Tech Giant Apple Ordered To Pay $532.9 Million For Patent Infringement

Tech Giant Apple Ordered To Pay $532.9 Million For Patent Infringement

A Texas jury has ordered Apple Inc to pay over half a billion dollars in damages to SmartFlash LLC- a little known Texan based Patent Licensing firm for patent infringement.

Smartflash which sued Apple in 2013 alleged that Apple Inc’s iTunes software wilfully infringed three patents that were owned privately held by the firm. The three patents relate to payment management and data storage.
Smartflash alleged that around the year 2000 the co-inventor of its patents- Patrick Racz- shared his ideas with Augustin Farrugia, who at the time was a member of the tech company Gemplus International SA, he is now a senior director at Apple. The company argued that Apple violated the patents by utilising technology in managing apps sold through its iTunes store, such as Grub Guardian and WizardBlox, developed by Kingsisle Entertainment Inc. Kingsisle Entertainment had been a defendant before being dismissed from the case.

Apple had tried to avoid trial by attempting to have 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 as previously patented inventions covered the same technology.
In a blow to Apple the jury which deliberated for eight hours concluded that Apple had not only used Smartflash’s patents without permission but had done so wilfully. The jury concluded that Apple had violated all three patents. The jury also said that Apple failed to demonstrate that the patents were invalid.

Apple now plan to appeal the decision and have commented that this case demonstrates why Congress needs to embrace reform of the patent system.

“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 Kristin Huguet an Apple spokeswoman. She continued “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. We rely on the patent system to protect real innovation and this case is one more example of why we feel so strongly Congress should enact meaningful patent reform”.

Brad Caldwell lead counsel for Smartflash commented in an email statement: “Smartflash is very happy with the jury’s verdict, which recognizes Apple’s longstanding wilful infringement. I don’t see how Apple could say Smartflash is exploiting the system. That seems to be based on some bitterness after a jury properly rejected the arguments Apple flung around the courtroom. He further commented “I would expect Apple to say they will appeal as part of Apple’s standard operating procedure, However Smartflash believes the facts and the law support the jury’s verdict”.

Smartflash have also filed similar cases against Google Inc and Samsung Electronics Co. Both cases are set to go to trial, so watch this space!

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