Apple Ordered to Pay $532.9 Million in iTunes-Related Patent Lawsuit

[MacRumors]

A federal jury in Tyler, Texas has ordered Apple to pay $532.9 million to patent licensing firm Smartflash LLC for using its patents without permission, reports Bloomberg. The court found certain iTunes apps to be infringing upon the Texas-based company's patents related to digital rights management, data storage and managing access through payment systems.

Apple argues that Smartflash is exploiting the patent system and plans to appeal the decision.

"Smartflash makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology Apple invented," said Kristin Huguet, an Apple spokeswoman. "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."

Smartflash was originally seeking $852 million in damages from Apple for infringing three patents, claiming that it was entitled to a percentage of sales of Apple products used to access iTunes, such as iPhones, iPads and Macs. Apple believed that $4.5 million was fair at most, arguing that it was not infringing upon the inventions and that the patents were invalid. Developers Game Circus and KingsIsle Entertainment Inc. were also defendants in the case but were later dismissed from the lawsuit.

"Apple doesn't respect Smartflash's inventions," the company's lawyer, John Ward of Ward & Smith in Longview, Texas, told the jury. "Not a single witness could be bothered with reviewing the patent."

Smartflash has also sued Samsung Electronics in a separate lawsuit that is scheduled to begin following the end of this Apple trial. The patent licensing firm also recently filed against Google, which has attempted to move its lawsuit to California, and Amazon in December. This case is Smartflash LLC v. Apple Inc., 13-447, in the U.S. District Court for the District of Texas.

Article Link: Apple Ordered to Pay $532.9 Million in iTunes-Related Patent Lawsuit

 

[farewelwilliams]

let's make the faces of patent trolls popular so everyone will hate them in person.

 

[maflynn]

It will get appealed apple will negotiate a smaller settlement and this will disappear.

 

[Crosscreek]

Patent Trolls.

 

[Elbon]

"The court found certain iTunes apps to be infringing upon the Texas-based company's patents"

What does that even mean? As far as I know, there's only one iTunes app.

 

[samcraig]

I think it's hard to comment on cases like this.

Just because it may appear like a money grab - doesn't mean it is. If there's a company or person that legitimately has a patent and wants to test the courts because they believe their patent holds up, they should have the right to do that. Apple's argument about creating job is irrelevant.

And honestly - Apple has sued plenty based on patents that other companies have probably "spent years innovating."

I don't fault Apple for fighting this either. If you believe you haven't "violated" patents that exists, you should take it to court as well.

But no doubt this thread will be filled with people crying patent trolls without knowing all the facts.

One of the ultimate truths is - there is often one (or similar) solution that makes sense and in this day and age - it's nearly impossible to NOT "violate" SOMEONE's patent. I would say this is done completely unknowingly. Not deliberately.

The problem is deeper - it's the patent system in general and how it currently works.

 

[DTphonehome]

Isn't this one of those East Texas courts that are notoriously friendly toward patent trolls?

 

[ScottHammet]

Sounds a lot like what Rambus was trying to do to everyone who made DRAM ten years or so ago. If Rambus hadn't gotten greedy, it might have worked.

 

[MacrumoursUser]

I think it's hard to comment on cases like this.

Just because it may appear like a money grab - doesn't mean it is. If there's a company or person that legitimately has a patent and wants to test the courts because they believe their patent holds up, they should have the right to do that. Apple's argument about creating job is irrelevant.

And honestly - Apple has sued plenty based on patents that other companies have probably "spent years innovating."

I don't fault Apple for fighting this either. If you believe you haven't "violated" patents that exists, you should take it to court as well.

But no doubt this thread will be filled with people crying patent trolls without knowing all the facts.

One of the ultimate truths is - there is often one (or similar) solution that makes sense and in this day and age - it's nearly impossible to NOT "violate" SOMEONE's patent. I would say this is done completely unknowingly. Not deliberately.

The problem is deeper - it's the patent system in general and how it currently works.

Thats the problem. Two people living on opposite sides of the world will come up with the same solution to the problem. That's just how it is. Especially with complex sophisticated problems.

 

[rdlink]

I think it's hard to comment on cases like this.

Just because it may appear like a money grab - doesn't mean it is. If there's a company or person that legitimately has a patent and wants to test the courts because they believe their patent holds up, they should have the right to do that. Apple's argument about creating job is irrelevant.

And honestly - Apple has sued plenty based on patents that other companies have probably "spent years innovating."

I don't fault Apple for fighting this either. If you believe you haven't "violated" patents that exists, you should take it to court as well.

But no doubt this thread will be filled with people crying patent trolls without knowing all the facts.

One of the ultimate truths is - there is often one (or similar) solution that makes sense and in this day and age - it's nearly impossible to NOT "violate" SOMEONE's patent. I would say this is done completely unknowingly. Not deliberately.

The problem is deeper - it's the patent system in general and how it currently works.

Most of what you say makes sense. But one little fact presented here tells me everything I need to know about this plaintiff: They try as hard as they can to get and keep these cases in Tyler, Texas. A well known plaintiff friendly venue. East Texas is to plaintiff lawyers what the briar patch is to Brer Rabbit.

 

[derek4484]

Funny, Apple whining about someone suing it for using technology it invented.... Yea right.

Apparently Apple didnt invent the technology...This other firm was issued the patent for it. Seems they were first, or the company that they obtained the patent from was first. Apple's just mad that they got caught and their army of millionaire lawyers couldnt find a way to get them off the hook. Pay up.

Maybe they can do what samsung did, pay in nickels.

 

[bbeagle]

Funny, Apple whining about someone suing it for using technology it invented.... Yea right.

Apparently Apple didnt invent the technology...This other firm was issued the patent for it. Seems they were first, or the company that they obtained the patent from was first. Apple's just mad that they got caught and their army of millionaire lawyers couldnt find a way to get them off the hook. Pay up.

Maybe they can do what samsung did, pay in nickels.

Samsung is the next to be sued. You'll be okay when Samsung has to pay $500 million or so too, right?

It's a PATENT TROLL. Everyone should be against them. They're thieves. That's all they are. It's a way a group of lawyers can get rich quick and HAMPERS innvoation.

 

[stewy]

Isn't this one of those East Texas courts that are notoriously friendly toward patent trolls?

So it's like all of the trials that Apple has 10 minutes away from their campus?

 

[maflynn]

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[Robert.Walter]

How I understood Apple's statement:

"(Company X) makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology (company Y) invented,”

It's like saying Inventor Y thinks that he can use the USPTO-patent protected inventions of InventorX for free just because Inventor X doesn't have a manufacturing arm or isn't US-based.

Until this is the basis on which a patent is awarded, it can't and shouldn't be the basis on which a patent is disputed.

Apple's PR statement makes it look bad.

 

[DeadSeaMac]

Why would Apple believe 4.5 million dollars was a fair settlement if they truly believe they did not infringe upon these patents in the first place?

Oh that's right, what's a few measley million dollars when it will save us from paying out 1/2 a billion dollars in the long run.

The "scales of justice" in 2015.

 

[PinkyMacGodess]

I predict that Smartfish will lose big time on appeal.

Call me psychic, but the 'court' in Texas is notorious for doing this.

 

[Iconoclysm]

Funny, Apple whining about someone suing it for using technology it invented.... Yea right.

Apparently Apple didnt invent the technology...This other firm was issued the patent for it. Seems they were first, or the company that they obtained the patent from was first. Apple's just mad that they got caught and their army of millionaire lawyers couldnt find a way to get them off the hook. Pay up.

Maybe they can do what samsung did, pay in nickels.

You do know Samsung didn't pay in nickels right?

 

[lolkthxbai]

What an exurbant penalty for having said me first. Ridiculous.

 

[KPOM]

Why would Apple believe 4.5 million dollars was a fair settlement if they truly believe they did not infringe upon these patents in the first place?

Oh that's right, what's a few measley million dollars when it will save us from paying out 1/2 a billion dollars in the long run.

The "scales of justice" in 2015.

The point is even if the patent were valid Apple argued that the damages were minimal.

Since this company filed suit in a plaintiff friendly venue and has no operations, and is going after Samsung and other deep pockets next there are lots of reasons to think they are a patent troll.

 

[KPOM]

How I understood Apple's statement:

"(Company X) makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology (company Y) invented,”

It's like saying Inventor Y thinks that he can use the USPTO-patent protected inventions of InventorX for free just because Inventor X doesn't have a manufacturing arm or isn't US-based.

Until this is the basis on which a patent is awarded, it can't and shouldn't be the basis on which a patent is disputed.

Apple's PR statement makes it look bad.

They are basically calling the company a patent troll. They can't use those exact words without facing a defamation suit so they are sticking to factual claims.

 

[Robert.Walter]

They are basically calling the company a patent troll. They can't use those exact words without facing a defamation suit so they are sticking to factual claims.

Frankly, I don't understand the meme of patent troll, and why anybody who invents, patents, and defends their patents is automatically labeled troll for doing this if they are not a big name company.

Likewise, companies that buy and exploit patents for their economic potential, why are these labelled trolls? It's like those accused of infringement wave the troll card in an attempt to create a different class of patent holder, one not entitled to gain economic benefit from their IP nor be allowed to defend it.

If the idea of Intellectual Property is to have any value, and the process of protecting it, i.e. by patenting and defending it, and the process of it being portable through sale, assignment, or licensing, just like any other property is to have any meaning, we have to stop waving the troll flag any time the owner of a patent wants to assert the right to defend said patent when it feels that patent is being infringed.

To continue to say troll this and troll that and "it's a troll just because they are a foreigner, or don't manufacture, or don't create US jobs"*, is just stupid and undermines the whole idea of what a patented invention is.

* none of which are the basis of a patent award or the holder's right to defend.

 

[subsonix]

Frankly, I don't understand the meme of patent troll, and why anybody who invents, patents, and defends their patents is automatically labeled troll for doing this if they are not a big name company.

Have you looked at their patents? It seems like almost anyone who has an online store that sells digital content would be in violation of this patent, but what is the actual invention?

Abstract:

Data storage and access systems are described for downloading and paying for data such as audio and video data, text, software, games and other types of data. A portable data carrier has an interface for sending and receiving data, non-volatile data memory for storing received content data and non-volatile payment validation memory for providing payment validation data to an external device. The carrier may also store a record of access made to the stored content, and content use rules for controlling access to the stored content. Preferred embodiments store further access control data and supplementary data such as hot links to web sites and/or advertising data. A complementary data access terminal, data supply computer system and data access device are also described. The combination of payment data and stored content data and, in preferred embodiments, use rule data, helps reduce the risk of unauthorized access to data such as compressed music and video data, especially over the Internet.

Gotta love the last sentence:

The skilled person will understand that many variants to the system are possible and the invention is not limited to the described embodiments but encompasses modifications which lie within the spirit and scope of the present invention.

http://patft1.uspto.gov/netacgi/nph...50&s1=7334720.PN.&OS=PN/7334720&RS=PN/7334720

 

[Robert.Walter]

What an exurbant penalty for having said me first. Ridiculous.

For me, the content of the above comment is what I think of as a Patent Troll.

 

[samcraig]

The point is even if the patent were valid Apple argued that the damages were minimal.

Since this company filed suit in a plaintiff friendly venue and has no operations, and is going after Samsung and other deep pockets next there are lots of reasons to think they are a patent troll.

"Damages" is often hard to quantify. Just because the patent owner isn't using the technology themselves doesn't automatically mean they aren't entitled to their intellectual property.

Many found it hard to listen to Apple "complain" about how Samsung was damaging Apple's iPhone sales because of some of the patents mentioned while at the same time, Apple was touting record sales, profits, etc.

At the end of the day - the system is broken. But I do think that if someone comes up with a great idea - and they patent it - then they have the right to defend it.

In fact, I would actually say that patents aren't even valid UNTIL they are tested or challenged. Until then - it's just something "on paper."