by laws and regulations that restrain anti-competitive behavior. Patent trolls almost by definition aren't subject to such restraints. Thus, while most large corporations lobby against patent trolls, it's not uncommon for them to sell to NPEs patents that they couldn't easily prosecute themselves. Patent trolls make it easier for everybody to monetize patents, but in practice it's the small players that arguably get the short end of the stick.

kinghtown• 6 years ago

Your response begs the question wether you work for a patent troll. Not seriously suggesting that, but come on:

1. They are user hostile. They add no value to the world. Only hinder technology and make life worse for the public.

2. Has any patent troll ever taken their court settlements to actually produce anything?

3. Anyone who knows anything about them only views them as blood sucking leeches.

4. HN loves to paint Apple as Satan but at least they bring quality products to market.

2bitencryption• 6 years ago

U.S. District Judge Robert Schroeder in Tyler, Texas

whoah, isn't that infamously patent troll capital of the world?

confiq• 6 years ago

yes it is: https://www.vox.com/2017/5/23/15678290/patent-trolls-eastern...

swiley• 6 years ago

What fresh hell is this? Wouldn't quake violate this patent?

olliej• 6 years ago

Even the uspto said the patents weren’t actually patentable but the judge said the jury should not be allowed to know that

Erlangen• 6 years ago

The patent system is crazy. It reminds me this, "patent lawsuit against GNOME",

https://news.ycombinator.com/item?id=21071699

Apple fails to overturn VirnetX patent verdict, could owe over $1.1B

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