Apple (NASDAQ: AAPL) has lost a $5.7 billion patent case tied to the vibration hardware used inside millions of iPhones and Apple Watches. A federal jury in San Diego ruled on Friday that Apple infringed parts of two patents owned by Taction Technology, awarding damages after a long period of litigation between the two companies. The size of the award illustrates the stakes component-level patent disputes can reach when the contested technology is embedded in hardware shipped across the iPhone and Apple Watch lines.

The dispute centers on tactile technology that generates physical feedback when a user touches a device's controls. Taction initiated the litigation against Apple in 2021 in the United States District Court for the Southern District of California, claiming that the defendant earned profits from its patented technologies without its consent.

Apple succeeded in having the case dismissed in 2023, but that victory did not hold. The matter was revived by the Federal Circuit and sent back for trial.

Taction wins its case as jurors rule against Apple's Taptic Engine

The verdict concerns two U.S. patents, numbers 10,659,885 and 10,820,117, both of which involve tactile transducers. A tactile transducer is a small system that converts electrical signals into controlled movement that can be sensed physically.

Taction argued that the technology Apple uses for its Taptic Engine infr those patents. The Taptic Engine is used across Apple's iPhones and watches, generating the vibrations felt during taps, notifications and other similar functions.

The trial began on September 14, with seven jurors selected to hear the case. They deliberated for two days before delivering their judgment in favor of Taction at 1:15 p.m. Pacific Time on Friday. The award handed to Taction totals $5.7 billion.

The jury did not, however, find that Apple's infringement was willful. That means the verdict stopped short of saying Apple deliberately violated the patents while knowing it was doing so. Under U.S. patent law, courts may increase a damages award when willful infringement is established, a route the jurors' finding has closed off in this case.

Taction's lead lawyer, Lance Yang, a partner at Quinn Emanuel, said: “We're happy the jury found for Taction and vindicated its patent rights. Taction waited five and a half years for this case to get to trial, so it was a long time coming. While we thank the jury for their consideration, we strongly disagree with today's verdict and the damages awarded, which are entirely unsupported by the facts.”

The company also argued: “Apple's Taptic Engine is fundamentally different from Taction's technology, which Taction's own testing of Apple's products confirmed during trial. Apple does not use Taction's technology, and we will appeal.”

Any appeal would be heard by the Federal Circuit, the same court that revived the case after Apple's earlier dismissal win, leaving the dispute's next procedural step outside the San Diego courtroom where the verdict was delivered.

Qualcomm continues to earn iPhone royalties

The verdict places Apple on one end of a major patent legal battle, even as it secures another of its patent relationships with Qualcomm (NASDAQ: QCOM). The two companies have announced a new agreement renewing their worldwide patent license deal, which will come into effect on April 1, 2027. No details of the financial arrangement have been made public.

The renewed deal will allow Qualcomm to collect royalties on all iPhones that use its patents without supplying the modems inside them.

Apple has worked for years to become independent of external modem suppliers, and it finally achieved that goal by designing its own baseband hardware. The iPhone 18 Pro, which launched just last month as part of Apple's “Surprise and Shine” event, uses Apple's proprietary C2 modem in some models — the first time a model in the iPhone series comes with baseband silicon designed by Apple. In the United States, the iPhone 18 Pro Max continues to use Qualcomm's Snapdragon X80 modem and will probably continue doing so in the next product cycle.

Switching modem suppliers, however, does not take Qualcomm out of the equation in an iPhone's economics. Both phones still require payment to Qualcomm for the cellular patents it has created and contributed to the 3GPP wireless standards used in modern networks. Those patents come with FRAND licensing terms, meaning the manufacturer still owes royalties even if someone else's modem is responsible for establishing the 5G connection.

One crucial number remains undisclosed. Neither Apple nor Qualcomm has disclosed whether the per-unit royalty under their new deal differs from the terms of their 2019 settlement agreement. That figure becomes important for estimating Qualcomm's licensing revenue in 2027 and 2028; so far, the payment has been modeled on a range because it has not been disclosed.

A previous report indicated that the new agreement includes an option to extend the deal by an additional two years, to 2029. Apple and Qualcomm have yet to confirm that aspect.

Qualcomm's licensing arm, Qualcomm Technology Licensing, has traditionally produced higher operating margins than its chip unit. Its patent customers include manufacturers around the world that build products using current cellular standards.

Source: Cryptopolitan