Apple Gets Good News in Bid to Knock Out $533 Million Verdict

  • Two Smartflash patents in the case were found to be invalid
  • Apple appealed the jury verdict to the Federal Circuit

Apple Inc. has succeeded in getting two additional Smartflash LLC patents invalidated, bringing it closer to escaping a $533 million patent verdict.

The U.S. Patent and Trademark Office on May 26 invalidated two of three patents owned by Smartflash, which won the award after a jury trial against the iPhone maker in February 2015.

A three-judge panel at the patent agency found that the two patents never should have been issued in the first place because the idea of storing and paying for data is an abstract concept, not a specific invention. In March, the agency said the same thing about a third Smartflash patent.

The ruling, however, doesn’t end the case. Smartflash can ask the Patent Trial and Appeal Board to reconsider and, if that doesn’t work, file an appeal with the U.S. Court of Appeals for the Federal Circuit.

The Federal Circuit, a Washington court that handles all patent appeals, is already considering the validity of the patents and whether Apple’s iTunes software used the Smartflash technology. Apple filed an appeal of the liability finding and the two sides are submitting their written arguments.

Inherently Abstract

Smartflash is counting on a May 12 ruling from the court in an unrelated case to boost its argument before the Federal Circuit. There, a three-judge panel said that not all software is “inherently” abstract.

That ruling “makes clear that the Smartflash patent claims at issue are not directed to an abstract idea,” Smartflash lawyer Aaron Panner said in a filing with the court.

Once the fighting over validity and infringement is done, if Smartflash wins at that stage, then the case still has to go back to trial. Apple had already won a new trial on the damages amount after the trial judge was found to have given “skewed” instructions to jurors.

Rachel Wolf Tulley, a spokeswoman for Cupertino, California-based Apple, said the company had no comment. Lawyers for closely held Smartflash didn’t immediately return queries seeking comment.

The case is Smartflash LLC v. Apple Inc., 13-447, U.S. District Court for the District of Texas (Tyler). The appeal is Smartflash LLC v. Apple Inc., 16-1059, U.S. Court of Appeals for the Federal Circuit (Washington).

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