© 2015 The Texas Lawbook.
By Natalie Posgate
(Feb. 25) – An East Texas federal jury ruled late Tuesday that Apple infringed three patents created by a Tyler-based data storage technology company and must pay $532.9 million for doing so.
The hometown victory is a step forward for Smartflash and its owner, Patrick Racz, who has also sued some of Apple’s peers on similar infringement claims, including Samsung, Google and Amazon.
“Ultimately, the jury saw through Apple’s arguments and reached the right result,” said Dallas attorney Brad Caldwell, who led the trial for Smartflash. “The jury’s verdict provides well-deserved and long-overdue recognition for our client, Smartflash, and Mr. Racz personally.”
Caldwell, a partner at Dallas firm Caldwell Cassady & Curry, tried Smartflash’s case with law partners Austin Curry and Jason Cassady and Longview attorney Johnny Ward.
Apple’s local counsel, Eric Albritton of the Albritton Law Firm in Longview, could not be reached for comment. Neither could Apple’s lead attorney, James Batchelder of Ropes & Gray in Silicon Valley.
Apple pledged to appeal in a company statement.
“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,” the statement said. “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.
“We rely on the patent system to protect real innovation and this case is one more example of why we feel so strongly Congress should enact meaningful patent reform.”
Smartflash sued Apple in May 2013. It claimed in its lawsuit that Apple infringed Smartflash-patented technology that enables customers to purchase and download apps in digital app stores.
Smartflash’s inventions for this technology date back to the late 1990s, but it claimed Apple infringed the technology by incorporating it into its App Store and iTunes Store software. Smartflash claimed Apple currently infringes the technology via Apple’s iPhone, iPod Touch and iPad, which all use iTunes and the App Store to download content.
When Racz invented the technology, he partnered up with a European company, Gemplus International SA, to build the invention. Smartflash claimed Apple learned of the inventions then because one of its current senior directors, Augustin Farrugia, worked at Gemplus at the time it was in discussions with Smartflash. Gemplus pulled out of the deal in 2002, the same year that Farrugia left Gemplus to work in Milan for another company, according to his LinkedIn page. Apple hired him in 2005.
During trial, Caldwell said the main strategy was to keep the case simple by “stay[ing] focused on the facts and evidence.”
Evidence he believed worked in his client’s favor included the fact that all of Apple’s witnesses revealed in their testimony that “none had taken the time to really study our patent,” Caldwell said. He said jurors also learned that Apple paid off about five third-party fact-witnesses that they claimed came up with the invention before Smartflash to not talk to Smartflash for the trial.
Jurors handed down a verdict of the six-day trial after about eight hours of deliberation, Caldwell said.
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