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VirnetX stock takes sharp U-turn into the red after appeals court said two patents were 'unpatenable,' but special dividend remains intact

Shares of VirnetX Holding Corp. (VHC) have pulled a sharp about face Thursday, to tumble 14.0% in afternoon trading after rocketing as much as 57.6% at at its intraday high, after the internet security software company confirmed that an appeals court invalidated two patents, that were part of a patent litigation with Apple. The stock initially soared Thursday after the internet security software company declared a special cash dividend of $1 a share, said it had reached a cooperation agreement with certain shareholders to distribute 80% of any future proceeds from its patent litigation with Apple Inc. (AAPL) and said it was "confident" that it was close to a final outcome of the litigation. The company said that while it was "disappointed and disagree" with the decision on the patents, the special dividend of $1 remained intact, "regardless of litigation outcomes." In 2020, VirnetX was awarded about $500 million in damages, but then Apple appealed the verdict in 2021. The stock suddenly started swinging south in morning trading Thursday, as Reuters reported that Apple won an appeal that invalidated two patents, which could jeopardize the $502 million verdict. VirnetX shares have still rallied 12.5% year to date and Apple's stock has run up 24.8%, while the S&P 500 has tacked on 5.5.

-Tomi Kilgore

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03-30-23 1545ET

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