Apple has been ordered to pay $532.9 million in damages after a federal jury decided its iTunes software infringed three patents owned by Texas-based licensing firm Smartflash LLC. After deliberating for eight hours, a jury in the U.S. District Court in Tyler, Texas rejected Apple's arguments that it didn't use the inventions -- related to payment systems and data storage for songs, games and videos.
Smartflash, also based in Tyler, filed its lawsuit against Apple in 2013, claiming it had used its patents in several iTunes applications, including the App store and its iAd advertising platform. The firm, which boasts of an "expanding portfolio of foundational patents relating to Data Storage and Access Systems Technology" on its stripped-down website, had been seeking $852 million in damages. Smartflash argued Apple got the ideas for the technology from its founder Patrick Racz, who gave a presentation in 2000 to a group that included Augustin Farrugia, a current senior director at Apple.
In its original complaint, Smartflash also said patents were infringed in Apple Store Kit, its in-application payment function. It specifically pointed out several games including KingIsle's "Grub Guardian" and Game Circus' "Coin Dozer Pro," who were original defendants in the case until they were dismissed last year.
Smartflash's initial filing claimed Apple infringed six of its patents, all of which deal with "data storage and access systems" as related to payment systems. They are: US8336772, US8118221, US7334720, US8033458, US7942317, and US8061598. Each lists Racz and Hermen-ard Hulst as co-inventors.
Apple denied any wrongdoing and argued that the patents were invalid because they were basically rehashes of previously patented inventions, and at best were worth only around $4.5 million. They vow to appeal the ruling.
"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," Apple said in a statement to Bloomberg. "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."
Apple had tried to have the trial thrown out, but Judge Rodney Gilstrap ruled earlier this month to proceed.
"Smartflash is very happy with the jury's verdict, which recognizes Apple's longstanding willful infringement," a spokesperson told Reuters. The company has also filed lawsuits against Samsung, Google and Amazon.com.
In 2012, a federal jury in the Tyler court ordered Apple to pay $368 million in damages to VirnetX in a similar patent case. A federal appeals court later threw out the amount.