U.S. appeals court tosses patent verdict against Apple

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By Jan Wolfe

<span class="articleLocation”>A federal appeals court has thrown out a jury
verdict that had originally required Apple Inc to pay
$533 million to Smartflash LLC, a technology developer and
licenser that claimed Apple’s iTunes software infringed its data
storage patents.

The trial judge vacated the large damages award a few months
after a Texas federal jury imposed it in February 2015, but the
U.S. Court of Appeals for the Federal Circuit said on Wednesday
the judge should have ruled Smartflash’s patents invalid and set
aside the verdict entirely.

A unanimous three-judge appeals panel said Smartflash’s
patents were too “abstract” and did not go far enough in
describing an actual invention to warrant protection.

The decision likely ends a case that had attracted wide
attention when the verdict was rendered but had gone against the plaintiff ever since.

Neither Smartflash nor Apple could be immediately reached
for comment.

Smartflash was founded in 2000 by inventor Patrick Racz, who
obtained several patents on a system for storing data like
songs, videos and games and accessing that data through
electronic payments systems. Racz was unable to commercialize
the technology and Smartflash sells no products of its own.

The company sued Apple in May 2013. Smartflash’s complaint
alleged that Racz has discussed his ideas in 2000 with a
technologist who later became a senior director at Apple.

Smartflash filed its lawsuit against Apple in the Eastern
District of Texas, a venue popular with patent owners.
Smartflash also brought a similar case in the same court against
Samsung Electronics Co, which remains pending. It
later filed additional cases against Google and Amazon

U.S. District Judge Rodney Gilstrap refused to set aside the
jury’s findings that Apple infringed Smartflash’s patents, but
he ordered a retrial on damages, saying he did not properly
instruct the jury on the question of how much to award.

Apple appealed to the Federal Circuit, which is designated
to hear patent cases. The tech giant also joined Samsung in
challenging the validity of Smartflash’s patents before the U.S.
Patent and Trademark Office, which invalidated as too abstract
the three Smartflash patents the jury found Apple infringed.

Smartflash appealed that ruling to the Federal Circuit,
which could have ended the case by affirming the patent office’s
determination. It instead ended the case by ruling Gilstrap
should have found Smartflash’s patents invalid himself.

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