A federal jury in Tyler, Texas has ordered Apple to pay US$532.9-million to Smartflash LLC, a company that licences patents and does not sell anything, Bloomberg reports. The jury ruled that the company’s iTunes software used a Smartflash LLC’s patented inventions without permission.
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Smartflash LLC has something of a history of suing big companies, including Amazon, and is also currently suing Google and Samsung.
The company, which appears to play exclusively in the patent space, claims that Apple infringed three patents, and was seeking US$852-million in damages. Apple argued against the accusation and said that the damages should be worth US$4.5-million at most. In its counter argument, to justify its decision to ask for US$852 million in damages, Smartflash LLC argued that it was entitled to a percentage of sales of any Apple devices, including iPhones, iPads and Mac computers, capable of accessing iTunes.
Read more: Google Play may have more apps but iTunes is making way more money
At the core of Smartflash LLC’s argument was that iTunes used the inventions in applications such as Game Circus LLC’s Coin Dozer and 4 Pics 1 Movie.
The jury arrived at its decision after rejecting Apple’s arguments that it didn’t use the inventions and that the patents were invalid. Apple is appealing the ruling.
“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. “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.”
This statement by the Apple spokesperson is a contentious point because Smartflash LLC claims that more than 10 years ago an Apple executive was given a briefing on the technology.
Given Apple’s status and the popularity of its devices, it should hardly be surprising that it should be the target of such accusations. This ruling is in many ways ground-breaking and it will be interesting what Apple’s next move will be.
