Ondrej Holzman In 2012, the most watched legal battle involving Apple was the one with Samsung. The Californian company came out as the winner, but in the same year it also hit hard once. Apple had to pay $368 million to VirnetX and, as it turns out, also lost several key FaceTime patents.
The verdict ordering Apple to pay $386 million to VirnetX for patent infringement was handed down last year, but this August the case continued with further depositions. It turned out that Apple is not only facing the threat of additional millions in license fees, but also that its FaceTime service is suffering due to missing patents.
The case of VirnetX vs. Apple has applied for several patents covering various parts of the FaceTime video chat system. While VirnetX did not win a full ban on FaceTime in court, the judge did agree that Apple should pay royalties for patent infringement.
Information has now surfaced that Apple has redesigned the backend architecture of FaceTime in order to further not infringe VirnetX patents, but because of this, users have suddenly started to complain in large numbers about the quality of the service.
The court retrial, which involved royalties and took place on August 15, was not reported by any media, and documents related to the case remained almost completely sealed. All the news comes mainly from VirnetX and server investors ArsTechnica one of them interviewed. As a VirnetX investor, Jeff Lease participated in all the court proceedings and kept very detailed notes, based on which we can at least partially unravel the whole case. Apple, like VirnetX, declined to comment on the matter.
Apple claims that it does not infringe patents, but acts differently
FaceTime calls were originally made through a direct communication system. This means that Apple verified that both parties have a valid FaceTime account and then allowed them to connect directly over the Internet without the need for any relay or intermediary servers. Only about five to ten percent of all calls went through such servers, one Apple engineer testified.
But in order for Apple not to infringe VirnetX patents, all calls would have to go through intermediary servers. This was agreed upon by both parties, and once Apple realized that it could pay royalties for this, it redesigned its system so that all FaceTime calls went through relay servers. According to Lease, Apple changed the path of the calls in April, although it continued to argue in court that it did not believe it was infringing the patents. Even so, he switched to the transmission servers.
Complaints and the threat of high fees
Apple engineer Patrick Gates described how FaceTime works in court, denying claims that changing the transmission system should affect the quality of the service. According to him, call quality could even improve rather than deteriorate. But Apple is probably just obfuscating here to divert attention from the VirnetX patents.
According to customer records Apple provided VirnetX representatives from April to mid-August, Apple received more than half a million calls from disgruntled users complaining about the quality of FaceTime. This would understandably play into the hands of VirnetX, which would thus have an easier time proving in court that its patents are technologically very important and deserve high license fees.
Specific amounts were not discussed, but VirnetX is seeking more than $700 million in royalties, according to Lease, who says it's hard to guess what the judge will decide because it's hard to read.
FaceTime is not the first issue Apple has dealt with in connection with VirnetX patents. In April, the Apple company announced that it would make some changes to its VPN On Demand service for iOS due to patent infringement, but it finally reversed itself a few weeks later and left everything as is. But it is not at all clear whether the original system for FaceTime will also return.
Hmm. which reminds me they just banned software patents here in New Zealand.
So I wouldn't want to have a software company there ;-).
On the contrary, I do. Today, it is almost impossible to write any software without infringing a patent. The fact that many such patents are not enforced or do not occur to you at the moment, is written by chance. But write some popular software that becomes popular or makes a lot of money, and the patent vultures will flock to you. If they try even a little bit, they will 100% find something.
Having a software company in a country where they have banned software patents sounds like heaven…
It depends if you let yourself be robbed or if you steal ;-).
Probably when someone writes something and completely by chance "invents" a function that is generally known and patented. so it's probably not a coincidence ;-).
It's true that as a user I could care less, on the other hand, why would people make startups and sell them to big companies for big money, when all you have to do is copy them.
Then there would be no point in starting anything, unless you are in a giant company.
this one looks like ft connects via apple servers only when it doesn't work directly, e.g. through NAT. If this is really the core of the dispute, then sow the bones.
I don't think that disputes are only about generally known patents. Does anyone already have patented comments under articles? :)
In my opinion, simply copying an idea does not guarantee success, startups that have already succeeded are sold, right?
When it comes to someone patenting a general thing (something like comments under an article, or an Apple rectangle with a display), that's the very problem of some "smart guy" allowing it to be granted as a patent. Last time, however, Apple lost the dispute over such a similarity. Someone would probably have to do it exactly the same in every detail, because I understand that then it makes sense to have a patent, because copying completely would be a bit too much. – Although I showed the file on HW, it is the same.
A little while longer and we'll have to communicate by classic letter again.