A small San Diego haptics company has won what legal commentators are calling the largest patent verdict in American history. If it holds, a big share of the money will go to the investors who paid for the case.
On Friday, a federal jury in the Southern District of California found that Apple had infringed two patents owned by Taction Technology, and awarded more than $5.7 billion in damages. 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, argued that Apple's Taptic Engine, built into iPhones and Apple Watches, used its inventions without a license.
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.
Thrown out, then revivedTaction 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 September 14, and seven jurors took parts of two days to find in Taction's favor.
One of the small wins for Apple was that the jury decided the infringement was not willful. Under the Patent Act, a judge can increase damages up to three times the jury's figure, but courts in practice reserve that for willful or egregious conduct. Without a willfulness finding, Taction has little prospect of enhanced damages.
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Taction did not fund the litigation alone. 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.
The verdict comes in the middle of the most aggressive push against third-party litigation funding (TPLF) the insurance industry has managed. In June, North Carolina became the first state to ban TPLF outright. Its law makes it unlawful to finance civil litigation in exchange for a stake in the outcome, with civil penalties of up to $50,000 per violation.
The bill passed the state House 112-0 and the Senate 45-1. Georgia, Montana, Indiana, Louisiana and several other states have passed laws requiring disclosure or registration, or limiting funder control.
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The Taction case shows the limits of the current reform push. North Carolina's ban covers only proceedings in North Carolina, and this case was tried in California.
At the federal level, Senators Grassley, Tillis, Kennedy and Cornyn introduced the Litigation Funding Transparency Act of 2026 in February. It would require parties to disclose funders and hand over funding agreements and would bar funders from steering strategy or settlement.
The American Property Casualty Insurance Association, which has also backed a uniform federal disclosure rule, supports it. However, the bill applies only to class actions, multidistrict litigation and coordinated proceedings of 100 or more cases. A single-plaintiff patent suit like Taction's would fall outside it. The bill also has yet to move out of committee. Meanwhile, the federal judiciary's Advisory Committee on Civil Rules looked at a disclosure rule last October and agreed to keep studying it.
Insurers are also acting through their own policies. ISO has introduced an optional "Litigation Funding Mutual Disclosure" endorsement for 2026 commercial liability programs, which gives carriers a route to obtain funding details in coverage disputes. The Council of Insurance Agents & Brokers has already linked funding to reduced availability and higher pricing in key liability lines.
Even where bans pass, don't expect claims costs to fall overnight. Gary Leonard, senior vice president of general liability claims at Gallagher Bassett, told Insurance Business after the North Carolina vote that the law marks a shift in the industry debate. "It's really going to move the conversation from disclosure and transparency to a direct restriction on outside capital or funding in litigation," Leonard told Insurance Business.
“For insurers and business leaders, it matters because it could significantly impact litigation dynamics by reducing funding-driven pressure on claim severity. Most importantly, it could serve as a model for other states considering similar action.”
He expects bans to bring claim severity down over time, though he cautioned the effect will be gradual and will depend on how widely other states follow and how plaintiff lawyers adapt.
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Insurers aren't only on the defense side of cases like this. A specialist market has grown up in judgment preservation insurance (JPI), which pays 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 Federal Circuit has a long record of cutting large awards down.
The product has cost its underwriters before. In 2024 the Fifth Circuit reversed a $1.6 billion judgment won by BMC Software against IBM, and insurers that had guaranteed part of it had to pay. 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.
For most commercial clients, the practical risk sits on the defense side, and a general liability policy is unlikely to help. Under the standard ISO commercial general liability wording, patent claims fall outside cover altogether. The same source puts the average cost of defending a moderate-sized patent case at $2.9 million before any settlement or damages.
Any client whose products depend on component technology they didn't develop themselves should at least review standalone IP defense cover. That includes device makers, med-tech companies, software businesses and anyone relying on supplier indemnities. As the Taction verdict shows, damages calculated per unit sold across a large installed base can grow far beyond anything a licensing negotiation would have produced.
History is on Apple's side. The previous record was the $2.54 billion 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 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 $5.7 billion award in the first place.
That happened in a year when funding reform has more political momentum than ever.
