Seeking Alpha

Apple's FaceTime workaround costs $2.4M/month, 500k complaints

  • The workaround Apple has developed so that its FaceTime video calling service does not infringe on a VirnetX (VHC -2.2%) VPN patent is costing the company $2.4M a month in fees to Internet content distribution companies that now handle the routed calls. Apple has also logged 500K complaints from customers since changes were made in April.
  • The backend workaround comes after VirnetX was awarded a $368M verdict in its patent infringement case against Apple last year.
  • Discussions over royalty payments and licensing are ongoing. However, the costs Apple has borne in its attempt to find a workaround appear to be a net positive for VirnetX, not only in providing more leverage at the negotiating table, but also in validating its IP.
  • Earlier in Aug., VirnetX added the IPhone 5, fifth generation iPod touch, iPad 4, iPad mini, and late-model Macs to the list of infringing devices in another patent suit against Apple involving its VPN technology.
Comments (19)
  • SoldHigh
    , contributor
    Comments (1002) | Send Message
     
    $2.4mm/mo for aapl is barely a rounding error, still, i agree it needs to be dealt with
    30 Aug 2013, 07:16 PM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    "Both companies are hashing out possible royalty payments and licensing issues, though not much has been reported on the proceedings as most relevant court documents are sealed. Instead, the publication spoke to a VirnetX investor named Jeff Lease who attended a recent royalty hearing earlier in August.

     

    It should be noted that Lease is not a legal expert and has a vested interest in VirnetX, meaning his view of the facts may inadvertently be colored. Lease's statements are based on his notes which were taken at at the jury trial and post-trial hearings."

     

    So SA reported on an Apple Insider article that reported on an article in/on ArsTechnica that is based on the unverified courtroom reportings of somebody that is invested in Virtnex.

     

    I'm not saying it's not an accurate portrayal, but the whole basis for presenting this as fact is pretty ludicrous.
    30 Aug 2013, 07:33 PM Reply Like
  • comyn
    , contributor
    Comments (2) | Send Message
     
    The salient facts in the report can be verified by a reference to the court docket - which is available to the public on Pacer.
    1 Sep 2013, 08:07 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    Are you saying you've verified the salient facts? None of the links provided by SA indicate that they have been verified as you suggest.
    1 Sep 2013, 09:22 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    Dig a little deeper, and...

     

    "Now, reports have emerged from a key hearing earlier this month indicating that Apple is logging vast numbers of complaints about FaceTime after a re-design of the service's backend architecture. It's important to note that these reports have emerged mainly from discussion groups of VirnetX investors; no media organizations have published reports from the royalty hearing, which occurred on August 15. The documents related to the royalty litigation are almost entirely sealed."

     

    Nos that's some crackerjack reporting there, to be certain. I guess in the absence of actual verifiable facts, we can take what a bunch of random internet people say as fact.
    30 Aug 2013, 07:41 PM Reply Like
  • Mongoose7916
    , contributor
    Comments (222) | Send Message
     
    The only people that care about this information are VirnetX investors. Which means if you are an apple investor you can proceed to ignore this, you don't have to write a comment questioning the validity of the news when you very likely have no information to debunk the news as false. Plenty of false information gets published on the internet everyday and that information eventually gets yanked lest the news outlet risk their credibility. Reporting the news has become a very cannibalizing business where getting the news out first is more important than every detail. In a nutshell news organizations want to get the headline out asap and reveal the details as they are able to verify them. Give seeking alpha a break just because you read a news story and fail to get anything out of it doesn't mean there isn't someone out there who found the news useful.
    30 Aug 2013, 08:57 PM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (366) | Send Message
     
    "Give seeking alpha a break just because you read a news story and fail to get anything out of it doesn't mean there isn't someone out there who found the news useful. "

     

    Regardless of who finds it useful, SA has taken what is an unfounded rumour and presented it as fact.

     

    It would have been easy to preface the entire item with "According to VirnetX investor Jeff Lease..." but they chose not to.

     

    For a site that tries to provide useful investment information, shoddy and biased 'reporting' like this is pretty ridiculous.
    31 Aug 2013, 06:26 AM Reply Like
  • ChicagoVol
    , contributor
    Comments (28) | Send Message
     
    Apple just needs to buy them out and be done with it.
    30 Aug 2013, 09:49 PM Reply Like
  • J. McRoberts
    , contributor
    Comments (98) | Send Message
     
    Patent trolling continue to be out of control. Companies like VirnetX are worthless, disgusting example of a broken system
    30 Aug 2013, 10:08 PM Reply Like
  • chopchop0
    , contributor
    Comments (3148) | Send Message
     
    Yup. About as ridiculous as patenting rounded corners
    30 Aug 2013, 11:10 PM Reply Like
  • Noreika
    , contributor
    Comments (457) | Send Message
     
    Zing!
    31 Aug 2013, 06:31 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    yes they are worthless when you are an apple investor and apple stole your lifes work. but if apple stole your lifes work apple can do no wrong? right.
    31 Aug 2013, 12:26 AM Reply Like
  • debtfree1
    , contributor
    Comments (209) | Send Message
     
    Hurray for our side go AAPL :)
    31 Aug 2013, 10:27 AM Reply Like
  • Cliff Hilton
    , contributor
    Comments (1434) | Send Message
     
    @J. McRoberts,

     

    "Companies like VirnetX are worthless,"

     

    I love it when a worthless companies give Apple a tough time. That worthless company is currently worth $368,000,000 and counting.
    Apple is not as intelligent as we are all lead to believe. They are liars and thieves. For those of you who have invested your hard earned money in a broken company, just keep your eyes peeled on all those upcoming court cases. They don't innovate, they steal. What a proud American company. And we complain about the Chinese...
    31 Aug 2013, 12:28 AM Reply Like
  • gipsy4449
    , contributor
    Comments (26) | Send Message
     
    the additional cost for Apple for circumventing VHC patents (in the FaceTime app.) only is about 1,25 per 1000 of Apple revenue . In other terms, if Apple buy VHC , the break-even point will be 10 months ... The problem is more acute for future mobile technologies and standards .
    Then it is clear Apple can afford to play time . The real problem is to know how US justice will consider in this case : the right on intellectual property and antitrust legal system . UPSTO is a federal administration and therefore intellectuall property rights are warranted by Constitution's, whatever a government may think or say . In NTIC some antitrust trial have been very expensive in the past to very large NTIC corporations , surely Apple's lawyers have that in mind .
    31 Aug 2013, 04:49 AM Reply Like
  • Neil459
    , contributor
    Comments (2644) | Send Message
     
    "rights are warranted by Constitution's, whatever a government may think or say"

     

    You have to be kidding, anyone paying any attention at all would understand that this government only cares about the Constitution when it suits then politically. Since the politically correct action is to hate Apple, they will, in the end, lose again.

     

    In this day and age, patents have nothing to do with who stole from whom.
    1 Sep 2013, 07:41 AM Reply Like
  • kodiak cowboy
    , contributor
    Comments (82) | Send Message
     
    To state that companies like VHC are worthless is one of the most absurd statements ever heard. Companies like Microsoft, Apple, Oracle And Samsung have emerged as high tec think tanks and have prospered because they evolved patented technology into hard products. They are also ruthless in stealing technology from anyone or company. There are many think tank companies that morphed into small and medium sized companies because they came up with a better high tec widget. One current example is T Mobile stealing the auto switching from tower to wifi. Calypso wireless is fighting this issue even after T Mobile signed an offer to settle and then decided to go to court. The big guys have enough money to drive the little guy out of business by financially strangleing them in the court system. We also have some judges that cater to big companies like T Mobile and Apple. Do you think that having hundreds of law suits against them is because they are the do gooders of this world? No, they prey on the small guy and companies because they know they can get away with it, in most instances. This country has and is built by the little guy. Give them the chance to become the next Apple. Remember when Apple stock was $5 not too long ago?
    3 Sep 2013, 12:38 PM Reply Like
  • Noreika
    , contributor
    Comments (457) | Send Message
     
    Well stated cowboy. And the little guy inventor is then labeled the troll.
    5 Oct 2013, 04:10 PM Reply Like
  • lbelet
    , contributor
    Comments (5) | Send Message
     
    I stopped using Facetime as it does not work as well now. Plenty of alternatives out there.
    19 Dec 2013, 02:46 PM Reply Like
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