Apple was recently ordered by a federal jury in Texas to pay $532.9 million to patent licensing firm Smartflash LLC. Smartflash, which was originally seeking $852 million in damages, claimed that Apple willfully used their patents in their iTunes software without their permission.
Smartflash originally filed suit against Apple in May of 2013, claiming that Apple used three of their patented ideas in their iTunes software. The patents, which concern digital rights management, data storage, and mobile payment systems, were allegedly used by iTunes in the way that it accesses and stores downloaded songs, videos, and games.
Apple originally denied the validity of these claims, asserting that they “refused to pay off this company (Smartflash) 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 jury, however, disagreed, and ordered Apple to pay $532.9 million after only 8 hours of deliberation.
Smartflash itself creates no products – the Texas based company holds and licenses patents regarding “data storage and access systems technology.” In a statement released to CNET after the case, Apple claimed that such companies exploit the patent system – “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.”
Apple has stated that they plan to appeal the verdict, and claimed that reform is needed in the patent system to nullify lawsuits filed by companies that don’t manufacture products themselves.