Summary
A federal jury in Texas found that Apple’s iTunes software infringed three patents owned by Smartflash LLC, a non-practicing entity established by Patrick Racz. The jury awarded Smartflash USD 532.9 million, concluding that Apple wilfully used the patents without permission. Smartflash had originally sought USD 852 million, while Apple argued the patents were worth much less. The case underscores challenges faced by technology firms in patent litigation, especially against licensing companies. Following the verdict, Smartflash intends to pursue further litigation against other major tech companies.
Apple, known for suing other high profile companies, gets a taste of its own medicine. Apple Inc. has been ordered to pay US$ 532.9 Mn after a federal jury in Texas found that its iTunes software infringed three patents owned by patent licensing firm, Smartflash LLC.
To market and commoditize his patents, Patrick Racz, in the early 2000s established Smartflash. As a non-practicing entity, the firm operates solely through patent licensing and litigation. Smartflash, a Texas-based patent licensing company, sued Apple in May, 2013, alleging that iTunes software infringed its patents related to accessing and storing downloaded songs, videos and games. After the 8-hour deliberation, the Jury determined that Apple had not only used Smartflash’s patents without permission, but did so wilfully. The trial was held in Tyler, which Apple tried to avoid, by having the lawsuit thrown out.
Smartflash demanded US$ 852 Mn in damages from Apple, a portion of which was calculated as a percentage of iPhone, iPad and Mac device sales. Apple lawyer, Eric Albritton, argued against awarding hardware royalties for a single device feature. Apple argued that the patents were worth US$ 4.5 Mn at most, saying the royalty demands were “excessive and unsupportable”.
After having taken a bite off of Apple, Smartflash now plans to take down Samsung Electronics Co. Ltd., HTC Corp and Google Inc. by filing patent infringement lawsuits.
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