Apple's Patent Verdict Sparks Ongoing Royalty Fears
Apple's $5.7 billion patent verdict has investors on edge, but experts say it's not the one-time payment that's the real concern, it's the possibility of an ongoing royalty on every affected iPhone and Apple Watch sold going forward.
The ruling against Apple ordered the tech giant to pay more than $5.7 billion to Taction Technology after finding that Apple's Taptic Engine infringed claims in two patents covering haptic-feedback technology used in iPhones and Apple Watches.
Apple has said it will appeal, but even if the company absorbs the one-time payment without issue, a recurring royalty would put material pressure on hardware margins over time.
The market may be focused less on the $5.7 billion verdict and more on what Apple might ultimately have to agree to pay to keep using the technology.