Apple Challenges $625.5 Million Mirror Worlds Verdict

Apple Inc. is challenging a jury verdict in which the computer maker was ordered to pay as much as $625.5 million to Mirror Worlds LLC for infringing patents related to how documents are displayed digitally.

Apple asked U.S. District Judge Leonard Davis for an emergency stay of the Oct. 1 verdict, saying there are outstanding issues on two of the three patents. Apple said patent owner Mirror Worlds would also be “triple dipping” if it were able to collect $208.5 million on each of the patents.

Closely held Mirror Worlds, founded by Yale University computer-science Professor David Gelernter, sued in 2008, claiming Apple’s iPod music device, iPhone and Mac computers infringed its patents for a way documents are displayed on a computer screen. Apple challenged the validity of the patents and whether they were infringed, according to court records. Some claims were thrown out before the case went to the jury.

The trial focused on the Spotlight, Time Machine and Cover Flow features in Apple’s Mac operating systems. Cover Flow lets users scroll through album cover art when browsing for music in their iTunes library. The feature also works for documents, pictures and other material stored in a computer.

Spotlight searches the computer’s hard drive, while Time Machine automatically saves copies of files.

Apple reported $13.9 billion in sales of Macintosh computers last year, almost a third of the Cupertino, California-based company’s $42.9 billion in total revenue.

Second-Biggest Verdict

The $625.5 million award is the second-biggest jury verdict in 2010, and the fourth-biggest patent verdict in U.S. history. The largest this year, for $677 million against nursing home company Skilled Healthcare Group Inc., later settled for $50 million.

An Apple lawyer, Jeffrey Randall of Paul Hastings Janofsky & Walker, told jurors in closing arguments that the Mirror Worlds patents had been sold, first for $210,000 and then $5 million, and weren’t worth any more than that, according to a transcript in the court record.

Judge Davis has asked the Apple and Mirror Worlds lawyers to submit legal arguments on the damages awarded by the federal jury in Tyler, Texas, according to the Oct. 3 Apple filing.

The arguments are needed “in light of counsel for Mirror Worlds’ erroneous and objectionable suggestion that, among other things, damages should be cumulative while at the same time suggesting that Mirror Worlds was not ‘triple-dipping,’” Apple said.

Apple fell $3.88, or 1.4 percent, to $278.64 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares are up 32 percent this year.

Lowering the Damages

Apple had $45.8 billion in cash and securities as of June 26. Officials at Apple didn’t return messages seeking additional information on the filing.

Davis also is considering Apple’s request, filed before the verdict, to rule the company doesn’t infringe two of the patents. The judge said that if he granted that request, he’d strike the amount of damages attributed to those two patents.

Mirror Worlds Technologies Inc. was founded in New Haven, Connecticut by Gelernter, who wrote “Mirror Worlds: or the Day Software Puts the Universe in a Shoebox” and “Drawing Life: Surviving the Unabomber” about his recovery from a bomb sent by Theodore Kaczynski in 1993 that damaged his right hand and eye.

Mirror Worlds LLC, the legal entity that filed the complaint, is incorporated in Tyler, Texas, according to the complaint. Lawyers for the company declined to comment today or Oct. 1 when asked about the verdict and the amount of damages.

The case is Mirror Worlds LLC v. Apple Inc., 08cv88, U.S. District Court for the Eastern District of Texas (Tyler).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net.

To contact the editors responsible for this story: Larry Liebert at lliebert@bloomberg.net; Tom Giles at tgiles5@bloomberg.net.

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