The U.S. Federal Circuit Court of Appeals in Washington, D.C., on Wednesday reversed a patent ruling requiring Apple to pay $533 million in damages to technology developing and licensing firm Smartflash LLC, which had claimed that the company’s iTunes software infringed upon its data storage patents.
The decision strikes down a large damages award to Smartflash imposed by a Texas federal jury in February 2015. The Court of Appeals said that the Texas judge should have ruled Smartflash’s patent invalid and entirely set aside the verdict. The three-judge appeals panel said unanimously that Smartflash's patents were too "abstract" and did not go far enough in describing an actual invention that would have warranted protection.
Smartflash was founded by Patrick Racz in 2000. The company had obtained patents for storing data such as songs and videos and accessing it via electronic payment system, something which iTunes does. Smartflash did not commercialize the technology or develop a product associated with it. Yet, it sued Apple in 2013, alleging that Racz had shared his ideas with a technologist, who later obtained a senior position at Apple.
Apple got reprieve in July 2015 when it won a retrial of the case that had been filed in East Texas. District Judge Rodney Gilstrap ordered a retrial on the basis of misleading jury instructions.
This is not the first time that Smartflash has been involved with abstract patents — in 2016, the U.S. Patent and Trademark Office declared some of its patents invalid for a similar reason.
The case also created a unique circumstance, wherein Apple’s rival Samsung lent support to the tech giant against Smartflash, as the two companies have themselves traded numerous accusations over violation of patents.