Judge axes $532M IP verdict against Apple, orders new trial on damages

By David Yates | Jul 8, 2015

On July 2 a federal judge declined to triple a $532,900,000 jury verdict against Apple for patent infringement. Less than a week later, on July 7 the judge vacated the verdict all together, ordering a new trial on damages.

In February, a Texas jury found Apple willfully infringed on three patents owned by Smartflash, a Tyler company, levying a $532,900,000 verdict against the tech giant.

Smartflash argued the willful finding entitled it to treble damages. However, U.S. District Judge Rodney Gilstrap found that no jury could reasonably conclude Apple’s infringement was willful, declining to triple the award to nearly $1.6 billion.

Five days later, Gilstrap went a step further, ordering a new trial on damages on the grounds that Smartflash did not attempt to apply the substantive legal rule known as the entire market value rule at trial.

The rule prevents a patent holder from using the entire market value of a product as the starting point when calculating patent damages.

Gilstrap found the confusion created by the damages instruction to the jury warranted a new trial.

The judge expects Smartflash to present a new damages model at the next trial, which is slated for Sept. 14, according to the order.

Case background

Smartflash filed suit against Apple on May 29, 2013, in the U.S. District Court for Eastern Texas, Tyler Division.

On Feb. 24, a Texas jury found Apple had willfully infringed on three of the Tyler company’s patents for media storage.

The following day, Smartflash filed a second complaint for patent infringement, alleging violations of the same patents the jury found Apple had infringed.

The litigation has spilled over into multiple courts, including a federal appeals court.

In its original complaint, Smartflash accused Apple of infringing on several patents for data storage and managing access to the data via payment information, including:

• U.S. Patent No. 7,334,720 issued Feb. 26, 2008;

• U.S. Patent No. 7,942,317 issued May 17, 2011;

• U.S. Patent No. 8,033,458 issued Oct. 11, 2011;

• U.S. Patent No. 8,061,598 issued Nov. 22, 2011;

• U.S. Patent No. 8,118,221 issued Feb. 21, 2012; and

• U.S. Patent No. 8,336,772 issued Dec. 25, 2012.

At trial, the jury found Apple’s infringement of the ‘720, ‘221 and ‘772 patents was willful and that the defendant failed to prove the patents were invalid.

Apple is represented in part by the Ropes & Gray law firm

Smartflash is represented by Bradley W. Caldwell, Jason D. Cassady, John Austin Curry, Daniel R. Pearson and Hamad M. Hamad of Caldwell Cassady Curry P.C. in Dallas; and T. John Ward and T. John Ward Jr. of Ward & Smith Law Firm in Longview.

Case No. 6:15-cv-00447

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