Back to Mobile View

Skip to Content

TUAW Deals

Meet the company that is dangerously close to collecting 1% of Apple's iPhone and iPad revenue

If you've never heard the name VirnetX that's OK, since the company doesn't really make anything you use on a daily basis, but Apple knows the name all too well. The two companies have been entangled in a long legal battle over a handful of patents applying to Apple products like FaceTime, and you guessed it, VirnetX is out for cash and not much else. Apple is no stranger to patent trolling, but where so many have failed, VirnetX has succeeded, and is creeping ever closer to scoring a huge payday off of Apple's iPhone and iPad sales.

VirnetX bills itself as an "end-user-focused company," that values integrity and security above all else. It does this -- it seems -- by creating licensing agreements to rake in cash and waging legal wars against anyone who it feels has infringed upon its holdings.

stock

The company has had some bad beats in its fight against other large tech companies, including losing its infringement case against Cisco in March of 2013. You can see the effect this ruling had on the company's stock price (it's the massive drop which cut its value in half).

But VirnetX is having much better luck against Apple. I'll save you most of the complicated details regarding the case and try to put it in simpler terms: VirnetX owns several patents on network protocols which the company argues are being used by Apple without royalties. In 2013, a jury agreed and ordered Apple to pay $368 million.

Apple then did some behind-the-scenes tweaking to try to skirt the patents, but earlier this year a judge determined Apple was still infringing and ordered that Apple fork over an ongoing royalty of 0.98% of iPhone and iPad revenue.

Running out of options, Apple then leaned on RPX, a company that buys up patents to aid large companies in defense of patent trolls, for help. RPX, operating as an entity separate from Apple, filed petitions to have the patents reviewed and hopefully invalidated as they apply to the lawsuit. The U.S. patent office found that Apple was really the one pulling the strings on RPX's request and, just last week, had it thrown out entirely. VirnetX hailed this as justice being served.

This not only makes Apple look a bit desperate, but it also puts VirnetX one big step closer to collecting on nearly 1% of the sales of Apple's most popular devices. Apple's next move is unclear, as the company has been barred from filing additional reviews on the grounds that it already had the opportunity to make its case, and with one of the biggest names in anti-patent-trolling, RPX, also dismissed, VirnetX is clearly winning this fight.

© 2014 AOL Inc. All Rights Reserved.