It’s like David versus Goliath. Apple, the world’s number one company, has been ordered by a jury to pay $532.9 million for involuntarily using another company’s patents. The winner of this legal battle is Smartflash LLC, a small company in Texas, which owns a number of patents relating to data storage and access systems technology. Smartflash’s surprising victory is proof that even giant companies like Apple can fall down and lose.
Smartflash claimed that Apple infringed three of its patents, seeking $852 million in damages. The company said that Apple’s iTunes is using its patented technologies on games like 4 Pics 1 Movie and Coin Dozer. Apple denied the allegation, saying that Smartflash doesn’t have products, employees and offices in the United States.
From Apple’s point of view, Smartflash is merely exploiting the patent system, seeking royalties for a technology that it did not invent. For Smartflash, Apple is the bully, using its inventions without permission. Apart from the $852 million, Smartflash also asked for a percentage of sales of Apple’s iPhone, iPad and Mac because these devices use iTunes.
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Smartflash is certain that Apple intentionally infringed the patents because one of its executives had knowledge of the technology. Augustin Farrugia, Apple’s director of security, previously met Smartflash founder, Patrick Racz, in the early 2000s. Smartflash is also suing Samsung Electronics. The company also sued Google and Amazon in the past. It is unclear whether Smartflash is merely defending its patents or exploiting the patent system.