Apple Hit with $532.9M Fine for Infringing on Smartflash Patents

A Texas court has ordered Apple to pay Smartflash US$532.9 million for infringing on the company's DRM and payment system-related patents. Smartflash argued that Apple used its patented technology in iTunes for managing purchases, along with accessing and storing downloaded content such as songs and apps.

Apple ordered to pay $532.9 million for infringing on Smartflash patentsApple ordered to pay $532.9 million for infringing on Smartflash patents

Smartflash had asked the court for $852 million in damages, but the Federal Court in Tyler, Texas awarded the patent holding company the lower amount instead.

Apple maintains that Smartflash's patents aren't valid, according to Bloomberg, and has vowed to appeal the ruling. Apple spokesperson Kristin Huguet said,

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. 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.

The company claimed Apple had prior knowledge if its patents as part of its argument. Smartflash was created as a patent holding company, or a company that gets its revenue from patent licensing fees, by inventor Patrick Racz.

Mr. Racz said he showed the technology to Apple senior director Augustin Farrugia before the man worked for the iPhone and iPad maker. The implication Mr. Racz pushed is that Mr. Farrugia then used what he knew after coming to Apple.

Apple isn't the only company Smartflash is targeting. The patent holder also has lawsuits against Google, HTC, and Samsung. Google is pushing to move its case from Texas to California, and Samsung's case is about to start.

The Smartflash legal team is, unsurprisingly, pleased with the verdict.

John Ward, one of the lawyers representing Smartflash said, "The jury was very attentive, took good notes and worked very hard. We think they got it right."

It's no surprise Apple's legal team sees the outcome differently. Apple attorney James Batchelder said Smartflash's patents "are not just invalid, they are invalid many times over."

Considering Apple has made it clear it will appeal the ruling it doesn't look like Smartflash will see any of the $532.9 million award any time soon. The appeals process typically doesn't move quickly, and until Apple exhausts all of its legal options, it'll hold on to its money.