$533 Million SmartFlash vs. Apple Suit Overturned

A US federal appeals court has overturned a two-year-old patent verdict against Apple, which would have required the company to pay out $533 million in damages.

Back in May of 2013, a company called SmartFlash sued Apple for a cool $852 million, claiming that Apple’s iTunes Store, App Store, Apple TV, and a number of other Apple services infringed upon six of their patents that all related to “Data Storage and Access Systems.” SmartFlash was founded by Patrick Racz, who applied for said patents in the late 1990’s. Originally, the company intended to develop some sort of digital media player that allowed its users to pay for and download digitally protected content. The SmartFlash device was even promoted by Britney Spears (see the commercial here) in conjunction with a 2001-2002 European tour. Neither the tour or the SmartFlash product ever saw the light of day.

That didn’t stop SmartFlash, however, from aggressively attempting to squeeze money out of the idea. Although at the time of the trial, SmartFlash had no employees, products, or services to speak of, it was awarded $532.9 million of the $852 million in February of 2015 by a federal jury in SmartFlash’s home town of Tyler, Texas. SmartFlash also tried to sue several smaller game developers such as Game Circus, Robot Entertainment, and KingIsle Entertainment – those suits were thrown out – as well as Google, Amazon, and Samsung, some of which are still pending.

Apple has been fighting the decision since it was rendered, stating in 2015 that “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.” This morning, the US Court of Appeals for the Federal Circuit threw out the two-year-old verdict. A trial judge vacated the damages shortly after the initial ruling in 2015, but this morning, a “unanimous three-judge appeals panel”, according to Reuters, said that the judge should have ruled the patents as invalid. The panel added that “SmartFlash’s patents were too ‘abstract’ and did not go far enough in describing an actual invention to warrant protection.”

Today’s decision likely ends the ongoing legal battle. Neither Apple nor SmartFlash have released statements on the decision.