Apple Defeats Patent Claim Over Invention of Smartphone

Apple Inc. (AAPL), the world’s most valuable technology company, was found by a federal jury not to infringe the patent of a 70-year-old electrical engineer who claims he came up with the idea for the smartphone.

The jury in Los Angeles yesterday rejected the claim by NetAirus Technologies LLC, the company owned by inventor Richard L. Ditzik, that Apple’s iPhone infringes its patent for a handheld device that combines computer and wireless-communication functions over both a Wi-Fi and cellular telephone network.

Apple last month defeated patent holder Wi-Lan Inc. (WIN) at trial over a $248 million royalty demand for wireless technology used in mobile devices, and last week won $290 million in damages from Samsung Electronics Co. (005930) in a retrial over damages following a jury verdict in 2012.

The trial in Los Angeles was limited to damages NetAirus could seek for infringement by Apple’s iPhone 4 since October of last year, when the patent was recertified with changes in the language of the claims. NetAirus has filed a separate lawsuit for alleged patent infringement by the iPad and iPhone models that Apple started selling since the suit was filed in 2010.

Apple, based in Cupertino, California, argued during the trial that Ditzik initially filed a patent application for a handset that used a laptop computer to make phone calls. The inventor revised the patent to include features that he had read about in magazines, such as the handset functioning as a personal digital assistant and being able to send e-mail, Apple said.

Juror George Escarrega, 50, a salesman for a uniform rental company, who voted in favor of the inventor on two questions and for Apple on two others, said after the verdict he wanted “to find some way” to reward Ditzik.

‘Little Guy’

Escarrega said he “almost felt like we were failing in doing everything we could for the system and for the inventor,” and that there “was an aspect to the case that Apple was this giant crushing the little guy.”

The jury of six women and two men had been deadlocked, repeatedly sending notes to the judge over three days of deliberations saying they were unable to reach the unanimous verdict required on each of the five main questions on the verdict form regarding whether Apple had infringed on the patents and damages. The judge had sent them back to continue deliberations.

After jurors sent a note saying they were still deadlocked yesterday morning, attorneys agreed to accept a majority vote, and sent them back to deliberate again. A majority of the panelists voted in favor of Apple on all four questions about the patent at issue. They didn’t reach the damages question.

Inventor Disappointed

Ditzik and his lawyer, Ray Niro of Chicago-based Niro Haller & Niro, said after the verdict they were disappointed with the outcome and are considering whether to appeal.

Attorneys for Apple declined to comment following the verdict.

“Obviously, the giant has more resources than the little guy and the little guy needs somebody to fight for him,” Escarrega said. “But it needs to be justified.”

The instructions given to the jury were “black and white” that the patent had to match the claims, Escarrega said. “We all looked at it and we found it just didn’t.”

The case is NetAirus Technologies LLC v. Apple Inc., 10-03257, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in federal court in Los Angeles at epettersson@bloomberg.net; Valerie Reitman in federal court in Los Angeles at valeriereitman@yahoo.com

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