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US Supreme Court won't review Apple's win against $503 million patent verdict

FILE PHOTO: Apple Inc. reports fourth quarter earnings in Washington

By Blake Brittain

WASHINGTON (Reuters) - The U.S. Supreme Court on Tuesday declined to hear patent-licensing company VirnetX's bid to revive a $502.8 million jury verdict it won against Apple in a dispute over internet-security patents.

The justices turned away Zephyr Cove, Nevada-based VirnetX's appeal of a lower court's decision to overturn the verdict against Cupertino, California-based Apple that had been reached by a jury in Tyler, Texas. VirnetX had challenged the U.S. Patent and Trademark Office's decisions to invalidate its patents.

Apple and VirnetX have waged a 14-year-long court battle over VirnetX's internet-security patents that has included several trials and appeals.

The jury awarded VirnetX $502.8 million in 2020 after a separate jury determined that Apple's iPhones and iPads infringed patents related to virtual private networks.

The patent office's Patent Trial and Appeal Board allows petitioners to challenge the validity of specific patents. The process, known as inter partes review (IPR), is often used by big tech companies that are frequently targeted with patent lawsuits to contest patents they are accused of infringing.

The board rejected Apple's requests to invalidate the patents under the IPR process after it found that Apple had waited too long to file its petitions. The board later declared the patents invalid based on separate requests from hedge fund Mangrove Partners in cases that Apple was allowed to join.

The patent-focused U.S. Court of Appeals for the Federal Circuit upheld the decisions to invalidate the patents and overturned the verdict last year. VirnetX had told the Supreme Court that letting the rulings stand would incentivize the "harassment" of patent owners at the board.

"A veritable cottage industry has sprung up," VirnetX said. "Entities with no discernable stake file IPR petitions challenging patents successfully asserted in litigation - only for well-heeled but time-barred infringement defendants to conveniently join the proceedings and shoulder the cost."

VirnetX cited a patent board case in which patent office director Kathi Vidal imposed sanctions on an entity called OpenSky Industries for attempting to extort both sides in a multi-billion-dollar dispute between Intel and patent owner VLSI Technology. Vidal removed OpenSky from the case based on its misconduct, and the tribunal allowed the challenge to a VLSI patent to continue with Intel leading it.

VirnetX also argued that former patent office interim director Drew Hirshfeld, who presided before Vidal was appointed, exceeded his authority by denying VirnetX's requests for director review of the decisions.

Apple and Mangrove responded that VirnetX's arguments were not supported by applicable federal law. President Joe Biden's administration, representing the patent office, also urged the justices to reject the case.

VirnetX previously won $440 million from Apple based on a 2016 verdict that the tech giant used its security technology in features like FaceTime video calls.

(Reporting by Blake Brittain in Washington; Editing by Will Dunham)

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