A small San Diego haptics company has won what US legal commentators are calling the largest patent verdict in American history. If it holds, a big slice of the money will go to the investors who paid for the case.
On Friday, US time, a federal jury in the Southern District of California found that Apple had infringed two patents owned by Taction Technology. It awarded more than US$5.7bn in damages, about £4.3bn at current exchange rates.
The patents cover tactile transducers, the vibration hardware that makes a phone or watch buzz back when you touch it. Taction, which uses the technology in headphones and gaming headsets, told the court that Apple's Taptic Engine, built into iPhones and Apple Watches, used its inventions without a licence.
Apple denies it. The company said its Taptic Engine is "fundamentally different" from Taction's technology and that it will appeal. Taction's lawyers at Quinn Emanuel said the verdict vindicated patent rights their client had waited more than five years to have heard.
Taction filed suit in 2021. In 2023, Judge Robinson excluded testimony from Taction's technical expert and granted Apple summary judgment, ending the case before trial. The Federal Circuit then revived it. The trial began on 14 September, and seven jurors took parts of two days to find for Taction.
One finding matters for anyone estimating Apple's final exposure. The jury decided the infringement was not wilful. Under US patent law, a judge can increase damages up to three times the jury's figure, but that power is in practice reserved for wilful or egregious conduct. Without a wilfulness finding, Taction has little prospect of enhanced damages.
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Taction did not fund the litigation alone. US legal reporting on court disclosures shows the case was financed by Gronostaj Investments LLC and Kenosha Investments LP. In separate litigation, Kenosha has been identified as an indirect subsidiary of Burford Capital, one of the world's largest litigation funders.
Liability insurers on both sides of the Atlantic have been lobbying against this model for years. In Europe, Insurance Europe and ten other trade bodies have urged the European Commission to regulate third-party funding, arguing that defendants often feel pressured to settle even weak claims. The US National Association of Insurance Commissionerslists funding and nuclear verdicts, generally awards above US$10m, among the main drivers of social inflation.
The Taction award is 570 times that nuclear threshold.
Insurers don't only sit on the defence side of cases like this. Much of the specialist capacity for judgment preservation insurance (JPI) is placed through London. These policies pay a winning claimant, or its funder, an agreed share of an award if the award is overturned on appeal. Patent verdicts are a core line for JPI because the US Federal Circuit has a long record of cutting large awards down.
The product has cost its underwriters before. In 2024 a US appeals court reversed a US$1.6bn judgment won by BMC Software against IBM, and insurers that had guaranteed part of it had to pay out. Brokers say capacity has since become more expensive and more selective. Whether anyone has written cover on the Taction award has not been made public.
Funders are also turning to the insurance market to protect the capital they put into cases, a trend that is changing the relationship between funders and ATE insurers.
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Litigation funding in England and Wales is in limbo. In 2023 the Supreme Court ruled in PACCAR that funding agreements paying the funder a percentage of damages count as damages-based agreements, which left many of them unenforceable. The Civil Justice Council recommended reversing that in June 2025, and the government said in December that it would legislate. However, the 2026 King's Speech contained no bill to do so, and there is still no timetable.
For UK insurers, that uncertainty cuts both ways. A reversal would probably mean more funded group actions against large corporates. Continued delay keeps some funding capital out of the English market. Either way, the ATE market sits in the middle of it. Industry estimates cited by Insurance Business put UK ATE premiums at roughly £200m to £275m a year.
The exposure is more direct for UK manufacturers, life sciences companies and software businesses selling into the US. Patent cases in England are heard by a judge rather than a jury, and damages awards here are typically far smaller. A UK exporter accused of infringement in Texas or California, however, faces the US system in full.
The Intellectual Property Office's guidance notes that businesses can insure against inadvertently infringing others' rights, not just against the cost of enforcing their own. Brokers should check whether a client's liability programme responds to a patent claim at all. In many cases it won't, and that conversation is better had before a letter arrives from US lawyers.
Read next: EU industry groups urge regulation of third-party litigation funding
History is on Apple's side. The previous record was the US$2.54bn (about £1.9bn) that a Delaware jury awarded Idenix against Gilead in 2016, which was later overturned. The next three largest awards, won by VLSI against Intel, Centocor against Abbott and Caltech against Apple, were all reversed or vacated on appeal.
Taction's award now goes to post-trial motions before Judge Robinson, where Apple will challenge both liability and damages. The appeal Apple has promised will follow. The final figure could be much smaller than the jury's, or nothing at all.
For UK insurers, what Apple eventually pays may matter less than the fact that a funded claimant, a revived case and a seven-person jury could produce a £4.3bn award in the first place. The debate over whether US social inflation will spread now has a new reference point.
