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Apple walloped with $625.6M in damages from FaceTime lawsuit

The tech giant was the target of a patent troll, a company that makes money by suing other companies.

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FaceTime, Apple's video chat service, is costing the company a lot of money.

Photo by James Martin/CNET

Those monthly video chats with your mom on her iPad are starting to get expensive.

Only Apple is the one that has to pay.

The Cupertino, California, tech giant was dealt a legal blow Wednesday when a Texas jury awarded patent-holding company VirnetX $625.6 million in damages after ruling that Apple illegally used VirnetX's technology in its popular FaceTime video chat service and virtual private networks.

Apple said it plans to appeal the decision.

"Our employees independently designed this technology over many years, and we received patents to protect this intellectual property," an Apple spokeswoman said in an emailed statement. "Cases like this simply reinforce the desperate need for patent reform."

It's just the latest legal squabble involving Apple, which isn't a stranger to patent infringement cases itself. But while Apple has sued to protect what it believes are the unique features of its products, companies like VirnetX don't make products and primarily make their money through lawsuits, and are derisively known as patent trolls.

There's wide agreement that the US patent system is sorely in need of changes. The White House, Congress and several state attorneys general have fought to curb the mountain of patent lawsuits clogging the judicial system. The problem is especially bad in the tech industry, where both tech giants and patent trolls have traded barbs in suits for years. Many government agencies see this rash of patent suits as hurting innovation, especially for small companies that don't have the money to fight drawn-out patent suits.

There have been a lot of efforts to cut down on patent suits, including Congress' 2011 America Invents Act, the first reform of patent laws in decades. Also, in 2014 the Supreme Court struck down a software patent in the case Alice Corp. v. CLS Bank. Since that ruling, many lower courts have thrown out other software patents, making it harder for patent trolls to go after bigger companies.

Still, the number of cases by patent trolls went up last year to 3,604, from 2,891 in 2014, according to a January report by patent services company RPX. The number was down from 3,733 in 2013. The most popular location by far to file these suits has been the Eastern District of Texas, which has long been considered the most plaintiff-friendly place for this kind of litigation. The Apple award on Wednesday was in the same district.

The Apple suit, meanwhile, is a do-over of a 2012 jury trial between the two companies, in which VirnetX won $368 million. An appeals court overturned the decision and ordered a new trial. VirnetX has also sued Microsoft, Cisco, Avaya and others over its patent portfolio.

VirnetX shares jumped 50 percent Thursday on the Apple decision, since the damages were worth more than the small company. Apple shares were flat.

The huge Apple award may mean the government has a long way to go before it kills off, or at least injures, patent trolls.

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