Tech Industry

Apple faces $862M fine after losing processor patent dispute

A federal jury has ruled that Apple infringed on a patent held by the University of Wisconsin relating to chips the company uses in its iPhones and iPads.

The iPhone's processor is the subject of a patent dispute that Apple has now lost. Apple

Apple could be forced to pay out hundreds of millions of dollars in damages after losing a patent lawsuit over its processors.

The case relates to Apple's A7, A8 and A8X processors used in the iPhone 5S, iPhone 6 and 6 Plus and various iPads. In the latest of many patent disputes for Apple, a US District Court jury agreed Tuesday that the company infringed on a 1998 patent held by the University of Wisconsin. Apple now faces damages of up to $862 million (around £560 million or AU$1.1 billion).

The suit was filed in January 2014 by Wisconsin Alumni Research Foundation, the University of Wisconsin at Madison's body for licensing technology invented by the university's researchers. Apple claimed that the patent was invalid and had previously tried to persuade the US Patent and Trademark Office to review it, but the jury in Madison, Wisconsin, decided that the patent was valid and that Apple had infringed on it.

Patents have been a battleground for Apple and rival Samsung in courtrooms around the world over the past several years. In 2012, Samsung was ordered to pay more than $1 billion to Apple. After various appeals, the two companies are set to return to court in 2016 to rehash the damages. The twists and turns of the international legal battle include a ruling in the UK that Apple must post a public apology to Samsung for its claims.

The outcome of the case is unlikely to affect what you pay for iPads and iPhones. The new damages are relatively small for Apple, which earlier this year reported the biggest quarterly profit ever of $18 billion (£11.8 billion or AU$25 billion).

The actual amount Apple must pay the university hasn't been set and could be reduced on appeal. However, the amount of damages could also increase if the court finds Apple willfully infringed on the patent. The Wisconsin Alumni Research Foundation has said that Apple ignored offers to license the patent, which would have meant paying a fee to the university.

There could be more bad news for Apple. The research foundation launched a second lawsuit last month taking aim at Apple's newest processors, the A9 and A9X found in the iPhone 6S and 6S Plus and the forthcoming iPad Pro.

"Technology development in this area is multidimensional and complex, often with parallel developments and it is inevitable that there are competing claims on intellectual property," Professor Loizos Heracleous of the Warwick Business School said. "In any case, any fine for Apple relating to this case would not have a substantial or lasting impact on its earnings."

The research foundation is known for fiercely defending patents. In 2008, it sued Intel over the same patent and settled out of court for an undisclosed sum.

Apple did not respond to a request for comment.