Jonathan Stempel and Blake Brittain

(Reuters) – Friday’s U.S. appeals court ruled that Apple Inc (NASDAQ) and Broadcom Inc (NASDAQ) were guilty of violating Wi-Fi patents. It ordered them to pay $1.1 Billion to California Institute of Technology and ordered a fresh trial for damages.

According to the U.S. Court of Appeals, the Federal Circuit, the Jan 2020 award made by Los Angeles’ federal jury was legally unsustainable.

The jury also found that Apple and Broadcom violated Caltech patents. It ordered another trial to determine if they infringed the third patent.

Caltech sued Apple, Broadcom, and Broadcom, alleging millions of iPhones/iPads/Apple Watches that violated Broadcom’s data transmission patents.

Caltech was ordered to pay Apple $837.8 millions by the jury, and Broadcom an additional $270.2million.

Broadcom, Caltech and Apple did not respond immediately to our requests for comment.

Apple is a major purchaser of Broadcom chips, and in January 2020 reached a $15 billion supply agreement https://www.reuters.com/article/us-broadcom-apple/broadcom-to-supply-wireless-components-to-apple-idUSKBN1ZM32H that ends in 2023. Broadcom estimates that Apple accounts for 20% of its revenues.

Caltech’s damage model relied on the argument that Caltech could simultaneously have negotiated licenses with Apple for Broadcom chips and with Broadcom for other chips.

Circuit Judge Richard Linn, writing for the appeals court rejected this theory.

Linn stated that the mere fact Broadcom and Apple infringers does not mean the chips should be treated differently in different phases of the supply chain. This record shows that Caltech’s two-tier damages theory cannot be legally supported.

Caltech is based in Pasadena (California). Microsoft Corp (NASDAQ:), Samsung Electronics(OTC:) Co., Dell Technologiess (NYSE:) Inc., and HP Inc. for alleged infringements. The cases against these companies are still pending.