Apple’s FaceTime Suffers From VirnetX Fallout
Is Apple’s (NASDAQ:AAPL) patent battle with a major patent-licensing company costing it more than just money? Last year Apple was ordered to pay $368 million in damages to VirnetX (AMEX:VHC) after several of the Cupertino-based company’s products were found to be infringing on a patented technology that it uses for FaceTime and iMessage. The companies are currently in litigation over the amount of royalties that Apple should pay.
As a result of this trial, Apple designed a technical workaround for FaceTime that keeps the service from infringing on VirtneX’s patents. However, it appears that the Apple’s creative patent-infringement solution is having a detrimental effect on FaceTime.
ArsTechnica spoke with Jeff Lease, a VirnetX investor who attended the original jury trial as well as various other hearings related to the case. According to Lease, Apple’s workaround solution for FaceTime has diminished the overall quality of the service and netted the company “over half a million” complaint calls.
Before Apple implemented its changes, most FaceTime calls used a direct connection between devices, while a small percentage of calls were routed through “relay servers,” reports ArsTechnica. However, in order to avoid infringing on VirnetX’s patents, Apple now routes all FaceTime calls through these servers. Unfortunately, it appears that this method is causing connection issues for some Apple users, who may be growing frustrated with the company.
Besides hurting FaceTime’s call quality, the workaround solution may also be costing Apple more money. According to Lease, Apple is paying $2.4 million per month to route FaceTime calls through relay servers. Apple’s customer complaints also seem to support VirnetX’s argument that its patented technology is “significant.” Since “significant” technologies are considered more valuable, this could boost the royalty payment that Apple must eventually make.
Lease noted that VirnetX is seeking over $700 million for Apple’s continued use of its patented technology. However, it should also be noted that Lease has a vested interest in the outcome of this hearing since he is a VirtnetX stockholder.
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