VirnetX Slays Apple In FaceTime Patent Battle
NEW YORK (TheStreet) - As hedge funder David Einhorn continues to press a shareholder revolt against Apple(AAPL) and its $137 billion cash hoard, other Davids are dusting themselves off after less heralded fights with the smartphone Goliath.
On Wednesday, VirnetX (VHC) , a licenser of security features for wireless communications ranging from 4G LTE networks, streaming video, to VOIP, announced that a U.S. court upheld a $368.2 million intellectual property ruling against Apple in its favor.
VirnetX's patent infringement claim stems from Apple's FaceTime chat program, which is currently a popular feature on the company's iPhone 5, iPad and iPod mobile devices and its iMac and Macbook PCs.
With the court ruling, VirnetX will receive about $330,000 a day until it can reach a royalty agreement with Apple on the patents. It doesn't appear Apple will be able to challenge the court's ruling, which affirms a late November jury decision in VirnetX's favor.
"We are extremely pleased with the outcome of our suit with Apple," said Kendall Larsen, VirnetX CEO and President. "This victory further establishes the importance of our patent portfolio."
While the $330,000 daily payments or a royalty agreement are unlikely to dent Apple's financials, the ruling represents what could be a major revenue stream for the company in coming quarters, as it continues to spend on its patent monetization efforts.
The patent infringement claim affirms VirnetX's position as a key player in the legal fights currently underway in Silicon Valley.
The company, which has been publicly traded since the late 1990's, has seen its shares recover from low single digit stock prices as a patent litigation for features on mobile intensified in recent years.
In the past five years, VirnetX's shares have surged nearly 600%. The company began to successfully litigate major patent infringement claims against the likes of Apple and Siemens(SI) in recent months.
Unlike Einhorn and his fight against Apple for a preferred dividend, VirnetX's battle against tech sector titans is unlikely to end anytime soon.
In March, the firm will pursue infringement claims against Cisco(CSCO) and private equity-owned Avaya. According to the company's statements, VirnetX's patent portfolio includes 20 U.S. and 32 international patents and over 100 pending applications.
In January, William Blair analysts highlighted that the Siemens ruling, and a licensing agreement with the Enterprise Communications division of the German conglomerate may help VirnetX in getting royalty agreements with Cisco and Avaya for its IP private branch exchange patents.
VirnetX shares rose over 5% to $35.91 in early afternoon trading on Wednesday. After big 2012 stock gains, VirnetX's market cap now stands at $1.84 billion.
Apple has not yet responded to TheStreet's request for comment on this story.
-- Written by Antoine Gara in New York