"We vacate the jury's damages award and remand for further proceedings consistent with this opinion," judges in a US appellate court said in a detailed written ruling.
Patent licensing firm VirnetX and Science Applications International Corporation filed suit four years ago in US District Court in Texas, accusing the iPhone, iPad, iPod and Macintosh computer maker of infringing on patented technology in secure video chat capabilities built into a FaceTime feature.
Computer networking gear titan Cisco, maker of a widely used virtual private network (VPN) software, was also named as a defendant in the suit.
Jurors concluded that VirnetX patents had been infringed on and calculated USD 368.16 million in damages, according to court documents.
Appeals court judges backed the finding of infringement, but said the lower court wrongly allowed expert testimony that may have influenced the damages award.
"While we are disappointed that the federal circuit has vacated portions of the judgement for further proceedings, we are bolstered by the fact that the patents were again found valid and that it was confirmed that Apple's VPN on Demand functionality infringes the VirnetX patents," VirnetX chief executive Kendall Larsen said in a released statement.
"We look forward to readdressing the FaceTime infringement and damages issues as soon as possible," he said.