Day After Announcing Record Revenue, Apple Gets Hit With Near Billion-Dollar Judgment

Photo: Eric Thayer, Getty

Apple was having a pretty good week. The company just reported a record quarter, raking in billions thanks to the iPhone 11 and selling a whole lot of AirPods and Apple Watches. Just a day later, Apple and its wireless chip provider, Broadcom, were slapped with a $US1.1 ($2) billion judgment. According to Bloomberg, the fine is the 6th largest patent judgment of all time.

Ouch.

Bloomberg notes that both Broadcom and Apple have already announced plans to appeal the judgment, while the California Institute of Technology, who brought the suit, is reportedly quite pleased with results.

CalTech originally filed suit back in May 2016, alleging that Broadcom and Apple both used wifi chips relying on something called irregular repeat and accumulate (IRA) encoders. These encoders (and their complementary decoders) basically allow for more efficient and better transmission of data over wireless signals. CalTech alleged that Broadcom used IRA encoders in their wifi chips and therefore owed CalTech royalties on the patents for those encoders.

Apple is one of Broadcom’s largest clients, and because Broadcom’s chips appear in nearly every Apple device with built-in wifi, CalTech alleged Apple owed royalties, too.

The companies spent millions of dollars disagreeing with one another in court. The jury trial finally began January 15 in California. Broadcom continued to insist it didn’t use CalTech’s IP, but then things got messy. An expert witness for Broadcom and Apple had to correct his testimony after it was submitted, and then, according to Law360, struggled to explain how the errors were initially made, weakening Broadcom and Apple’s defence. Then CalTech’s attorneys claimed in closing arguments that Broadcom and Apple had hidden a witness.

The allegations apparently held water with the jury—they ordered the companies to pay CalTech over $US1.1 ($2) billion, with Apple ordered to pay $US837.8 million ($1.24 billion) and Broadcom ordered to pay $US270.2 ($400) million.

While both companies can probably afford the judgment, they’ve said that they will appeal.

The judgment comes less than a week after a San Diego jury ordered Apple to pay $US85 ($126) million to Canadian tech developer Wi-Lan for infringing on patents that allow a phone to download information while making a call.

Maybe some of Apple’s record-setting holiday-quarter profit can go toward double-checking which patents it has the right to use—or paying fines.

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