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   Technology StocksVHC - VIRNETX - Mobile internet security - Hottest technol


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From: Paul Lee4/8/2013 10:35:11 AM
   of 41
 
one man's opinion


Apple Says It Is Willing To Throw The Baby Out With The Bath Water Over Royalties

Apr 8 2013, 10:09 by: EXPstocktrader |




Disclosure: I am long VHC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

The phrase to "throw out the baby with the bath water" is an idiomatic expression (that means something other than the literal meanings of its individual words) used to suggest an avoidable error in which something good is eliminated when trying to get rid of something bad, or in other words, rejecting the essential along with the inessential.

The longer term valuation of VirnetX ( VHC) according to statements implied by the company are solid. Even today Kendall Larsen, CEO of VirnetX said; "We believe that VirnetX invented technologies are essential to securing the rapidly growing 4G/LTE networks." VirnetX has ientified additional 3GPP specification to ETSI and ATIS. "VirnetX remains strong and undaunted as we continue to execute on our long-term strategy to become a key provider of technology and intellectual property required for making communications secure over the 4G/LTE networks."

Look, anyone wanting to use 4G LTE technology will have to agree to a licensing agreement with the company. It all makes sense. Having a patent process and enforcement of patents is warranted here, otherwise why have a USPTO? Further, because of the validity placed on the patents like the 180 patent by the USPTO, several licensing agreements have already been made by a few companies which include: Microsoft ( MSFT), Aastra ( AATSF.PK), Mitel ( MITL), NEC (NIPNF) and Siemens. I suspect that news regarding Apple's royalty will send shares much higher despite the recent drop.

In a communication last week, Apple ( AAPL) informed its enterprise customers that it was removing the VPN On Demand feature due to a lawsuit that they lost to VirnetX. Here's the communique:

Due to a lawsuit by VirnetX, Apple will be changing the behavior of VPN On Demand for iOS devices using iOS 6.1 and later.



Essentially, the move follows a U.S. $368 million ruling against Apple, where a federal jury found the company had violated VirnetX patents. Apple went on to list a number of problems that users might experience as it essentially said that customers must manually initiate a VPN connection.

So, let me get this straight:

1) Apple is essentially now admitting that it was using VirnetX's patented technology; however in court Apple swore under oath that it wasn't? Hmmm ...

2) Apple who reported record revenue on January 23, 2013, of over $54 billion and sales of over 75 million iOS devices in a single quarter with a balance sheet of over $196 billion dollars worth of assets, would rather throw away its enterprise business rather than pay a 1% royalty rate?

Let's Be Perfectly Clear About This Move:

Apple is not providing a work around to VirnetX's technology; it is simply removing it at the expense of its enterprise customers. Also, this has absolutely NO impact on FaceTime or iMessaging. To date, Apple has NOT provided a viable work around to VirnetX's patented key technology as it pertains to FaceTime or iMessaging.

VirnetX's 1% royalty stems from arguments made in the Jury trial that concluded with a Jury siding with VirnetX and the $368 million dollars. And on top of this as determined by Judge Davis's final judgment, he apparently finds a 1% royalty as being reasonable. Running royalties can run anywhere from 1% - 7% as the judge so determines. At this point, the ongoing use of the patents is now willful infringement and could carry an even higher royalty rate if the judge sees fit.

Due to the high volume of Apple sales on accused products, Apple, facing an imposed royalty rate around 1%, could very well be on the hook for royalty payments that range anywhere from $800 million to $1.5 billion per year.

This Coming Week Will Tell More:

April 12, 2013 ends the time parameters for court ordered mediation meetings to establish a running royalty rate between Apple and VirnetX. If no agreement is made, the judge has ordered VirnetX to file a motion for him to establish an ongoing royalty rate. I wouldn't be surprised if VirnetX hasn't already written this motion with an even higher ongoing royalty rate greater than 1% now that its usage of the technology is willful.

The Walls Are Closing In On Apple:

Is Apple, who is dragging its feet here, actually going to place its fate in the hands of the judge? The same judge who has already favored VirnetX with the Markman Order ruling and has indicated that a 1% ongoing royalty rate is "reasonable" or will it try to work out an arrangement with VirnetX?

As a longer term investor in VirnetX, it appears that this stock is a good value play once again. The shares have been cut in half and the short volume is huge. At some point (as we see from time to time) the shorts will need to unwind some or all of their position and cover. When this occurs (as we have experienced many times in the past few years) the stock should spike hard. In any event, expect more short term volatility.

One last thought. If Apple continues to use VirnetX's secure patented technology, it only makes sense that it will have to pay a "reasonable running royalty rate" just like Microsoft and the other large tech companies are doing. It's like a toll road. If you use it you have to pay. I really think that Apple's announcement of removing VPN On Demand might just be a posturing maneuver in the negotiation process or possibly as a way of garnering public sympathy? We should all know how this plays out within a week. Stay tuned.



Additional disclosure: I may add more to my current position that was initiated on the recent drop in the next 72 hours

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From: Solarity6/7/2018 9:50:40 PM
1 Recommendation   of 41
 
Time to put VHC back on your watch list. Good things going to happen here. The 7 year battle between Apple and Virnetx will likely come to a head later this year and the result could be explosive.

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To: Solarity who wrote (29)8/31/2018 12:05:56 AM
From: hdl
   of 41
 
vhc got another judgment against aapl

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To: JakeStraw who wrote (22)1/15/2019 1:02:06 PM
From: sixty2nds
1 Recommendation   of 41
 
PR just now
Press Release
January 15, 2019 at 12:03 PM EST
VirnetX's Judgement Against Apple Affirmed by the United States Court of Appeals for the Federal Circuit
$439.8 Million Affirmed Judgement Includes Jury Verdict, Willful Infringement, Interest, Costs and Attorney Fees
ZEPHYR COVE, Nev., Jan. 15, 2019 /PRNewswire/ -- VirnetX™ Holding Corporation (NYSE AMERICAN: VHC), an Internet security software and technology company, announced today that the United States Court of Appeals for the Federal Circuit entered a unanimous Rule 36 order in the Federal Circuit case 2018-1197 titled "Appeal from the United States District Court for the Eastern District of Texas in No. 6:10-cv-00417-RWS, Judge Robert Schroeder, III" affirming the judgement issued by the United States District Court for the Eastern District of Texas in this case. The original District court judgement awarded the Company a total of $439.8 million including jury verdict, willful infringement, interest, costs and attorney fees, following the previously disclosed jury trial and verdict in the amount of $302.4 million.

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From: Solarity2/6/2019 6:40:48 PM
   of 41
 
Not my comment but an excellent summary of recent developments by an astute observer of VHC.

"For Apple, a settlement enables negotiation, while it still has some semblance of leverage, of a one time payment granting a worldwide, pre-paid license to VHC's patents booked as an extraordinary item.

If Apple chooses not to settle, it will pay (via Apple 4) a court mandated $1.20 per unit ongoing cash payment on US iPhone revenues; that will fall to the COGS line, and a reduction in gross margin will have a much, much greater impact on Apple's market cap than a discounted aggregation of that payment stream booked as a one time extraordinary item.

If Apple chooses not to settle, the company will certainly use Apple's initial Apple 3 payment to fund litigation against Apple in Europe (Germany), Japan, etc. for patent infringement. Some of those markets issue injunctions first and ask questions later.

If Apple, per your suggestion, waits until Apple 4 is Rule 36'd to phone Zephyr Cove, VirnetX has every incentive to flash the big middle finger and take the actions above. Apple has more leverage today than it will after Apple 3 is denied en banc, when it will have more leverage than it will after Apple 4 is heard, when it will have more leverage than it will when writ is denied or Apple 4 is Rule 36d (which ever comes first), etc. You may think the IPR's remain a factor, for all the reasons discussed ad nauseum on this board over the last couple of weeks, I don't, and I doubt that Apple does either.

As for other infringers, if they don't settle on reasonable terms, VHC will sue for willful infringement. Validity will be established, infringement will be obvious, and damages will certainly include a step up for willfulness.

The infringers, including Apple, played a much longer game than they could have wished for initially. They lost. It's over. Time to pay up."

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To: Solarity who wrote (32)2/10/2019 7:47:11 PM
From: sixty2nds
   of 41
 
I remember that post well...

There is a lot to like about it.

I disagree with the settlement talk.

I do not believe it is in VHC's best interest to settle for .01 less than the court orders.

Cheers,
60

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To: sixty2nds who wrote (33)3/8/2019 6:26:55 PM
From: Solarity
1 Recommendation   of 41
 
A recent Dallas Morning News editorial blamed so-called patent trolls for Apple closing two stores in Plano and Frisco. My law firm represents several of the businesses described as "opportunistic companies" that "exploit the courts and our patent law." In fact, Apple is the opportunistic company.

Apple has lost multiple trials in the U.S. District Court for the Eastern District of Texas, including some cases won by my law firm, Caldwell Cassady & Curry. Our verdicts against Apple include $533 million (2015), $625 million (2016), $302 million (2016), $22 million (2016) and $502 million (2018).

In three of these trials, we represented Nevada-based VirnetX Inc. in cases involving the technology that enables the popular FaceTime feature to work on Apple's iPhones and other company products. VirtnetX, a publicly traded company, owns a valuable patent portfolio that covers secure communications technology, and its patented ideas originated with a group of inventors from Science Applications International Corp., the respected defense contractor and technology supplier.

One of the main inventors of VirnetX's patented technology is a former chief system architect and assistant vice president at SAIC. Another holds a Ph.D. in electrical engineering and previously worked as assistant vice president and division manager at SAIC.

The reason Apple was sued is because the company has never licensed VirnetX's technology. Instead, Apple has used its vast resources to drag VirnetX through trial after trial and appeal after appeal. Despite having had multiple opportunities, Apple has never won at trial against VirnetX because it has never been able to muster a defense that jurors found credible.

In 2013, Apple modified FaceTime to avoid infringing VirnetX's patents. This redesign was so expensive that it was abandoned after only three months, and Apple again modified FaceTime to resume infringing VirnetX's patents. Meanwhile, Apple misrepresented this fact in litigation and claimed that it was continuing to use its expensive redesign. After the truth was uncovered, a Federal District Court judge found that Apple had tried to conceal its infringement. But to this day — after nearly a decade in court — Apple has never paid VirnetX one penny for using its technology.

Who is really the "opportunistic company" here? Apple has made more than a trillion dollars selling products that rely on VirnetX's technology. Even if it did not originally intend to infringe VirnetX's patents, Apple certainly made a cold calculation to resume its infringement after its redesign failed —knowing that it would take VirnetX years to get any relief in court.

And who is really "exploiting" the courts? For one, it's entirely prudent to file cases in a proper legal venue such as the Eastern District, where the judges are very experienced in patent law and adept at identifying and managing any cases that are not brought with good reason. It's also important to note that, at any point in time, Apple could have decided to take responsibility and license VirnetX's technology on fair terms. Instead, it has engaged in litigation misconduct while trying to string out the proceedings to avoid paying anything.

If Apple officials want to move out of Frisco, that is their prerogative. But let's not pretend that Apple is a victim.

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To: Solarity who wrote (34)3/8/2019 6:28:20 PM
From: Solarity
1 Recommendation   of 41
 
For Apple, a settlement enables negotiation, while it still has some semblance of leverage, of a one time payment granting a worldwide, pre-paid license to VHC's patents booked as an extraordinary item.

If Apple chooses not to settle, it will pay (via Apple 4) a court mandated $1.20 per unit ongoing cash payment on US iPhone revenues; that will fall to the COGS line, and a reduction in gross margin will have a much, much greater impact on Apple's market cap than a discounted aggregation of that payment stream booked as a one time extraordinary item.

If Apple chooses not to settle, the company will certainly use Apple's initial Apple 3 payment to fund litigation against Apple in Europe (Germany), Japan, etc. for patent infringement. Some of those markets issue injunctions first and ask questions later.

If Apple, per your suggestion, waits until Apple 4 is Rule 36'd to phone Zephyr Cove, VirnetX has every incentive to flash the big middle finger and take the actions above. Apple has more leverage today than it will after Apple 3 is denied en banc, when it will have more leverage than it will after Apple 4 is heard, when it will have more leverage than it will when writ is denied or Apple 4 is Rule 36d (which ever comes first), etc. You may think the IPR's remain a factor, for all the reasons discussed ad nauseum on this board over the last couple of weeks, I don't, and I doubt that Apple does either.

As for other infringers, if they don't settle on reasonable terms, VHC will sue for willful infringement. Validity will be established, infringement will be obvious, and damages will certainly include a step up for willfulness.

The infringers, including Apple, played a much longer game than they could have wished for initially. They lost. It's over. Time to pay up.

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To: Solarity who wrote (35)6/6/2019 8:55:42 PM
From: Solarity
1 Recommendation   of 41
 
Do you want to make some money? VHC is the stock to load up on. The US Court of Appeals for the Federal Circuit is going to issue an opinion any day now that validates their patents and sends this innovative company to the moon. Mark my word.

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To: Solarity who wrote (36)3/17/2020 3:40:43 PM
From: sixty2nds
   of 41
 
virnetx.com
VirnetX Receives Payment in Apple Suit
by Virnetx on March 13, 2020 in Press Releases
ZEPHYR COVE, Nev., March 13, 2020 – VirnetX™ Holding Corporation (NYSE AMERICAN: VHC), an Internet security software and technology company, announced today that it has received payment of $454,033,859.87, representing the previously announced judgment with interest in the VirnetX Inc. v. Apple case, 6:10-cv-00417 (“Apple I”).

About VirnetX

VirnetX Holding Corporation is an Internet security software and technology company with patented technology for secure communications including 4G LTE and 5G security. The Company’s software and technology solutions, including its secure domain name registry and Gabriel Connection Technology™, are designed to facilitate secure communications and to create a secure environment for real-time communication applications such as instant messaging, VoIP, smart phones, eReaders and video conferencing. The Company’s patent portfolio includes over 190 U.S. and Foreign granted patents/validations and pending applications. For more information, please visit www.virnetx.com

Forward Looking Statements

Statements in this 8-K that are not statements of historical or current fact, including the statement regarding VirnetX’s damages award, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on expectations, estimates and projections, and certain assumptions made by management and involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements, including but not limited to the results of a pending motion by Apple in the district court seeking to vacate the court’s final judgment and efforts by Apple to seek restitution of the payment if relief is awarded. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s reports and registration statements filed with the Securities and Exchange Commission, including those under the heading “Risk Factors” in Company’s Annual Report on Form 10-K filed on March 19, 2019 and Quarterly Report on Form 10-Q filed with the SEC on November 8, 2019, and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 when it is filed. Many of the factors that will determine the outcome of the subject matter of this press release are beyond the Company’s ability to control or predict. Except as required by law, the Company is under no duty to update any of the forward-looking statements after the date of this press release to conform to actual results.

Contact:

Investor Relations
VirnetX Holding Corporation
415.505.0456
ir@virnetx.com

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