VirnetX Holding Corporation is a 20-employee, publicly-traded (NYSE: VHC) corporation with a market capitalization of $505 million and with unusual family compensation. VirnetX owns 190 patents for some of the key technologies of the last fifteen years, including technologies used for Skype, iMessage, FaceTime and virtual private networks.
VirnetX is in the business of licensing those patent rights and has had astonishing success in pursuing major corporations for patent infringement. VirnetX filed several infringement lawsuits in 2010, including against Microsoft, Apple, NEC Corporation and Cisco Systems. Cisco Systems won and NEC and Microsoft settled. VirnetX received $200 million from Microsoft for Skype technology in 2010, and another $23 million from Microsoft in 2013.
Apple decided to slug it out. After two jury trials, two appeals to the Federal Circuit Court, and a denied petition to the Supreme Court, Apple finally paid VirnetX $454 million for patent infringement in 2020.
VirnetX was not done with Apple, and filed a second lawsuit in 2012 for infringement by Apple products launched after the first lawsuit was filed. After a jury trial, appeal, and re-trial on damages, in 2021 VirnetX received a judgement against Apple for another $502.8 million for infringement of patents related to virtual private networks. This case is not over and we can expect further appeals. Apple has said that the total payout of both cases may top $1.116 billion.
We know what you’re thinking:
a) You thought the patent troll business model was dead after the Supreme Court’s Heartland decision.
b) VirnetX is publicly traded – you can buy stock and ride the VirnetX gravy train!
The Heartland decision related to where a patent owner can sue for infringement, not whether the patent owner can sue. And VirnetX is not like the patent trolls of the past – VirnetX developed and continues to develop its technology in-house rather than acquiring issued patents by others. VirnetX is less like a troll and more like a research & development shop that protects its inventions and enforces its patents. VirnetX also has a software product, even though the product makes little money and was launched several years after VirnetX filed the infringement lawsuits.
As to the VirnetX gravy train, the company does not pay dividends. If the shareholder complaint is to be believed, the family at the head of the company is sopping up the gravy.
— Robert Yarbrough, Esq.