Wednesday, February 25, 2015

Apple ordered to pay $530m for iTunes patents


Jury in Texas orders Apple to pay hundreds of millions to Smartflash for infringing three patents relating to its software for iTunes.
Jury in Texas orders Apple to pay hundreds of millions to Smartflash for infringing three patents relating to its...

Apple has been ordered to pay more than $530m after a federal jury in Texas found its iTunes software infringed three patents owned by a patent licensing company called Smartflash.

Although Smartflash had been asking for $852m in damages, the verdict handed down on Tuesday night was still a blow to Apple.

The jury, which deliberated for eight hours, determined Apple had not only used Smartflash’s patents without permission, but did so wilfully.

The patents concerned digital rights management, data storage and payment systems.

Apple, which said it would appeal, said the outcome was another reason that reform was needed in the patent system to curb litigation by companies that do not make products themselves.

“Smartflash makes no products, has no employees, creates no jobs, has no US presence, and is exploiting our patent system to seek royalties for technology Apple invented,” said Apple’s Kristin Huguet. “We refused to pay off this company for the ideas our employees spent years innovating, and unfortunately we have been left with no choice but to take this fight up through the court system.”

‘Very happy’

Smartflash sued Apple in May 2013, alleging its iTunes software infringed its patents related to accessing and storing downloaded songs, videos and games.

“Smartflash is very happy with the jury’s verdict, which recognises Apple’s longstanding wilful infringement,” said Brad Caldwell, a lawyer for Smartflash.

The trial was held in Tyler, Texas, which over the past decade has become a focus for patent litigation. Smartflash’s registered office is also located in Tyler.

It was also in Tyler federal court that a jury in 2012 ordered Apple to pay $368m to VirnetX for patent infringement. A federal appeals court later rejected that damages figure, saying it was wrongly calculated.

Apple tried to avoid a trial by having the lawsuit thrown out. However, US district judge Rodney Gilstrap, who presided over the case, ruled earlier this month that Smartflash’s technology was not too basic to deserve the patents.

Apple had asked the jury to find Smartflash’s patents invalid because previously patented inventions covered the same technology.

Smartflash’s suit said that about 2000, the co-inventor of its patents, Patrick Racz, had met with executives of what is now European SIM card maker Gemalto, including Augustin Farrugia, who is now a senior director at Apple.

Smartflash has also filed patent infringement lawsuits against Samsung, HTC and Google.