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You are here: Home / Business Briefing / Apple Must Pay Patent Troll $532.9M
Apple Ordered To Pay $532.9 Million to Texas Patent Troll
Apple Ordered To Pay $532.9 Million to Texas Patent Troll
By Shirley Siluk / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
A Texas jury on Tuesday ordered Apple to pay $532.9 million to a small technology licensing company that charged the tech giant infringed on several of its patents. Smartflash, based in Tyler, Texas, is frequently described as a "patent troll" for its lawsuits against large technology firms.

Smartflash filed suit against Apple in U.S. District Court for the Eastern District of Texas in May 2013. It also lodged a patent infringement complaint against Samsung Electronics and HTC on the same day in the same court, and a similar suit against Google in May 2014.

A limited liability corporation founded in 2000, Smartflash claimed that Apple's iTunes software violated its patents for data storage and access systems. Those inventions were developed by Patrick Racz, described as a "serial entrepreneur," according to the company.

'Congress Should Enact Patent Reform'

"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," a statement from Apple noted after the jury verdict. "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."

The lawsuit against Apple also named Robot Entertainment, Kingsisle Entertainment and Game Circus as Defendants in the case. Smartflash alleged that the apps produced by those companies required the use of Apple's iTunes payment functionality.

Smartflash claimed its patents cover the use of a portable data carrier and server network for managing and validating online payment data. It also alleged that Racz discussed that technology with several people at a company called Gemplus (now Gemalto S.A.), including Augustin Farrugia, who later went to work for Apple.

In addition to seeking an injunction against further infringement, the Smartflash lawsuit also sought an award of $852 million from Apple.

You Don't Award $500M if Doubts

We reached Bradley Caldwell, an attorney with the Dallas-based law firm Caldwell Cassady Curry, one of the firms representing Smartflash, who told us, "We were very pleased. We think the jury did the right thing. My sense is the jury really liked our inventor. You don't award $500 million if you have doubts."

Caldwell said it could take another year to go through the appeals process. The case would be heard by the U.S. Court of Appeals for the Federal Circuit.

Since a 2003 Texas law capping awards in medical malpractice lawsuits, there have been a rise in patent infringement lawsuits in the state's courts. In fact, Smartflash "even set up its only office across from the courthouse holding the trial, making clear that lawsuits were expected from the start," according to a report in Engadget.

Image credit: Apple; iStock/Artist's concept.

Tell Us What You Think


Posted: 2015-02-26 @ 12:41pm PT
Trolling from both sides of the aisle. The only beneficiaries are lawyers. An entity that does not use its patents should not be helped to enforce them by the taxpayer-funded court system.

Posted: 2015-02-26 @ 10:58am PT
It gets harder every day for a garage entrepreneur to get a patent, much less to fight a corporation like Apple. Big business thinks it's unfair for anyone not in their employ to get a patent and they are doing their best to bribe Congress into agreeing.

Posted: 2015-02-25 @ 1:57pm PT
Apple, the biggest patent troll of them all, gets bitten. Delicious irony.

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