On February 3, 2016, a federal district court jury ruled that Apple must pay my company, VirnetX, $625 million for willfully infringing four of our patents. To no one’s surprise, we were immediately labeled a “patent troll” by much of the press.
They turned out to be just slightly wrong on their facts. Indeed, sometimes the patent troll label gets wrongly applied to companies like mine that have made a genuine contribution to U.S. national security.
What, exactly, is a patent troll? Most people would agree that true patent trolls exhibit the following characteristics:
• Their patents cover no real invention, no true breakthrough in science or technology.
• They are led by lawyers, not scientists, engineers or technology business executives.
• They neither develop, make nor sell any real products or licensable technology.
• They assert weak patents — and usually seek nuisance settlements.
Let’s tackle these issues one-by-one.
Do VirnetX’s patents cover a genuine technological breakthrough?
Our story begins in 1999, when In-Q-Tel, the venture capital arm of the Central Intelligence Agency, asked the $4 billion defense contractor SAIC (Science Applications International Corporation) to solve a national security problem. Out of this project, code named “Net Eraser,” came a simplified zero-click way to enable secure encrypted communications.
Until then, secure real-time communications had been far too slow and cumbersome, typically requiring 150-200 keystrokes and a lot of IT handshaking on both ends. If you’re an agent in the field in a hot environment like Afghanistan — or even a travelling employee trying to access your private network — this sort of an unwieldy communications system posed significant operational and security dangers. Zero-click solved this problem.
When Jason Bourne in the movie The Bourne Identity makes a zero-click encrypted code-in phone call to CIA headquarters at Langley, that’s the sort of capability we’re talking about.
Was it a genuine breakthrough? Just ask Jason Bourne — or rather, the thousands of men and women who risk their lives every day overseas to keep our nation safe.
Is our company led by technologists or lawyers?
Was VirnetX founded by ambulance-chasing lawyers with nothing but a P.O. box and a couple of patents? Hardly. It was formed with the very same team of SAIC scientists who invented the zero-click secure communications technology in the first place.
SAIC had approached me to spin out this technology into a new communications security firm because I had served as the senior vice president of the security products division of Phoenix Technologies as well as a senior VP at RSA Security Inc. SAIC is a defense contractor that doesn’t make products, but they clearly saw the potential of zero-click technology for securing the fast-evolving Internet. And the scientists, despite having to give up their job security at SAIC to join VirnetX, saw the enormous potential as well. So despite the difficulties of launching VirnetX in the wake of the 2000s technology industry implosion, SAIC eagerly collaborated to spin out the technology in exchange for a share in our new venture.
The spinning out of new ventures from government-backed defense research is a tried–and-true business model. It led to the formation of Qualcomm, Verisign and many other companies in the Internet and tech sectors. As a business model, it’s as American as apple pie.
Who are our scientists and original inventors? Prior to becoming our chief technology officer, Edmund Munger was chief system architect and assistant vice president at SAIC, after previously holding the same position at the FBI's Counterterrorism Data Warehouse Prototype. Our chief scientist, Robert Short III, was previously assistant vice president and division manager at SAIC. He holds a Ph.D. in electrical engineering. (When Munger retired, Short took over his job.) Our VP of research and development, Victor Larson, also worked at SAIC on advanced prototypes for secure communications, remote sensing data extraction and processing, and holds a Ph.D. in Information Technology. The list goes on.
Do we make any products?
It always astonishes me when the reporters routinely write that VirnetX “has no products.” Have they never heard of the Apple’s App Store or the Google Play Store? All you have to do is look in the app store on your iPhone and you’ll find the Gabriel Collaboration Suite, a set of integrated applications that enable secure messaging, secure voice and video calling, secure mail and secure encrypted file sharing with any other device. We created and sell these products.
You know those blue (not green) text bubbles you see when you use Apple’s iMessage? That shows you are using a messaging system secured by our technology. We invented it. Unlike Apple’s iMessage, however, Gabriel allows you to get secure blue-bubble text, chat and video with anydevice using any operating system — be it a phone, tablet, PC or Mac — rather than only with other iPhones.
We also license our technology to other companies for integration into their own product offerings. Current licensees include Microsoft, Aastra, Mitel, NEC, Siemens and Avaya.
Do we have valid, high-quality patents covering real inventions?
When we say that our patents are “valid” and of “high-quality,” we’re not just making self-serving claims. We can prove it.
On four separate occasions — three times in federal district courts, and once more in the U.S. Court of Appeals for the Federal Circuit, the nation’s highest court for patent appeals — our four key patents and all patent claims in those trials have been judged valid and enforceable. In addition, in two of the trials, the infringement of those same four patents was found to be willful.
The simple and irrefutable truth, proven time after time in court after court to jury after jury, is that Apple infringed the patented security technology we invented and used it in its iMessage, FaceTime and VPN on Demand services. In addition, the courts determined that Apple’s infringement and use of our technology in FaceTime and VPN on Demand services was willful. Now these juries have decided that Apple must compensate us for the value that we created but they used without permission.
If fighting for our rights makes us patent trolls, then Lady Justice herself is a troll.
Kendall Larsen is the chairman and chief executive officer of VirnetX.