Home / News / Internet News / Apple hit with $533 million iTunes patent bill

Apple hit with $533 million iTunes patent bill

Luke Johnson

by

iTunes logo

Apple has been forced to fork out $533 million in damages after being found guilty of iTunes-based patent infringement.

Having been deemed to have unlawfully infringed on a trio of intellectual properties held by Smartflash, a British Virgin Islands-based patent licensing company, Apple was found guilty by a federal judge in the US.

The patents in question relate to technologies used in the back end of the company’s digital iTunes store. They cover methods of managing and storing audio and video files, apps and games as well as means of authenticating purchases.

Although Smartflash had originally sought damages of $852 million (£550m), the final sum was reduced to $533 (£344m) million by the judge.

Despite the reduced fine, Apple is still unhappy and has announced it intends to appeal, suggesting the technologies are worth no more than $5 million.

"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," an official statement from the iPhone make declared.

"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.”

Related: Future Tech: Biggest patent acquistions of the month

The Cupertino-based tech giant has also called for patent reform as the fine is the latest in a run of damages to be inflicted at the hands of so-called ‘patent trolls’.

Smartflash is one of a number of non-practising entities (NPEs) which buy up patents and licenses with the aim of capitalising on infringements.

U.S. President Barack Obama recently waded into the debate on patent trolls, urging Congress to reform the legal system they operate in.

According to reports, Smartflash is already targeting Samsung, Amazon and Google in other patent cases.

toboev

February 25, 2015, 5:01 pm

I'd agree that companies should not just sit on patents and collect money from "infringements". It's a bit like owning a plot of land and using it for nothing except extorting money from hapless motorists who stop there.
But Apple are no strangers to patenting ideas and doing nothing productive with them, other than to queer the pitch for others who might come independently to the same idea. Which does not seem a whole lot better.

MikeL

February 25, 2015, 5:29 pm

I do agree if you patent something then sit on it you should be given a very limited amount of time in which you can 'manufacture' or make use of/sell it before it becomes public domain. Use it or lose it basically.

toboev

February 25, 2015, 6:23 pm

...although I did read something over on the BBC which makes sense. Suppose I, as an individual or a small business, invent something original and useful, but I am not in the big game of manufacturing and selling. I should still be able to profit from my enterprise. You could argue that even ARM fall into that category - they manufature nothing, but they are the brains behind most of our mobile chips. How do you separate legitimate "making use of" from simple trolls?

MikeL

February 25, 2015, 6:34 pm

they sell the patent to a manufacturer with possibly an upfront cost and a royalty for piece manufacture but the manufacturer owns the rights to it, so they have full exclusivity. if that manufacturer doesn't produce then the rights reverts back to the original patent holder and the cycle starts again until the patent expires. This scenario means there's only ever 1 'user' of the patent. It may be argued this will stifle competition.

comments powered by Disqus