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Why VirnetX Stock Soared on Tuesday

Daniel Sparks, The Motley Fool

What happened

Shares of software company VirnetX (NYSEMKT: VHC) skyrocketed on Tuesday, rising nearly 53% as of 2:35 p.m. EST.

The stock's gain came as an appeals court upheld a former verdict requiring Apple (NASDAQ: AAPL) to pay VirnetX for infringing on patents that were allegedly used in the tech giant's secure communications technologies, including FaceTime and iMessage. 

A chart showing a stock price rising

Image source: Getty Images.

So what

"The U.S. Court of Appeals for the Federal Circuit denied Apple's appeal of a 2016 jury verdict originally valued at $302 million that grew to $440 million with interest, enhanced damages, and other costs," Reuters reported on Tuesday.

For VirnetX, a company that had a market capitalization below $300 million before the news of this ruling on Tuesday, a legal win like this could be a major windfall.

Now what

VirnetX investors shouldn't consider the reward from this litigation to be totally in the bag yet. The patents in question were ruled invalid by an administrative court, according to Reuters. VirnetX is appealing this administrative ruling.

In addition, Apple is planning to appeal Tuesday's ruling.

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Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.