Apple Ordered to Pay Over $500 Million to Smartflash LLC

On February 24, 2015, a Texas jury award Smartflash, LLC for infringing on three Smartflash patents that covered methods of managing digital rights and paying for songs, games, and other data. Although Apple viewed Smartflash as a patent troll, Smartflash alleged it had a legitimate claim because one of the co-inventors of the patents, Patrick Racz, discussed the data management technology in 2000 with Augustin Farrugia, who later became a senior director at Apple.

The holding, along with over 5,000 other patent cases filed in district courts last year, raise questions about whether or not he U.S. patent system is broken. Apple argues that “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.” On the other hand, companies like Smartflash argue that it is one of the many legitimate non-practicing entities that hold valuable patent assets that have the right to enforce them. John Curry, an attorney for Smartflash, stated that Racz had attempted to launch a line of products in the late 1990s, but the business was not successful and instead he filed for patent protection.

Apple remains unwavering in their stance against patent trolls especially because they face more than 100 law suits in the recent years from companies that threaten to file patent lawsuits unless they receive royalty payments. Apple states that it will appeal the verdict.