Smartflash alleged that Apple's iTunes software infringed on its data storage patents and in February 2015 a Texas federal jury ordered Apple to pay $533 million in damages. The large award was later vacated by District Judge Rodney Gilstrap who said jurors may have been confused by his instructions on how to properly calculate royalties.
Smartflash was founded in 2000 by inventor Patrick Racz. He obtained patents on a system for storing data like songs, videos, and games and accessing that data through electronic payments systems. Racz was unable to commercialize the technology but sued Apple in May 2013. He alleges that in 2000 his ideas were discussed with a technologist who later became a senior director at Apple.
The verdict was appealed by Apple to the Federal Circuit and along with Samsung, the company challenged the validity of the patents with the USPTO. The three Smartflash patents Apple infringed were determined invalid. Smartflash appealed that ruling to the Federal Circuit who ended the case by ruling that District Judge Rodney Gilstrap should have found the patents invalid himself.
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