Apple is in trouble for disrupting the testimony of one of its engineers in a patent dispute with VirnetX. Apple told its engineer to “zip it” when VirnetX’s questioning got tough.

A court order was handed down on Wednesday that might have gravely crippled Apple’s defense in its patent infringement case with VirnetX – a holding company that claims a portfolio of four dozen patents, many of them awarded to a team of engineers who once worked at SAIC, (Science Application International Corporation), a firm that regularly contracts with the Department of Defense.

A judge granted VirnetX’s proposed sanctions against Apple – for obstructing a witness during deposition. The sanctions have put Apple in a disadvantageous position against VirnetX, with it possibly having to pay millions in damages, future royalties and potentially faces an injunction on sales of its popular products including the iPhone, iPhone 3G, iPhone 3GS, iPhone 4, iPod Touch and iPad.

The incident happened earlier this year when VirnetX questioned an Apple software engineer who was key in developing Apple’s “VPN (virtual private networks) on Demand”. VPN plays a crucial role in this case and similarly, is pivotal to Apple with this function found across most Apple devices and countless apps would fail to connect without VPN.

During questioning, the software engineer claimed to have devised the method of “determining whether to establish a VPN based on a domain name” for Apple’s VPN on Demand. The witness continued to add that he and his team had tried to patent this idea with patent application 10/940,225.

However, a similar method of establishing a VPN based on a DNS request has already been patented by VirnetX – its 6,502,135 patent (the ‘135 patent) – four and a half years earlier.

The engineer claimed to be unaware of the ‘135 patent and was read claim 1 of the patent. Following that VirnetX asked the witness whether he still believed that he and his team had invented the DNS-triggered VPN. It was then that Apple’s counsel intervened and after the witness was pressed further, the Apple counsel told the engineer to “zip it”, which led to a shut down of the deposition.

The court has now given Apple a choice between two sanctions - either admitting that it had interfered on purpose, or not admitting fault but allowing VirnetX to continue the interview with the engineer with Apple being banned from speaking to the witness about the two patents, writes Seeking Alpha.

As this case unravels and Apple’s defense begins to crumble, it brings one back to the VirnetX suing Microsoft case back in 2010 with VirnetX walking away with a £127.6 million (US$200 million) settlement.  It is interesting to see how Apple behaves in court, could we see Apple act in a similar manner in the on-going Apple VS Samsung patent trial.