Apple to Pay Largest Verdict in Company History
On January 30, a federal jury in Los Angeles returned a $1.1 billion verdict for California Institute of Technology for its patent infringement claims against Apple Inc. and Broadcom.[1] This is one of the largest patent verdicts of all time, and certainly one of the largest Apple has faced.[2]
Caltech asserted that both Broadcom and Apple were infringing on four different patents in violation of 35 U.S.C. § 271. Specifically, these four patents “disclose a seminal improvement to coding systems and methods”[3] by introducing a new type of error correction code, known as “irregular repeat and accumulate codes” (or “IRA codes”).[4] Essentially, the methods and apparatuses correct errors by reconstructing data if some bits are scrambled during transmission.[5] This allows for improved transmission rates and performance through simpler coding circuity which provides both technical and practical advantages.[6] Broadcom was “manufacturing, using, importing, or offering for sale” these codes in their Wi-Fi chips in violation of § 271.[7] Apple, one of Broadcom’s largest customers, purchased these Wi-Fi chips and used them in most all of its key products, including iPhones, iPads, and Mac computers[8], which generate hundreds of billions of dollars in revenue.[9] Despite being put on actual notice of this infringement, Apple continues to sell these products “with knowledge of or willful blindness to the fact that its actions will induce others” to directly infringe the patents, specifically violating § 271(b).[10]
Apple, which plans to appeal, maintained in its court filings that all of the university’s claims resulted from Apple’s use Broadcom’s chips, calling itself “merely an indirect downstream party.”[11] The jury was asked only to decide whether the Broadcom chips utilized the university’s patents and if so, how much in damages was owed.[12] The verdict awarded CalTech $837.8 million from Apple and $270.2 million from Broadcom.[13]
Such a substantial award would dramatically alter the university’s research capabilities, and Apple’s share of $837 million would only equal approximately two days’ worth of sales.[14] However, this would send a dangerous message to those targeting Apple for a large payout. No verdict of this magnitude has ever stood in a patent infringement case, as they are usually reduced to a lower amount on appeal.[15]
While Apple has spent its fair share of time suing other companies for patent infringement, it has also been critical of damage calculations.[16] Apple and other tech companies have argued that juries are too high considering the invention is only a small part of an extremely complex device.[17] Apple has even asked the U.S. Supreme Court to review the issue in its long time dispute with VirnetX Holding Corp., a small company that has been pursuing a big payday from Apple for years.[18]
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