Apple Gains Retrial to Challenge $533 Million Award in iTunes Patent Case
A federal judge earlier this week tossed a $533 million patent violation award against Apple (AAPL), giving the iPhone maker another chance to challenge damages from a February jury ruling that its iTunes software infringed on three patents owned by Smartflash.
U.S. District Judge Rodney Gilstrap said jurors who ruled against Apple in the February 24 award to Smartflash may have been confused by his instructions on correctly figuring royalties. Judge Gilstrap said that even though his instructions to the jury were legally correct, they “may have created a skewed damages horizon for the jury,” essentially agreeing with Apple’s argument that the distinction between patented and unpatented features had not been made clear.
The judge set September 14 for the new trial date on the damages award issue to be heard in Tyler, Texas, where Smartflash is based.
Last February, a federal jury in Tyler told Apple to pay little-known Smartflash $532.9 million in damages for violating three of its patents with the iTunes software in a case originating in March, 2013.
The courtroom win appeared to embolden Smartflash, which promptly sued Apple again, this time alleging the iPhone maker had infringed Smartflash’s seven patents in its iPhone 6, iPhone 6 Plus, iPad mini 3, and iPad Air 2 devices using any version of iTunes to access the iTunes Store or the App Store.
Smartflash, which inventor Patrick Racz began in the early 2000s, doesn’t make any products, has no employees and its revenue comes solely from issuing licenses for technology on seven patents it owns. It and companies like it are referred to disparagingly in the IT industry as patent trolls.
In its complaint against Apple, Smartflash alleged the vendor violated six of its patents, asking the court for $852 million in damages. Apple, which argued the Smartflash patents were invalid, countered that the claim was worth about $4.5 million.
In a somewhat ironic twist to the case, Smartflash also is suing Apple rival Samsung over the same issue in a battle scheduled for court in Tyler this coming August. Samsung, however, has successfully convinced a review panel at the U.S. Patent and Trademark Office to examine the validity of two of Smartflash’s patents.
Along with Apple’s earlier appeal for Smartflash patent review, regulators have agreed to investigate five of the six patents in question.
In the Samsung case, patent agency reviewers issued preliminary findings that because Smartflash’s patents don’t cover actual inventions but instead abstract ideas they don’t meet the requirements for legal protection. Now it’s up to a judiciary panel to make a final decision, which could take up to a year.
For Apple, it’s unclear whether the vendor will be able to hold off paying the damage claim to Smartflash until the Samsung ruling arrives.