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VirnetX

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VirnetX
NYSE: VHC
Russell 2000 Component
Founded1 January 2005 Edit this on Wikidata
Headquarters
308 Dorla Court, Suite 206 Zephyr Cove, Nevada
Key people
Kendall Larsen (CEO)
Number of employees
20
SubsidiariesNational Research Corporation - Japan, Ltd. VirnetX Inc.

VirnetX (NYSE: VHC) is a publicly traded Internet security software and technology company based in Zephyr Cove, Nevada.[1] VirnetX has been described as being a patent troll, accused of marketing no actual products or services and instead earning its revenue through licensing patents and suing anyone that infringes them.[2][3][4] The company has won intellectual property litigation against various technology companies.[5][6] The firm is run by Kendall Larsen and his family.

Patents and litigation

The company's patent portfolio includes U.S. and international patents in areas such as DNS and network communication. Since 2010, VirnetX has been in litigation with companies including Apple, Cisco, and Microsoft.[7] Separately, in December 2014, Microsoft and VirnetX settled patent disputes over Skype technology for $23 million.[8] In their Apple case, VirnetX worked together with SAIC,[9] and was awarded $368 million in damages for FaceTime infringement.[10] That ruling was partially vacated in August 2014, but two patents were confirmed to be infringed by the United States Court of Appeals for the Federal Circuit.[11] In December 2014, VirnetX opened access to their Gabriel platform, which builds upon their patents, and is implemented as small to medium-sized business enterprise collaboration software.[12] Apple has appealed rulings against it in state and federal courts and demanded a jury trial for the VirtnetX case. In February 2016 an East Texas jury unanimously ruled in federal court that Apple had willfully violated 13 VirnetX patents. The jury said Apple must pay VirnetX $625.6 million for infringing four of the patents, and the court was considering ongoing royalty rates and punitive damages.[13] At Apple's request, the ruling was vacated in August 2016 and the case sent back to be retried separating the patents into two groups. VirnetX has filed an injunction to block sales of Facetime and iMessage, claiming that its own platforms are suffering. The first retrial, conducted Sept 26-Sept 30, 2016 resulted in another unanimous jury verdict for VirnetX.[14] The verdict re-affirmed patent violations enabling Facetime and iMessage and awarded $439.7 million to VirnetX. The remaining 2 patents will be tried separately.

In 2021 VirnetX was paid $502.8 million from Apple.[15]

The company has been plagued by corporate governance issues. In a lawsuit filed by shareholder Neal Hurwitz he alleges widespread self serving and violations of fiduciary responsibility. Saying in part "Including his wife, a son and two stepsons, four of Mr. Larsen’s immediate family members are employed by VirnetX, each earning compensation valued annually in the six figures and collectively earned nearly $2 million in fiscal 2018 alone".[16]

The company spends over a million dollars a year leasing a Gulfstream jet (N224KL), for the chief executives, from an entity owned by the chief executives.[17]

Executives

Kendall Scott Larsen is the Founder, CEO, President and Chairman of VirnetX. The company has been described as a "family business" by some. Larsen employs his wife, children and grandchildren at the company.[16]

Larsen is worth some $40 million.[18]

References

  1. ^ "VirnetX - Nevada Secretary of State". Retrieved 14 Nov 2018.
  2. ^ "Apple loses bid to undo $440 million judgment in VirnetX patent case". Retrieved 27 Mar 2019.
  3. ^ "How VirnetX beat Apple: The strange case of the patent trolls". The Independent. February 17, 2016.
  4. ^ "VirnetX Doesn't Like Being Called a Patent Troll". Patent Progress. April 8, 2016.
  5. ^ Foley, Mary Jo. "Microsoft pays VirnetX $200 million to settle patent case". ZDNet.
  6. ^ "Apple Rebuffed by Supreme Court in $1 Billion VirnetX Dispute".
  7. ^ "Company Interview: Kendall Larsen, VirnetX Holding Corporation". April 22, 2008.
  8. ^ Armental, Richard. "VirnetX, Microsoft Settle Patent Dispute Over Skype". wsj.
  9. ^ Smith, Gina. "Who is VirnetX? Apple To Pay $368 Million to IBM? NSA? CIA? Who?". A New Domain. Retrieved 27 April 2013.
  10. ^ Bell, Killian. "U.S. Court Orders Apple To Pay $439.7 Million Damages For FaceTime Patent Infringement". TechCrunch. Retrieved 4 Aug 2014.
  11. ^ "United States Court of Appeals for the Federal Circuit: Virnetx, Inc. v. Cisco Systems, Inc" (PDF). Archived from the original (PDF) on May 22, 2015. Retrieved September 19, 2014.
  12. ^ "VirnetX Opens Gabriel Beta Program". VirnetX.
  13. ^ Joe Mullin, Jury: Apple must pay $626 million to patent troll VirnetX, Ars Technica, February 4, 2016
  14. ^ Andrew Liptak, [1], The Verge, October 1, 2016
  15. ^ Lyons, Kim (2020-10-31). "Apple ordered to pay VirnetX $502.8 million in patent trial". The Verge. Retrieved 2021-01-25.
  16. ^ a b "Neal Hurwitz v. Virnetx Holding Corporation" (PDF). 2019.
  17. ^ "VirnetX Annual 10-K".
  18. ^ "Kendall Larsen Net Worth (2020) – wallmine.com". wallmine.com. Retrieved 2020-12-31.
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