Apple’s Tiny iPhone, Watch Feature Just Triggered A $5.7B Legal Blow — What Investors Need To Know

• The case centers on Apple’s Taptic Engine, a haptic actuator that creates the taps, vibrations and other tactile sensations users feel when interacting with an iPhone or Apple Watch.
• Taction’s 2021 complaint said Apple had incorporated technology covered by two of its patents into the Taptic Engine.
• Taction argued that haptics had become an important part of the iPhone and Apple Watch experience, rather than simply a feature for notifications.

Apple Inc. (AAPL) owes $5.7 billion in damages to San Diego-based Taction Technology over one of the smallest components inside its iPhone and Apple Watch, which is the technology that makes the devices vibrate.

A federal jury in San Diego found Apple infringed two Taction Technology patents covering haptic technology, while noting that it did not find Apple’s infringement to be willful.

Apple shares ended with gains of about 2% in Friday’s regular trade.

What AAPL Is Accused Of

The case centers on Apple’s Taptic Engine, a haptic actuator that creates the taps, vibrations and other tactile sensations users feel when interacting with an iPhone or Apple Watch. Taction’s 2021 complaint said Apple had incorporated technology covered by two of its patents into the Taptic Engine.

The patents cover systems designed to produce more precise vibrations by controlling the movement of a mass inside a haptic actuator. Taction’s approach uses a combination of coils, magnets and flexures, with magnetic ferrofluid used to damp unwanted vibrations. The company said this allows the actuator to reproduce a wider range of input signals more accurately.

The complaint specifically alleged that newer Taptic Engines used ferrofluid to damp vibrations and in-plane flexures to guide the moving mass. It also alleged that these improvements helped Apple deliver more accurate haptic feedback.

Why This Matters For AAPL Investors

Taction argued that haptics had become an important part of the iPhone and Apple Watch experience, rather than simply a feature for notifications.

The complaint pointed to Apple’s use of haptics for interactions including taps, alerts and other tactile feedback, and said improved haptics helped Apple remove the physical Home button and maximize the screen real estate.

The original lawsuit identified a range of iPhones and Apple Watches where Apple had been accused of violating the patents, including the iPhone 8 through the iPhone 12 lineup and several Apple Watch models. Taction alleged those products contained Taptic Engine actuators incorporating the patented elements.

What Retail Traders Think Of AAPL Stock

Retail sentiment on Stocktwits around Apple trended in the ‘bearish’ territory at the time of writing.

AAPL stock is up 25% year-to-date and 33% over the past 12 months. The S&P 500 ETF Trust (SPY) is up 17% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 25%.

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