Apple Fined $532.9 Million For Breaching Three Smartflash Patents
Apple has been caught in the headlights, and is being fined $532.9 million for breaching three Smartflash patents related to “data storage and managing access through payment systems.”
Apple’s iTunes Store, iOS and Mac App Stores and iAd, are being targeted for infringement in the complaint originally filed in 2013.
The jury in Texas had reported that it was not really convinced by Apple’s statement and arguments that the patents-in-suit were not being used by iTunes or other first-party products. It also failed to invalidate Smartflash’s inventions, according to the in-court reports from Bloomberg.
Smartflash is a non-practicing entity which works through patent licensing and litigation. Founded in the early 2000s by Patrick Racz, Smartflash was seen as a way to market and commoditize his patents. However, suing a company for infringement of patents is not a new norm for the company. Last year in 2014, Smartflash sued game making firms Game Circus and KingsIsle Entertainment based on seven of their own patents, but the case settled out of court.
Court documents have claimed that somewhere around Smartflash’s birth, Racz had met with executives from Gemalto SA to sell technology related to the patents-in-suit. One of the employees of Gemalto who had knowledge of the patent and the technology it encompassed, Augustin Farrugia, eventually left Gemalto to join Apple as a senior director of Internet service security.
Smartflash was seeking $852 million in damages from Apple, where a portion was accredited to the percentage of sales of iPhone, iPad and Mac devices. Resultantly, Apple lawyer Eric Albritton argued against awarding hardware royalties for a single device feature.
“It doesn’t make a lick of sense that one person would buy an iPhone and not make calls,” Albritton said in court. “People do not buy cell phones for the sole purpose of using apps.”
Apple fought that the patents were worth $4.5 million at most, as according to the company, the royalty demands were “excessive and unsupportable.”
Once the case with Apple is done and dusted, Smartflash seeks to use the same patents against the Korean tech giant – Samsung – in a new case. Smartflash seems to be confident in its defense, as it has already thrown the same lawsuits at Google and Amazon. Those cases have not yet been concluded.