Apple Persuades US Judge to Void $533 Million iTunes Award

A federal judge has thrown out a $532.9 million (roughly Rs. 3,385 crores) award against Apple Inc and ordered a new trial on damages, in a case where a jury found that the iPhone maker's iTunes software infringed three patents owned by a Texas company.

In a decision on Tuesday, U.S. District Judge Rodney Gilstrap in Tyler, Texas, said jurors who on February 24 awarded the damages to Smartflash LLC because of Apple's willful infringement might have been confused by his instructions on how to properly calculate royalties.

Apple had argued that the damages were too high because jurors might have improperly considered the entire market value of the products, rather than distinguishing between patented and unpatented features.

Gilstrap said his jury instructions were legally correct but not applicable to the facts of the case, and "may have created a skewed damages horizon for the jury."

He set a new trial only on the issue of damages for September 14 in Tyler, where Smartflash is based.

Bradley Caldwell, a lawyer for Smartflash, did not immediately respond on Wednesday to requests for comment.

Apple declined to comment on Gilstrap's decision, but said the case showed why Congress should try to curb litigation by Smartflash and similar companies whose business models depend in part on lawsuits to enforce their patents.

"We refused to pay off this company for the ideas our employees spent years innovating," Apple said.

Shares of Apple were down 1.9 percent at $123.36 in afternoon Nasdaq trading.

Smartflash accused Apple in a May 2013 lawsuit of infringing patents for accessing and storing songs, videos and games, enabling the Cupertino, California-based company to sell more of its iPhone, iPad and iPod Touch products.

The lawsuit said Patrick Racz, a co-inventor of Smartflash's patents, had discussed some of his ideas in 2000 with officials of a European company, including Augustin Farrugia, who later became a senior director at Apple.

Smartflash originally sought damages of $852 million (roughly Rs. 5,412 crores).

The trial took place in the federal court for the Eastern District of Texas, a favorite for lawyers representing patent holders because of its reputation for high damages awards.

The case is Smartflash LLC et al v. Apple Inc et al, U.S. District Court, Eastern District of Texas, No. 13-00447.

© Thomson Reuters 2015