Apple latest hurdle in the world of patent disputes could blow a small hole in its $200 billion cash mountain.
A U.S. federal jury has ruled that Apple used technology owned by the licensing arm of the University of Wisconsin on some of the chips that found their way into recent iPads and iPhones.
The jury has yet to decide on damages but the University has been seeking as much as $862 million for patent infringement.
The University filed the patent in 1998, for technology that could enhance the efficiency of computer processors.
It sued Intel INTC -3.23% for infringing on the same patent in 2008, and settled out of court with the company before it could go trial. Intel ended up paying the University a $110 million lump sum to license the patent, court documents show.
Apple had argued that the patent was invalid and thus couldn’t have been infringed, but the jury deemed Apple wrong on that count. They agreed with the plaintiffs that Apple’s A7, A8 and A8X processors, which are found in its latest iPhones and iPads, had violated the patent.
Apple was forbidden from referring to the University as a “patent troll,” according to court documents, because such terms could prove prejudicial and carried negative weight.
Having initially sued Apple in January 2014, the University’s licensing arm, known as the Wisconsin Alumni Research Foundation, launched a separate, still-pending lawsuit last in September claiming it had also infringed on the patent with its latest iPhone models, the 6S and the 6S Plus.
The licensing arm claims that it offered to license the patent to Apple for a fee, but the offer was ignored. A representative at the Wisconsin Alumni Research Foundation could not be reached for comment.
The way in which Apple allegedly ignored that issue could come back to haunt the company further. Once the jury in Madison Wisconsin decides on damages, they’ll also be asked to decide whether Apple infringed on the patent wilfully, and that could lead to bigger penalties, according to Reuters.
“I wouldn’t be surprised if the plaintiff made an aggressive push for willfulness enhancements,” says Florian Mueller, an expert in patent infringement lawsuits who writes the FOSS Patents blog. That could theoretically end up in tripling the damages, a nightmare scenario for Apple. “But in the past, damages awards of this proportion have typically been reduced on appeal.”
Shares of Apple were down 1.5% to $110.10 in Wednesday morning trading in New York.