Apple told to pay up $532.9m in trial on patent

Apple Inc was told to pay $532.9 million after a federal jury said the company's iTunes software used a Texas company's patented inventions without permission.

Closely held Smartflash LLC, which claimed that Apple infringed three patents, was seeking $852 million in damages, while Apple said it was worth $4.5 million at most. A federal jury in Tyler, Texas, where Smartflash is based, on Tuesday rejected Apple's arguments that it didn't use the inventions and that the patents were invalid.

The dispute is over digital rights management and inventions related to data storage and managing access through payment systems. Smartflash claimed that iTunes used the inventions in applications such as Game Circus LLC's Coin Dozer and 4 Pics 1 Movie. Apple pledged to appeal.

"Smartflash makes no products, has no employees, creates no jobs, has no US 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 to but take this fight up through the court system."

Game Circus and another game developer, KingsIsle Entertainment Inc, maker of Wizard 101 and Grub Guardian, had also been defendants before they were dismissed from the case last year.

In asking for $852 million, Smartflash argued it was entitled to a percentage of sales of Apple's devices, including the iPhone, iPad and Mac computers, that were used to access iTunes. It claimed that Apple had intentionally infringed the patents, in part because one of its executives had been given a briefing on the technology more than a decade ago.

Apple arguments

"Apple doesn't respect Smartflash's inventions," the company's lawyer, John Ward of Ward & Smith in Longview, Texas, told the jury. "Not a single witness could be bothered with reviewing the patent."

Cupertino, California-based Apple attacked every aspect of Smartflash's case. It said the patents were invalid and weren't infringed. It said Smartflash didn't have complete control of the patents and waited too long to file suit. It also argued that Smartflash's royalty demands were "excessive and unsupportable".

"They are not just invalid, they are invalid many times over," James Batchelder, a lawyer at Ropes & Gray in East Palo Alto, California, who is representing Apple, told the jury.