Apple (NASDAQ:AAPL) was ordered by a federal jury in Texas to pay $532.9 million in damages to Smartflash LLC, a digital technology company whose only business comes from licensing 7 patents. During the trial, the company stated that Apple’s iTunes software infringed on 3 patent innovations. Originally, Smartflash sought upwards of $852 million, despite claims from Apple that the patents were valued at most $4.5 million.
According to Bloomberg, the Texas jury discarded Apple’s arguments of the patents being invalid; Apple plans to appeal the ruling.
“Smartflash makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology Apple invented,” said Kristin Huguet, an Apple spokeswoman. “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.”
The tech giant has in the past success in persuading appeals courts to toss damage awards ordered in Texan courts, and is hoping for a similar situation this time around. In 2011, a $625.5 million verdict over document display methods was overturned in an appeals court. And in 2014, the same appeals court reversed a $338.2 million damages decision originally won by VirnetX Holding (AMEX:VHC), stating the damages were calculated in an untrue way.
Just as Apple has experience with winning in appeals court, Smartflash has experience suing other tech giants. Samsung Electronics (OTC:SSNLF) Google (NASDAQ:GOOGL), and Amazon.com (NASDAQ:AMZN) have all faced lawsuits from the company; Google is even in the process of transferring its case to a California court.
Currently, Apple sits at $128.79, and its shares were down 2.56% yesterday. The company rests at a Zacks Rank #2 (Buy) and is in the top 43% in Zacks Industry Rank: Computers-Mini.