A federal jury decided this week that Apple should pay $532.9 million in damages for violating patents held by Smartflash, a business based in Texas.
If you haven’t heard of Smartflash before, you wouldn’t be alone. The company does not make any products and its sole business is licensing seven patents. Smartflash filed its original complaint against Apple in 2013 in the Eastern District of Texas.
In the trial, which was held in a courthouse in Tyler, down the street from Smartflash’s office, the patent holder accused Apple of violating three patents covering digital copyright management, payment systems and data storage.
The jury said on Tuesday that Apple had violated all three patents. It also said that Apple failed to demonstrate that the patents were invalid.
Apple said it planned to appeal the decision. It said the case was an example of why Congress needed to embrace reform of 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,” said Kristin Huguet, an Apple spokeswoman. “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.”
Smartflash’s lead lawyer, Johnny Ward, said the company was satisfied with the verdict.
“Smartflash is very pleased with the jury’s verdict in this case, confirming that Apple devices designed to use the Apple iTunes Store and App Store infringe Smartflash’s patents,” Mr. Ward said in a statement. “Ultimately, the jury saw through Apple’s arguments and reached the right result.”
The outcome was a surprising turn for Apple, which has mostly won its patent fights in the United States. Most notably, the company in 2012 won a decisive victory in its high-profile patent lawsuit against Samsung Electronics, after a jury unanimously decided that Samsung had violated a series of Apple’s mobile patents. A separate jury in a damages trial later determined that Samsung owed Apple $930 million for infringing the patents.
Smartflash is expected to pursue similar litigation against Samsung and Google. Both cases are set to go to trial. Smartflash also sued Amazon late last year.