Apple's $370 Million Video Call
Who would have imagined that Apple's (NAS: AAPL) FaceTime video calling service, which is free for users, could end up costing the company so much?
The iPhone maker has just been ordered to pay $368.2 million to patent troll VirnetX Holdings (ASE: VHC) after Apple was found to be infringing on VirnetX's patents related to virtual private network, or VPN, technology. A federal jury in Texas ruled that FaceTime uses VirnetX's patents that involve using a domain name service to set up a VPN, which can then be used to set up a secure line of communication.
Two years ago, VirnetX scored a similar victory over Microsoft (NAS: MSFT) relating to the same technology, earning itself a $200 million settlement in the process. The $368.2 million that Apple's now on the hook for is a little over half of the $708 million in damages that VirnetX was initially seeking, but the Mac maker will certainly appeal at this point.
This is a major win for VirnetX, but little more than an annoying pinprick in Apple's side. VirnetX had just $36,000 in royalty revenueÂ through the first half of 2012, up from $17,000 in the same period a year ago. At the end of June, it had $63.8 million in cash and investments classified as available for sale. In contrast, Apple just cleared $36 billion in revenue last quarter and now sits on over $120 billion in cash and investments.
VirnetX also has pending claims against other tech companies like Cisco Systems (NAS: CSCO) , Avaya, and Siemens, so this victory could give it some ammo in those suits.
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The article Apple's $370 Million Video Call originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.