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Apple ordered to pay Smartflash $533M for iTunes patent infringement

March 4, 2015

By Bhupinder Randhawa

Apple Inc. has lost a patent infringement lawsuit relating to its iTunes software and has been ordered to pay almost $533 million to Smartflash LLC.

Smartflash sued Apple in May 2013 in the U.S. District Court in the Eastern District of Texas, alleging that Apple’s iTunes software infringes six patents licensed by Smartflash from its founder and only employee. Smartflash’s head office is in Tyler, Texas, where the case was heard, possibly in an attempt to create a home field advantage in a jurisdiction widely reputed to favour patent owners.

Smartflash’s patents relate to digital rights management and data storage on mobile devices. iTunes is at the heart of Apple’s mobile device management system. All of Apple’s mobile products, including iPods, iPhones and iPads are configured and controlled using iTunes.

Smartflash also alleged that Apple was aware of Smartflash’s patents and had wilfully infringed them. A unique feature of the US court system is that patent infringement cases are determined by a jury at the trial level. In this case, the jury deliberated for only eight hours before determining that Apple had indeed wilfully infringed three of the patents, opening up the possibility that Judge Rodney Gilstrap may increase the damages award. The jury’s award was less than the $852 million Smartflash had sought.

Apple plans to appeal and contends that even if it should be held liable for patent infringement, in this case the damages should not exceed a few million dollars. That and other appeals, possibly by both companies, will likely continue for many months, before there is a final word in the case.

After the decision was announced, Smartflash filed a second lawsuit against Apple over the same patents, this time targeting newer products that were not included in the first case, including the iPhone 6, iPhone 6 Plus and iPad Air 2.

Smartflash has also sued Amazon, Samsung, HTC Corp and Google for infringing the same patents. Those cases remain pending in the U.S. District Court for the Eastern District of Texas.

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Bhupinder Randhawa Bhupinder Randhawa
B.A.Sc. (Comp. Eng.), J.D.
416.957.1630  email Bhupinder Randhawa